USD - Rising Stocks and Housing Data Hurt the Dollar
The Dollar continued its upward correction as a rise in stock markets and better than anticipated economic data fueled further risk-taking in the forex market. The EUR/USD was under pressure during trading hours in Japan and Europe, falling throughout the day. However, the pair failed to break a key support line at 1.3200 and reversed course. Driving this appreciation of the pair were gains in equity markets. The Dow Jones Industrial Average finished the day up 2.61%. Adding further to risk appetite in the market was the release of better U.S. Pending Home Sales data. The release came in surprisingly high, contributing to the sell-off of the Dollar.
Prices could have been exaggerated earlier in the day as liquidity was light due to Japanese markets being closed for "Golden Week". We may expect further weakness in the Dollar's crosses as expectations abound to the easing of the global economic recession. This may be seen extensively against currencies linked to commodity prices such as the Aussie Dollar (AUD) and New Zealand Dollar (NZD).
Two major events are on tap for today's trading. The Institute for Supply Management (ISM) will release its Non-Manufacturing PMI report. This indicator is a key gauge of economic activity and expansion. The reading is expected to show moderate improvement from the previous month's release. A second event will be testimony from Federal Reserve Chairman Ben Bernanke on the economic outlook before the Joint Economic Committee of Congress. His comments may hint at an improving economic environment, which may in turn hurt the Dollar. We could see the EUR/USD test the 1.3600 resistance line today.
EUR - EUR Continues Bullish Correction
The EUR has risen the past 3 trading sessions against the Dollar. Yesterday was no different as European investors had reason to cheer as positive momentum was given by the Purchasing Manager's Index reading. This release, along with gains in stock markets helped to boost the EUR against the major currency pairs. The EUR finished at $1.3376 from $1.3315. The EUR/JPY was higher at 132.10 from 131.35. Also the EUR/GBP finished stronger at 0.8945 from 0.8890.
The 16-nation currency has reason to be satisfied in recent days considering the sudden surge in foreign investment, largely due to uncertainty across the safe-haven spectrum. As traders look elsewhere for riskier investments, the Euro-Zone apparently ranks high on the list, and the EUR and GBP appear to be reaping the rewards.
We may see higher-than-average volatility for EUR pairs as traders position themselves over the next few days for the European Central Bank's (ECB) Interest Rate decision. The market will be looking for not only a 25 point basis rate cut, but also for a quantitative easing program. This would be enacted similar to the program undertaken by the U.S. Federal Reserve to purchase long-term government securities. A failure by the ECB to enact such a program could send the EUR sharply lower against the Dollar.
JPY - Yen Hits 3-Week Low vs. EUR
The Yen has reached a 3-week low against the EUR amid speculation the global recession is easing. The upcoming release of U.S. stress tests is also a negative for the Yen. This has traders dumping the Japanese Yen in favor of riskier, higher yielding currencies. Against the Dollar, the Yen has reversed a bit from its bullish run of the past week. Yesterday the USD/JPY finished the day at 98.80 from 99.45.
Trading during the Japanese session could have higher volatility due to the holiday which concludes Thursday. This time period could have prices pushed further than expected, and the Yen driven by events occurring outside the Japanese economy. Two key events that traders will need to be mindful of for the Yen will be release of U.S. bank stress test results on Thursday and U.S. Non-Payrolls on Friday.
Crude Oil - Crude Hits Yearly High
The price of Crude Oil hit its yearly high during yesterday's trading as gains in equity markets and heightened optimism helped rally the commodity's price. An improvement in the global economy will help to boost the demand for energy consumption, adding to the price of Crude Oil. The S&P 500 finished the day in positive territory for the current year, and the weakness of the Dollar has helped to support Crude prices. The price of Crude Oil closed yesterday at $54.00 from $53.20.
Further consensus that the economy is set for a rebound may continue to support the price of Crude Oil. During today's trading we could see a slight pullback below the $54 mark as traders may be inclined to book profits. However, tomorrow's Crude Oil Inventories report could send the price back above this level, perhaps breaking the $55 resistance line.
Article Source - Increased Optimism sets the Tone for Trading
What is Forex?
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 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.
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!