Currency Corner - Jan/Feb 2012

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Bradley Gilbert provides analysis of the currency market: This isn’t just another crisis, it’s the Perfect Storm!

The financial markets are at a serious crossroads. Many traders are not aware of the potential consequences of past decisions made by central banks to fund global debt. Have you seen the movie ‘Perfect Storm’, with George Clooney? If you have, you’ll know what I’m talking about. The financial markets have passed the point where Captain Billy Tyne decides to take his boat, the ‘Andrea Gail’, way offshore to the Flemish Cap to catch some fish. It was a perilous mission and being so far offshore had incredible risks associated with it (sounds familiar). As the story unfolds the crew manage to catch a record haul but unfortunately never get to realise their profits as they are engulfed in the ‘Perfect Storm’. Ship and crew are lost at sea without a trace. We are now at the point where Captain Tyne addresses the crew and informs them they are going down and there’s no way out!

I make this assessment because multiple issues are arising and they are not confined to just one region. Global debt has been coming at us from two fronts: the USA and Europe. But now we have a third front, with potentially bigger problems: China. On the surface China appears to have been quietly going about its business, but recent data show that just below the surface there are rumblings of a major cash crisis. No longer is it a one-way bet. If the three biggest economies in the world implode at the same time, I’d say that’s the ‘perfect financial storm’, wouldn’t you...

Excerpted from an article originally published in the Jan/Feb 2012 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2012, Your Media Edge Pty Ltd.
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