Every diligent forex (FX) trader knows the value of following international news events. Every currency rises and falls in response to various political, economic, and social activities. This general principle is particularly true in a volatile economic environment, as is the case in mid-2022. What are the significant stories attentive FX enthusiasts should be following right now? There are several, including the recent batch of economic reports issued by the US government regarding unemployment and the general direction of the domestic economy. Add to that the latest round of global political unrest, including the shocking assassination of former Japanese prime minister Abe, and it’s apparent that there are plenty of critical events happening all at once.
On a slightly positive note, and one that is of intense importance to foreign currency traders everywhere, the international price of petroleum appears to be backing off from its recent historical highs. At the same time, nationwide food and fuel shortages in Sri Lanka have turned violent as the country’s entire infrastructure implodes and the government officially declared bankruptcy. Other developments, like the continuing Russia-Ukraine war, farmer protests in the Netherlands, more troublemaking from the communist Chinese dictators, and the resignation of Boris Johnson as the head of the UK, are all of immense relevance for the forex community. Here are pertinent details about the leading stories for the third quarter of 2022.
Poor Economic Reports from US Government
Recent governmental announcements from US officials have painted an across-the-board negative picture of the nation’s economy. In addition to an unexpected increase in the number of persons who have officially left the job market, there was similarly dismal data on the number of adults unemployed. But even the worst financial news from a government body can mean opportunities for FX aficionados and beginners alike. One of the ways a trader can gain an excellent position is to use the best forex trading platform available and follow the news closely. While negative reports don’t always translate into immediate currency weakness, the figures often portend a near-term weakening of the domestic currency, in this case, the US dollar.
Global Political Unrest and Violence
What are investors and FX followers to make of political unrest? In the majority of cases, the place where the disturbances take place will take a hit in terms of the local currency’s strength. The main challenge of most FX strategies is that there are multiple factors at play. That’s why it’s so crucial to remain informed on a wide range of issues. In mid-2022, China became more aggressive in its talk about invading Taiwan, a move that could shatter international confidence in the yuan, China’s fiat currency. The recent assassination of Japan’s former prime minister, Abe, was celebrated by China’s dictators, who despised Abe’s intention to use Japan’s military as a deterrent against a communist invasion of Taiwan. Other global hot spots include the Netherlands, where farmers recently protested a fertilizer shortage and were shot at by government police. The UK’s unpopular prime minister, Johnson, resigned amid a personal scandal, a move that could weaken an already troubled pound.
Food and Fuel Shortages in Sri Lanka
India’s east-side neighbor, Sri Lanka, has been playing an increasingly important role in the world’s financial and agricultural markets since 2010. However, recent moves by the country’s government led directly to a food and fuel shortage of extreme proportions. Government agents have recently shot at protesters who attempt to show their disgust with federal policies, rationing, and harsh law enforcement techniques. For foreign exchange followers, the situation is instructive mainly because the Sri Lankan government officially announced that it could not pay its foreign debts. In effect, the country declared a kind of de facto bankruptcy. Online traders should keep a close watch on the crisis. If India doesn’t bail them out, Sri Lanka’s close trading allies could suffer immense financial losses.
Oil Prices Coming Down
Petroleum prices on the spot and futures exchanges have been slowly coming down since the start of Q3. Online investors and FX followers should take note. Oil is perhaps the single most important commodity of the modern era. Currencies that depend on their fortunes, like the Russian ruble and Canadian dollar, could be hit by losses if petroleum’s price levels continue to drop. However, as long as the Ukraine-Russia war lingers, with no peace talks or cease-fire in sight, there’s a strong possibility that oil’s recent value fallbacks could be either temporary or simply stall out at their current levels. The war in Eastern Europe was one of the initial factors that sent petrol prices rising to record levels in early 2022.
