Japan Announces 15 Trillion Yen in New Stimulus Spending (Euro Open)

Japan’s government unveiled a new fiscal stimulus plan worth 15 trillion yen ($154 billion) aimed at boosting the world’s second-largest economy amid deepening recession. The massive outlay amounts to 3% of total output and brings the total spent to revive growth to 25 trillion yen.

Key Overnight Developments

• Japan Announces 15 Trillion Yen in New Stimulus Spending
• Japan's CGPI Saw Producer Prices Fall By Most in 7 Years
• Euro, British Pound Slip Lower Against US Dollar

Critical Levels

The Euro slipped as much as -0.5% against the US Dollar in overnight trading. The British Pound fell to test as low as 1.4604 but prices recovered late into the session to yield an effectively flat result. On balance, the greenback oscillated in a narrow 0.3% band against a basket of six top currencies.

Asia Session Highlights

Japan’s wholesale inflation fell more than economists expected, with the Domestic Corporate Goods Price Index shedding -2.2% in the year to March versus expectations of a -1.8% result. The reading is the lowest in nearly 7 years and points to further downward pressure on consumer prices (the benchmark inflation gauge) as firms pass on lower manufacturing costs via cheaper finished products. The current downturn could substantially accelerate if expectations of falling prices become entrenched, encouraging consumers and businesses to perpetually put off spending and investment waiting for the best possible bargain.

Meanwhile, the government unveiled a new stimulus plan worth 15 trillion yen ($154 billion) aimed at boosting the world’s second-largest economy amid deepening recession. The massive outlay amounts to 3% of total output and is the third measure of its type introduced by the administration of Prime Minister Taro Aso, bringing the total spent to revive growth to a whopping 25 trillion yen. The current proposal calls for spending on low-carbon “green” technology, expanded employment measures, and subsidies for new car purchases.

Euro Session: What to Expect

European markets are closed for the Easter Monday holiday, clearing the calendar of any economic releases and likely thinning out liquidity as traders turn their eyes away from price action. Trading is likely to remain muted heading into the US session, though caution is warranted as limited market depth may amplify price swings from any unexpected development. Technical positioning sees the US Dollar setting up to challenge the major currencies after losing as much as 7.8% on average since early March.

Written by Ilya Spivak, Currency Analyst
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What is Forex?

If you would go out on a dinner with your friends or family and you mentioned that you were trading on the Forex market most of them wouldn’t know what you were talking about. The worst thing is that most of the Forex traders that join the Forex market don’t know what they are doing. Understanding what Forex is, is the first good step to your success at Forex trading.

The foreign exchange market (Currency, Forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. Forex transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when world over countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.

Today, the Forex market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. Since then, the market has continued to grow. According to Euromoney's annual Forex Poll, volumes grew a further 41% between 2007 and 2008.

Forex Turnover

Forex Turnover
Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.
The purpose of Forex market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, Yen, etc., and the need for trading in such currencies. Since you aren’t buying anything physical this kind of trading can be confusing. When buying a currency think of it as buying a part in that particular country’s economy because the currency rate reflects the economical situation of the country when compared to others.


List of most popular currencies on the Forex market

Forex used to be a closed market because only the “big boys” because you needed between 10 and 50 million $ to open an account. But today, with the development of internet, online Forex brokers have the possibility to offer their services to “little” traders. All you need to start is a computer, fast internet connection and information which you can find on this page also.

This enormous market is like the dangerous sea where you can meet lots of sharks and dangerous waters but at the same time it is the only one where two weeks of trading can hypothetically bring you $1,000,000 out of $1,000 of initial investment.

This is certainly hypothetically because a lot of newbie traders deal with their trades as gambling, that surely bring them to having nothing in the end. You should always keep the phrase "be careful!" in your mind. This market would give you its profit possibilities only if you learn the basic things hard and make lots of demo trading.

The statistics is that as much as 95% of traders come to losing their money at Forex, 5% have profit and less than 1% of traders make large fortune at Forex. You shouldn't produce, sell or advertise anything trading at Forex. Your assets are your knowledge, experience and a small amount of cash.

This market is a platform for banks, transnational corporations and individual traders to change the currencies they possess into other ones. This is the spot Forex market. At this market you can trade with up to 1:400 leverage which means that you'll get $400 on your account for each dollar invested. So, you can trade with the $400,000 sum having invested $1,000 onto your account.

Forex is unique among other world markets because in any time of day and night, somewhere in the world, a financial centre is open for business, banks and corporations exchange currency all the time, with a little lower frequency during the weekend.

Why to trade on Forex?

1. There is no commission fee for trading at Forex.
2. There is no intermediary, you can trade directly at Forex.
3. Forex is open 24-hours a day.
4. Nobody can influence the market for a longer period.
5. High liquidity.
6. Free demo accounts, analysis and charts.
7. Small accounts that allow everyone to try out his luck.

Hope this has answered a lot of questions you were asking yourself about Forex and that you can now start trading. Also make sure that you check out other articles on this blog which can help you earn your fortune.

Good luck to everyone!