Watching International Markets



The U.S. dollar recently hit a 13 year high against the Japanese yen, but it looks like there will be a slowdown in that momentum, even if it is only for a brief time. A lot of this has to do with the fact that the Federal Reserve is expected to raise rates later this year and make the dollar a bit harder to get, but the repercussions of a strong dollar are being felt everywhere. As the dollar gets stronger, investing in the U.S. economy becomes a bit harder for people in other nations that need to convert their local currency to buy stocks. The strong dollar is just a sign that the stock market is going to begin to get a bit choppier.

As a sign of this, as the U.S. dollar gets stronger, other nations see their markets doing well. That’s why it’s surprising that China’s stocks are taking such a huge hit right now. To understand this better, you need to look at fundamental data and apply it.

For starters, the ongoing Greece debt issue is a big concern. It makes investing anywhere in Europe a bit difficult because things are so unpredictable right now. It has also made the euro very unattractive. Also, G7 talks are currently underway, and this usually marks the beginning of some new international guidelines that will be set in place. Investors are always a bit cautious when things like this happen. Finally, if you take into consideration the fact that China is starting to be much stricter when it comes to trading with margin accounts, you will understand why the Chinese stock market is struggling. New policies often create a temporary slowdown, especially when that new policy is geared toward how easy it is to buy and sell stocks with margin.

These declines in China will likely not be long lived, at least for these three reasons. Other factors may contribute later on in the future, but these are the three points are the ones affecting price now, but they are all easy to overcome. The G7 talks will end on Friday, and next week, it is likely that traders will be able to overcome margin issues as brokers clear up confusion. This means that the major indices in China and Hong Kong will likely see a boost at the beginning of next week, creating a chance for short term traders to jump on and make a profit. This is especially true of binary options traders that do not have to worry about currency conversion and international trading costs. Because there’s no change in ownership of anything, binary options traders have the same ability to trade Chinese indices as they do U.S. indices. For situations like this, it’s a very nice setup and an even better money making opportunity.

The CSI300 dropped over 3 percent the other day At the same time, Shanghai’s main index dropped over 2%, and Hong Kong’s dropped 2% exactly. Huge drops like this often lead to rebound gains, even if the market’s not quite healthy. Keep an eye out for action in these areas and be prepared to act upon your information if you find it to be profitable. However you decide to trade, remember that markets don’t always move on international fronts as they do in the U.S., but using the dollar’s strength as a reference point as you move forward can help you to monitor what’s going on in these other countries to a degree. It’s a rough estimate at best, but it is helpful if you do not have a total understanding of how foreign markets and currencies interact.