Samuel Williams, one of the top financial analysts at Olsson Capital confirms that financial markets, especially the stocks, cryptocurrency and Forex markets, are very much influenced by what happens around the globe and more so in the political arena. The Forex markets are usually the most hit since the markets are determined by the value of currencies from different economies and those economies are run and controlled by a government through the central banks. Therefore, anything small that happens with the government, directly affect the value of currencies and that will end up affecting the exchange rates in the Forex market.
The US dollar is known to be the most used currency across the world and it is in most cases used to determine the value of most currencies. The US dollar is from one of the most developed countries and it kind of sets the pace for other economies.
With the current unpredictable president in the US, the markets seem to kind of get mixed up due to some of the radical decisions being made by Donald Trump’s government. Everyone remembers that one of the main objectives of Trump’s administration was “to make the United States of America great again” and this was going have something to do with the economy of the United States.
When Donald Trump got into power, one of the first things that his administration did was to open a confrontation with the Chinese due to their increased involvement in almost everything which made them seem to be taking all the businesses from the United States. This confrontation is still on with the recent warning from the Chinese government that the user should think through its sanctions on Chinese sanctions especially with the issue of North Korea at hand.
You will recall that Donald Trump once visited Beijing during heightened Washington’s confrontation with North Korea when everyone almost thought that the next thing that we would see was an all-out war which would have been catastrophic. The market at that time had become very volatile and any event around the Korean Peninsula ended up making the markets react heavily.
In the real sense, the confrontation of Donald Trump administration with Beijing should not be taken lightly since China is the second largest economy in the world and it plays a major part in the financial markets. When the Tokyo Forex session is open, trillion and trillions of money are normally traded especially in the Forex market. Also, the Chinese Yuan has climbed the ranks and it is also among the most traded currency pairs. If the two most powerful countries got into a “financial fight”, the financial markets would be the worst hit.
The most recent activities around the issue of North Korea are what financial market analysts have been so much concentrating on. The situation had become too tensed with the US trying to look for allies even trying to cue Chinese government to stop them from funding North Korea’s Nuclear weapon program. Every analyst remained tight-lipped to see the reactions of Beijing noting that Beijing is the only true economic partner that North Korea has. After the military drips with South Korea around the Peninsula and the increased accusations from both Chinese and North Korea governments, it had almost become impossible to predict what would happen next. The markets especially the Asian markets had become too fragile and any slight provocation would have sent them crumbling. Every eye remained on Trump to see what his next step was considering it is also very hard to predict what he does and when he does it.
With the recent handshake between Trump and Kim Jong-un, the financial markets seemed to cool off although the hard part still remains. Although there was a deal that was struck between the two leaders, we all know that the USA wants North Korea to completely denuclearise and get rid of all its nuclear arsenals and we don’t know if Kim Jong-Un will be willing to let all that effort in research go into waste.
All eyes are still on the two economies especially the US to see what its next move will be. This includes the debate on whether Trump will stick to the deal or not and if he decides otherwise, we can only hope for the best.