Weekend News Highlights

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US China DisputeThere are three news items in the news headlines today which are likely to be of interest to Forex traders right now.

Australia held a general election over the weekend which produced a surprising result, confounding a steady run of opinion polls which almost entirely predicted the return of a new Labor government. As the final votes are counted, it is clear the current right-of-center government has been re-elected to an additional three-year term of office. This might be interesting for the Australian Dollar, which has been steadily falling towards long-term low prices, and generally acting like a very weak currency. It could be that this unexpected result provides a small boost for the Australian Dollar, or at least a temporary halt to its downwards slide. Nevertheless, don’t forget it makes better sense to pay more attention to a price trend than the news.

The trade dispute between the U.S.A. and China remains unresolved with no end in sight. This weekend we hear reports that China has just warned the U.S. administration “not to go too far” in pursuing the dispute, as China is still willing to negotiate a solution, even though Chinese firms and interests have been harmed. This could be something of an olive branch, or at least an attempt to the Chinese leadership to signal that a positive resolution of the dispute is still on the table, intended to calm fears on both sides.

The final item concerns tension between the U.S. and its allies and Iran in the Persian Gulf, which has been ratcheted up as the U.S. administration has acted to place unprecedented financial pressure upon the Iranian economy and regime, and Iranian oil exports generally. It seems likely that Iran hit back last week by sabotaging Saudi tanker ships in port in the U.A.E. and there seems to be an expectation of some Iranian proxy strike against the U.S. side to be launched from within Iraq any day now. Should there be any significant military development such as a major attack on U.S. military forces based in the region, the current risk-off market sentiment could increase sharply and accentuate the current flow out of risky assets into safe-haven assets.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.