Thursday, February 3, 2011

Tensions Flaring!

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By Mike Conlon | February 3, 2011

It was only a matter of time before violence escalated in Egypt as the government protests that were taking place have been met seemingly with violence by supporters of the current regime. While this is not a surprise to anyone who understands the social dynamic of Middle Eastern countries, it has caused oil to rise yet again.

However, if it is true that the violence is coming from pro-government supporters, then it seems unlikely that there will be an oil supply interruption unless it provokes a counter-reaction in equal or greater violence.

Tensions may also flare over in the Euro zone as the ECB rate decision is due out at 7:45 EST and tomorrow’s summit of economic leaders is intended to come up with a resolution to Euro debt crisis. Meanwhile, PMI figures came in better than expected though retail sales figures showed a decrease vs. an expected increase.

Last night in New Zealand, the unemployment rate jumped higher to 6.8% vs. an expectation of 6.5% as the participation rate decrease slightly.

In the forex market:

Aussie (AUD): The Aussie is higher across the board despite Cyclone Yasi, the largest cyclone ever, bringing destruction. Building permits increased as did the trade surplus showing signs of economic resilience.

Kiwi (NZD): The Kiwi is mostly lower as the jobless rate came in higher than expected, posting an increase of 6.8% vs. an expectation of 6.5%. In addition, the NZ finance minister called a stronger Kiwi an “impediment” to export growth and said it would be hard to envision another rate hike this year. (Click chart to enlarge)


Loonie (CAD): The Loonie is also higher with no new on tap today but ahead of tomorrow’s employment report. With higher oil prices due to unrest in Egypt but without the perceived risk, the Loonie is following along.

Euro (EUR): The Euro is mostly lower ahead of this morning’s ECB rate decision despite lower than expected retail sale figures. PMI data did come in better than expected and the ECB has its eye on inflation though is expected to maintain the 1% interest rate. The last go-round produced hawkish comments from Trichet, which pushed the Euro higher. (Click chart to enlarge)


Pound (GBP): The Pound is trading higher after posting better than expected PMI services figures which showed a reading of 54.5 vs. an expected 51.3. Thought the Pound is giving back some of it’s earlier gains, it does show that there is still life in the UK economy.

Dollar (USD): The Dollar is mixed this morning as it is gaining strength ahead of this morning’s initial jobless claims numbers which are expected to show another 420K people lost jobs. There is also a little bit of anti-Euro sentiment driving the Dollar ahead of the ECB rate announcement.

Yen (JPY): The Yen is mostly weaker this morning despite the risk out of Egypt and a lower stock market overnight as yield seeking is taking place.

As we have seen over the past week, the global economy is very sensitive to world events and it is this type of action that makes the forex market so exciting. And it is also what provides significant opportunity to smart investors who know what makes things happen.

For there are many reasons why the forex market is the largest financial market in the world as not everyone is in it to win it! If I told you that there were investors in the forex market who actually want to lose, would you believe me?

Many investors use the forex market to hedge their currency risk and limit their losses, sometimes all but guaranteeing that they will have them. Savvy investors get compensated for assuming some of that risk; so their gains are someone else’s loss!

Are you this type of savvy investor? Would you like to be?

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currency, currency trading, dollar, economy, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, interest, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, USD, Yen

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