Political Issues that Rocked Forex Trading Events
History is bound to repeat itself. So we better learn from what happened to forex trading as major political events unfolded in recent years. Here is a summary of such forex trading events.
Year 2005 was a golden year for Canada. Its oil exports to the US were astounding - it was America's number one oil exporter, and yet the Canadian dollar stayed weak compared to the US dollar. In fact, for 30 years Canada had been enjoying peak economic performance thanks to the leadership of Prime Minister Paul Martin. Why was this happening? Let's look at some forex trading events.
It was due to speculations. The Liberal Party, Martin's party, was rocked with corruption problems. Some past undoing was now haunting the party and Martin was receiving the brunt of the issue. He was about to face a non-confidence vote from his party and forex speculators anticipated a major political crisis and adopted a wait-and-see attitude despite the strong Canadian economy. They didn't see yet the next forex trading events about to unfold.
The next set of events proved the speculators wrong. Martin made it to another fresh term and the Canadian dollar substantially improved against the US dollar. The next forex trading events were even more remarkable. The USD/CAD went down to 200 points in a few days and the global currency market again trained its eyes on the Canadian dollar.
If the gloomy political outlook had prevailed and a major shift in politics erupted from the corruption issue speculators would have back out totally from the scene and forex trading events could have led to a major Canadian dollar plunge due to the negative reverberations to the Canadian economy. An economic debacle was in the works if not for the confidence regained by Martin and his party.
In some cases foreign investors play business cronies to politicians or government officials in power. They sometimes play supporter for the same financially. As long as the politician is in power they get protection and do business in the country with special favors - the politician pull some strings to ensure this.
However, once the politician gets to sit in hot water and condemned foreign investors under the politician's aegis gets ready to back out and the next forex trading events see a major foreign capital exodus on the way.
Forex trading events are harbingers of speculations that often pave the way for a forex trading trend. To prepare, we should learn from their past lessons.