The FTSE 100 had a rough day in the market today, and while you may immediately think Brexit as you read this, believe it or not, the Brexit has nothing to do with the fall. In fact, the declines that we’re seeing from the index today are ultimately the result of US political uncertainty. Below, we’ll talk about the factor that has opened the box of uncertainty in US politics, what that has to do with the FTSE 100, and what binary options traders should be watching for ahead.
US Political Uncertainty Strikes
As mentioned above, the FTSE 100 had a rough day in the market today, thanks to US political uncertainty taking center stage. The build up to this event started months ago, when Donald Trump was elected as the President of the United States. However, the straw that broke the camel’s back, so to speak, just took place on Friday.
On Friday, a bill to repeal and replace the US healthcare act, commonly known as Obamacare was put onto the house floor for a vote. Unfortunately, the bill did not pass, which is leading to incredible uncertainty in the United States political circuit.
You see, one of the biggest promises that Donald Trump made throughout his campaign was a promise to repeal and replace Obamacare. This was just one of many promises made with regard to improving the economy in the United States. These promises led to gains in the USD as well as the United States market. However, with Trump’s inability to pass his healthcare bill, major questions are being asked with regard to his other plans to improve the US economy, and that’s not a good thing for the market.
How This Has Anything To Do With The FTSE 100
In many cases, when we see cause and effect in the market, it can be difficult to draw the line between the two. This just so happens to be one of those cases. After all, from the outside looking in, it’s easy to come to the conclusion that US politics have little to nothing to do with the FTSE 100. However, that notion couldn’t be further from the case.
The truth is that the FTSE 100 is a commodities heavy index, and this fact alone, closely ties the index to the political and economic scene in the United States. This happens because around the world, commodities are generally priced using the USD. Therefore, when the USD climbs in value, the commodities companies listed on the FTSE 100 see larger profits thanks to currency exchange rates. However, when the USD falls in value, currency exchange rates eat away at the profits.
With the political state in the United States being one of complete and utter unrest, the USD is falling, and falling hard. Because of this, commodity-centric companies listed on the FTSE 100 are seeing declines in profits, and ultimately, declines in the values of their stock. Because there are so many of these companies listed on the FTSE 100, we’re seeing wide sweeping declines across the entire index.
What Binary Options Traders Should Be Watching For Ahead
Moving forward, the FTSE 100 is likely to present several opportunities for binary options traders. After all, there are two big stories circling the index as we speak, and both of them have the ability to set waves in motion. First and foremost, keep an eye on the US economic and political unrest. As this story continues to break, we’ll likely see more movement in the USD, causing more movement in the FTSE 100. Also, keep in mind that the Brexit is likely to be triggered on Wednesday. This move will also lead to big movements in the FTSE 100 for binary options traders to turn into profit.
What Do You Think?
Where do you think the FTSE 100 is headed moving forward? Join the discussion in the comments below!