After the British voted for Brexit, the pound decreased in value by ten per cent. After Emmanuel Macron won the French elections, the exchange rate of the euro-dollar decreased by two per cent. The claim that the currency market is the most liquid market, the flightiest market, made by Laurens Maartens from the NBWM (the Dutch Payment and Exchange Company), therefore doesn’t seem to be completely unfounded.
During the event organised by currency traders to look back on President Trump’s first 100 days, Laurens took some time to zoom out a bit further. “The market is very much event driven,” he says. That means elections, for example, can shake up the market quite a bit, while economic figures appear to be less influential. An event would have more effect on the market than the publication of figures.
Populism appears to have stopped gaining ground, he continues. But although Geert Wilders didn’t win the Dutch elections, he is the second-largest party of the Netherlands, and despite the fact that Marine le Pen lost, she did make it to the second round of the French presidential elections. However, it appears to have less repercussions on the currency market, and that’s positive for everyone dealing with trade that requires multiple currencies.
However, the first clouds can be spotted over the market, the first signs of possible thunderstorms have been sighted, and the sky doesn’t appear to be blue anymore either. In the short-term, the firing of FBI director Comey could have consequences. He was recently fired by Trump. In American media, references to the Watergate scandal were made. In June, the FED, the American Federal Reserve Bank, will probably increase interest rates again. This will also affect the currency market. “An increase of American interest rates will also put more pressure on Mario Draghi, president of the ECB, to reduce the purchasing programme.”
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Laurens Maartens
Dutch Payment and Exchange Company