International markets jumped up on Tuesday, October 4, after a few major currencies fell considerably in value. Most notably among these was the British pound sterling and the Japanese yen. The FTSE 100 jumped significantly over the first few hours of the trading day, rising as much as 1.3 percent. It helped the index move to its highest point in over a year. The Nikkei 225—Japan’s leading index—also moved up in price by about 0.83 percent, helping spur forward movement in Asian stocks. Growth in markets is always welcome, but it is hard to say whether or not this is lasting, especially because of the circumstances going on in England at this point.
The drop in the pound is no surprise, but merely a continuation of the fears that have been pulling it down off and on over the last several months. England has not yet begun the formal process of separating from the EU, but even without this catalyst, worldwide fears are hurting the pound. And with the fact that U.S. factories have reportedly been more productive than expected, the yen dropped, adding to the currency’s instability. Because Japan and many other Asian nations rely heavily on U.S. factory output, this news negatively impacts the currency.
As the pound and yen drop in price, it would be expected that the U.S. dollar would rise in price, and this is exactly what happened early. The GBP/USD fell by 0.85 percent and the USD/JPY rose by 0.60 percent within the opening minutes of the trading day on Tuesday. Keeping track of this information helps you to find better trading opportunities regardless of how you trade. Short term opportunities exist in plentitude right now, whether you are focused solely on the Forex market, just the binary options market, you’re a day trader in the stock market, or you use some sort of combination of these three things. Paying attention to the news can be a huge boost for your trading as long as you are able to apply the information that you gain accurately. There is a downside here as the GBP is approaching a 31 year low when compared to the USD. While this is an obviously harmful thing to those that rely on a strong pound, it is possible to use this knowledge to your advantage. Markets will correct themselves over time, but there’s no reason you should not profit from them until that happens.
And it’s not just in indices and currency pairs that these chances to make higher profits pop up. Besides the obvious drop in the pound and yen compared to the rise of the U.S. dollar, currency prices impact the indices that support them, as we’ve seen. With the U.S. markets, because much of this action occurred before the U.S. stock markets even opened, we saw index futures in the U.S. jump in a major way, too. When the markets open, the natural reaction is to watch stocks catch up to their indices. This often occurs in a pre-market setting, so opening prices will be higher than closing prices from the day before.
There are many takeaways that you can find here. The first is to follow economic and political events. These have an impact on not just currencies, but on futures action. When futures move, there is sometimes a lag between this and the actual price of the asset in question, and this creates an uneven atmosphere for any type of asset to move in, whether it be an index, a stock, or a commodity. There are various methods of evaluating these discrepancies, and refining this process on your own can help make you a better trader in the future.