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The World Economic Forum (WEF) holds its annual meeting each year in Davos, Switzerland, and the recent May event concluded without settling any major issues. However, there was plenty to be gleaned from the hundreds of smaller meetings at this year’s Davos get together. The unavoidable topic was the Ukraine-Russia war. How can individuals who trade foreign currency benefit from reviewing what happened at Davos 2022? It’s imperative to view the indecisiveness of the conference with an eye toward how the wealthiest and most powerful unelected humans on the planet think. The center stage issue at the recent confab was the European war. Here’s a short review of how the results of Davos might affect the international currency markets.
2022 Will Be an Exciting Time for Forex Traders
Indecision at the Davos Summit was widespread and might be one of the clearest indicators of ongoing financial instability and volatility in the global markets. In fact, many of the speakers at the summit pointed out that the international financial community is in a state of transition. Few were able to say what it was transitioning from or to, only that it was on its way to a new order. For individuals who trade anything but particularly international currencies on forex (FX) exchanges, one of the big lessons from the Davos Summit participants was that 2022 could be one of the most turbulent years in recent memory. That’s actually very good news for FX devotees, who tend to prefer anything but an overly stable price environment. Opening an account with a regulated, reputable broker like Friedberg Direct, is the first step for newcomers to the world of FX. Benefits of taking part in forex trading now include an almost assured scenario of price movement, the chance to get started for extremely low initial account deposits, and the ease of learning about the interplay among various currencies like the dollar (USD), yen (JPD), euro (EUR), and ruble (RUB), four of the most active national fiat currencies at the present time.
The War in Ukraine Could Last Until Next Year
Wars are never a societal good, but in modern times they are an inevitable result of disputes between nations. Russia’s February invasion of Ukraine was one such event. But, how should FX enthusiasts view the conflict? The ongoing fighting has caused significant changes in multiple commodities sectors, pushing up the price of petroleum being one of the most obvious examples. An eventual cease fire between the two combatants could have direct effects, in a sort of chain reaction, on the strength of many currencies. They include the Russian ruble, the Chinese yuan, the US dollar, and perhaps most importantly, the euro. Individuals who buy and sell FX pairs should closely watch all war-related news and incorporate it into their predictions about how it might affect their holdings.
The Chinese Market is Imploding
Why is the Chinese economy on the brink of a large restructuring, or perhaps even a meltdown? Additionally, what can traders expect to happen to the value of the yuan if China’s leaders can’t control the widespread chaos that rules their domestic economy right now? For reasons known only to members of the ruling communist party in the People’s Republic of China (or mainland China, as opposed to Taiwan), the COVID lockdowns continue. The recent total shutdown of Shanghai crippled China’s export markets and decimated international confidence in the communists to build a stable domestic financial environment. What might happen? The strength of the yuan could drop precipitously during the remainder of 2022, a development that would be of massive interest to investors and anyone interested in buying and selling currencies.
The WEF is Revealing
After China and Russia were banned from attending the Davos Summit this year, it soon became apparent that politics, not economic policy, was at the root of the decision-making process among the cabal of wealthy leaders who did take part in the meetings. Oddly, those who oversee the global supply chain situation stated that they have no idea about how to resolve it. The story was the same on other vital issues of the day, like worldwide inflation, slow growth, inexplicable COVID lockdowns in some nations, and more. What might be the results of Davos 2022, in both the long and short term? The number one outcome is probably continued international financial chaos. FX practitioners should watch for signs of a return to a prior world order based on trading blocs, currency wars, trade battles, and many of the events that characterized the 1970s, 80s, and 90s. If Davos proved anything, it was that unelected billionaires are not very good at solving problems but are adept at protecting their own financial turf.
