Forex Response to Nuclear Summit Talks

World leaders meet in Seoul, Korea for a nuclear summit while traders anticipate a Forex response to nuclear summit talks. Twin issues dominate the agenda at the summit, the nuclear programs of North Korea and Iran. One of these so called “rogue states” possesses nuclear weapons and the other is believed to be intent on making them. This is an era in which the major nuclear powers are slowly but surely reducing their nuclear stockpiles. The possession of nuclear bombs by North Korea and Iran is seen as a destabilizing factor for Asia, the Middle East, and the world. As part of their fundamental analysis, Forex traders commonly concern themselves with issues such as access to markets in China or Euro Zone fiscal austerity. These issues pale in comparison to the risk of a so called rogue state threatening to use or actually use a nuclear bomb. The Forex response to nuclear summit talks will depend upon whether or not these talks give any hope of success in disarming North Korea and/or Iran.

The current nuclear summit is playing host to 50 world leaders. Although there is a set daily agenda there are also private discussions between world leaders that may be more important than the summit itself. For example, President Obama is meeting privately with leaders of both Russia and China. On issue on the front burner is that these nations have blocked US action in Syria. The Arab Spring has resulted in the regime change across North Africa and in the Middle East. Pro-democracy demonstrations in Syria have resulted in a government crackdown and the deaths of thousands of civilians. A Forex response to nuclear summit talks will take into account the “back room” discussions as well as the published reports of the summit itself. Which Forex currency rates will change as a Forex response to the nuclear summit talks? Which rates will change if the conference is successful and which will change if the conference is a failure?

North Korea not only has a nuclear capability but it also has long range missiles. If North Korea gives up its nuclear weapons, that fact would lead to increased stability from South Korea and Japan to mainland China, the Philippines, and the nations of South Asia. Forex traders might even change their strategy in trading an Asian currency decline with the expectation that more stability could lead to more profits. The apparent Chinese real estate crash would not go away but a more stable Asian rim might be profitable. Reconstruction of a pacified North Korea could bring a welcome economic stimulus to the region. The point of this for the Forex trader is that a positive Forex response to nuclear summit talks could be profitable.

The situation with Iran is raising oil prices as Iran is a major oil producer. If armed conflict occurs due to the failure of the current sanctions on Iran it could imperil the shipment of a fifth of the world’s oil supply out of the Persian Gulf. A very positive Forex response to nuclear summit talks would be the case if Iran falls into line and gives up its nuclear ambitions. Foreign currency exchange rates in the Middle East and Europe cold well benefit from a stabilized Middle East.