Key Overnight Developments
• Japan's Trade Surplus Shrinks in July, Further Losses Likely
• Euro Flat, British Pound Lower Against USD in Overnight Trading
The Euro tried lower but rebounded late into the session to yield a flat result in Asian trading. The British Pound declined, testing as low as 1.6306. Technical positioning suggests the US Dollar is carving out a bottom against most major currencies.
Asia Session Highlights
Japan’s Merchandise Trade Balance surplus shrank to 380.2 billion yen in July, down from a revised 507.5 billion in June as imports grew 3% while exports shrank -1.3% from the previous month. The metric hit a record low in January 2009 and has since corrected higher, coinciding with acceleration in the growth of unemployment that has weighed on consumer spending, including that of foreign-made products. Indeed, in annual terms, the rate of contraction in inbound shipments (-40.8%) continues to outpace the drop in overseas sales (-36.5%). Still, the trade balance has been trending firmly lower since the surplus peaked in September 2007, the same month that US personal consumption of durable goods topped out and began to trend sharply lower. Although current economic growth forecasts suggest the US will outpace most industrial countries as the global recovery gains traction, chances are it will be some time before the American consumer is ready to meaningfully commit to big-ticket purchases such as Japanese cars and electronics. Indeed, a survey of economists conducted by Bloomberg calls for the external sector to add just 2.3% to overall growth on average this year and in 2010, the least in 9 years.
Euro Session: What to Expect
Germany’s IFO Survey of business confidence is expected to show that firms’ 6-month economic outlook improved for the eighth consecutive month in August. Still, the reading is expected at 92.0, a print below the 100 “boom-bust” threshold, suggesting conditions are still deteriorating but at a perpetually slower pace. Some recovery is to be expected as an array of fiscal stimulus both in Germany and abroad boost domestic demand and exports, but the big question in the Euro Zone’s top economy as well as most anywhere at this stage is whether growth is sustainable after the flow of government cash dries up. As it stands, a survey of economists conducted by Bloomberg suggests that Germany, and by extension the Euro region as a whole, will underperform most industrialized countries at least through the end of next year. The most pronounced differentials are seen against commodity-linked counties (Canada, Australia, and New Zealand) as well as the United States. A comparatively slower pace of economic growth will mean that Europe lags behind the curve as central banks begin to return to higher interest rates, a prospect that surely bodes ill for the single currency.
Written by Ilya Spivak, Currency Analyst
Article Source - Euro May Gain as German IFO Rises But Long-Term Outlook Favors Downside (Euro Open)
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!