Archive for December, 2016

More trouble for the EuroZone

Just when Forex Robot members thought that the aggressive measures taken by major central banks to allow greater liquidity to lending institutions would improve the Eurozone's overall plight, a lack of cohesion among European members has rattled stock markets and currency valuations.  As this article is being written, markets in Asia have tumbled in light of Europe's continued lack of cooperation at the European Union summit.  Unlike in the United States, where there is more flexibility in terms infusing more liquidity into the markets, the European Central bank has many restrictions that prevent these types of policies.  The only way the ECB will be permitted to make these important changes its laws are ratified.  However, ratification requires a consensus of the 27 European countries.  With continued squabbling, the Euro remains in crisis.


Crude over $100

The increase in crude prices has risen to over $100 dollars a barrel.  This price increase is on the backdrop of news reports that an advanced US unmanned aerial vehicle was either shot down or crashed in Iranian territory.  What makes this event particularly concerning to the Forex Robot team is that the specifications of this sophisticated UAV remains classified due to the sensitive technologies of this unique aircraft.  The RQ-170 Sentinel is the only known UAV designed with sophisticated stealth to allow for spying missions deep inside enemy territory.  

The CIA is often in direct control of these aircraft, and there are mixed reports as to whether the Iranians were able to retrieve most of the aircraft intact, or whether it incurred significant damage upon impact.  In any case, there is a good chance that US made technology in now in the hands of a serious adversary, which will allow the nexus of pariah states, including North Korea and Syria to increase their capabilities or learn ours.  Perhaps these aircraft should include an automated self destruct module for situations like the one we find ourselves in today. 


Cain out… Ron Paul in?

The next U.S. presidential elections in 2012 will be both interesting and unique.  Ron Paul, a self described libertarian has become more popular among Republican voters after Cain's recent announcement.  He informed members of the press that he intends to leave the presidential race after allegations surfaced of an extra-marital affair.  In order to protect himself and family members, this announcement came over the weekend.  It is hard for the Forex Robot team to contemplate the next leader of the United States being a full fledged and committed Libertarian.  

Under Ron Paul, many federal-based government issued programs will cease to exist.  An example of some these programs include both Medicare and Medicaid.  According to Paul, these federal based programs are not in the constitution and therefore unlawful.  With increasing debt of the US government, war, unnecessary military spending, and bases scattered throughout the world, Americans are fed up with having little say with their destiny.  They simply want the United States government to start making appropriate and sound decisions.  Obama promised change but delivered little.  Ron Paul would certainly change US foreign policy as well as internal policies.  More power to individual union states and less power to the federal government.  The Forex Robot team wishes Ron Paul the best of luck in his pursuit of the presidency. 


Iranian Intransigence

Forex Robot analysts were frustrated but not surprised by the unprecedented and irresponsible attack on the British Embassy in Tehran, Iran.  This event brought chilling memories of the 1979 Islamic revolution that resulted in US embassy personnel being held hostage for more than a year.  At the time, president Carter refrained from military intervention until exhausting all diplomatic options.  However, the military operation failed miserably after a C-130 fuel tanker crashed with a helicopter enroute to rescue to the US embassy diplomats.  Eight American servicemen lost their lives in this failed operation.

To the relief of the British government, any hostages taken by the aggressive and emotionally charged Iranian crowd did not result in a similar hostage situation.  In fact, all the embassy workers were quickly released and flown back to London.  As a consequence of this event, the UK embassy in Iran has been effectively closed down until further notice and the British government has expelled all Iranian diplomats in response.  Of course, the price of oil was effected adverses, with prices going higher.  It is now being reported in various media outlets that the French government has also ordered its many of it embassy staff to return to Paris.  


Positive Unemployment Report

The Forex Robot team is happy to announce continued positive economic activity being reported in the United States.  According to the data gathered, the unemployment rate has dropped to 8.6%.  This has alleviated some fear among economists and financial analysts about the possibility of a double dip recession in the United States.  Additionally, recent measures taken by the Federal Reserve, European Central Bank and China will enable financial institutions to lend money more easily to qualified individuals and companies looking to expand or purchase assets.  We're curious to see if the Federal Reserve will consider taking steps to hinder inflationary pressures as a result of this unexpected positive news in unemployment figures.  If so, interest rates will rise and the USD will appreciate against the Euro. 

Despite the positive economic indicators, Forex Robot analysts believe that there continues to be much risk for the global economy.  The Europeans must still figure out how to deal with the messy debt issues for countries like Greece, Italy and Ireland.  Even with increased liquidity measures designed to assist lending institutions, a small negative event could have serious global repercussions.  

The Forex Robot team is also keeping a close eye on Egyptian election results.  According to preliminary reports, the Muslim Brotherhood is expected to have a majority in parliamentary seats.  The world's initial response to the most nonviolent elections was positive.  The Egyptian stock market rose and the Egyptian Pound rose against other currencies.  However, political scientists and world leaders are waiting anxiously to see how the organized Muslim Brotherhood movement will uphold Egypt's current peace treaty with Israel and whether the country will adopt more hard-line Islamist values.  10% of the country is Coptic Christian, who are already beginning to feel more persecuted by growing Islamist trends.  Additionally, the small country of Israel is watching events unfold in the region as well.  It has enjoyed relative stability with Egypt under Mubarak and hopes to preserve this atmosphere of peace. 


Markets Roar Back

Our last entry by our Forex Robot team discussed the gloomy outlook for both Europe and the rest of the international economic community if a viable solution was not quickly found .  At the time, it had not been announced by the US Federal Reserve Bank, the European Central Bank and China that aggressive measures were agreed upon to supply much needed liquidity to financial institutions.  Investors were exhilarated by this announcement yesterday and stock markets throughout the world jumped by nearly 3-5%.  The EUR also recovered somewhat against the USD to nearly $1.34.

The question in the minds of our Forex Robot team is whether this is a short-term solution or something that will permanently have a positive impact on the markets and currency valuations.  After yesterday's central bank induced rallies, it appears that markets are staying within range of their opening positions.  The Europeans must continue to contend with a very complicated situation involving both Greece and Italy, who continue to struggle with the austerity measures they promised to implement.  These policies are the reasons why so many Italian and Greek citizens are protesting against their respective governments.  Unlike in the United States, that has relatively limited social services program, countries like Greece and Italy have many.  These programs are quickly accepted by societies but very difficult to let go.  

The possibility of a disorganized break-up of the Euro still exists and should be considered when investing in Forex.  You should be vigilant and listen to news often.  The Forex Robot will do our best in supplying you with information about current events related to economic activity and currency valuations, especially the Euro. 


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