Many people ignore the currency market, assuming it’s something only bankers and governments need to think about.
But behind the scenes, foreign exchange (forex) has a bigger impact on your life than you might expect.
Right now, we should watch the connection between interest rates and the currency market closely…
As we’ve seen over the past year, the Federal Reserve raised U.S. interest rates at the fastest pace since the ’80s. Yet the ripple effects are only starting to be felt.
If history holds true, though, we have a unique opportunity before us…
Because whenever interest rate narratives take hold of the market, forex becomes the place to be.
The Window Is Opening
In the past, macro events have had an outsized impact on the forex markets.
Debt crises, global trade negotiations, recessions, and political turmoil all create new opportunities to profit from forex.
We saw this right after the COVID crisis hit in 2020. The crisis led to a shortage of dollars.
Investors rushed to get ahold of the world’s most liquid currency… especially when the stock market initially cratered.
The Federal Reserve ended up creating swap lines with international counterparts like the European Central Bank to help manage the shortage.
This situation created one of the biggest opportunities on record in the forex market. If you knew how to position yourself at the time, you could have massively profited from these rapid shifts in currency values.
And we’re facing a similar opportunity today.
As I mentioned above, changing interest rates have a potent effect on the forex markets.
This comes from expectations about what one country’s short-term rates will be compared to another’s.
If one country’s central bank raises rates faster than another, that currency will often strengthen compared to a more dovish one.
After all, rising interest rates attract investment. The more investment, the more value the currency has.
That is why we saw the dollar skyrocket in 2022 as the Fed raised rates more aggressively than other countries. The value of the dollar is back to near parity with the euro for the first time since around 2002.
That means now is the right time to have the currency market on your radar. The way I see it, we have a new “currency window” opening right in front of us…
So while many people may be tempted to focus solely on stocks and bonds and even options, I don’t want my readers to be among them.
Instead, I want to show how you can diversify your portfolio… and take advantage of what’s happening right now…
Moving Behind the Scenes
During my 35-year career, I’ve traded more than $500 billion worth of currencies… and learned the best strategies for spotting promising movements in this market.
What fascinated me was that currencies were a critical piece of the picture for trading… To understand how money is moving behind the scenes, you have to understand forex.
It was a tool I used while running my $800 million hedge fund. And it helped me maintain my 20-year winning streak during that time.
One reason for that is forex doesn’t always move in line with other investments. In fact, the BarclayHedge Currency Traders Index has a negative 0.08 correlation with the S&P 500.
In other words, forex can work even when other investments don’t.
That’s one reason it can help diversify your portfolio… and help you profit even when stocks are losing ground.
This is just the tip of the iceberg, though.
That’s why I’m putting together an in-depth look at this market and will show you the kind of opportunity we’re looking at.
Please plan to join me at my “Currency Window” event tonight at 8 p.m. ET.
I’ll discuss the unique features of currencies… the kind of profit potential we have… and all the info you’ll need to know to get started.
I hope I’ll see you there!
Editor, Trading With Larry Benedict