USD - Dollar Climbs on Increased Risk Aversion
The U.S Dollar rose broadly yesterday against the GBP and EUR, due to uncertainty about the global economic outlook, and a renewed bout of risk aversion ahead of a key government report on the U.S. labor market due today. By yesterday's close, the USD rose against the GBP, pushing the oft-traded currency pair to 1.6769. The Dollar experienced similar behavior against the EUR, and closed at 1.4360.
A leading indicator released yesterday from the U.S was the Unemployment Claims report. Data showed a drop in U.S. weekly jobless claims failed to support expectations that the labor market and the economy were stabilizing. The report showed claims fell by 38000 to 550000 last week, the fifth straight time claims were under 600000, after being above that level since January.
The other factor that led to the bullish Dollar yesterday was that U.S stocks fell, which boosted demand for the USD as a safe-haven currency. Moreover, renewed demand for the Dollar comes after a sharp drop earlier in the week, when the greenback hit multi-month lows versus the EUR, as investors favored foreign currencies and other riskier assets such as equities.
Looking ahead today, the news event that may have a very large impact on the Dollar and its main currency pairs in today's trading is the Non-Farm Employment Change at around 12:30 GMT. This report is very important as it is likely to impact Dollar volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release.
EUR - EUR Falls against the USD on Interest Rate Decision
The EUR finished yesterday's trading session with mixed results versus the major currencies. The 16-nation currency extended gains versus the Pound Sterling during yesterday's trading session, to trade above 0.8560 amid a broad sell-off in the GBP. This was largely owed to the Bank of England (BoE) increasing quantitative easing to ₤175 billion from ₤125 billion. The EUR did see bearishness as well, as it lost over 50 pips against the USD, and closed at the 143.60 level.
A leading indicator released yesterday was the EUR Minimum Bid Rate. The European Central Bank (ECB) left Interest Rates at a record low of 1%, as it tries to get credit flowing again to strengthen an economy that may return to growth this quarter. Some reports show the outlook is brightening for the Euro-Zone. Economic confidence rose to an eight-month high in July, and the contraction in the region's manufacturing and service industries has slowed. In Germany, Europe's largest economy, Factory Orders posted their biggest gain in two years in June.
As for today, the most important economic indicator scheduled to be released from the Euro-Zone is the German Industrial Production at 10:00 GMT. Traders will be paying close attention to today's announcement as a stronger than expected result may boost the EUR in the short-term. Traders are also advised to follow the Non-Farm Employment Change figures coming out of the U.S at 12:30 GMT, as this result may set the EUR's main currency pairs for the day.
JPY - JPY Set to Move on Key Economic Data
The Yen completed yesterday's trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the EUR yesterday and closed its trading session at around the 137 level. The JPY experienced bullishness against the GBP as it jumped around 250 points to close at the 159.86. This behavior comes about as exports improve and manufacturers boost production. However, deflation may escalate as households, whose spending accounts for more than half of the nation's GDP, delay purchases on the expectation that goods will get cheaper, restraining a recovery in the world's second-largest economy.
The JPY's trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY's movement today, especially the U.S. Non-Farm Employment Change at 12:30. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.
Crude Oil - Oil Prices Stabilize Near $72
Crude Oil ended yesterday's trading below $72 as equities declined and the Dollar strengthened, undermining the need to use commodities as an alternative investment. Crude dropped to an intra-day low of $70.24 a barrel before rebounding to the settlement level of 71.55, which was little changed compared with the previous session.
Oil prices were pressured by the weaker equity markets and the strong Dollar yesterday, as the USD strengthened against the EUR and GBP, limiting the demand for Crude Oil as an alternative investment. Today, the U.S monthly Non-Farm Employment report will likely determine Crude's next moves, with any mildly positive elements within the data is likely to keep the Crude price in an upwards direction.
Article Source - U.S Non-Farm employment Change Set to Determine USD Volatility
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!