March Coming to an End

An article by Gus    No Comments

Hi everyone hope the trading week has treated everyone pretty good and you where able to lock in some good pips. So March is coming too a close and must say it has been one crazy month. The markets have been fluctuating erradically the first two weeks of the month but they are finally stabilizing and coming back to their normal levels.

The principal cause of this is of course the news coming out of Japan which sent the global economy into a downward spin. I am sure everyone by now has heard of the tsunami in Japan and mainly the nuclear plant failures they are experiecing right now and the radiation leak that they are trying to contain. The screenshot below shows exactly how bad the USDJPY dropped earlier this month, yet the Bank of Japan has really done its part to keep the Japanese economy form completely tanking.

The Bank of Japan has been hard at work pumping cash into the eocnomy to try and curb the fears from around the world that Japan is in trouble. While all this news out of Japan is bad there are still positive signs to it. The first thing is that even though there was so much destruction across Japan and it has been tagged as one of the most expensive natural disasters of our time, at around $250 billion and the price jsut keeps climbing.

While this is bad and there is no positive spin to the traggic loss of life that has happened, the Japanese economy is not completely doomed. Japan has a long history of tsunamis being in a location with frequent earthquakes. The path that Japan is taking to rebuild Japan such as roads, buildings, and basic infrastructure. The amount of resources and workers that will be needed to rebuild Japan will increase employment and productions of goods across Japan.

So the idea that the Japanese economy will not recover from this disaster and that the Yen is just going to keep going downhill is just incorrect and without any premises. As you can already see in the previous screenshot of the USDJPY pair, the Yen is already gaining back some of what it loss and I expect it will be back to its normaly trading volume and level by early April.

The only thign that could affect Japan to the point of no return is the Nuclear Reactor issues they are experiecing. Right now their is strong belief that the cooling of the reactors if working and they should be able to bring the overheating spent fuel rods back too decent temperatures so they can be contained. But again with something as sensitive as nuclear power anything can happen. I highly recommend to keep a close eye on this and be careful, since any bad news can cause market panic and across the board selling of Japanese shares.

So while the month has been a tough one I think markets are coming back to normal after massive sell offs at the beginning of the month due to mass fear and panic. With April almost here I  am excited too see how the Japanese situation turns out and hoping for the best. Remember always do your research and dont just go into markets blindly knowledge is your number one tool for this crazy game we call Forex.

Thanks,
Gus FX