By James McKee – At its core the market is comprised of people, not numbers or goods or even units of currency, the market is a living entity in much the same way that its parts (people) are living entities. This is why large companies fear unions, and why companies spend huge amounts of money to address the needs of their individual employees, individuals make decisions (good or bad) and the market reflects them through stock price, the price of goods, and of course the value of currency. Recognizing the impact of not only individuals but that the status of various companies and even their host country is critical in assessing the stability of a given stock or currency at any given moment.
Currently Japan and China are a great example of a eminent global market shift due to political tensions, a couple weeks ago a Chinese fishing boat captain collided with Japanese coastguard vessels and was arrested. The Chinese government contested the arrest and threatened Japan with political action if the man was not released. Several days later the ship captain was released into Chinese custody. Despite his release Chinese officials are still posturing against Japan politically and have recently arrested (and subsequently released) 3 Japanese chemical disposal experts who were in China disposing of chemical weapons left there by the Japanese during WW2. One Japanese employee remains detained and China has begun threatening to place an embargo on Japan in regard to precious and rare minerals, which are used in the manufacturing process of many Japanese automobiles and electronics.
Such an embargo with have an immense ripple effect on not only many businesses in Japan, but retail outlets around the world and particularly in America. The implications for forex exchange rates are open to interpretation but it is clear that the US dollar and Japanese Yen may be effected in ways which would depress their value if the Chinese embargo moves forward. American imports from Japan would decrease and the availability of many US goods including hybrid cars, many electronic devices and other unknown components of devices I can’t begin to speculate on.
Information such as this is presented daily not only online but in newspapers as well, having the foresight to connect the dots and realize that being in the know in regard to current events is critical in the stock market as well as in the forex exchange market. Even though it might seem boring reading that newspaper and dropping in on the Wall Street Journal is truly the first line of defense against business related ignorance. So don’t hesitate to pick up the newspaper and find out where your favorite stock or currency might be standing, never hesitate to think outside the box and remember that if you observe an oncoming trend or series of events before someone else does it doesn’t mean that you’re being unconventional or taking a risk…it means that you have discovered something valuable, and the best strategy is the one you do NOT share with others (hence the reason no one else has mentioned it).
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. It is vital to remain in the loop where new technologies are concerned, make sure to stay up to date and aware of forex exchange rates and developments
