At the beginning of each year, it's a good time to get some perspective on whatever changes will be coming for the year.
In 2009, I worked with a psychic to come up with some ideas for what might be coming down the line.
The psychic in question is Miss Bonnie. We had just a small discussion on some of the bigger things that will be coming for 2010. Please keep in mind that Miss Bonnie is not a forex trader, so this info is just relayed as it comes to her. It's up to us to figure out what it means.
Q: The world has just been put through the ringer financially, where do we go from here?
A: I believe that there will be an uneasy yet mandatory alliance this year, between two superpowers who, in the past, have not been friends let alone partners. This alliance springs from a desperation that exists in their respective countries. So as they say "it is better to hang together, than to hang separately" The flavor of this 'marriage' is East meets West. Whether it occurs across oceans or continents is yet to be seen.
Q: The US Dollar was really beat up for 2009, what will happen to it in 2010?
A: The dollar is truly, as you infer, torn and tattered. Do not expect healing until August of 2010. But all in all, the travel industry will be the largest factor in the dollar's progression or digression this year. This includes security issues.
Q: How should people that trade foreign exchange approach the new year?
A: Keep an eye on Japan. There can be a false surge which would attract investors but then the drop is just as quick. Some African nations will hop on board the market this year. My only concern would be, the integrity of what is being sold.
Q: Anything specific that should be avoided for forex traders in the new year?
A: On the upside: Forex traders need to be aware of some stocks that will split. This is good news, it seems to be that this is possible within the framework of companies that provide food products/services.
On the downside: stay clear of gambling with your investments this year. High risk funds will fare better, by the first whispers of 2011.
End of Interview Forex Translation
On the first answer, it sounds like an unlikely alliance between the US and maybe China or Japan, my speculation being China. Hard to imagine, but totally possible. The US has been at odds with China for years, even though the US tiptoes around issues, maybe something good will finally shake out of the situation.
For answer number two. I expect a dollar recovery earlier in the year. This answer could possibly say that while the dollar will stabilize, it won't start a true recovery until after half the year is gone.
Answer three, the issue with Japan. There are already rumors circulating as we speak that Japan is having more troubles than anyone expects. Perhaps a flood of information will come out all at once and people will be trapped in their trades. The Yen tends to benefit from risk aversion, getting strong when the markets are avoiding risk. It's hard to pinpoint exactly what this answer means, but I suspect it hints that there will be a good amount of volatility in the yen(JPY) and it could become a controversial issue.
Last answer, things to avoid. Although we don't trade stocks, stocks do tend to be correlated with aspects of our market. If stocks are splitting, that is a good thing. This means that the economy should be growing and there should be some optimism. That also implies that traders will be looking to take risk. The last line reminds us to take it easy with high risk forex investing strategies, which is a good idea in general. The overall general idea that I've gotten from this is to be overly careful with the Yen trade. The Yen can be volatile when risk is uncertain, and although 2010 should be a recovering year, the road might not be a straight one.
All in all, I think 2009 was a strange year. It looks like 2010 is going to also be strange, but maybe more stable.