USD - Dollar Drops against the Majors
The U.S. dollar fell against most of its major currencies on Tuesday, touching a 15-year low below 83 yen as a break of technical support levels in several currency pairs sparked a stampede out of the greenback. Also the AUD/USD pair rose as high as 0.9456, its highest level since July 2008 before correcting itself. Currently the pair is trading around the 0.9370 level.
The significant break came in late morning New York trade on market talk that Goldman Sachs said in a research note that while it suspects the Federal Reserve will ratchet down growth forecasts, the revision is unlikely to be enough to spark additional easing.
Another leading indicator released yesterday was U.S. Core Retail Sales. This number handedly beat last month's results but failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies.
Looking ahead today, the two main news events that may have a very large impact on the Dollar and its main currency pairs are the Industrial Production and Crude Oil Inventories at 13:15 GMT and 14:30 GMT respectively. These reports are very important and are likely to impact dollar volatility. Traders should pay close attention to the market as there is an opportunity to capitalize on the fluctuations which are likely to follow this release.
EUR - EUR Traded Near One-Month High against Dollar
The EUR strengthened against most of its major counterparts yesterday, continuing to prove that for the time being the euro is the solid currency that traders can rely on to provide them with steady profits. The 16-nation currency extended gains versus the USD on Tuesday, to close at around 1.2980 amid a broad sell-off in the U.S. dollar.
The euro experienced similar behavior against the JPY and closed at 109.90.
The euro's advance began after U.S. retail sales rose more than expected in August, notching the largest gain in 5-months. Once the euro broke above $1.2920-30 area, the level that was the top of the range since August, it kept going to a one-month high of $1.3033. The move may be accelerated, as being at parity was a key technical point which may encourage more selling of dollars, analysts said.
In addition, the single currency, which slid below $1.19 in June on euro-zone debt trouble, has since risen by more than 8% after smooth government debt auctions in Greece, Portugal, Spain and Ireland eased concerns.
JPY - Yen at 15-Years High vs. Dollar
The yen rose to a 15- year high against the dollar on Tuesday after Japan's prime minister won a ruling party leadership vote, reducing the chances Japanese authorities would attempt to stem yen gains. The USD/JPY fell as low as 82.91, its lowest level since mid-1995 before correcting itself. Currently the pair is trading around the 84.60 level.
The yen has gained more than 10% against the dollar this year as recent weak U.S. data and record low bond yields drove money away from U.S. assets.
Investors worry over a recent rise in the JPY as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency. With steady gains primarily against the dollar, much of the yen's bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. This has had a positive effect on major JPY currency pairings, as the rising turmoil in the market is leading to greater investment in the Japanese currency.
Oil - Traders Await Crude Oil Inventory Report
Oil settled below $77 a barrel Tuesday as the stock market swung between losses and gains on mixed economic news. After a run-up from $72 a barrel at the end of August, crude oil has again slowed its advance, mainly on concerns about the strength of the global economy. While positive news on China's economy has tended to push prices up, data from the U.S. and Europe has been a mixed bag, keeping a lid on price increases.
Today, the release of the crude oil inventory report is likely to help determine the market's next direction for black gold. Moreover, a release of a string of positive economic figures from U.S. could help its bullishness. Therefore, traders are advised now to make some profits as the price of crude oil is set to remain volatile in the short term.
There appears to be a bullish cross on the hourly chart's Slow Stochastic for this pair, indicating an upward correction may be imminent. The recent bullish cross on the daily chart's Slow Stochastic supports this notion. Going long might not be a bad idea today.
The price of this pair appears to be floating in the over-sold territory on the RSI of both the hourly and daily charts, indicating that we could see an upward correction in the nearest future. The bullish cross on the hourly chart's Slow Stochastic supports this notion. Going long might be a good strategy today.
After yesterday's volatile price movements, this pair appears to have temporarily calmed down. The price appears to be floating in neutral territory on most oscillators and momentum appears to be showing a flat price movement. Waiting for a clearer signal might be the right choice today.
The Bollinger Bands on the hourly and daily charts appear to be tightening in anticipation of a volatile movement. With the recent bullish cross on the 4-hour chart's Slow Stochastic oscillator, the impending movement may be a downward correction. Going long with tight stops might be the right choice today.
The continuous upward trend in this commodity appears to be running out of steam lately. The highs of the upswings have begun to diminish in size and the longer-term oscillators are beginning indicate an imminent correction. There appears to be a bearish cross on the daily chart's Slow Stochastic, and the weekly Momentum oscillator has turned downwards. Forex traders have a great opportunity to enter this possible trend reversal at a fantastic price and capture the impending price swing.
Article Source - Yen Reaches 15-Year High
USD - Dollar Falls Ahead of Japan Leadership Vote
The U.S. currency was near a 1-month low against a basket of currencies after suffering its steepest fall against the euro in two months as rising investor risk appetite helped the European currency.
The dollar fell to a 9-month low against the Swiss franc on Tuesday as market players scaled back investments in risk currencies and poured funds into low-yielding currencies such as the yen and the franc. The dollar fell 0.2% to 1.0050 franc, its lowest since December of last year.
The greenback traded broadly flat against the euro on Tuesday, at $1.2870, after losing more than 1% against the common currency on Monday. The dollar touched 83.23 yen, the lowest level in 15 years, but later recovered slightly to 83.43, but still down from 83.66 in late trading on Monday. The move came ahead of an election to decide the leader of the Democratic Party of Japan, with the winner widely expected to serve as the nation's prime minister. Analysts said that dollar-yen pair may firm and could strengthen toward 85 should Japan's political situation stabilize.
EUR - Euro Gains on Risk-Asset Demand
The euro rose the most in 10 weeks against the U.S. dollar after regulators gave European banks more time than analysts expected to meet new capital requirements. The euro also strengthened after the European Commission said the region's economy may grow almost twice as fast this year as previously forecasted. Against the Japanese yen however, the euro lost ground, hitting 107.42, down from 107.63 Monday.
The euro strengthened 1.6% against the dollar to $1.2878. It climbed earlier as much as 1.7% to $1.2893 in the biggest intraday gain since July 1. The euro rebounded 12% from a four-year low on June 7 through Aug. 6 as investors focused on worse-than-forecasted U.S. economic data as European statistics surpassed predictions. Still, the euro may be unable to sustain its gains against the dollar as renewed concern over the solvency of nations from Portugal to Ireland points to another slump for the common European currency.
JPY - Yen Extends Gains Versus Dollar Before Election
The yen rose to a 15-year high on Tuesday ahead of a decisive vote in Japan, weighing on Japanese equities and leaving traders wondering whether a rally that has lifted global stock markets to their highest levels in a month can be sustained.
The yen rallied versus the dollar on speculation Prime Minister Naoto Kan will beat his rival Ichiro Ozawa in a party vote today; reducing the likelihood the government will intervene to weaken the currency. Japan's currency also strengthened against all the major currencies as the Japanese stocks dropped, boosting demand for safer assets.
OIL - Oil Rises on Improved Global Economic Outlook
Crude Oil closed above $77 a barrel Monday after upbeat data from China stoked optimism about the global economy, while the closure of a pipeline in the Midwest disrupted supplies to refineries in the region. Oil traders were cheered by increasing industrial production in China, which over the weekend reported manufacturing gains of nearly 14% in August from a year ago, with the data signaling the world's second-biggest economy is growing.
Crude prices earlier reached an intraday high of $78.07 a barrel, the first time a front-month contract breached the $78 mark since Aug. 11. On Friday, Oil gained $2.20 to end at $76.45 a barrel, closing the week higher by 2.5%. A softer U.S. dollar also supported the dollar-denominated commodity by making it less costly for holders of other currencies.
The pair has been rising constantly since the beginning of the week and is currently trading around the 1.2870 level. As the MACD on the 4-hour chart continues to point up, the pair could rise further, with potential to reach the 1.2950 level.
The pair failed to breach the 1.5500 level yesterday, and as a result saw a sharp fall which took it as low as the 1.5365 level. The bearish move might continue today, with a key-target level of 1.5300.
The bearish trend continues with full steam as the USD/JPY has reached a 15-year low on yesterday's trading. The RSI on the weekly chart remains within the over-sold section, suggesting that the pair might drop even further. Going short might be preferable today.
Ever since peaking at the 1.275 level, the pair is dropping with no apparent stops. The MACD and the RSI on the 4-hour chart continue to point down, indicating that the bearish move has more room to go. Going short might be a good strategy today.
A swift rise in the price of spot crude oil by $5 may have left the commodity oversold. A bearish cross has formed on the daily chart's Slow Stochastic oscillator, indicating that the price may fall in the near term. Another sign supporting an end to the price rally is the doji candlestick from yesterday's trading. The price climbed to a high of $77, a previous resistance level from early February. CFD traders may want to liquidate any long positions they may have in spot crude oil. Support is found at $75.60.
Article Source - USD/JPY Hits New 15-year Low
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.
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