USD - Gloomy Stock Market Puts Downward Pressure on the USD
In regards to the light news days traders have been experiencing recently, most active investors have tuned into the status of the stock market, which has seen a light downward slide lately. As a result, the USD also slid partially against its major currency counterparts. Ending the day down at 1.3316 against the EUR and 1.4831 against the British Pound, the Dollar sustained some moderate losses. However, throughout today's early trading hours the USD appeared to be recovering some of these losses. We could potentially see a rebound throughout the day.
With a relatively heavier news day expected, the USD could experience much more volatility throughout today's trading. With significant data on U.S. retail sales and inflationary figures for producers, the U.S. economy will likely be the primary driving force in trading later on. Towards the end of the day, Federal Reserve Board Chairman Ben Bernanke is also due to speak at Morehouse College in Atlanta regarding the recent financial crisis. His appearances tend to move the market as traders speculate about future monetary policy decisions based on the subtle clues in his speeches.
The stock market has been having a relatively stronger impact on the value of currencies lately. This is mainly because many eyes are watching economic indicators very closely in anticipation of signs that the economy is turning a corner and beginning to recover. This hopeful optimism may help the economy recover faster as speculation becomes a strong player in the growth of markets. If that is indeed the case, the USD may begin to strengthen in the short-run, but weaken overall as its safe-haven status is diminished.
EUR - EUR Not Driving its Own Market; Traders Look to the USD
The EUR appeared to be yesterday's losing currency pair, as it lost ground to every major counterpart except the USD. Trading up against the Dollar at 1.3316 at the end of yesterday's trading session, the EUR has now actually lost most of what it gained and is currently riding a downward slope against the greenback. Dropping back to 0.8970 against the Pound after making short-term gains, and sinking against the Yen to 132.70, the EUR's recent losses highlight the rising weakness in the Euro-Zone's regional economy.
With no news expected out of the Euro-Zone, the 16-nation currency is not expected to out-perform any of its currency rivals in the hours ahead. In fact, with almost zero news being released from the European Monetary Union this week, the driving force behind the EUR's pairs will most likely be the GBP and USD. With a relatively heavy news week for the USD, it has been forecast by many that the USD will be this week's market mover.
With an already low confidence level in the European economic system, traders have begun to look for weakness in other currency pairs when deciding when to enter a position on the EUR. Without a shock to the system in the form of quantitative easing, a reduced interest rate, or economic stimulus, the EUR will likely be a follower instead of a leader as other world currencies dictate its direction and momentum. Traders should look to the Dollar this week for the direction of the market.
JPY - JPY Posts Losses Throughout the Day; Recovers in Early Trading
The JPY has made a strong rebound over the past few hours. After steadily losing ground to most of its currency rivals, the Japanese Yen is now beginning to regain its losses from a correction in the market. Ending the day at 100.33 against the USD, the Yen is now trading at 99.67. Also, dropping as low as 134.21 against the EUR, the JPY is currently trading at 132.80 against this 16-nation currency in today's early trading hours, and there doesn't appear to be any signs of stopping this recent movement..
As many equities and various stocks feel the pinch from recent banking and economic data, traditional safe havens have gotten slightly more relevant. However, yesterday's lack of data highlighted the growing weakness in world stock markets and traditional safe havens apparently responded with downward trends as well. As a correction to this recent downward movement, the Yen has started its latest rebound and may continue to do so throughout the trading day
OIL - The Price of Crude Oil Flirts with the $50 Price Level
The price of Crude Oil has appeared to be flirting with the $50-a-barrel mark over the previous week. With the future strength of the USD coming under scrutiny by investors lately, the price of Crude could potentially rise back towards $55 in the days ahead. However, with the latest batch of banking data, the USD could be regaining safe-haven status as investors flee the stock market. This would then push the price of oil back towards $48 a barrel.
Without any signs of a clear direction, the flirtation with the $50 price level is likely to continue. In the absence of any significant news from the Organization of Petroleum Exporting Countries (OPEC), low confidence in the stock market, and a sinking feeling about the value of the Dollar, Crude Oil could be experiencing some unpredictable volatility over the coming week, but within a relatively clear price range. Traders have a great opportunity to jump into this market today and capture these impending price movements for a healthy profit.
Article Source - EUR Correction Continues
Key Overnight Developments
• New Zealand Retail Sales Unexpectedly Rise in February
• Australian Business Confidence Improved in March, Says NAB
• BOJ’s Shirakawa Skeptical About Signs Economy is Rebounding
• Euro Corrects Lower, British Pound Range-Bound Against USD
The Euro corrected downward in overnight trading after an impressive rally in New York hours, testing as low as 1.3306 to the US Dollar. The British Pound traded sideways in a choppy, 40-pip range above 1.4830.
Asia Session Highlights
New Zealand Retail Sales unexpectedly rose in February, adding 0.2% from the previous month. The improvement may mean that consumers are starting to respond as the central bank brought borrowing costs to a record-low 3.00% while the government cut income taxes on those earning over NZ$42k per year. Ample room for skepticism remains, however, as rising unemployment weighs on disposable incomes and discourages spending. Further, a rebound in oil prices may also explain the uptick: fuel sales led gainers in February, rising 6.7%; meanwhile, crude rose for the first in seven months during the same period, rising 7.2%. New Zealand’s retail sales data is not adjusted for price changes, suggesting the improvement in the headline figure may be reflective of higher petrol costs rather than a rebound in consumer sentiment. Indeed, core retail sales (which exclude fuel sales) declined -0.1%.
In Australia, NAB Business Confidence rose for the second consecutive month to print at -13 in March from -22 in the previous period. NAB chief economist Alan Oster remained cautious, saying, “While an element of fear appears to be abating, the index is still quite low [and] points to falling demand in the first quarter.” The measure is based on a survey of around 350 small- to medium-sized firms, with a negative reading showing pessimists continue to outnumber optimists among respondents.
Bank of Japan Governor Maasaki Shirakawa said he was “cautious” about the initial signs that the current economic downturn was stabilizing in a speech to a parliamentary committee in Tokyo. The bank chief noted that, “While drops in exports and output are easing, we expect business investment and consumer spending to keep weakening and become major factors that will drag down growth.”
Euro Session: What to Expect
With no substantial, market-moving data on the economic calendar, price action is likely to fall in with risk trends in the forthcoming session. European stock exchanges have been closed since last week, opening the door for a move higher as traders price in announcements of Japan’s third stimulus package as well as news that first-quarter earnings at US investment banking giant Goldman Sachs more than doubled expectations. Stock market gains could weigh on the US Dollar: the greenback remains over -90% inversely correlated with the MSCI World Stock Index.
Written by Ilya Spivak, Currency Analyst
Article Source - US Dollar May Fall as Goldman Earnings, Japan Stimulus Boost European Stocks (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!