The Cost of Independance

It’s sometimes sad how some of the largest issues the world is facing turn the least amount of heads. The mostly Muslim Rohingya People of Myanmar have very few allies these days but the list of people who are even willing to hear about the current humanitarian crisis is getting shorter.

The problem is far more complex and less interesting than say a spat between the US President and some of the top NFL stars.

On the other hand, even in the first world country of Spain the Politics of nationality have now taken center stage in a standoff that could have vast implications for the European continent. In the last few hours, Police from Madrid have moved in to stop an illegal referendum vote.

The vote scheduled for October 1st is expected to show that most Catalans do not want to be independent. However, a whopping 80% of the people in the region do want to at least vote on it.

We do hope that all conflicts mentioned above and below are resolved peacefully and we will be monitoring carefully to gauge the reaction of the financial markets.

@MatiGreenspan
eToro, Senior Market Analyst

 

Kurdish Interest

Controversy in the Middle East today as the Kurds of Iraq vote for their own independence. The government of Iraq is doing everything they can to stop the vote but don’t seem to have the will or the power to kill the vote.

The Kurdish people have been fighting hard during the war against ISIS and Assad and with the help of some powerful allies have managed some great victories. At the moment approximately 30 Million Kurds across four countries do not have a home.

For the financial markets, this conflict could have great consequences. The area that they’re fighting over is very rich in oil, which is the world’s main source of energy at the moment. So we’ll be gauging the reaction to this referendum on the price of crude.

The price has managed to stay above $50 a barrel for the past week but hasn’t been able to go much further. Perhaps a resolution or further progression to this hot button issue will be able to help oil choose a direction as well.

Politics are Changing

Of course, we all saw the great victory of Angela Merkel last night, winning her fourth term as Chancellor of Germany. The minor inconvenience of having to work with the country’s most controversial party since WWII doesn’t seem to be affecting her mood too much though.

The Euro opened with a small gap down but remained within it’s familiar price range that it has been building over the past month (rectangle). The move is nowhere near the momentum caused by Macron’s sweeping victory in the first round of the French Elections (circle)

New Zealand also had elections over the weekend. Unfortunately, there was no decisive outcome and it seems we’ll have a few weeks of political deadlock to keep an eye on.

The strife is having a noticeable effect on the currency, which also opened with a gap down (circle). Of course, the movement pales in comparison to the FOMC statement from the USA last Thursday (rectangle).

As if that’s not enough, the Prime Minister of Japan is likely to announce snap elections as well today. Japanese traders are responsible for most of the FX volumes on the planet so we can look forward to some exciting opportunities coming up on the USDJPY.

Brexit Progress

May, in fact, gave some big statements in Italy on Friday saying that the UK will in fact pay up on everything they owe before leaving the Union. When Brexit talks resume today both sides will likely try to put a price tag on that statement.

Political analysts estimate that May’s words amount to about 40 Billion Euros, a number which less than the EU is looking for but more than most English Politicians are willing to pay. So it seems we can finally begin the negotiations.

The British Pound has been in a good mood ever since the Bank of England announced that they will soon be raising rates. Let’s see if this can continue.

Let’s have an amazing week!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.
The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.