USD - Dollar Drops on Poor Economic Data
Yesterday the Dollar depreciated against all its main currencies crosses. The greenback's biggest drop was against the EUR, as the EUR/USD pair rose above the 1.4150 level. The Dollar also dropped against the Pound and the Yen as well.
The Treasury International Capital (TIC) published the Long-Term Purchases report yesterday. This report measures the difference in value between foreign long-term securities purchased by US citizens and U.S long-term securities purchased by foreigners during May. The figures showed a negative balance of $19.8 billion. The data also showed that China's holding of U.S treasury securities topped $800 billion. The gigantic debt has raised concerns that it might have the potential to erode the value of the Dollar in the long term.
Also yesterday, the Philadelphia Manufacturing Index, which is used to measure the business conditions in the Federal Reserve district, was published. The report showed a -7.5 mark, which means that the factory activity in the district has contracted for the 10th consecutive month in July. This contributed to the Dollar's downfall as well.
As for today, very important housing data are scheduled from the U.S. At 12:30 GMT, both the Building Permits and Housing Starts indicators will be published. The two are leading gauge of the housing sector in the U.S, and has the potential to severely impact the market. According to current forecasts, the housing sector has shown relatively positive figures in June. If the actual result will be similar or even higher than forecasts, the USD might be able to correct yesterday's slide. Traders are advised to follow the publications, and take advantage of their impact on the market.
EUR - EUR Hits 2 Week High against the Dollar
The EUR continued its bullish trend against the Dollar yesterday, and the EUR/USD is currently trading near the 1.4130 level. The EUR rose against the Pound as well and declined slightly against the JPY.
The EUR climbed against the Dollar as poor data was released from the U.S economy and Crude Oil's prices rose, which further weakened the Dollar. This drove the European currency to a 2 week high against the USD.
The positive data from the Euro-Zone leading nations also supported the EUR yesterday. The French Consumer Price Index rose 0.1% in June, showing that fears from deflation are very unlikely, resulting in a temporary relief for the crisis-hit economy. The Italian Trade Balance, which measures the difference in value between imported and exported goods and services during May, rose by 1.19 billion EUR. This has a crucial impact on the Italian economy, which relies greatly on its exporting activity.
Looking ahead to today, the only significant data from the Euro-Zone will be the European Trade Balance. Analysts forecast a 1.2B result, which means that the exporting activity in the Euro-Zone was larger by 1.2 billion EUR from importing during May. If the actual result will be similar to forecasts, it will be the first positive result in 13 months. In turn, this may have a positive effect on the EUR.
JPY - JPY Records Mixed Results against the Majors
The Yen underwent an extremely volatile session against the major currencies yesterday. Although the Yen did not see a sharp depreciation yesterday, it is about to mark the biggest weekly loss against the EUR in two months, following an extremely bearish week. The most significant publication from the Japanese economy was the Tertiary Industry Activity report. The report failed to reach expectations for a 0.3% rise, as the actual result showed that the value of services purchased has dropped by 0.1% in May.
As for now, current expectations are assuming that the Yen may fall against the EUR on speculations an advance in stocks will increase demand for higher yielding assets. The JPY is known as a currency which rises in times of global financial crisis, and it seems that the rising stocks could be a leading sign for the financial improvement which has the potential to significantly weaken the Yen.
Crude Oil - Crude Oil Completes Bullish Week
Crude Oil continued to hold its yesterday, and a barrel of Oil is currently traded for $62.70. Crude Oil is currently heading for its first bullish week in more than a month.
Crude rose as a result of two leading factors. One, the bearishness of the USD supported the price of Oil. Crude Oil's prices are valued in Dollars, and thus any depreciation in the USD's value has the potential to further push-up Oil prices. Higher global equity markets also restored optimism that an economic recovery is impending.
An improvement in economic conditions is set to increase demand for Crude Oil, which will of course hike Crude Oil prices. This week might be acknowledged as the first strong sign that investors have regained their faith in Crude Oil as a long-term investment. Traders are now advised to follow the news from the strongest economies and especially from the U.S in order to predict Oil's direction for the coming weeks. It seems that as long as the news will show that the world is pulling out of recession, Crude Oil prices are likely to rise.
Article Source - U.S. Building Permits Data to Drive USD 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!