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By Justin Duke
Special to the Financial Independence Hub
All over the world, trading markets are rapidly evolving. There are a lot of factors influencing the difference in the high and low of global currencies. In America, the influencing factors only get bigger: talk of oil prices, the outcome of the election, and many more factors. Currency pairs are moving with the market trends. What exactly does this mean for forex traders? The market can be lucrative, and it can be resilient.
In the past few weeks, a lot has happened in forex trading that the investors of this market should be aware of. Risky trends in the market have been amplified lately, but with the American Thanksgiving holiday coming up soon, forex traders in the U.S. are looking at some sort of break, but this time off from the market trends also means a period away from the optimism that some currencies were showing in the past week.
How commodities impact Forex
The market is still recovering from the somewhat aggressive election run by Trump and Clinton. Other trading commodities that influence the Forex Trading market, like oil and gold, also experience major changes. Thanksgiving, in the past, has rigged the market of its liquidity. The S&P 500, for instance, hits some of its highs during such holidays, leading many investors to believe that holiday cheer is an influential factor that can move the market from a low to a high.
Oil rigs moved from 452 to 471 in just a week, while gold is making a move towards $1,200. Last week, US stocks were trading at a low thanks to the loss of the bias previously owned by the GBP/USD currency trading pair. The Fed is looking to diversify some of its policies so as to help strengthen the current position of the dollar in the market. The position of the Euro, on the other hand, might just be about to get very interesting given the current market flux in Europe. Forex traders should consider the word of trading experts before placing their investments on any currency combinations in the current risky markets.
The NASDAQ index gained 1.61%, while the S&P gained 0.81%. Most of the other global indices were also higher, but in the US, the NASDAQ and the S&P’s rise gives traders hope for good returns on their investment. Crude oil was at $45.54 at the end of last week. Gold was at 1208.77. Bond yields might have begun at a low when the week started, but they ended at highs. Like these market indicators, the US dollar is also moving near the high levels again.
Currency combinations, like the AUD/USD pair, the USD/JPY pair, GBP/USD pair, and the EUR/USD pair, that have attracted forex traders have had major changes. The Euro/Dollar combination hit a new low of 1.0600. This is the lowest that this pair has fallen since 2015. The GBP/USD combination also hit a low last week, and as for the USD/JPY combination, there was some good news for traders as the pair ended the week at a steady high of 111.00. Lastly, the AUD/USD combination ended the week stuck at a 50% level in its rise from a 2015 low to a 2016 high.
Most traders have the opinion that the dollar will continue to rally until December when the market interest rates are expected to be hiked by the Fed. Come next year, after the Fed hike and the official presidency of Trump, the same traders think that the position of the dollar will not rally so well.
Now, the US forex trading market is focusing on Trump and his cabinet appointees. Even after the tension of the election, the markets still has to endure uncertainties and doubtfulness from Trump’s government; from the ban on Muslims to the trade war that he plans to launch.
The upcoming thanksgiving holiday will also be a huge influence on markets such as CMC Markets that deal in stock and forex trading. As for now, there is no currency pair that offers an illusion of a ‘safe haven’ to forex traders; the market just as risky as ever. US traders in this market are therefore advised to consider their options, objectives, and risk tolerance carefully before trading in any global currencies.
Justin Duke covers topics relating to money, investing, business and finance. He specialises in online article copywriting and has a particular interest in psychology and behaviour when it comes to people and money. He also enjoys looking to the past for lessons that can be learnt from history.