The Current Economic Downturn and Its Impact on the Forex Market

The Current Economic Downturn and Its Impact on the Forex Market

The Current Economic Downturn and Its Impact on the Forex Market

The past week the financial world was abuzz with the sudden spike in oil prices. Analysts had staunchly stuck to their belief that the Egyptian crisis would have no impact whatsoever on the US economy. They thought so due to the low trade relations between USA and Egypt. However, in a global economy especially for something as crucial as oil, it's not possible that turmoil in one country would leave the central force of the world economy unscathed. The price of crude oil rose dramatically due to the political turmoil in Libya and broke the $100 per barrel level. The price of oil started at $90 at the beginning of the week and actually touched $103.35 before falling back to $98 a barrel. Economists all over the world are worried that the sky rocketing price of oil would put a lot of pressure on world economy.

Due to the low equity level of the global economy inflation is rising at an alarming level which would surely influence the central banks to put a tight leash on the monetary policy. Bank of England is already voting for the need of a rate hike. In the meantime, ECB members noted that banks need to alert and ready to raise rates if inflationary pressures continue to persist. That however, hasn't stopped the fed from continuing asset purchase as planned.

The result was as expected. Greenback faced a downward pressure as the week went by. Apart from oil, CHF and JPY also witnessed a significant inflow of funds investors sought safety from the effects of the global uncertainty. The value of the Canadian dollar also increased later in the week.

So what does all of this mean for the budding forex trader?

Despite the fluctuating global trends there's always money to be made on Forex. The US Dollar may be in the tough spot but its bound to bounce back soon enough. The Yen is in a strong position and so is the Canadian dollar. These are always sound currencies to trade in. Since the forex market operates 24/7 you can monitor and trade in the market any time of the day and night. The best part is that you do not need the assistance of a licensed broker to trade and can do it yourself. The last and most important benefit of the forex market is that its not subject to the wild swings like the stock market. This makes it a predictable and safe trading avenue. So go ahead and give forex a try.

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