Often times economic and political forex news is outweighed by war talks. Syria is creating a situation of worry. Syria is very fearful that Western countries are going to take action in the form of military strikes. Western countries like the USA stated that Syrian opposition with President Bashar al-Assad might require military action. The President is trying to meet with the Syrian National Coalition in Istanbul which is going to create unrest for Syrian people. Syria is just one of the countries that has been experiencing troubles of late.
Forex News is Always Affected by Military Action
Whether military action is happening in Asia like US involvement in North Korean talks, Egyptian attacks, or Syrian fears the forex market will react. The degree of reaction is based on what the powers are saying. For Tuesday August 27, 2013 talk was about actual military action in Syria. It is not a matter of debate of whether USA and other Western countries should interfere, but if they interfere what will happen?
Forex news such as the German business survey which looks to sentiment or confidence in the business market was overshadowed. It was nothing as a report when compared to the reaction of the news that military action might take place.
The reaction was for many traders to run from currency trades into two of the top safe haven currencies in the market right now. These two currencies – Yen and Swiss Franc – traded better than all other pairs for the day. Risks were definitely off due to the forex news impact of Syrian trouble.
The impact had the dollar losing value against the Yen, Swiss Franc and in other pairings too. If the USA is going to enact military action it can mean turmoil again. The USA deficit is already large enough without adding an all out war. There is definitely fear that war is on the horizon again and that it might start in Syria this time.
Bond markets reacted to the news as well. Many of the top bond markets like the US, UK, and German markets rose in demand. Currencies are not the only safe havens.
Why Forex News Reports Created Worry
Washington announced that on studies of a recent chemical weapons attack that Syrian’s president was most likely responsible. The USA is up in arms so to speak about this attack, thus on the forex news front that military action against the Syrian president might happen risk became too great.
Many emerging market currencies like the Russian rouble and Indian rupee hit all time lows losing any gains these currencies had made on positive forex news. Positive news is still rolling out, but with more trouble coming up there is definitely concern that things will not go according to plan with regards to economic data.
Leaving aside the question of whether any country should be involved in military action, those trading in the forex market need to be concerned about their money if that action actually happens.