A Profitable Forex Trade due to Economics A Proverb on for the Wealthy

A Profitable Forex Trade due to Political Circumstance

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In mid-Sept 2005, both Japan and Germany had elections. In Japan, Prime Minister Junichiro Koizumi ran on a reform agenda that called for the privatization of the Japanese postal service, a quasi-banking institution with $3 trillion in deposits and 25,000 branches. In Germany, the reform-minded candidate Angela Merkel ran against the standing Chancellor Gerhard Schroeder. While Koizumi's message resonated well with the Japanese voters as he headed to an overwhelming win, Merkel's victory over Schroeder was hard-fought - the two contenders were locked in a struggle for leadership for more than a month after the German elections were initially held. In Sept 2005, therefore, the EUR/JPY cross presented a tremendous profit opportunity as a de facto "Koizumi/Schroeder spread". Indeed, from Sept 9 to Sept 12, the cross tumbled nearly 200 points as traders bid up the yen and shorted the euro as a response to the election results.
Source: http://www.investopedia.com/articles/forex/05/CurrencyCross.asp

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