USD - USD Sees Mixed Trading Ahead of FOMC Statement
The Dollar experienced a mixed trading day Tuesday ahead of today's FOMC meeting, continuing its rally against its commodity based counterparts while slipping slightly against the EUR and dropping sharply against the Yen. The Dollar traded at 95.80 Yen early this morning, from 95.99 yesterday, after falling 1.2%. The U.S. currency was at $1.4161 per EUR from $1.4149 yesterday.
The highly anticipated FOMC meeting statement is due to be released today at 18:15 GMT. Breaking with its trend throughout the recession, the Dollar unexpectedly rose Friday following a surprisingly strong U.S employment data release. This was seen as a signal that the recession is coming to an end and the Dollar might start benefiting from positive U.S data. This statement will be the first test of whether this trend will persist and the Dollar's strength can be maintained on positive economic data.
While no interest rate changes are expected, any clues as to the progress or end of the quantitative easing program will likely cause great market volatility. The statement is expected to provide an assessment of the current economic condition in the world's largest economy and more importantly provide an economic outlook, therefore, likely setting short-term direction for the USD.
EUR - EUR Continues its Decline against the Yen
The EUR continues to decline versus the Yen pushing its loss to 1.9%. The decline was exacerbated after consumer prices in Germany posted their first annual decline in more than 22 years in July, boosting speculations the European Central Bank (ECB) will keep interest rates at a record low. The EUR was at $1.4154 from $1.4142 late Monday and was at 135.74 yen, down from 137.32.
The Pound continues its decline against the Dollar, reaching a low of $1.6476. Pushing down on the Pound was a worse then expected trade balance as well as falling stock markets, prompted by declines in financial stocks. With the financial sector being the largest sector in the British economy, equity market movements tend to have major affects on the GBP's value. Furthermore, investors are staying cautious ahead of today's BOE inflation statement.
A heavy news day is expected today from the U.K which will likely set the direction for the Pound for the rest of the week with the Claimant Count Change to be released at 8:30 GMT along with the Average Earnings Index and the BOE Inflation statement. at 9:30 GMT. These will provide an assessment of the current economic conditions in the U.K as well as provide an outlook on the prospects of recovery. The Euro-Zone Industrial Production report is also due to be released at 9:00 GMT, worse than expected results will likely put further downward pressure on the EUR.
JPY - The JPY Gains against all Major Currencies
The JPY traded at its highest level in a week against the EUR yesterday on concern the improvement in financial companies' earnings will stall. The Yen traded at 135.82 per EUR early today, following a 1.1% gain yesterday. Japan's currency traded at 95.96 per USD and 158.17 against the Pound, both up from yesterday's figures.
Disappointing Chinese economic data and dropping stock prices on global exchanges soured risk appetite. Expectations that the Japanese economy will pull out of the recession ahead of the U.S have also helped push up the JPY against the greenback as investors turned to Japanese assets.
With no major news releases from Japan today, the Yen's short term direction will likely be set by the news coming from the U.S and Europe, mainly the FOMC statement minutes.
Crude Oil - Crude Falls below $70 a Barrel
Light Sweet Crude for September delivery settled down $1.15, or 1.6%, at $69.45 a barrel on the New York Mercantile Exchange (NYMEX) yesterday as U.S. equities dropped ahead of a government report forecasting an increase in crude supplies in the biggest energy consuming nation. This was the lowest settlement since July 31. It was the fourth straight daily decline and the first time oil settled below $70 this month.
While global economic recovery is impending, demand is still contracting sharply, collapsing faster than anyone expected. Traders should follow today's release of U.S Crude Oil inventories as any bearish number could prompt a further decline in prices.
Article Source - JPY This Week's Lead Investment; US Federal Funds Rate Today!
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!