8.10.2009

Japan's Reliance on the World Pays Off As Exports Jump (Euro Open)

Japan dominated Asian headlines after its Current Account Balance surged to a 13-month high and its Machine Orders jumped by the most since April of 2008. A 6.3% rise in exports sent the Nikkei rallying 1.21% by 00:00 EST. Price action on the Japanese Yen initially reacted favorably, but ultimately lost its footing.

Key Overnight Developments

• Japanese Machine Orders Rise by Most in 14 Months
• Current Account Balance in Japan Surges on Exports

Critical Levels



Euro and Pound action against the U.S. Dollar opened the week similarly to each other after labor figures came in stronger than expected for the American country at the end of trading on Friday. Both pairs found themselves trading tangent to the 200-hour moving average with the slow stochastic oscillator suggesting both EUR/USD and GBP/USD rising from “oversold” conditions.

Asia Session Highlights



Japanese Machine Orders, when excluding ships and utilities, June rose by 9.7% in June, beating expectations of a 2.6% increase in the figure. The latest release is the highest of such since April of 2008. Last month’s release saw orders for such industrial needs contract by 3.0%. Most of the increase in demand in June came from abroad, growing 43.8% on the month. The domestic public sector weighed in only slightly. Overall, when including when including orders for ships and utilities, total orders rose only 2.3% with private demand actually slipping by 15.9%. But it is important to strip the metric of boat orders because such expenditures are generally used for military or freighters. Still, it may somewhat worrisome to see such a substantial gap between the headline figure and the figure with the two excluded items. Such a great magnitude in difference may indicate that orders for the two products are generally quite large.

Japan's Current Account Balance, when adjusted for fluctuations in the Yen exchange rate, surged to it's highest level since May 2008 to 1798.8 billion Yen. The news comes as demand for Japanese industrial products from abroad jumped ahead. In fact, the demand for machinery from other countries made a leap of 43.8% in the month alone. In it's third rise in four months, the Trade Balance made a sizable move ahead to 602.2 billion Yen. With a 6.3% increase in its exports, the Asian country may soon be moving out of recession. But much of this good news comes on the back of conditions abroad. The risk here, then, is that if other countries experience a downturn then Japan will surely go down just as quickly.

Home Loans in Australia got a boost in June as well, rising 1.1% after the sharp upward revision of 6.2% in the month prior. Despite posting a 9th straight month of growth, the economy still remains weak. Estimates for the latest figure had called for a much stronger 1.8% increase in the metric. It is thus no wonder that Investment Lending in the same month declined for the first time since February. Perhaps the Australian economy isn’t as resilient as many had originally hoped. May’s such lending was also weaker than initially thought after it was revised down 0.6 percentage points to 1.8%.

Euro Session: What to Expect



The light European calendar offers some insight into the current direction of the region’s economic environment. French Industrial Production, expected to rise 0.2% in July, will be coming off of the largest monthly gain in the figure since November of 2005. This current estimate may be substantially conservative; afterall, the previous month’s expectations called for a 0.2% contraction. Clearly such estimates proved to be poor. Previously released data may also show that French production may be on a spree. The Purchasing Manufacturer’s Index of Manufacturing rose to its highest level since June of 2008. Manufacturing Orders in the country are also expected to rise on the month. Like the industrial production figure, manufacturing orders performed unusually strong in the previous month.

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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!