Tuesday 24 September, 2013 was supposed to be a good day for the USA. Plenty happening like the Fed restating their position to start stimulus the minute the economy is ready and hope that talks at the U.N. would provide a clear path towards better relations are essentially dashed. Foreign exchange rates for the EUR/USD were heading in favour of the USD late Monday and even through Tuesday. A part of the rate change had to do with some worries in Europe after the German election and PMI data was released. Unfortunately, now that news of Obama’s speech at the U.N. is out things have turned against the USD again.
Obama’s Speech Affects Foreign Exchange Rates
There is nothing easier for foreign exchange rates to change a decent trend for a bad one than for a high ranking official to make a speech that irritates traders. Without getting into the essential debate that surrounds Obama and his entire presidency, there is certainly evidence to show the media and thus traders that he can be irresolute in anything he says.
He is under fire in the media for stating with extreme resolution that air strikes on Syria will take place only to back out of his words after pressure from Russia. It is not only Russia that felt his statement was a bit premature and threatening; allies of the USA were also not happy with the threat. Foreign exchange rates at the time certainly lost their hold for the USD as many ran for safe havens on the announcement of a possible military strike.
Now the statement to the U.N. was yet again something that has upset the market gain the USD had against the EUR for the past two days. In his speech he stated that it was the responsibility of the USA to help with diplomacy and that it was the best nation to do so. He also stated that he would pursue USA interests in the Middle East and that it was the responsibility of the USA to do so. For those not too happy with Obama this can definitely be seen as an arrogant speech and media alluded to such feelings.
Middle East and Asian Focus Talks Tank Foreign Exchange Rates
Obama’s speech was mostly about the Middle East, but he also touched on Asia implying that the Middle East could gain the same economic development that Asia has if they are willing to put aside certain issues and start taking a better role towards democracy. The speech implied the USA will not stop interfering in local wars and inhumane acts if conflicts continue like those in Iraq, Bahrain, and Syria. Yet, many feel this won’t happen since he did not back up the threat against Syria.
It all points to investors losing confidence even in EUR/USD exchange rates. There is definite expectation that the USD will continue to lose value if speeches such as these continue, especially with the promise not to leave the Middle East on a military level. To be fair there is worry the USA would be attacked like 9-11-01 should the military back off.
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