Back to Macro? | Forex Factory

  • Back to Macro?

    From marctomarket.com

    The US-China trade conflict and then US-Iran confrontation distracted investors from the macroeconomic drivers of the capital markets. It is not that there is really much closure with the exogenous issues, but they are in a less challenging place, at least on the surface. A Chinese delegation, led by the Vice-Premier Liu He, who spearheaded the negotiations, will participate in the signing ceremony on January 15.. While China has agreed to buy $200 bln more of US goods over the next two years, they were prepared to do this or something similar more than a year ago with the trade deal that Treasury Secretary Mnuchin ... (full story)

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AnniLi
Jan 12, 2020 4:15am
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Markets always revert to economic fundamentals though it can be a lengthy process of political interference, murky tools such as tariffs (on and off), sanctions (on and off) and threats of both (on and off). Supporters of free market economics (not sure of the percentage which endures) must wait impatiently until such political theatricals diminish in influence which is taking an age this time around for several reasons already covered in previous posts.

So don't be dismayed if at the start of the New Year there is no more clear a picture than there was during 2019. Even the slaying by the USA of an Iranian general abroad for talks nor an incompetent downing of a Boeing in Iran add up to any significant trend shift in any meaningful way for forex markets. Looking at the charts you would not perceive an associated impulse. Current forex rates are broadly the same as a month ago.

Rather the secret to future fortunes from trading lies in stalking the fundamental economic performance of the major and commodity currencies. Many forex rates lie way out of kilter with economic sense within a longer term framework than 6 to 12 months. There lies your answers and there should be your focus.
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