Like all markets, the currency market is affected by what is going on in the world. Key political events around the world can have a big impact on a country's economy and on the value of its respective currency. Turmoil, caused by labor strikes and terrorist attacks, as we have witnessed in this new millennium, can cause short-term price shocks in the currency markets. Terrorist attacks seem to have played more havoc on the energy markets than on the currency markets in 2006, but we need to be aware of any lasting economic impact these heinous acts have before we react by forming an opinion and placing a trade. We have heard the term flight to safety, indicating that traders are moving money from one country to another, thereby causing shifts in currency values. These events need to be monitored by forex traders as well.
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