USD - Dollar Moves on ISM Non-Manufacturing PMI Publication
The Dollar went bullish in early trading yesterday, as U.S. equities dropped.
However, the U.S. ISM Non-Manufacturing PMI publication pushed the USD closer to its opening levels. This release is significant as it measures a large portion of economic activity in the U.S. Optimism returned to the U.S. equity markets later in the day after the index's better-than-forecast results. Thus, risk aversion dissipated as the day dragged on, despite financial turmoil threatening the EUR and GBP, as the economies of the Euro-Zone and Britain face a possible long-term financial crisis.
The Dollar hit a 1-month high vs. the GBP before losing these gains to finish almost level for the day at 1.6261. The greenback hit a 5-week high against the EUR, before also finishing virtually unchanged at 1.3964. Monday's volatility in the forex market may have been due to slightly lower than usual trading volume, coming on the back of the U.S. Independence bank holiday. The factor that also played into investor's minds was the dire unemployment figures that came out of the U.S. last week. This led to sharp movements in the forex market on Monday.
As for today, there is a lack of primary economic news, which will be coming out of the U.S. The US Building Permits figures will be published at 12:30 GMT and the Ivey PMI will be released at 14:00 GMT. A wide set of economic results will be published from Britain and Japan though, meaning the GBP and Yen may be the most vulnerable currencies as today's trading gets under way.
EUR - EUR Hits 5-Week Low vs. USD
The EUR hit a 5-week low against the USD, before recovering in late-day trading. This behavior was due to a variety of factors, such as fears about the prolonged economic crisis, as unemployment continues to grow. Furthermore, Joaqin Almunia, the EU Economic Commissioner stated that the Euro-Zone is likely to be constrained by low economic growth for the foreseeable future. The reasons for these remarks were due to the nations of Europe spending very heavily on the financial crisis. In turn, this has resulted in mounting debt that may cripple their recovery in the long-run.
The EUR/USD pair hit the 1.3875 level before recovering back towards 1.3964. Analysts are now left wondering on the state of Britain too as the island economy faces losing its AAA debt rating. If it does indeed end up losing this, then Britain's economy would be in permanent retreat, meaning the GBP will be put on life-support. However, the recent worsening of the banking situation in Germany and the threat of collapse in other Euro-Zone currencies may mean even more dire consequences for the EUR in the long-run.
Looking ahead to today, there is plenty of news that is set to determine the EUR and GBP crosses for today's trading. At 10:00 GMT German Factory Orders are set to be published. From Britain, we can expect the Manufacturing Production figures and Industrial Production figures at 8:30 GMT and Consumer Confidence at 23:01 GMT. Positive results from Britain and the Euro-Zone may lead the way for the rest of the week. This could lead to lessening risk aversion, as traders ditch the USD and JPY, in favor of the EUR and GBP.
JPY - Yen Continues its Bullishness vs. Major Currencies
The Yen continued its bullishness against the major currencies on Monday on increased risk aversion. Yesterday saw traders ditch currencies such as the USD, EUR, and GBP in favor of the JPY. Additionally, the JPY benefited from reports from the Japanese government that the worst of the economic crisis in Japan may be over. The reason for yesterday's risk aversion was due to reports that the recession is set to be prolonged. This was compounded by the dire forecasts of the economic future of both Britain and the Euro-Zone.
Today, there are many economic releases that are set to be released out of Japan in late trading. These include the Core Machinery Orders, Bank Lending, and Current Account figures that will be released simultaneously at 23:50 GMT. Leading up to these releases, forex traders are advised to follow plans from the Obama administration regarding the rising unemployment in the U.S. If his administration fails to provide answers, then the JPY is likely to continue its winning streak.
Crude Oil - Oil Tumbles on Dismal Global Economic Outlook
The price of Crude slid to a 5-week low due to a dismal global economic outlook in yesterday's trading. The price of Crude hit $63.35 a barrel before recovering slightly to $64.20 by day's end. Monday's bearish behavior was exasperated by concerns of falling fuel consumption, pushing down Crude Oil even further. These fears are likely to continue as global unemployment continues to rise, which in turns is taking its toll on falling demand for Oil.
The 6th straight trading session fall in Crude Oil prices has also led to concern amongst OPEC ministers, who would prefer to see Crude at a healthier $75 a barrel. It's important to take into account that Crude prices also fell due to the bullish Dollar throughout much of Monday's trading. The thing which is likely to continue dominating the price of Crude is news surrounding the upcoming G8 Meeting in L'Aquila, Italy on July 8th.
Article Source - Risk Aversion Subsides as Data Boosts Confidence
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.
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4. Nobody can influence the market for a longer period.
5. High liquidity.
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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!