Forex trading is all about making big money. Some investors have found it quite easy to make a large amount of money as the forex market changes daily. Forex, is the foreign exchange market. Online and offline you will find references to the forex market as FX as well. Forex trading takes place through a broker or a financial institution often where you are able to purchase other types of stocks, bonds and investments.
When you are thinking about getting involved in the forex markets you should know you are sending money to be invested with other countries. This is done to prop up the investments of people involved in certain types of hedge funds, and in the markets overseas. The forex market could have your money invested in one market one day, and the next day your money is invested in another country. The daily changes are determined by your broker or financial institution. When reading your statements and learning more about your account, you will find that every type of currency has three letters that will represent that currency.
For example, the United States dollars is USD, the Japanese yen is JPY, and the British pound sterling will read as GBP. You will also find that for every transaction on your account listing you will see information that looks like this: JPYzzz/GBPzzz. This means that you took your Japanese yen money and invested it into something in the British pound market. You will find many transactions from one currency to another if you have money that is scattered through out the forex markets.
Forex markets trading by investment management firms are the companies you can trust with your money. You want to find a company that has been dealing with forex trading since the early seventies, and not someone just new on the block so you get the most for your hard earned money. It is important that you beware of companies that are popping up online, and often times from foreign countries that are stating they can get you involved in the forex markets and trading. Read the fine print, and know whom you are dealing with for the best possible protection.
If you are interested in trading on the forex market, you will find limits for investing are different from company to company. Often times you will learn that you need a minimum of $250 or $500 while other companies will need $1000 or $10,000. The company you are dealing with will set limits in how much you need to open an account with their company. The scams that are online will tell you, that you only need a $1 or $5 to open an account, but you need to learn more about that company and where they are doing business before investing any money, this is for your own protection while dealing in forex trading and markets online.
FOREX FLUCTUATIONS
Thursday, January 23, 2014
Saturday, January 18, 2014
Forex Trading - should you invest?
Forex trading is all about putting your money into other currencies, so you can
gain the interest for the night, for time period or the difference in trading
money all around. Forex trading does involve other assets along with money, but
because you are investing in other countries and in other businesses that are
dealing in other currencies the basis for the money you make or lose will be
based on the trading of money.
Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.
A forex market will be present when two countries are involved in trading, and when money is traded for goods, services or a combination of these things. Currency is the money that trades hands, from one to another. Often times, a bank is going to be the source of forex trading, as millions of dollars are traded daily. There is nearly two trillion dollars traded daily on the forex market. Should you get involved in forex trading? If you are already involved in the stock market, you have some idea of what forex trading really is all about.
The stock market involves buying shares of a company, and you watch how that company does, waiting for a bigger return. In the forex markets, you are purchasing items or products, or goods, and you are paying money for them. As you do this, you are gaining or losing as the currency exchange differs daily from country to country. To better prepare you for the forex markets you can learn about trading and purchasing online using free 'game' like software.
You will log on and create an account. Entering information about what you are interested in and what you want to do. The 'game' will allow you to make purchases and trades, involving different currencies, so you can then see first hand what a gain or loss will be like. As you continue on with this fake account you will see first hand how to make decisions based on what you know, which means you will have to read about the market changes or you will have to take a brokers information at value and play from there.
If you, as an individual want to be involved in forex trading, you must get involved through broker, or a financial institution. Individuals are also known as spectators, even if you are investing money because the amount of money you are investing is minimal compared to the millions of dollars that are invested by governments and by banks at any given time. This does not mean you can't get involved. Your broker or investment advisor will be able to tell you more about how you can be involved in forex trading. In the US, there are many regulations and laws in regards to who can handle forex trading for US citizens so if you are searching the internet for a broker, be sure you read the print, and the information about where the company is located and if it is legal for you to do business with that company.
Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.
A forex market will be present when two countries are involved in trading, and when money is traded for goods, services or a combination of these things. Currency is the money that trades hands, from one to another. Often times, a bank is going to be the source of forex trading, as millions of dollars are traded daily. There is nearly two trillion dollars traded daily on the forex market. Should you get involved in forex trading? If you are already involved in the stock market, you have some idea of what forex trading really is all about.
The stock market involves buying shares of a company, and you watch how that company does, waiting for a bigger return. In the forex markets, you are purchasing items or products, or goods, and you are paying money for them. As you do this, you are gaining or losing as the currency exchange differs daily from country to country. To better prepare you for the forex markets you can learn about trading and purchasing online using free 'game' like software.
You will log on and create an account. Entering information about what you are interested in and what you want to do. The 'game' will allow you to make purchases and trades, involving different currencies, so you can then see first hand what a gain or loss will be like. As you continue on with this fake account you will see first hand how to make decisions based on what you know, which means you will have to read about the market changes or you will have to take a brokers information at value and play from there.
If you, as an individual want to be involved in forex trading, you must get involved through broker, or a financial institution. Individuals are also known as spectators, even if you are investing money because the amount of money you are investing is minimal compared to the millions of dollars that are invested by governments and by banks at any given time. This does not mean you can't get involved. Your broker or investment advisor will be able to tell you more about how you can be involved in forex trading. In the US, there are many regulations and laws in regards to who can handle forex trading for US citizens so if you are searching the internet for a broker, be sure you read the print, and the information about where the company is located and if it is legal for you to do business with that company.
Thursday, January 16, 2014
Features of Forex Trading
Forex is the most popularly traded market in the world and when you look at the specific features of forex trading, it is easy to understand why.
Forex – the most liquid market in the world
Forex is the most liquid market in the world, meaning that forex market spreads tend to remain tight throughout most of the day, whilst traders have the safety of the knowledge that positions and orders can always be executed. With an average turnover in excess of US$4 trillion per day being traded by governments, central banks, financial institutions, corporations and professional and retail traders, foreign exchange is the largest financial market in the world. In comparison, the New York Stock Exchange has a daily turnover of around US$50 billion.
As a City Index FX Trader, you can trade 37 currency pairs including majors, minors and exotic pairs. See our range of forex markets and spreads.
24-hour market
Forex is a 24-hour market, and is traded continuously round the clock, except on weekends, meaning that traders have unlimited access.
At City Index, our offering matches the underlying market, meaning that our platform is available to trade 24-hours a day, from Sunday evening GMT to Friday night GMT.
Leverage
Forex trading is leveraged and traders utilise this leverage to increase their exposure to currencies and magnify their potential profits. With leverage, you can control a relatively large exposure for only a small initial deposit amount in your trading account, potentially maximising your return on investment.
At City Index, we offer some of the most competitive margin rates in the retail forex industry and our ‘Leverage to Suit’ model enables you to select your preferred leverage ratios to suit your specific trading strategy and style.
It is important to remember however that leveraged forex trading involves greater risk of loss and may not be suitable for everyone. You can lose more than your initial deposit if the market moves against you. We offer a wide range of trading tools to help you manage your trading risk.
Volatility
Foreign exchange rates can change rapidly in response to any real-time economic and political events. This offers great opportunities for traders to make profits in the forex markets. Of course, volatility can be a double-edged sword, and losses can accumulate just as quickly.
Ability to go long and short
Unlike traditional equity markets, forex trading allows you to trade and profit on any price movement up or down. As a forex trader, you can go long (buy) on a currency pair when you expect the first currency will strengthen (appreciate) against the second currency and your profits will rise in line with any increase as the exchange rate goes up. You can also go short (sell) on the currency pair when you expect the first currency will weaken (depreciate) against the second currency and your profits will rise in line with any fall in the exchange rate.
Range of Markets
At City Index, you can trade 37 currency pairs including majors, minors and exotic pairs. See our range of forex markets and spreads. This means that you can gain instant exposure to currencies such as the Kiwi or Nokki as much as Dollar or Euro.
Wednesday, January 15, 2014
Forex: Dollar Suffers Critical Break Ahead of Confusing NFPs
Dollar Suffers Critical Break Ahead of Confusing NFPs
Euro Rally – How Far Can it Go on ‘No Change’
Yen Crosses Finally Charge Higher but Still Trailing S&P 500
Euro Rally – How Far Can it Go on ‘No Change’
Yen Crosses Finally Charge Higher but Still Trailing S&P 500
Dollar Suffers Critical Break Ahead of Confusing NFPs
Whether dollar traders’ focus rests with the currency’s risk bearings or relative monetary policy, their faith has been tested. Through this past session, EURUSD closed above 1.3850 for the first time in more than two years while the Dow Jones FXCM Dollar Index (ticker = USDollar) slipped below trendline support that has been in place since September 2012. Sentiment behind the greenback is raw, even though its fundamental cues are still a mixed bag. For a definitive driver for the benchmark’s slide this week, the positive lean on risk trends – which has lifted equities as well as FX-based carry – would be a reasonable connection. However, the dubious conviction behind the speculative build up (some say chasing yield) and the dollar’s lax correlation to the underlying current suggests this isn’t an engaged driver moving forward.
Whether dollar traders’ focus rests with the currency’s risk bearings or relative monetary policy, their faith has been tested. Through this past session, EURUSD closed above 1.3850 for the first time in more than two years while the Dow Jones FXCM Dollar Index (ticker = USDollar) slipped below trendline support that has been in place since September 2012. Sentiment behind the greenback is raw, even though its fundamental cues are still a mixed bag. For a definitive driver for the benchmark’s slide this week, the positive lean on risk trends – which has lifted equities as well as FX-based carry – would be a reasonable connection. However, the dubious conviction behind the speculative build up (some say chasing yield) and the dollar’s lax correlation to the underlying current suggests this isn’t an engaged driver moving forward.
Far more influential over the listing currency is the strength of its counterparts. The Euro, Australian and New Zealand dollars in particular have leveraged impressive strength through Thursday’s session against most other counterparts. A joint appetite for carry currencies and the world’s second most liquid fiat positions the dollar in a difficult position as it struggles for momentum of its own. That said, if the greenback’s weightiest fundamental issues are cross winds, its tumble is likely to end rather quickly. An ECB rate hold does not leverage a definitive advantage for the euro over the dollar. As for carry appetite, risk trends in most forms are second guessed every step of the way. Yet, another spark may offer the dollar a more durable momentum: the February labor data.
Market reaction to the monthly employment stats is already a game in confusion, but this release promises to be a particular brand of disorder. There are many considerations to account for in this event. Recently, we’ve heard a number of Fed officials preempt the release’s implications for the central bank’s Taper policy as weather-related issues would likely cause temporary distortions. A ‘Taper-is-the-pace-absent-a-systemic-change’ seems the mantra for nearly every one of the policy officials. That being the case, disappointing data would weigh on growth and risk bearings rather than stimulus and rate forecasts. Alternatively, robust employment data ensures the steady $10 billion reductions in QE and may even add weight to an argument to accelerate. What optimism would be found in the implications this holds for economic activity, the capital market influence would likely be capped rather quickly. Watch for the short-term, media-driven market response. Then look for the trend.
Euro Rally – How Far Can it Go on ‘No Change’
The Euro climbed against all of its major counterparts with the exception of the Australian dollar this past session. The catalyst for the jump was straightforward: the ECB’s decision to forgo an upgrade in its stimulus program would necessitate a reversal in the discount applied to the currency on the chance that a new wave of support would have been realized. Heading into the meeting, the consensus amongst economists established an approximate 25 percent probability that a rate hike would be announced. Though speculative interests were not directly in line with those assumptions, they weren’t likely far off. Subsequently, a hold necessitated short covering. The question is how much drive a ‘no change’ outcome can muster. With an uptick in the 2014 GDP forecast (to 1.1 percent) and downtick in its CPI view (to 1.0 percent), there is still plenty of room for ‘negative risks’ to spur the ECB into action. Ultimately, this is a passive action, so traders will seek out more.
The Euro climbed against all of its major counterparts with the exception of the Australian dollar this past session. The catalyst for the jump was straightforward: the ECB’s decision to forgo an upgrade in its stimulus program would necessitate a reversal in the discount applied to the currency on the chance that a new wave of support would have been realized. Heading into the meeting, the consensus amongst economists established an approximate 25 percent probability that a rate hike would be announced. Though speculative interests were not directly in line with those assumptions, they weren’t likely far off. Subsequently, a hold necessitated short covering. The question is how much drive a ‘no change’ outcome can muster. With an uptick in the 2014 GDP forecast (to 1.1 percent) and downtick in its CPI view (to 1.0 percent), there is still plenty of room for ‘negative risks’ to spur the ECB into action. Ultimately, this is a passive action, so traders will seek out more.
Yen Crosses Finally Charge Higher but Still Trailing S&P 500
The yen crosses soared Thursday with the funding currency dropping between 0.8 percent (USDJPY) and 1.9 percent (AUDJPY) against its major counterparts. This was certainly a ‘risk on’ reflection. Though global equities offered limited moral support, the Deutsche Bank Carry Harvest Index surged to a near four-month high while emerging markets heaved higher. Appetite for yield is a powerful catalyst for the yen pairings, and there is room to close with more stretched benchmarks like the S&P 500. Yet, it is still wise to watch the Nikkei 225 for guidance.
The yen crosses soared Thursday with the funding currency dropping between 0.8 percent (USDJPY) and 1.9 percent (AUDJPY) against its major counterparts. This was certainly a ‘risk on’ reflection. Though global equities offered limited moral support, the Deutsche Bank Carry Harvest Index surged to a near four-month high while emerging markets heaved higher. Appetite for yield is a powerful catalyst for the yen pairings, and there is room to close with more stretched benchmarks like the S&P 500. Yet, it is still wise to watch the Nikkei 225 for guidance.
British Pound Bypasses BoE, Moves on to Inflation Forecast Update
As expected, the Bank of England (BoE) left its monetary policy objectives untouched at its policy meeting Thursday. Without an update, there would be no commentary for industrious speculators to ferret out forecasts. That said, the 10-year UK gilt yield (an important lead for the pound rate forecasts) did jump sharply Thursday. Perhaps today’s BoE/GfK inflation forecast report will offer more to work with.
As expected, the Bank of England (BoE) left its monetary policy objectives untouched at its policy meeting Thursday. Without an update, there would be no commentary for industrious speculators to ferret out forecasts. That said, the 10-year UK gilt yield (an important lead for the pound rate forecasts) did jump sharply Thursday. Perhaps today’s BoE/GfK inflation forecast report will offer more to work with.
New Zealand Dollar Positioning at Extraordinary Levels
Retail FX traders positioning is reflecting a staggering imbalance on NZDUSD exposure. For every one long trade amongst the speculative ranks, there are 19 shorts. There is evidence to suggest extremes in positioning correlate to extremes in price, but those excesses can build before folding. Next week, we have the RBNZ rate decision which is expected to deliver the groups firs hike in a projected two-year regime.
Retail FX traders positioning is reflecting a staggering imbalance on NZDUSD exposure. For every one long trade amongst the speculative ranks, there are 19 shorts. There is evidence to suggest extremes in positioning correlate to extremes in price, but those excesses can build before folding. Next week, we have the RBNZ rate decision which is expected to deliver the groups firs hike in a projected two-year regime.
Canadian Dollar Closes Out Week with Jobs Data, Volatility?
Manufacturing activity growth in Canada unexpectedly accelerated last month according to the Ivey PMI survey. That’s a notable economic development, but it doesn’t carry the clout necessary to dislodge the loonie’s passive tracking of its US counterpart. The upcoming docket may find better success. February employment figures and January trade statistics are two key pieces of data.
Manufacturing activity growth in Canada unexpectedly accelerated last month according to the Ivey PMI survey. That’s a notable economic development, but it doesn’t carry the clout necessary to dislodge the loonie’s passive tracking of its US counterpart. The upcoming docket may find better success. February employment figures and January trade statistics are two key pieces of data.
Emerging Markets From Panic to Multi-Month Highs in a Week
At the beginning of the week, the emerging markets were returning to a sense of panic with the segment’s currencies tumbling versus the dollar and volatility soaring. How things have changed, as we now find USDZAR at two month lows while USDBRL is finding its own three-month trough. These currencies are sensitive to risk trends, but are not in the line of site for crisis (like Ukraine and Venezuela).
At the beginning of the week, the emerging markets were returning to a sense of panic with the segment’s currencies tumbling versus the dollar and volatility soaring. How things have changed, as we now find USDZAR at two month lows while USDBRL is finding its own three-month trough. These currencies are sensitive to risk trends, but are not in the line of site for crisis (like Ukraine and Venezuela).
Gold Rallies Back to $1,350 but Doesn’t Progress Further
With a distinct tumble in the US dollar, gold would reap the benefits of a cheaper pricing instrument. The metal jumped 1 percent back to $1,350, but priced in euros or Australian dollars the progress was significantly mitigated. The gold drive we are seeing now is not the same from four years ago. This is not a need for fiat alternatives, rather it seems a bid for ‘cheap’ assets. Like most other assets, that requires steady risk.
With a distinct tumble in the US dollar, gold would reap the benefits of a cheaper pricing instrument. The metal jumped 1 percent back to $1,350, but priced in euros or Australian dollars the progress was significantly mitigated. The gold drive we are seeing now is not the same from four years ago. This is not a need for fiat alternatives, rather it seems a bid for ‘cheap’ assets. Like most other assets, that requires steady risk.
Monday, January 6, 2014
What is Forex Trading? Euro vs the Dollar
Compare this to the New York Stock Exchange, which has a daily turnover of around US$50 billion and it’s easy to see how the foreign exchange market is the biggest financial market in the world.
Essentially, forex trading is the act of simultaneously buying one currency while selling another, primarily for the purpose of speculation. Currency values rise (appreciate) and fall (depreciate) against each other due to a number of factors including economics and geopolitics. The common goal of forex traders is to profit from these changes in the value of one currency against another by actively speculating on which way forex prices are likely to turn in the future.
Unlike most financial markets, the OTC (over-the-counter) forex market has no physical location or central exchange and trades 24-hours a day through a global network of businesses, banks and individuals. This means that currency prices are constantly fluctuating in value against each other, offering multiple trading opportunities.
24-Hour Forex Trading
One of the key elements behind forex’s popularity is the fact that forex markets are open 24-hours a day from Sunday evening through to Friday night. Trading follows the clock, opening on Monday morning in Wellington, New Zealand, progressing to Asian trade spearheaded out of Tokyo and Singapore, before moving to London and closing on Friday evening in New York.
The fact that prices are available to trade 24 hours a day helps to ensure that price gapping (when a price jumps from one level to the next without trading in between) is less and ensures that traders can take a position whenever they want, regardless of time, though in truth there are certain ‘lull’ times when volumes are below their daily average which can widen market spreads.
Leverage
Foreign exchange is a leveraged (or margined) product, which means that you are only required to deposit a small percentage of the full value of your position to place a forex trade. This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading. Find out more about risk management.
Pricing
All forex is quoted in terms of one currency versus another. Each currency pair has a ‘base’ currency and a ‘counter’ currency. The base currency is the currency on the left of the currency pair and the counter currency is on the right.
For example, in EUR/USD, EUR is the ‘base’ currency and USD the ‘counter’ currency. Forex price movements are triggered by currencies either appreciating in value (strengthening) or depreciating in value (weakening). If the price of EUR/USD for example was to fall, this would indicate that the counter currency (US dollars) was appreciating, whilst the base currency (Euros) was depreciating.
When trading forex prices, you would buy a currency pair if you believed that the base currency will strengthen against the counter currency. Alternatively, you would sell a currency pair if you believed that the base currency will weaken in value against the counter currency. Some examples of major currency pairs are:
EUR/USD (The value of 1 EUR expressed in US dollars)
USD/CHF (The value of 1 USD expressed in Swiss francs)
USD/CHF (The value of 1 USD expressed in Swiss francs)
Pips (Percentage in Points)
Pip stands for Percentage in Points. Most of our currency pairs are quoted to 5 decimal places with the change from the 4th decimal place (0.0001) in price commonly referred to as a ‘pip’. For example, if the price of the EUR/USD forex pair moved from 1.33800 to 1.33920, it is said to have climbed by 12 ‘pips’ (92-80=12).
Spread
The difference in the BID/ASK of the currency pairs is referred to as the ‘spread’. An example would be EUR/USD dealing at 1.33800/1.33808 (in this case the spread is 0.8 pips or 0.00008). The exceptions to this are the JPY pairs which are quoted to just 2 decimal places. A USD/JPY price of 97.41/97.44 displays a 3 pip ‘spread’.
What affects forex prices?
Forex prices are influenced by a multitude of different factors, from international trade or investment flows to economic or political conditions. This is what makes trading forex so interesting and exciting. High market liquidity means that prices can change rapidly in response to news and short-term events, creating multiple trading opportunities for retail forex traders.
Forex Technical Analysis 13.03.2014 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD)
EUR USD, “Euro vs US Dollar”
Euro is moving upwards; market has broken another consolidation channel upwards and continues growing up. We think, today price may reach level of 1.3990, stat new correction, and then continue its ascending movement towards level of 1.4100.
GBP USD, “Great Britain Pound vs US Dollar”
Pound is moving inside consolidation channel; market has reached minimum of this correction. We think, today price may continue moving upwards. However, we should note, that according to main scenario, pair is expected to fall down to reach level of 1.6480 and only after that continue growing up to reach level of 1.7000.
forex
USD CHF, “US Dollar vs Swiss Franc”
Franc reached level of 0.8730 and right now is moving downwards. We think, today price may form another consolidation channel near level of 0.8730 and then to continue forming descending structure to reach level of 0.8300.
USD JPY, “US Dollar vs Japanese Yen”
forex
AUD USD, “Australian Dollar vs US Dollar”
forex
Sunday, January 5, 2014
What is Forex Trading?
Foreign exchange, commonly known as ‘Forex’ or ‘FX’, is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market. Forex is the world’s most traded market, with an average turnover in excess of US$4 trillion per day.
What is Forex Trading? Euro vs the Dollar
Compare this to the New York Stock Exchange, which has a daily turnover of around US$50 billion and it’s easy to see how the foreign exchange market is the biggest financial market in the world.
Essentially, forex trading is the act of simultaneously buying one currency while selling another, primarily for the purpose of speculation. Currency values rise (appreciate) and fall (depreciate) against each other due to a number of factors including economics and geopolitics. The common goal of forex traders is to profit from these changes in the value of one currency against another by actively speculating on which way forex prices are likely to turn in the future.
Unlike most financial markets, the OTC (over-the-counter) forex market has no physical location or central exchange and trades 24-hours a day through a global network of businesses, banks and individuals. This means that currency prices are constantly fluctuating in value against each other, offering multiple trading opportunities.
24-Hour Forex Trading
One of the key elements behind forex’s popularity is the fact that forex markets are open 24-hours a day from Sunday evening through to Friday night. Trading follows the clock, opening on Monday morning in Wellington, New Zealand, progressing to Asian trade spearheaded out of Tokyo and Singapore, before moving to London and closing on Friday evening in New York.
The fact that prices are available to trade 24 hours a day helps to ensure that price gapping (when a price jumps from one level to the next without trading in between) is less and ensures that traders can take a position whenever they want, regardless of time, though in truth there are certain ‘lull’ times when volumes are below their daily average which can widen market spreads.
Leverage
Foreign exchange is a leveraged (or margined) product, which means that you are only required to deposit a small percentage of the full value of your position to place a forex trade. This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading. Find out more about risk management.
Pricing
All forex is quoted in terms of one currency versus another. Each currency pair has a ‘base’ currency and a ‘counter’ currency. The base currency is the currency on the left of the currency pair and the counter currency is on the right.
For example, in EUR/USD, EUR is the ‘base’ currency and USD the ‘counter’ currency. Forex price movements are triggered by currencies either appreciating in value (strengthening) or depreciating in value (weakening). If the price of EUR/USD for example was to fall, this would indicate that the counter currency (US dollars) was appreciating, whilst the base currency (Euros) was depreciating.
When trading forex prices, you would buy a currency pair if you believed that the base currency will strengthen against the counter currency. Alternatively, you would sell a currency pair if you believed that the base currency will weaken in value against the counter currency. Some examples of major currency pairs are:
EUR/USD (The value of 1 EUR expressed in US dollars)
USD/CHF (The value of 1 USD expressed in Swiss francs)
USD/CHF (The value of 1 USD expressed in Swiss francs)
Pips (Percentage in Points)
Pip stands for Percentage in Points. Most of our currency pairs are quoted to 5 decimal places with the change from the 4th decimal place (0.0001) in price commonly referred to as a ‘pip’. For example, if the price of the EUR/USD forex pair moved from 1.33800 to 1.33920, it is said to have climbed by 12 ‘pips’ (92-80=12).
Spread
The difference in the BID/ASK of the currency pairs is referred to as the ‘spread’. An example would be EUR/USD dealing at 1.33800/1.33808 (in this case the spread is 0.8 pips or 0.00008). The exceptions to this are the JPY pairs which are quoted to just 2 decimal places. A USD/JPY price of 97.41/97.44 displays a 3 pip ‘spread’.
What affects forex prices?
Forex prices are influenced by a multitude of different factors, from international trade or investment flows to economic or political conditions. This is what makes trading forex so interesting and exciting. High market liquidity means that prices can change rapidly in response to news and short-term events, creating multiple trading opportunities for retail forex traders.
Thursday, January 2, 2014
US dollar under pressure again overnight lifting weight off the Aussie dollar
What a strange market we have at the moment as concerns over China which drove Asian and European stocks sharply lower washed away by the time US trader entered the fray. How it is that the US markets could so easily shrug off the negativity with prices recovering their early weakness I just don’t understand.
Anyway at the close the Dow was down 0.07% while the S&P 500 was flat at 1,868. The Nasdaq was however in the black rising 0.37%.
In Europe the FTSE fell 0.97%, the DAX fell 1.28% and the CAC dropped 1.01%. Stocks in Milan and madrid were 0.25% and 0.92% lower respectively.
Locally on the ASX futures trade overnight the march SPI 200 contract is up 2 points but well off yesterdays lows at 5372 bid.
On global FX markets the US dollar lost some ground with the Euro and Yen stronger and the Aussie recoverying very well from the weakness yesterday that took it down to 0.8822. This morning Euro is up 0.33% to 1.3905, GBP is flat at 1.6618 and USDJPY is down 0.30% to 102.69.
Incredibly the Aussie is also up on the day at 0.8988 for a gain of 0.14% and it is going to be a very big day today for the Aussie after that recovery with the employment numbers released today at 11.30am AEDT.
Whether in the US or here in Australia the employment report is the number one market watched statistic released each month. This is kind of strange in many ways because it is the stat which is prone to the most error and has the broadest standard deviation relative to the number the market is looking for.
So it’s a number I learnt 25 years ago not to punt – but it is a number that is likely to cause the market to move afterwards. So lets look at the setup.
The pink line you can see on the 4 hour chart above is the daily uptrend from the low in January. yesterday’s break was decisive and the Aussie ran down to a low of 0.8922 but the rally has been very solid. 0.8993 was the overnight high and the fast moving average on this 4 hour chart which often works as resistance. A break will open a small run to 0.9003 and if 0.9013 gives way the Aussie might roar again.
On commodities copper for March deliver lost 0.31% to $3.02 lb which together with the fall of 1.84% in Nymex Crude for march to $98.14 (on a huge 6 million barrell build) suggests the US and global growth outlook continues to be rerated. Gold rallied $20 or 1.51% to $1366
Gold is still solidly in its uptrend and while it’s tight up progress continues and the fast moving average continues to support on any pullbacks.
Top of the channel is $1388 support $1333.
On the Ags corn rallied 1.31%, wheat roared 3.73% but Soybeans sold off 2.11%. Continuing the Ag volatility Oats rallied 4.7% and have made up all the ground lost earlier in the week.
On the data front today Austalia’s biggest number for the month will be released at 11.30 when the ABS announced the employment report. The market is expecting some payback after the last 2 month’s fall with an expectation of a rise of 18,000 jobs and the unemployment rate stable at 6%.
Chinese retail sales and industrial production might overshadow this data a little when released and this afternoon and then tonight’s inflation data in the EU is likely to focus traders about what is happening with deflation in the Eurozone. In the US its jobless claims, new housing price index and very importantly retail sales.
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