Advertisement
Kathy Lien | February 16 2012 11:33 EST
2012 is a big year for politics with 10 countries holding Presidential Elections. The potential leadership changes in the United States, France, Russia, Venezuela, Hong Kong, Finland, India, South Korea, Mexico and Taiwan are all important, but some more so than others. For example, the outcome of the elections in Hong Kong, Finland and Taiwan will only impact the markets domestically whereas the outcome of the U.S. and French elections could have global repercussions.
The Presidential battles in Washington and Paris mean that world leaders will be more focused on domestic developments than global cooperation. Unfortunately this comes at a dangerous time when countries around the world need to work together to help each other rise from the ashes. For the currency market, an inward focus could mean less global progress and more risk aversion / deleveraging / demand for safe havens like the U.S. dollar. Stocks usually perform well in election years 2008 was different because we had the financial crisis but over the past five decades stocks fell only 4 out of 17 election years. Using the deutschmark as a proxy, we analyzed data on the EUR/USD going back to the 1970s which covers 9 election years in the U.S. As shown in the table below, we found that the EUR/USD weakened 8 out of the 9 election years by an average of 6 percent. In other words, the U.S. dollar tends to perform well against the euro in election years. No consistent election year patterns were found in USD/JPY or the Dollar Index. Although history does not always repeat itself, it is helpful to understand where the seasonal bias lies. The EUR/USD has performed extremely well in the start of the year, but eight out of nine times are very high odds and for this reason, we would not be surprised to see the EUR/USD reverse trend as the year progresses.
Company : www.kathylien.com
Website : http://www.kathylien.com
About :
Kathy Lien is an Internationally Published Author and the Director of Currency Research of FX360.com and GFT. Her trading books include the following:
1) Second edition of the highly acclaimed, “Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2008, Wiley).”
2) The internationally published, “Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley).”
3) Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley)
4) High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia)
As Director of Currency Research, Kathy is responsible for providing research and analysis for GFT. She also runs an FX Signal Service BKForex Advisor, with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 3 Trillion/day FX market.
Kathy is a “Trader First, Analyst Second.” She publishes both technical and fundamental research reports, market commentaries and trading strategies. A seasoned FX analyst and trader, Kathy has direct interbank experience. Prior to joining GFT, Kathy was the Chief Strategist of DailyFX.com and worked in JPMorgan Chase’s Cross Markets and Foreign Exchange Trading groups using both technical and fundamental analysis to trade FX spot and options. She also has experience trading a number of products outside of FX, including interest rate derivatives, bonds, equities and futures. She has taught seminars around the world on day and swing trading the currency market.
Kathy is also one of the authors of Investopedia’s Forex Education section and has written for Tradingmarkets.com, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also been on a few episodes of Wall Street Warriors, hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.
Many people have asked how Kathy has managed to achieve so much at such a young age, but if you consider that she graduated New York University’s Stern School of Business at the age of 18 in 1999, she actually has a wealth of experience.
