7.31.2009

U.S. Dollar to Go Volatile on the Release of Advance GDP Figures

The USD is set to go extremely volatile today on the release of Advance GDP figures for the 2nd quarter from the U.S. economy at 12:30 GMT. The forecasted results are -1.4%, significantly better than the 1st quarter results of -5.5%. The other things that are expected to move the market to day are the publication of the CPI Flash Estimate and the Unemployment Rate from the Euro-Zone. In order to make some big profits today, open you positions in the USD, EUR, GBP, and JPY now, as Friday's trading gets under way.



USD - USD Slides on Further Signs of Recovery

The Dollar slid yesterday, as the U.S. and global economy showed further signs of recovery. This was due to both the predictions for today's U.S. GDP figures, which show the U.S. economy declined at a much slower pace the in the 2nd quarter than the 1st, and global corporate earnings figures led to a jump in optimism. In turn, this helped spark a global stock rally, as investors took advantage of the fresh optimism to snap up higher-yielding currencies, such as the EUR and Australian Dollar.

The USD fell against the EUR by 75 pips to 1.4128. This comes about as Germany and the Euro-Zone released better than expected unemployment and consumer confidence figures. The USD also tumbled against the GBP, as Britain posted optimistic consumer confidence figures. The GBP/USD pair closed higher by 150 pips at the 1.6519 level. Against the Japanese Yen, the Dollar rose 0.5% to 95.35 Yen, extending gains after government data showed a drop in continuing claims, boosting optimism about the U.S. labor market.

Today, there is a reasonably strong possibility that much of the same behavior in the forex market will continue. This is likely to occur as traders continue to trade on Thursday's optimism. This may continue to drive the USD lower against its major currency [pairs. Also, it is advisable for traders to follow the following releases from the U.S. economy: Advance GDP and Employment Cost Index at 12:30 GMT and the Chicago PMI at 13:45 GMT. So if you want to make some bug money as end-of-week trading kicks in open your USD positions now.

EUR - EUR Rallies on Improved Global Economic Sentiment

The EUR was driven higher vs. the U.S Dollar yesterday by data showing an improvement in Euro-Zone economic sentiment in July, as well as an unexpected fall in German unemployment, which was seen as an encouraging sign for the region's recovery prospects. The European currency also gained more ground versus the Yen to hit session highs on Thursday as a sharp rally in stocks boosted risk appetite. The EUR rose as high as 134.86 Yen, and finished trading at 134.67 Yen.

The EUR rose dramatically against the USD to $1.4128, rebounding from a 2 week low near the $1.40 level. The Euro-Zone single currency briefly pared gains after the International Monetary Fund (IMF) said the EUR exchange rate looks somewhat on the strong side relative to its fundamentals. According to analysts, the EUR may pare its monthly gains against the U.S Dollar today prior to reports that will show deflation deepened in the 16-nation area, and job losses increased.

The GBP leaped against the U.S. Dollar on Thursday, after a report showed British house prices climbed in July for a 3rd month. This led the British Pound to extend its gains, hitting a 4 week high against the EUR. The Pound also gained against the EUR and USD due to a report released yesterday showing British consumer confidence at its highest level since April 2008. This was yet another sign that Britain is rising out of the recession. Analysts expect much of the gains for the EUR and GBP may continue throughout today's trading.

JPY - JPY Plummets against the Major Currencies


The Japanese Yen fell against its most traded currencies on Thursday as the leading economies published a string of optimistic figures. This led to global stocks rising for a 3rd straight week, reducing demand for the relative safety of the Japanese currency. Looking at the bigger picture; positive economic data, rising stocks and better-than- expected earnings improved risk appetite, analysts said. Additionally, the improved risk appetite means that the safe-haven currencies will weaken further.

A wave of Japanese mutual funds will be launched today, keeping the Yen soft against the U.S Dollar and higher-yielding currencies, such as the Australian Dollar. But in the near term, the rush in the launching of these funds is expected to have only a limited impact, as a rally in global stocks and commodities in the past few weeks has made fund managers cautious about immediately putting money to work, many traders believe.

Crude Oil - Oil Rebounds On Market Optimism

Crude Oil rose above $67.50 a barrel on Thursday, boosted by higher stock markets in Europe and Asia, better than expected corporate results and data suggesting the economic downturn is bottoming out. The more than 5% rally yesterday, the highest gain in more than 3 months was boosted as continuing U.S. jobless claims figures improved sentiment in the energy sector. All of this is further evidence that the leading economies may rise out of recession in the coming months.

Oil may continue to gain on increased optimism that the global economic decline will ease. The number of people collecting unemployment insurance decreased for a third week, according to the U.S. Labor Department. A U.S. report yesterday showed that Crude supplies unexpectedly climbed as demand lagged behind year-earlier levels. However, this failed to drive prices lower, as the price of Crude also soared on a extremely weak USD.

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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.

Currencies

Currencies
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!