USD - USD Falls Steeply on Thin Trading and Market Optimism
After a period of steady appreciation, the USD took a sharp nose dive at the end of European market hours to close yesterday's trading at 1.4364 versus the EUR, 1.6284 against the Pound, and 1.0877 against the CAD. The greenback fell due to several reasons that are linked to thin summer trading.
First, with Crude Oil advancing from industrial growth worldwide, the USD is experiencing some downward pressure from commodity purchases. With growth being forecast on the horizon, safety investments like the USD are losing some of their appeal. While the Gross Domestic Product (GDP) of the United States shrank less than expected, many economists are anticipating a rally in US stocks, Crude Oil prices, and riskier investments. These all point to further downward pressure on the Dollar in the days ahead. As such, yesterday's sharp drop was inevitable.
If today's figures on Personal Income and Personal Spending in the US confirm the rising trend of growth, the USD could see some added downward pressure. The University of Michigan's Consumer Sentiment report will also give credibility to these assumptions if it reveals market optimism is on the rise. Traders may anticipate a bearish Dollar if economic news continues to support these latest trends.
EUR - EUR Remains Bullish at End of Month Trading
The EUR's bullish rally against all major currency pairs continued yesterday with a surprising reversal to the EUR/USD's recent downtrend coming at the close of European markets. Closing at a surprising 1.4364 against the greenback, the EUR made significant gains on recent boosts to market optimism, risk appetite, and thin market trading. As the month comes to an end, a significant level of position shifting takes place and some trends may see a reversal at the start of September.
Market data from the Euro-Zone and Britain has lately put a positive spin on the 16-nation currency. Germany's Ifo Business Climate report on Wednesday showed an improvement to investor confidence in the German economy and other data yesterday continued adding momentum. While Britain's economic figures may also show positive data, the level of confidence in the British banking system, as well as their influx of cash from their quantitative easing program, has put a downward spin on the GBP. This trend may not come to an end anytime soon, but end of month trading usually generates enough volatility to surprise even the most veteran traders.
As for today, the Euro-Zone isn't scheduled to release any significant reports, but the British government will release its Revised GDP figures showing that Britain's economy likely shrank by 0.8% last quarter. Switzerland will also publish its KOF Economic Barometer today, measuring the relative strength of the Swiss economy. This report has the potential to add a level of volatility to the CHF not typically experienced in the average trading week.
JPY - JPY Ends August with Batch of Poor Data
Yesterday was a day of bearishness for the Japanese Yen. Losing on all fronts, the JPY finished the day at 134.48 against the EUR, 152.35 versus the GBP, and stable at 93.64 against the Dollar. With the recent surge in market optimism, combined with thin trading at the end of the month, the Japanese Yen has faced surmounting downward pressure as safe-havens are losing their appeal.
Adding to this downward momentum was a batch of negative data releases from Tokyo at the start of Friday's trading session. Household spending, Japanese CPI, and Japan's Unemployment Rate all showed worse than expected numbers, with unemployment climbing to 5.7% last month. Closing out the month with such abysmal data definitely does not help the JPY's strength.
Crude Oil - Crude Oil's Appeal as Alternative Investment on the Rise
The appeal of Crude Oil investments rose yesterday after the US Dollar weakened on thin trading, growing risk appetite, increasing demand for energy, and end of month investment shifting. As Crude Oil prices rose for the first time in 3 days, investors flocked to the commodity as an alternative investment. Failing to breach the $70 support level, the price of a barrel of Light Sweet Crude subsequently rose back to $72.68 by the end of Thursday's trading hours.
With global economies beginning to show signs of recovery, and countries such as Australia already on their way to substantial growth, energy prices are expected to pick up in the near future. Likewise, as strength returns to the market, the safety of the US Dollar will fall alongside it, adding further support to Crude Oil prices. A near-term target of $75 a barrel has become a popular goal for many speculators as a result.
Article Source - U.S. Consumer Spending Report at Forefront of Forex Trading 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!