I decided to take the day off today as I needed a breather
from everything at work and recharge my batteries. This basically means I work
from home, but that is a different topic. I wanted to use today to discuss
something very briefly or at least put the question out there and you guys to
what you want with it.
I have had several discussions with forex traders and I was
surprised how only a few realized the importance of developments out of Egypt
as well as Syria. On one hand I was surprised of their utter lack of knowledge,
but on the other hand I am glad they work for our competition and not on my
trading floor.
While it is true that the Egyptian Pound as well as the
Syrian Pound are not heavily traded currency pairs and most don’t even have
access to them; that problems in Egypt as well as Syria won’t have an indirect
impact on major currency pairs such as the EURUSD and GBPUSD as well as the
USDCHF and USDJPY. Always keep in mind that the world is connected and what
happens on one end of the world will ripple to the other.
Egypt is home to the Suez Canal which is a major transport
route for crude oil and natural gas and should the terrorists, the Muslim Brotherhood,
get a hold of the canal and either block it or damage it then the entire global
oil market will feel a supply strain which will cause oil prices to spike and
therefore have an impact on the consumer which drives almost 70% of all economic
activity.
Furthermore, crude oil is used in plenty of other commercial
products such as rubber and plastics that it will have a negative impact on
other industry sectors which in turn will be evident in GDP figures. Weak GDP
figures may alter how central banks interact and that can weaken or strengthen individual
currencies and therefore impact major currency crosses in an indirect way.
Those who fail to realize and underhand that are nothing
more than misinformed retail traders who claim to act in a professional capacity.
I was laughing at the ignorance displayed by our competition which makes it
even better for us as we have less people chasing the same opportunity and that
is how money is being made.
Syria is equally important to the oil trade as their biggest
ally Iran could shut the Strait of Hormuz which is responsible for over
one-third of global crude oil traffic and therefore impact oil prices,
consumers, the economy and currencies in a similar manner. Don’t be ignorant
like our competitors and understand what could happen under different
circumstances as your lack of knowledge is and will be directly reflected in
your trading account.