Today is yet another crucial day in the ongoing problems in Europe, with heads of state once again battling to reach an agreement to stave off the crippling debt issues in Greece, which now threaten to infect the rest of the EU member states. So how will investors react to the latest crisis. Well last year we saw the US dollar and gold moving in tandem as investors sought the sanctuary of both paper and hard assets, and the question of course now, is whether this will be repeated once again. I’ve recorded this short video to help forex traders understand this relationship as it is one of the key linkages between commodities and currencies which shapes the daily movements in the currency markets.
Thanks for another insighful presentation – great help, as usual.
I just wish the ECB would let the PIIGS default (& the Fed with the US come to that) rather than just keep kicking the can down the road – perhaps then we could have a suitable market correction and then form a base to move forward – oh well, I guess life isn’t that simple!
Regards
Alex
Hi Alex – as always many thanks for your kind comments – I couldn’t agree more – unfortunately we are stuck with this situation which is likely to continue for a long time to come. We all know that Greece will default at some point – its just a question of when. For us as traders however, it is hard to ignore the news, as logic tells us that the euro should have collapsed long ago, but this will never happen, as there are too many egos and reputations at stake, so no matter how bad the news, the euro will survive.
Many forex traders simply short on the bad news, and cannot understand the deeper political implications of what is, in effect, a political currency, which then not only recovers, but continues to climb higher as the markets breathe a sign of relief once again!! Just to put this into context, I have been long the eur/usd all this week following the hammer candle on the daily chart – no doubt there are many traders who simply shorted as it broke below 1.4000 and are now panicking or have been stopped out. Once again thanks for your comments which are much appreciated, and have a great weekend and good trading – Anna