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Monthly Archives

November 2016

Frexit the new Brexit?

By | FX Trading, Opinion, Government | No Comments

Frexit in 2017 could be the new Brexit?

Is it all too soon? I know right……We are still getting over Brexit and Trump’s victory.

Well Frexit could potentially break up the European Union. Brexit opened the gates for unexpected change and it looks like the people have spoken.

Marine Le Pen the leader of the Front National Party has proposed a referendum if she were to win power in the 2017 elections. Support for the bloc is declining across many of the 28-member-states with referendums and elections opening up across the continent.

Referendums have rocked the EU over the last few months with Brexit, the Dutch refusing an EU treaty with Ukraine and the coming votes in Italy and Hungary. The floodgates will open in the 28 member union, that’s 11 more currencies to trade if the Euro$ breaks up.

I might be showing my age, but this is back to pre 1999, and the volatility and uncertainty that goes hand in hand. I forsee dark clouds accumulating in the not too distant future, watch this space.

Adrian Jones

Election Blog Update: Opinion

By | FX Trading, Opinion, Government | No Comments
What will happen to the USD on a Trump victory.

On election day, the Forex Markets are open, as well as the Futures Markets, the NYSE and the NASDAQ. However, that’s not the problem, the elections results will become apparent during the Asian time zone.

There is a window between New York close and Tokyo opening affectionately known as the “ Twilight Zone” where volume represents only 2 percent of maximum turnover. As a result, any transactions in that period are vulnerable and can hit the market awkwardly. Let alone any major news event, such as, a lopsided or unexpected election result. So, hold onto your hats. Wednesday Asia time could be similar to a “Brexit style” and “Flash Crash” currency moving Market all rolled into one. The market hates uncertainty.

Trump Victory and the USD

A few months ago nobody gave Donald a snowflakes’ hope in hell of winning the election. Today however, is a different story. It’s neck and neck.

We have already a selloff in stocks globally in the lead up to the election. Be certain, there will be more volatility to come in both currency and stock markets. Trade agreements worldwide could be in jeopardy with a Trump win as he wants to renegotiate NAFTA and scrap the TPP – most certainly harm developing nations who export to the U.S.

Uncertainty almost always spells negativity in markets. Initial reactions to a Trump victory would see an exaggerated USD and stocks selloff globally. Markets tend to react in a “shoot first- ask questions later” fashion, especially if the results happens in the “Twilight Zone”.

That said “fortune follows the brave”. There is always opportunity in the contrarian approach to overreacting moves in markets.

Trade selection is the key component in these exaggerated events.

Either way, Hillary or Donald, brace yourself for years of uncertainty.

 

Adrian Jones