The Foreign Exchange market, as we know it today, is 50 years old. In 1971, due to fears of recession, high unemployment and most significantly the worry over rising inflation and higher prices, the then US President, Richard Nixon, unilaterally removed the USD from the Gold Standard, preventing overseas governments and investors from swapping US dollars for gold at fixed rates.
This eventually led to the floating exchange rate system we enjoy today. At the time the US inflation rate was 5.84% and unemployment was running at 6.1%.
Today, as US inflation is once again running at 5.8% it has led many commentators to predict that the stagflation of the 1970s could return in the 2020s, though central bankers argue that the pandemic induced spike in inflation is only temporary and that it will naturally cool within 12 months. Also, employment is much stronger today than in the 1970s with the unemployment rate already reduced to 4.6% and approaching pre-pandemic levels.
1979
Energy Crisis / 3 Mile Island: Crude oil prices rose by over 9%, following the Iranian Revolution & disruption of supplies, which undermined sentiment following an accident at Three Mile Island nuclear reactor in the USA.
European Monetary System: Most nations of the EEC linked their currencies to prevent large fluctuations relative to one another.
October 19, 1987: Global stock markets crash after the DJIA lost over 22% in a single day. Since then, the SEC has built a number of protective mechanisms, such as trading curbs and circuit breakers , to prevent panic-selling.
2007
The Sub-Prime Mortgage inspired Great Financial Recession.
2008-9
The Lehman Moment, huge job losses, home repossessions and the Euro debt crisis
The birth of Bitcoin
2015
Swiss Franc Black Swan - Switzerland removed the floor of 1.2000 EURCHF, the pair dropped thousands of pips within a minute. It was the largest single-day move in any currency since the Nixon Shock in 1971.
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