By James McKee
The Obama Administration announced today that it will be lifting the deep water oil drilling moratorium which was put into place after an underwater oil rig exploded on April 20th of this year causing unimaginable damage in terms of lost life, lost wages and, overall damage to the environment near the Gulf Of Mexico. It has been cited as one of the worst ecological disasters in history, and the moratorium was supposed to act as incentive for the oil companies to take extra measures in the future to avoid any further catastrophes. Now that the hole in the well has been plugged and the political storm has settled somewhat the moratorium has been lifted. It is lifted under the assumption that oil companies abide by safety regulations and possess the equipment necessary to prevent further accidents, the return of offshore drilling signals a decrease in US dependence on foreign oil.
Oil is present in every transaction in any economy on any given day, some might be more indirect than others but oil is necessary to provide transportation for goods, parts of goods, to transport employees to manufacture the goods etc… etc… This article is not here to draw attention to the oil crisis but rather the economic impact of cheap oil in the United States. To put it simply it will be a positive impact where the US dollar is concerned, and I believe it is a good idea to keep your eyes on the USD for the next month or so as the oil rigs come back online to see how large of an impact this event will have.
I would say that considering the GBP’s poor performance as of late against a number of other currencies would certainly make the USD|GBP a pair to keep an eye on. Something I would proobably avoid is the USD|CHF in the short term due to the CHF’s recent breakout comparisons to the EUR, the USD, and the GBP. In any event the USD is looking to kick up some dust in the eyes of the other majors and traders should definitely take note of this.
Remember that when dealing with a volatile pair you should always keep an eye on the way your trade is moving along within the currency exchange, forex is always an unpredictable place to carve out a living but in situations like this extra caution is needed. Look for trends, be patient and make sure to keep solid SL/TP limits in place. Happy trading!
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 on the latest developments and always make the most of your ability to utilize the best forex exchange rates as much as possible when trading!