The next few weeks will be interesting for international investors. Right now, Greece is the main focal point of concern as Europe reacts to the ongoing debt crisis, but the immediate focus will soon be shifting to Janet Yellen and the U.S. Federal Reserve. Ongoing developments in the U.S. and world economy are getting independent experts to think that the Fed might be rethinking some of its earlier plans about raising interest rates.
The Global Chief Investment Strategist at Citi Private Bank had an interesting, and very realistic, perspective on Greece and the impact that it will have on the world economy. His basic words were that Greece is a small market, and doesn’t have a huge impact on the European economy, let alone that of the entire world. While U.S. markets are responding to the issue now, it’s not likely to stay that way for long. The responses that are occurring are strong and overstated. The problem is much smaller than major indices in the U.S. would leave us to believe. And the influence that it does have overall will easily be compensated for in the coming weeks, regardless of what happens with Greece’s status in the European Union.
The upcoming issue that will have a bigger impact is what the Fed will be doing about raising rates. It was expected that Fed Chairperson Yellen would soon be announcing an upcoming rate hike on borrowing, but a poor June’s job report has perhaps stifled this. Wage growth has remained flat, and people are leaving the workforce, indicating that there is not as much income as there was a month ago in the U.S. This would make a rate hike a little more problematic, and not necessarily a good idea for the economy. Yellen has been adamant in the past about how these factors are going to have a strong influence on the Fed’s final decision, and things are not progressing at quite the rate that was expected. It might be enough to push the rate hike from mid to late 2015 all the way into 2016. This remains to be seen, for the moment.
Of course, one month of bad data doesn’t make a problem, but April and May data was revised, too, indicating that 60,000 fewer jobs were added than originally thought. This is enough of a trend to make experts raise some eyebrows and start rethinking current plans. The Fed might not make a decision in the next week,, but they might hint at what their thought process is.
There is a group of experts that believe Europe will benefit long term from getting Greece off of the euro. Over the short term, it looks like the U.S. will be a better spot for your trading than Europe, especially if a rate hike is stalled. The dollar and the euro have remained pretty even the last week, with only about a 0.3 percent change in favor of the USD, but over the long term, European stocks have much upside. They are down heavy right now because of the ongoing drama, and the stronger companies only have one way to go. Short term traders, and especially binary options traders, should be looking at what Yellen has to say next week, as well as the many major earnings reports that are coming out. There are a lot of opportunities for short lasting, but quick spikes in price when these two things couple together. Binary traders, if timed right, have the most upward potential as some growth might be slower than others. This allows you to trade small and fast, but with bigger than average returns when you’re correct in your predictions.