The European Central Bank (ECB) will stop its purchases of EU government bonds which has been in place since 2015 despite criticism from Germany. The ECB added over €2 trillion worth of assets to its balance sheet during that period which includes €180 billion of corporate bonds. While the ECB will stop purchasing bonds at the end of this month, it may reinvest proceeds. In addition, interest rates are on track to remain at current levels for much longer than previously expect.

Japan is traditionally know as a risk averse country which is why the Japanese Yen has always been the go-to safe-haven currency for forex traders around the world. When geopolitical tensions rise or economic uncertainty increases, the Japanese Yen usually benefits as forex traders rotate capital out of more volatile currencies and park them in the Japanese Yen until the situation calms.

As widely expected, the US Federal Reserve increased interest rates for the second time in 2018 by 25 basis points to Lower Bound Level of 1.75% and and Upper Bound Level of 2.00%. The US central bank also upgraded the amount of planned interest rate increases to four, which means that two more 25 basis point increases are on the table in the second-half of the year. The hike came on the back on a rise of inflation as well as a drop in the official unemployment rate.

Italy is one of Europe’s biggest economies and a key anchor for the Eurozone behind Germany and France. It is also the economy which has never fully recovered from the last financial crisis as Italian banks are still loaded with bad loans and the Italian consumer is hesitant to open its wallet. Italy also has the second highest debt-to-GDP ratio with 131.1% as of 2014, trailing only Greece.

Bond investors around the globe have enjoyed a bull market which lasted for over 30 years, but as will all assets which go up they will eventually come down. While an overall long-term advance is normal, nothing can advance in a straight line. Usually, the longer a bull market lasts the steeper and more powerful the correction will be. In addition, if there is no corrective phase many forget how to act and react once one begins which results in panic.

Every day, traders try to gain an edge in the markets in order to boost their profits. This often requires plenty of outside-the-box thinking and making correlations where others fail to look. Many forex traders tend to focus on forex only and therefore often miss why their trades moved. Money flows through the global financial system and crosses asset classes. Therefore it is always a smart trade to make sure to know what’s happening across the board in order to make the best trading decisions.