Sharefounders reviews: hot political news

Sharefounders reviews: hot political news

Sharefounders reviews: hot political news
John Dou - 22/11/2019

Trump Who Stole Сhristmas: How Political News Affect the Forex Market

 Even for experienced traders, it is not always obvious how political news affects global markets, including forex. Sharefounders offers this article, which uses a recent example to show why it is vital for a trader to follow the main political news. Of course, there are many other factors that can cause volatility on the currency market: economic indices, Federal Reserve rate, corporate reports, and so on. However, there is a direct link between politics and economic, so the major politic news is also important. The international relationships between the two major counties of the world are important for many aspects of economics, so that is no wonder that US-Chinese trade war tops the list of political news in the focus of forex market.  Share founders forex broker provides the review of the recent events and political moves on this field to make easier the understanding of current events and future market volatility.

Not so long ago, at the end of the 20th century, China was considered an emerging economy and a third world country. After the collapse of the USSR, the Communist China decided to make some changes in its international policy. For example, Chinese government opened its market for the foreign businesses. Large corporation highly appreciated this opportunity for the business. China is rich by the raw natural materials metals. Sharefounders broker reviews prove Chinese raw materials exports played an important role on the international markets that time. However, the logistics was complex and expensive, so it seemed reasonable to move the resource-consuming production closer to the sources of raw materials.

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Together with the natural resources, China was reach by another valuable resource people. The workforce of the Chinese that time was the cheapest on the world market, according to experts from Sharefounders broker. China always faced the problem of overpopulation; its social programs could not provide enough money for socially vulnerable groups, especially in rural regions. It seemed reasonable to open the internal market for the foreign investors and businesses and to get the new workplaces. So, taking in attention cheap labor, an abundance of various natural resources in China, the availability of seaports, and the current level of development, many global corporations have transferred production to this country. At that time the famous economists called China “a global manufacture”.

For almost twenty years the production costs in China stayed the cheapest in the world. Of course, other countries, for example neighboring India, also wanted to attract foreign investors. India was also poor developing overpopulated country. However, the investors preferred China because it was cheaper. Sharefounders broker informs is was not scam, but it was well-thought plan by the Chinese authorities. The monetary policy of the Chinese financial leaders also played a significant role in Chinese economic growth. Chinese financiers keep the exchange rate for yuan at a fixed level, without releasing it to free circulation on forex. Sharefounders believes that one of the reasons to keep this policy is the example of neighboring Japan.

Japan is one of the most prominent countries in the world. After the loss in WWII, the country reorganized its production and manufacturing and focused on several high-margin products. As the result, in the 1980s Japan experienced an economic boom. As the Japanese economy grew, so did the exchange rate of the Japanese yen. The relative cost of Japanese goods increased, and they lost their competitive advantages. Of course, Japanese goods were on high demand in the world because of the high quality. But it could not last long: it is known that the end user prefers cheaper consumer goods, even of the poorer quality. Sharefounders broker could predict the problems in Japanese economy because of this.

Since the Japanese yen has been successfully trading in forex, Share founders recall that the Japanese national bank used the currency interventions. The intervention is based on the primary economic rule: the growing proposition reduces the price. While the currency (in particular, Japanese yen) is the good for sale on forex market, it price can change together with proposition. To limit the strengthening of the yen, the Japanese bank released large volumes of the national currency to the market, artificially reducing the exchange rate. At the same time, traders who use economic forecasts in analytics have opened long-term positions hoping for the growth of the yen. When the price plummeted, positions closed negatively, and traders believed that the brokers, including Sharefounders, scammers. However, the Japanese financiers reached their goal: the growth of yen stopped. The Bank of Japan used the method of interventions for several times. Sometimes they had even pay the fee for the unfair play. However, the size of the fee was too small comparatively to the benefits from cheaper yen for Japanese economy, says Share founders broker.

Chinese authorities also made their conclusions: they correctly understood that the low price of their products was their trump card, sorry for this calambour. If they enter the international forex market and let the investors to buy and sell Chinese yuan, the cross rate to U.S. dollar can go higher. The comparative price of Chinese-produced goods for the foreign customers will increase, as well as the operational expenses for the business owners. It would be reasonable to expect the job cuts and production slowdown. Sharefounders broker reviews of that time contains the information about the long-term negotiations between the Chinese authorities and the famous financiers. However, they ended with no success for the foreign influencers. So Chinese rulers did not release their currency on the open market.

But with the new millennium, the situation has changed. As soon as the Chinese leaders realized that the whole world was firmly addicted to cheap Chinese goods, they began to dictate their terms. Sharefounders broker claim it was not scam, they just used all the possible options.  The trade war developed slowly, step by step. China took all the possible measures to promote Chinese goods to all markets in the world. When any country started imposing duties on the export of Chinese goods, trying to protect national producers, China began to protest. Their protests ranged from disputes within the World Trade Organization to the introduction of counter-duties. At the same time China invested the profits from the import of cheap goods to the national development: construction, infrastructure development, military programs, and so on. From the poor Communist country China turned to the second economy in the world. And they still kept their national currency away from the international Sharefounders forex market.

At the same time, the Chinese economy continued to grow, overtaking both Japan and the Eurozone. There are several criteria for the economic growth estimation, and China increased in all dimensions.  At last Chinese economy became almost equal to the US economy, reminds Sharefounders broker. The nature of their relationships also changed: now they become the competitors. Reviews from these experts clearly indicate: a trade war between the United States and China was inevitable.

In the summer of 2019, the global market was shocked by a large multi-series scandal related to the products of Chinese concern Huawei. US President Donald Trump announced the package of import duties for Chinese-made consumer goods. According to the broker Sharefounders, after the introduction of the package, prices for Chinese products should have grown by at least 15%. That time Huawei was preparing to launch a new flagship smartphone, with the US market as the target consumer base. Huawei is one of the largest Chinese corporations that produces electronic goods. Starting from the low-cost brand, they reached the top positions on the global markets. In particular, on the markets of smartphones their top models successfully compete with the production of South Korean Samsung – which, in its turn, compete with Apple, global brand #1 for mobile gadgets. Of course, Chinese producers were not happy with the new duties. Sharefounders broker suppose thay coud use some scam to return their leading positions, but with no success.

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The currency market has reacted to the trade war very sensitively. Since the yuan exchange rate is practically not affected, all losses fell on the dollar: the US currency was moving down. Investors who waited for the growth of the dollar suffered losses and said Sharefounders scam. At the same time, the same thing happened on the stock market: the largest US indices went down. Trading volume was declining  and everyone waited for the end of the confrontation. Soon the US and Chinese authorities announced they had reached an agreement, and the new deal between the two countries would be announced. The currency market partly calmed down, the dollar exchange rate stabilized, and an upward trend appeared for a short time.

But this calm was deceiving. On September 1st, new rules for Chinese goods came into force. New duty of 15% was imposed on certain types of shoes, bedding, mini-printers, flash drives, and some other goods. The Chinese authorities are rudely putting pressure on the US government, up to Sharefounders: scammers from the Chinese government are asking to cancel these duties. In this case, the US budget will lose $125 billion. Therefore, instead of canceling the duties, the White House plans to raise them. Moreover: in the new package of duties, they supposed to add the new tax on goods from the “4B” list. Together with the abovementioned smartphones, this list includes laptops and game consoles, monitors, Christmas-tree decorations, and a bunch of other goods, that peak sales on Christmas and New Year

The introduction of this package is scheduled for December 15th. Accordingly, the days before holidays in the USA, prices for traditional New Year and Christmas presents can rise. Of course, most of these goods were ordered and purchased in advance: the delivery from China to the USA takes several weeks, taking into account the time for registration of the goods. But US retailers can still raise prices, according to Sharefounders. Scam is an international phenomenon, and American traders can simply take advantage of the info and inflate prices. Meanwhile, President Trump promises to introduce new duties on December 15th, if he does not come to a deal with the Chinese side.

Amid such news, there is real chaos in the forex market. Once Donald Trump makes another belligerent statement, the dollar is immediately moving down. Along with it, the stock market indices are declining. However, according to the Sharefounders broker, reviews from traders prove: when warlike rhetoric changes to more peaceful, the dollar rolls back to previous positions. After all, there are no reasons for the dollar depreciation, as all existing factors have been already taken into account.

Now there is a risk that Trump will give the Americans an unpleasant surprise by Christmas; experienced traders are watching Donald Trump’s speeches, as well as news from China. As you can see, the political situation directly affects the currency market, so the trader simply needs to follow the important news.

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