Forex Trading Currency Influencers
Tuesday, August 11, 2009 15:41In successful Forex trading it is said that changes in politics always trump economics for changing the currency values. A good example of political issues swaying the value of currency over economic issues is in mid 2005 Canada’s Liberal party leader Paul Martin the prime minister had led Canada to best economic performance in 30 years and despite the huge profits due to oil exports to the US the Canadian dollar stayed weak due to political issues. The political issues in Canada with the Liberal party lead to a no-confidence vote for the prime minister, which effected the currency, yet when Martin’s government was reelected the focus again turned to economy and Canadian dollar rallied.
If you like predicting currency changes you could easily profit from changes like recently when the Canadian dollar earned close to 70 points in 24 hours, which at a trade of $10,000 would have paid $700 at a 10 to 1 leverage.
In Forex trading as I have stated political changes far out weigh economic results at changing currency values, another example would be when in Japan the yen floundered in mid 2006 when Governor Fukui was thought to have to step down due to investments with Yoshiaki Murakami. Murakami was involved in insider trading, and Governor Fukui having invested with Murakami damaged his reputation significantly. Fukui was one of the most important people involved in Japan’s monetary policy, and the scandal made the Yen flounder despite Fukui’s innocence. During this time the economy of Japan was dong very well business, exports, and investments were all strong, and unemployment was low as well but this political scandal and the rumors that Fukui might have to step down kept the Yen low. Governor Fukui was a proud man and refused to step down and eventually the scandal about possible implications to the insider trading scandal passed and the Yen bounced back and reflected the strong economy. This is once again a prime example of why you have to watch the politics of a country that you look to speculate the changes of currency, as clearly politics can effect currency values more than economy as I have clearly shown.
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