USD - Dollar Outlook Remains Weak
The USD continued its decline against the EUR, as well as other risk sensitive currencies on Wednesday. However, the overall direction of the market was subdued due to unsteady equity markets. While the Dollar sentiment is bearish, the EUR seems unable to really take off. On Wednesday, the Dollar index was at 78.745, down from 78.920 on Tuesday
Strong performances from the stock markets continue to put downward pressure on the Dollar, as investors move to riskier higher yielding assets. Furthermore, the Dollar outlook suffers from concerns over U.S monetary policy. With growing uncertainty about the framework of the monetary and fiscal policies, particularly in light of the proposed health care reform, the outlook on the Dollar looks very weak despite the Fed's and Treasury's assurances.
Looking ahead to today, several important news releases are expected from the U.S, including the Unemployment Claims at 12:30 GMT and the Existing Home Sales at 14:00 GMT. These indicators are very important since they are leading indicators of economic health and tend to create great market volatility.
EUR - EUR Rises on Weaker Dollar
The EUR experienced a moderate rise against the Dollar and Yen yesterday. Late Wednesday, the EUR was at $1.4211 from $1.4197 late Tuesday and at ¥132.96 from ¥133.01. The Pound depreciated 0.3% to 153.92 Yen, and traded at 86.41 pence versus the EUR. The British Pound also appreciated slightly versus the Dollar, trading at $1.6463 from $1.6436.
The Pound's drop against the EUR came after the National Institute of Economic and Social Research stated that home values will resume their decline. The institute also predicted Gross Domestic Product (GDP) will shrink by 0.4% in the second quarter, slightly worse the 0.3% expected by economists. Also putting downward pressure on the Pound were losses in equities throughout the trading day.
While no major news releases are expected from the Euro-Zone today, traders should follow the release of British Retail Sales that is due at 8:30 GMT. As this is a leading indicator of economic activity, it is likely to cause great volatility for the GBP pairs.
Yen - Yen Benefits from Stock Market Losses
The Yen gained for a fourth day against the Dollar, and for a second day against the EUR yesterday following a larger than expected second-quarter loss by Morgan Stanley, as well as a statement by Wells Fargo & Co. stating that bad loans jumped. The Yen traded at 132.87 per EUR from 133.18 and at 93.56 versus the Dollar from 93.68 yesterday.
With reports from CIT Group Inc. and American Express Co., risk aversion today will likely stay prominent as the expectation is for weak earnings announcements. As the Yen is highly sensitive to moves in the equity markets, any negative earnings reports will revive risk aversion among investors and push them toward the safety of the Japanese currency. The Yen may also rise today ahead of the U.S Unemployment Claims report which is expected to show an increase in claims.
Crude Oil - Oil Prices Slide on Disappointing Inventories Report
Crude Oil for September delivery settled down 21 cents, or 0.3%, at $65.40 a barrel Wednesday, snapping a five-day rally following the release of slightly worse than expected U.S Oil inventories. However, losses were limited due to a weak Dollar and equity gains.
With inventories remaining high and OPEC members not sticking to quotas, there is still too much supply and not enough demand. While rising equity markets and a weak Dollar continue to push Oil prices up, the fundamentals are still weak and do not supports another rally to the $70 price level. Furthermore, any negative news from the stock market, or signs of a faltering economic recovery might send Oil back to the $60 level.
Article Source - Global Stock Rally Dominates USD 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!