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Time for Alarm Bells?

By | USA, Euro, FX Trading, Opinion | No Comments

Do the Financial Markets need a “Black Swan” event to ring a bell to indicate a crises is looming, or will they just let the below events just play out and create a slow burn, which will eventually create turmoil “run for the exits” style panic sell off.

“A complacent Global Financial Markets to the significant events in the U.S, Europe and beyond which could trigger the next global financial crisis.

Financial Markets, including key regulatory authorities do not understand risk, and they do not price it correctly.

There is a danger of drifting into a global trade war, given US President Donald Trump has finally imposed long promised tariffs on steel and aluminium imports from the EU, Canada and Mexico. If not handled with care by all sides, this could lead to global slump such as that created by protectionist legislation in the US in 1930.

The Eurozone also faces a potentially existential crisis as the result of the new anti-austerity, anti-EU, heavily indebted government in Italy. As the Eurozone’s third largest economy (ranking 7th or 8th globally, and six times the size of Greece) the risk is of a debt crisis that would dwarf the Greek debt crisis in severity and threaten the future of the Eurozone (and perhaps of the EU).

As if all this uncertainty isn’t enough, there is renewed concern about oil prices, global (especially Chinese) debt, the transition – being led by the US Federal Reserve – to “normalise” interest rates, and key elections in emerging markets (Turkey, Brazil and Colombia), with other key emerging nations in dire, debt/inflation-ridden economic circumstances.”

Let’s see how this plays out.

FREXIT and Euro Exit……Anyone for Dominoes?

By | USA, China, FX Trading, Opinion | No Comments

More Currency Pairs to Trade. Go the Le Pen.

CNBC 3/4/17

French presidential candidate Marine Le Pen told a political rally on Sunday that the Euro currency which she wants France to ditch, was like a knife in the ribs of the French people.

The leader of the eurosceptic and anti-immigrant National Front (FN) also told the rally in the city of Bordeaux that the forthcoming election for president could herald a “change in civilization”.

Encouraged by the unexpected election of Donald Trump in the United States and by Britain’s vote to leave the European Union, Le Pen hopes to profit from a similar populist momentum in France, though opinion polls suggest she will lose the May 7 run-off.

“We are at the mercy of a currency adapted to Germany and not to our economy. The euro is mostly a knife stuck in our ribs to make us go where others want us to go,” Le Pen said to loud cheers and applause.

A government under Le Pen’s presidency would take France out of the euro zone and bring back a national currency, hold a referendum on its EU membership and slap taxes on imports and on companies hiring foreigners.

Adrian Jones

China 2017

By | USA, China, FX Trading, Opinion | No Comments

As the analogy goes…..If the United States coughs…We in Australia catch a cold. So, what happens if China gets a cough…or worse the flu? You would think we in “The Lucky Country” are toast! How many countries would be infected? A Plague perhaps?

China represents a massive 26 % of our Trade Weighted Index, whereas the United States is at 11 %.

Any decline in this number would be detrimental to our economic health. You can see the importance of China firing a shot across our bough recently suggesting siding with the U.S. would not be such a good idea.

The dilemma we have is on multiple fronts, what if, or what happens to Australia, if China’s growth comes to a standstill? Economically, China is looking vulnerable at the moment.

Here are some of the concerning headlines of late:

  • Chinese capital controls bite
  • China slams brakes on outgoing investment.
  • China tightens capital account again.
  • What would a U.S-China Trade war look like?
  • China property correction imminent.
  • Shrinkflation comes to China
  • China is wrestling with a building financial crisis.

At home, here in the land of milk and honey, a GDP print of -0.5 was less than acceptable. Another negative print in the March release and we are officially in a recession.

I don’t even want to think about what is on the horizon for interest rates and the Housing Market bubble.

As in Europe, we are in for an interesting 2017. So, buckle up folks we are approaching some turbulence.

The good news is Trading FX is recession proof.

Adrian Jones