BCFS brings together a multi-disciplinary team with depth and breadth of experience in structuring, trading, investment management, accounting and regulatory and legal requirements. We have global reach through our investment professionals based in London, New York, Tokyo, Singapore and Sydney.
Our investment philosophy is to continuously improve upon established ideas and flexibly adapt to changing market dynamics. We have integrated our business and infrastructure platforms to enable a cross-border approach that is unique in investment management. The team focuses on four distinct yet harmonised functions:
Fund Structuring works with clients to define, develop and execute customised solutions
Fund Management is responsible for the asset and risk management of each fund in accordance with its objectives, investment policies and regulatory guidelines
Portfolio Engineering creates investment strategies and methodologies in accordance with our investment philosophy, with a focus on asset class neutral models and performance consistency
Trading manages the re-balancing, risk exposure and execution of portfolios in a way that enhances alpha generation and reduces transaction impact on the strategy returns
Sunday, June 7, 2009
Key Attributes
Since launch of the first fund in January 2006, BCFS has:
Attracted leading investors, establishing a significant fund business and market leadership in applied investment innovation
Established a diverse client base from insurance companies, asset managers and corporate treasuries to family offices and private banking investors
Provided exposure to multiple asset classes including equities, commodities, interest rates, foreign exchange, fixed income, emerging markets, hedge funds and property
Grown assets under management to more than USD 6bn* in structured and quantitative strategies and manages more than 70 funds
Built a global footprint with funds distributed throughout South America, Europe and Asia Pacific
Increased its strong front- to back-office team to 70
*as of 30 June 2008
Attracted leading investors, establishing a significant fund business and market leadership in applied investment innovation
Established a diverse client base from insurance companies, asset managers and corporate treasuries to family offices and private banking investors
Provided exposure to multiple asset classes including equities, commodities, interest rates, foreign exchange, fixed income, emerging markets, hedge funds and property
Grown assets under management to more than USD 6bn* in structured and quantitative strategies and manages more than 70 funds
Built a global footprint with funds distributed throughout South America, Europe and Asia Pacific
Increased its strong front- to back-office team to 70
*as of 30 June 2008
Fund Solutions
Fund Solutions
Barclays Capital Fund Solutions (BCFS) is the investment management business of Barclays Capital, the investment banking division of Barclays Bank PLC.
The emergence of new asset classes, growth in demand for derivative solutions and an investor shift towards absolute returns have identified a strong necessity for an alternative fund management approach that:
Offers clients greater customisation of investment management products
Uses state-of-the art financial thinking but is adaptive to changes in the investment environment
Delivers multi-asset class performance, with the flexibility to access new asset classes as they emerge
Considers the complexities of multi-jurisdictional investors and asset bases to deliver pragmatic financial solutions
The BCFS business model and approach focus on this evolving market segment. BCFS combines its multi–jurisdictional fund expertise with world-class structuring, derivatives trading and asset allocation expertise to deliver applied investment innovation in fund management across all asset classes. The BCFS team is advised by Barclays Capital’s award-winning research team.
Barclays Capital Fund Solutions (BCFS) is the investment management business of Barclays Capital, the investment banking division of Barclays Bank PLC.
The emergence of new asset classes, growth in demand for derivative solutions and an investor shift towards absolute returns have identified a strong necessity for an alternative fund management approach that:
Offers clients greater customisation of investment management products
Uses state-of-the art financial thinking but is adaptive to changes in the investment environment
Delivers multi-asset class performance, with the flexibility to access new asset classes as they emerge
Considers the complexities of multi-jurisdictional investors and asset bases to deliver pragmatic financial solutions
The BCFS business model and approach focus on this evolving market segment. BCFS combines its multi–jurisdictional fund expertise with world-class structuring, derivatives trading and asset allocation expertise to deliver applied investment innovation in fund management across all asset classes. The BCFS team is advised by Barclays Capital’s award-winning research team.
Wednesday, June 3, 2009
Foreign Exchange Trader III
Responsible for the timely buying and selling of foreign currencies. Recommends competitive foreign exchange rates based on market performance. Reviews orders to ensure accuracy, proper record keeping, and conformance to regulations. Carries out trades and maintains the organization's accounts. Requires a bachelor's degree in area of specialty and at least 5 years of experience in the field or in a related area, and may require state license. Familiar with a variety of the field's concepts, practices, and procedures. Relies on extensive experience and judgment to plan and accomplish goals. Performs a variety of tasks. May lead and direct the work of others. A wide degree of creativity and latitude is expected.
Currency Trading Between Banks
Banks are a major force in the FX market and employ a large number of traders. Trading between banks is done in two ways—through a broker or directly with each other.
Brokers: If a U.S. bank trades with another bank, a FX broker may be used as an intermediary. The broker arranges the transaction, matching the buyer and seller without ever taking a position and charges a commission to both the buyer and seller. About a third of transactions are arranged in this way.
Direct: Mostly banks deal with each other directly. A trader "makes a market" for another by quoting a two-way price i.e. he is willing to buy or sell the currency. The difference between the two price quotes (the spread) is usually no more than 10 pips, or hundredths, of a currency unit.
Most currencies are quoted in terms of how many units of that currency would equal $1. However, the British pound, New Zealand dollar, Australian dollar, Irish punt and the Euro are quoted in terms of how many U.S. dollars would equal one unit of those currencies.
The currencies of the world’s large, industrialized economies, or hard currencies, are always in demand and are actively traded. In terms of trading volumes, the FX market is dominated by four currencies: the U.S. dollar, the euro, the Japanese yen and the British pound. Together these account for over 80 percent of the market.
It is not always easy to find a market for all currencies. The demand for currencies of less developed countries, soft currencies, is a lot less than for the hard currencies. Weak demand internationally along with exchange controls may make these currencies difficult to convert.
Brokers: If a U.S. bank trades with another bank, a FX broker may be used as an intermediary. The broker arranges the transaction, matching the buyer and seller without ever taking a position and charges a commission to both the buyer and seller. About a third of transactions are arranged in this way.
Direct: Mostly banks deal with each other directly. A trader "makes a market" for another by quoting a two-way price i.e. he is willing to buy or sell the currency. The difference between the two price quotes (the spread) is usually no more than 10 pips, or hundredths, of a currency unit.
Most currencies are quoted in terms of how many units of that currency would equal $1. However, the British pound, New Zealand dollar, Australian dollar, Irish punt and the Euro are quoted in terms of how many U.S. dollars would equal one unit of those currencies.
The currencies of the world’s large, industrialized economies, or hard currencies, are always in demand and are actively traded. In terms of trading volumes, the FX market is dominated by four currencies: the U.S. dollar, the euro, the Japanese yen and the British pound. Together these account for over 80 percent of the market.
It is not always easy to find a market for all currencies. The demand for currencies of less developed countries, soft currencies, is a lot less than for the hard currencies. Weak demand internationally along with exchange controls may make these currencies difficult to convert.
Sources for currency demand on the FX market
The currency of a growing economy with relative price stability and a wide variety of competitive goods and services will be more in demand than that of a country in political turmoil, with high inflation and few marketable exports.
Money will flow to wherever it can get the highest return with the least risk. If a nation’s financial instruments, such as stocks and bonds, offer relatively high rates of return at relatively low risk, foreigners will demand its currency to invest in them.
FX traders speculate within the market about how different events will move the exchange rates. For example:
News of political instability in other countries drives up demand for U.S. dollars as investors are looking for a "safe haven" for their money.
A country’s interest rates rise and its currency appreciates as foreign investors seek higher returns than they can get in their own countries.
Developing nations undertaking successful economic reforms may experience currency appreciation as foreign investors seek new opportunities.
Money will flow to wherever it can get the highest return with the least risk. If a nation’s financial instruments, such as stocks and bonds, offer relatively high rates of return at relatively low risk, foreigners will demand its currency to invest in them.
FX traders speculate within the market about how different events will move the exchange rates. For example:
News of political instability in other countries drives up demand for U.S. dollars as investors are looking for a "safe haven" for their money.
A country’s interest rates rise and its currency appreciates as foreign investors seek higher returns than they can get in their own countries.
Developing nations undertaking successful economic reforms may experience currency appreciation as foreign investors seek new opportunities.
Determination of Foreign Exchange Rates
Exchange rates respond directly to all sorts of events, both tangible and psychological—
Business cycles;
Balance of payment statistics;
Political developments;
New tax laws;
Stock market news;
Inflationary expectations;
International investment patterns;
And government and central bank policies among others.
At the heart of this complex market are the same forces of demand and supply that determine the prices of goods and services in any free market. If at any given rate, the demand for a currency is greater than its supply, its price will rise. If supply exceeds demand, the price will fall.
The supply of a nation’s currency is influenced by that nation’s monetary authority, (usually its central bank), consistent with the amount of spending taking place in the economy. Government and central banks closely monitor economic activity to keep money supply at a level appropriate to achieve their economic goals
Business cycles;
Balance of payment statistics;
Political developments;
New tax laws;
Stock market news;
Inflationary expectations;
International investment patterns;
And government and central bank policies among others.
At the heart of this complex market are the same forces of demand and supply that determine the prices of goods and services in any free market. If at any given rate, the demand for a currency is greater than its supply, its price will rise. If supply exceeds demand, the price will fall.
The supply of a nation’s currency is influenced by that nation’s monetary authority, (usually its central bank), consistent with the amount of spending taking place in the economy. Government and central banks closely monitor economic activity to keep money supply at a level appropriate to achieve their economic goals
J–curve
The J–curve explains why the trade position does not improve soon after the weakening of a currency. Most import/export orders are taken months in advance. Immediately after a currency’s value drops, the volume of imports remains about the same, but the prices in terms of the home currency rise. On the other hand, the value of the domestic exports remains the same, and the difference in values worsens the trade balance until the imports and exports adjust to the new exchange rates.
Exchange rates are an important consideration when making international investment decisions. The money invested overseas incurs an exchange rate risk.
When an investor decides to "cash out," or bring his money home, any gains could be magnified or wiped out depending on the change in the exchange rates in the interim. Thus, changes in exchange rates can have many repercussions on an economy:
Affects the prices of imported goods
Affects the overall level of price and wage inflation
Influences tourism patterns
May influence consumers’ buying decisions and investors’ long-term commitments.
Exchange rates are an important consideration when making international investment decisions. The money invested overseas incurs an exchange rate risk.
When an investor decides to "cash out," or bring his money home, any gains could be magnified or wiped out depending on the change in the exchange rates in the interim. Thus, changes in exchange rates can have many repercussions on an economy:
Affects the prices of imported goods
Affects the overall level of price and wage inflation
Influences tourism patterns
May influence consumers’ buying decisions and investors’ long-term commitments.
Foreign Exchange Market Participants
There are four types of market participants—banks, brokers, customers, and central banks.
Banks and other financial institutions are the biggest participants. They earn profits by buying and selling currencies from and to each other. Roughly two-thirds of all FX transactions involve banks dealing directly with each other.
Brokers act as intermediaries between banks. Dealers call them to find out where they can get the best price for currencies. Such arrangements are beneficial since they afford anonymity to the buyer/seller. Brokers earn profit by charging a commission on the transactions they arrange.
Customers, mainly large companies, require foreign currency in the course of doing business or making investments. Some even have their own trading desks if their requirements are large. Other types of customers are individuals who buy foreign exchange to travel abroad or make purchases in foreign countries.
Central banks, which act on behalf of their governments, sometimes participate in the FX market to influence the value of their currencies.
Banks and other financial institutions are the biggest participants. They earn profits by buying and selling currencies from and to each other. Roughly two-thirds of all FX transactions involve banks dealing directly with each other.
Brokers act as intermediaries between banks. Dealers call them to find out where they can get the best price for currencies. Such arrangements are beneficial since they afford anonymity to the buyer/seller. Brokers earn profit by charging a commission on the transactions they arrange.
Customers, mainly large companies, require foreign currency in the course of doing business or making investments. Some even have their own trading desks if their requirements are large. Other types of customers are individuals who buy foreign exchange to travel abroad or make purchases in foreign countries.
Central banks, which act on behalf of their governments, sometimes participate in the FX market to influence the value of their currencies.
The foreign exchange market
The foreign exchange market, or the "FX" market, is where the buying and selling of different currencies takes place. The price of one currency in terms of another is called an exchange rate.
The market itself is actually a worldwide network of traders, connected by telephone lines and computer screens—there is no central headquarters. There are three main centers of trading, which handle the majority of all FX transactions—United Kingdom, United States, and Japan.
Transactions in Singapore, Switzerland, Hong Kong, Germany, France and Australia account for most of the remaining transactions in the market. Trading goes on 24 hours a day: at 8 a.m. the exchange market is first opening in London, while the trading day is ending in Singapore and Hong Kong. At 1 p.m. in London, the New York market opens for business and later in the afternoon the traders in San Francisco can also conduct business. As the market closes in San Francisco, the Singapore and Hong Kong markets are starting their day.
The FX market is fast paced, volatile and enormous—it is the largest market in the world. In 2001 on average, an estimated $1,210 billion was traded each day—roughly equivalent to every person in the world trading $195 each day.
The market itself is actually a worldwide network of traders, connected by telephone lines and computer screens—there is no central headquarters. There are three main centers of trading, which handle the majority of all FX transactions—United Kingdom, United States, and Japan.
Transactions in Singapore, Switzerland, Hong Kong, Germany, France and Australia account for most of the remaining transactions in the market. Trading goes on 24 hours a day: at 8 a.m. the exchange market is first opening in London, while the trading day is ending in Singapore and Hong Kong. At 1 p.m. in London, the New York market opens for business and later in the afternoon the traders in San Francisco can also conduct business. As the market closes in San Francisco, the Singapore and Hong Kong markets are starting their day.
The FX market is fast paced, volatile and enormous—it is the largest market in the world. In 2001 on average, an estimated $1,210 billion was traded each day—roughly equivalent to every person in the world trading $195 each day.
Foreign Exchange Market: What Is It?
To buy foreign goods or services, or to invest in other countries, companies and individuals may need to first buy the currency of the country with which they are doing business. Generally, exporters prefer to be paid in their country’s currency or in U.S. dollars, which are accepted all over the world.
When Canadians buy oil from Saudi Arabia they may pay in U.S. dollars and not in Canadian dollars or Saudi riyals, even though the United States is not involved in the transaction.
When Canadians buy oil from Saudi Arabia they may pay in U.S. dollars and not in Canadian dollars or Saudi riyals, even though the United States is not involved in the transaction.
Associated Careers
FX traders are good at strong and immediate decision making, and many apply this skill to other trading environments, such as stock trading, sales, or institutional buying. Their mathematical and financial skills recommend them to Wall Street firms in a number of positions, from back-office account settlement to options valuation analysis. In general, though, FX traders seek the adrenaline rush of trading and enjoy the open unregulated market-the number who leave (a small 20 percent over the course of a career) actually provide the largest single industry donation of manpower to the world of professional gambling.
Paying Your Dues
Economics, mathematics, and statistics majors have a distinct advantage in applying for positions in this field, as do history majors whose coursework included economics. A bachelor’s degree is required. Any experience in a trading environment is valued, as is any work that demonstrates the ability to work hard, make fast and accurate decisions, and manipulate numbers. Many employers appreciate study abroad, international work experience or fluency in a foreign language. As a number of entry-level positions are account representatives as opposed to trading positions, candidates who have good interpersonal skills and access to capital may have an advantage. While on the job, keeping abreast of changes in the industry is important; continuing education is the norm. Few people leave to get advanced degrees in this field-there is a reverse snobbery associated with most trading floors that holds that traders are born, not made, and that no advanced degree will ever make anyone a more competent trader.
A Day in the life of a Foreign Exchange Trader
A foreign exchange trader looks at the various factors that influence local economies and rates of exchange, then takes advantage of any misvaluations of currencies by buying and selling in different foreign exchange markets. Those with the most information, the best contacts, and strongest decision-making skills come out ahead. “It’s the wild west of trading,” wrote one foreign exchange (FX) trader, “and remember: A lot of people died in the wild west.” Those who are comfortable with a high degree of risk and uncertainty should look into this exciting career. A foreign exchange trader manages an account, looks at reports, reads the press from various countries, and most importantly, spends time on the phone. He may spend up to 80 percent of the day on the telephone and working at his computer. Traders must act fast to exploit valuation differences: “You’ve got seconds to decide how millions of dollars should be spent,” said one trader, “so you have to have confidence.” Confidence ranked second right after “guts” in qualities important in new traders. A sharp analytic mind is also crucial; while a variety of degrees are helpful, those with technical or scientific analysis backgrounds tend to find the job more manageable. Accounting strengths are helpful in keeping track of positions and profit and losses throughout hectic days. FX traders specialize early in their careers, following one currency and the underlying economy of its country. Many traders specialize in groups of geographically related countries, such as those who trade Central American currencies or Pacific Rim currencies. Since foreign exchange trading is international, it can take place at any time of day. Many managers run twenty-four-hour shops and do business around the clock; most employees do have regular shifts, but world events may demand being summoned from bed late at night. Eighty percent of the traders we surveyed were satisfied with their choice of profession, but over 40 percent responded that they were exhausted at every day’s end.
peculating
Speculating is by nature profit-driven. In the forex market, futures and spot forex are not all that different. So why exactly would you want to participate in the futures market instead of the spot market? Well, there are several arguments for and against trading in the futures market:
Advantages
• Lower spreads (2-3).
• Lower transaction costs (as low as $5 per contract).
• More leverage (often $500+ per contract).
Disadvantages
• Often requires a higher amount of capital ($100,000 lots).
• Limited to the exchange's session times.
• NFA (National Futures Association) fees may apply.
Advantages
• Lower spreads (2-3).
• Lower transaction costs (as low as $5 per contract).
• More leverage (often $500+ per contract).
Disadvantages
• Often requires a higher amount of capital ($100,000 lots).
• Limited to the exchange's session times.
• NFA (National Futures Association) fees may apply.
Hedging
There are many reasons to use a hedging strategy in the forex futures market. One main purpose is to neutralize the effect of currency fluctuations on sales revenue. For example, if a business operating overseas wanted to know exactly how much revenue it will obtain (in U.S. dollars) from its European stores, it could purchase a futures contract in the amount of its projected net sales to eliminate currency fluctuations.
When hedging, traders must often choose between futures and another derivative known as a forward. There are several differences between these two instruments, the most notable of which are these:
• Forwards allow the trader more flexibility in choosing contract sizes and setting dates. This allows you to tailor the contracts to your needs instead of using a set contract size (futures).
• The cash that's backing a forward is not due until the expiration of the contract, whereas the cash behind futures is calculated daily, and buyer and seller are held liable for daily cash settlements. By using futures, you have the ability to re-evaluate your position as often as you like. With forwards, you must wait until the contract expires.
When hedging, traders must often choose between futures and another derivative known as a forward. There are several differences between these two instruments, the most notable of which are these:
• Forwards allow the trader more flexibility in choosing contract sizes and setting dates. This allows you to tailor the contracts to your needs instead of using a set contract size (futures).
• The cash that's backing a forward is not due until the expiration of the contract, whereas the cash behind futures is calculated daily, and buyer and seller are held liable for daily cash settlements. By using futures, you have the ability to re-evaluate your position as often as you like. With forwards, you must wait until the contract expires.
Forex Futures versus Traditional Futures
Both forex and traditional futures operate in the same basic manner: a contract is purchased to buy or sell a specific amount of an asset at a particular price on a predetermined date. (For an in-depth introduction to futures, see Futures Fundamentals.) There is, however, one key difference between the two: forex futures are not traded on a centralized exchange; rather, the deal flow is available through several different exchanges in the U.S. and abroad. The vast majority of forex futures are traded through the Chicago Mercantile Exchange (CME) and its partners (introducing brokers).
However, this is not to say that forex futures contracts are OTC per se; they are still bound to a designated 'size per contract,' and they are offered only in whole numbers (unlike forward contracts). It is important to remember that all currency futures quotes are made against the U.S. dollar, unlike the spot forex market.
However, this is not to say that forex futures contracts are OTC per se; they are still bound to a designated 'size per contract,' and they are offered only in whole numbers (unlike forward contracts). It is important to remember that all currency futures quotes are made against the U.S. dollar, unlike the spot forex market.
Friday, May 29, 2009
RESEARCH & INFORMATION-INITIAL CAPITAL-LEGALITIES
RESEARCH & INFORMATION
For someone to trade shoes, you would have to: 1. Research the local market for shoes, 2. Find out more about the big players in the shoe business, 3. Get acquainted with the different types of shoes and how much they are selling for, 4. Find out what costs are involved in importing shoes and 5. Determine how you can market and distribute them. 6. When I trade currencies, I have all the information I need by looking at a chart. It takes a long time to learn to do this well, but so does selling shoes.
INITIAL CAPITAL
To order a thousand pairs of shoes, you would require a lot more money than what it takes to start trading forex: usually, anything between $200 to $300 is sufficient. (In my book: The Part-Time Currency Trader , I discuss the costs of trading forex).
LEGALITIES
To start, you would have to establish the paperwork necessary to ensure that you get familiar with the legalities of the goods you wish to import and distribute.
What if a particular shipment of shoes does not sell, because even though they may have been popular in other countries, consumers in your country might not like it? Do you have more money to order another batch?
What if the stock you buy is defective and the seller does not want to have anything more to do with you? You can take them to court, but can you muster the resources to do so? You can threaten them by not doing business with them ever again, but would they care when they have other businesses to deal with?
For someone to trade shoes, you would have to: 1. Research the local market for shoes, 2. Find out more about the big players in the shoe business, 3. Get acquainted with the different types of shoes and how much they are selling for, 4. Find out what costs are involved in importing shoes and 5. Determine how you can market and distribute them. 6. When I trade currencies, I have all the information I need by looking at a chart. It takes a long time to learn to do this well, but so does selling shoes.
INITIAL CAPITAL
To order a thousand pairs of shoes, you would require a lot more money than what it takes to start trading forex: usually, anything between $200 to $300 is sufficient. (In my book: The Part-Time Currency Trader , I discuss the costs of trading forex).
LEGALITIES
To start, you would have to establish the paperwork necessary to ensure that you get familiar with the legalities of the goods you wish to import and distribute.
What if a particular shipment of shoes does not sell, because even though they may have been popular in other countries, consumers in your country might not like it? Do you have more money to order another batch?
What if the stock you buy is defective and the seller does not want to have anything more to do with you? You can take them to court, but can you muster the resources to do so? You can threaten them by not doing business with them ever again, but would they care when they have other businesses to deal with?
RESEARCH & INFORMATION-INITIAL CAPITAL-LEGALITIES
RESEARCH & INFORMATION
For someone to trade shoes, you would have to: 1. Research the local market for shoes, 2. Find out more about the big players in the shoe business, 3. Get acquainted with the different types of shoes and how much they are selling for, 4. Find out what costs are involved in importing shoes and 5. Determine how you can market and distribute them. 6. When I trade currencies, I have all the information I need by looking at a chart. It takes a long time to learn to do this well, but so does selling shoes.
INITIAL CAPITAL
To order a thousand pairs of shoes, you would require a lot more money than what it takes to start trading forex: usually, anything between $200 to $300 is sufficient. (In my book: The Part-Time Currency Trader , I discuss the costs of trading forex).
LEGALITIES
To start, you would have to establish the paperwork necessary to ensure that you get familiar with the legalities of the goods you wish to import and distribute.
What if a particular shipment of shoes does not sell, because even though they may have been popular in other countries, consumers in your country might not like it? Do you have more money to order another batch?
What if the stock you buy is defective and the seller does not want to have anything more to do with you? You can take them to court, but can you muster the resources to do so? You can threaten them by not doing business with them ever again, but would they care when they have other businesses to deal with?
For someone to trade shoes, you would have to: 1. Research the local market for shoes, 2. Find out more about the big players in the shoe business, 3. Get acquainted with the different types of shoes and how much they are selling for, 4. Find out what costs are involved in importing shoes and 5. Determine how you can market and distribute them. 6. When I trade currencies, I have all the information I need by looking at a chart. It takes a long time to learn to do this well, but so does selling shoes.
INITIAL CAPITAL
To order a thousand pairs of shoes, you would require a lot more money than what it takes to start trading forex: usually, anything between $200 to $300 is sufficient. (In my book: The Part-Time Currency Trader , I discuss the costs of trading forex).
LEGALITIES
To start, you would have to establish the paperwork necessary to ensure that you get familiar with the legalities of the goods you wish to import and distribute.
What if a particular shipment of shoes does not sell, because even though they may have been popular in other countries, consumers in your country might not like it? Do you have more money to order another batch?
What if the stock you buy is defective and the seller does not want to have anything more to do with you? You can take them to court, but can you muster the resources to do so? You can threaten them by not doing business with them ever again, but would they care when they have other businesses to deal with?
Mother Could Make Money In Forex Trading-2
It also is essential to develop your own personal trading strategy. Your ability to assume certain risks might not exactly be what other traders or your broker recommends. A Forex trading strategy is not something generic and involves your personal game plan.
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
by Wayne Watson
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
by Wayne Watson
BENEFITS OF TRADING FOREX OVER SHOES-ONE MONTH LATER
BENEFITS OF TRADING FOREX OVER SHOES
There are advantages in trading shoes, but I could see more benefits in trading currencies. You do not need to worry about the process of importing or exporting, transporting goods, defective items, marketing and distribution as well as ensuring that you are complying with the law. Furthermore, in forex, you do not have to invest too much just to 'test the waters'.
ONE MONTH LATER
A month later, I rang my friend and told him that I might take him up on his offer in the future, if it was still available. However for the moment, I explained that I had more passion for currencies than I had for shoes. He laughed and we agreed to meet one day so that I can tell him more about currencies.
About The Author:
There are advantages in trading shoes, but I could see more benefits in trading currencies. You do not need to worry about the process of importing or exporting, transporting goods, defective items, marketing and distribution as well as ensuring that you are complying with the law. Furthermore, in forex, you do not have to invest too much just to 'test the waters'.
ONE MONTH LATER
A month later, I rang my friend and told him that I might take him up on his offer in the future, if it was still available. However for the moment, I explained that I had more passion for currencies than I had for shoes. He laughed and we agreed to meet one day so that I can tell him more about currencies.
About The Author:
Mother Could Make Money In Forex Trading-2
It also is essential to develop your own personal trading strategy. Your ability to assume certain risks might not exactly be what other traders or your broker recommends. A Forex trading strategy is not something generic and involves your personal game plan.
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
by Wayne Watson
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
by Wayne Watson
BENEFITS OF TRADING FOREX OVER SHOES-ONE MONTH LATER
BENEFITS OF TRADING FOREX OVER SHOES
There are advantages in trading shoes, but I could see more benefits in trading currencies. You do not need to worry about the process of importing or exporting, transporting goods, defective items, marketing and distribution as well as ensuring that you are complying with the law. Furthermore, in forex, you do not have to invest too much just to 'test the waters'.
ONE MONTH LATER
A month later, I rang my friend and told him that I might take him up on his offer in the future, if it was still available. However for the moment, I explained that I had more passion for currencies than I had for shoes. He laughed and we agreed to meet one day so that I can tell him more about currencies.
About The Author:
There are advantages in trading shoes, but I could see more benefits in trading currencies. You do not need to worry about the process of importing or exporting, transporting goods, defective items, marketing and distribution as well as ensuring that you are complying with the law. Furthermore, in forex, you do not have to invest too much just to 'test the waters'.
ONE MONTH LATER
A month later, I rang my friend and told him that I might take him up on his offer in the future, if it was still available. However for the moment, I explained that I had more passion for currencies than I had for shoes. He laughed and we agreed to meet one day so that I can tell him more about currencies.
About The Author:
Trends of Forex Market
Forex is actually the foreign exchange and deals in the goods, services and currency trading. Forex trading has gained prominence with the passage of time and more and more people have started chasing the trend. This concept of forex is purely based upon investment whether they are small, or big one.
Forex is also considered the economic indicator of economy and help to ascertain the financial picture of the nation. Also, forex market is the biggest financial and economical market of the world. Its money capacity is considered even larger than the equity and treasury markets.
Currency trading is the chief work undertaken in this market and thus, great risk factors are involved with them. It is also said that it reflects the true financial and economic condition of the country in a defined way. Moreover, currency trading also highlights the factors connected with the assets that country store.
It is generally said that forex is a very volatile market and prices fluctuate very quickly in fraction of seconds. So, while trading meticulous concentration should be paid so that you do not miss out any prominent moment where price has gone steeply upwards. This is considered as the most important forex trading strategy which can bring you huge sums of profits.
Forex is also considered the economic indicator of economy and help to ascertain the financial picture of the nation. Also, forex market is the biggest financial and economical market of the world. Its money capacity is considered even larger than the equity and treasury markets.
Currency trading is the chief work undertaken in this market and thus, great risk factors are involved with them. It is also said that it reflects the true financial and economic condition of the country in a defined way. Moreover, currency trading also highlights the factors connected with the assets that country store.
It is generally said that forex is a very volatile market and prices fluctuate very quickly in fraction of seconds. So, while trading meticulous concentration should be paid so that you do not miss out any prominent moment where price has gone steeply upwards. This is considered as the most important forex trading strategy which can bring you huge sums of profits.
Understanding the Trends of Forex Market-2
As per the different forex trading signals, emphasis must be paid upon the mediums through which you can get instant information. Thus, internet and mobile phones can serve the purpose in the most appropriate way. These different forex trading signals can get you access to the forex alerts all 24/7. This makes them highly convenient and hassle free service mediums.
Forex strategy system works on the economic driving force of demand and supply concept. Once the demand f any product increases steeply, it directly influences the supply side. On the overall picture of the forex trading system, it highlights the profitability of the forex market.
Forex alerts are also needed for the awareness about the changes that take place in the financial market of forex forex signals so that economic feasibility of that country can be determined accordingly. This in turn helps the economists for analyzing the different trends that influence the market. They after bring the new theories of economics that can help in understanding the forex strategy system in a better way.
Forex strategy system works on the economic driving force of demand and supply concept. Once the demand f any product increases steeply, it directly influences the supply side. On the overall picture of the forex trading system, it highlights the profitability of the forex market.
Forex alerts are also needed for the awareness about the changes that take place in the financial market of forex forex signals so that economic feasibility of that country can be determined accordingly. This in turn helps the economists for analyzing the different trends that influence the market. They after bring the new theories of economics that can help in understanding the forex strategy system in a better way.
Understanding the Trends of Forex Market-3
Forex alerts are also needed for the awareness about the changes that take place in the financial market of forex forex signals so that economic feasibility of that country can be determined accordingly. This in turn helps the economists for analyzing the different trends that influence the market. They after bring the new theories of economics that can help in understanding the forex strategy system in a better way.
Currency trading also help in exchanging the most used currency in which most of the trades of the country can be undertaken. In case, company wants to trade with any other country, at that time it requires its currency so that it can further undertake the business. Also, currency trading forms a vital part of investment that can help to earn profits.
Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading are all important components often market of forex and influence the financial position of a country in a big way. So, Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading should be studied in details so that you can trade in the financial markets in the most appropriate way.
Currency trading also help in exchanging the most used currency in which most of the trades of the country can be undertaken. In case, company wants to trade with any other country, at that time it requires its currency so that it can further undertake the business. Also, currency trading forms a vital part of investment that can help to earn profits.
Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading are all important components often market of forex and influence the financial position of a country in a big way. So, Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading should be studied in details so that you can trade in the financial markets in the most appropriate way.
Money In Forex Trading
The question would be not whether she could but rather would she enter the Forex trading market. The Forex day trading arena is a veritable snake pit ripe for scam artists to bilk money out of unwary investors. On the other hand, it is a forum for educated traders with the correct education, tools, and trading strategy to make a handsome income.
Becoming a successful Forex trader basically comes down to four things; 1) attaining the correct education, 2) using Forex tools which 3) use your own personal trading strategy, and 4) finding the correct Forex broker to fulfill your requirements. Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
Becoming a successful Forex trader basically comes down to four things; 1) attaining the correct education, 2) using Forex tools which 3) use your own personal trading strategy, and 4) finding the correct Forex broker to fulfill your requirements. Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
Trends of Forex Market
Forex is actually the foreign exchange and deals in the goods, services and currency trading. Forex trading has gained prominence with the passage of time and more and more people have started chasing the trend. This concept of forex is purely based upon investment whether they are small, or big one.
Forex is also considered the economic indicator of economy and help to ascertain the financial picture of the nation. Also, forex market is the biggest financial and economical market of the world. Its money capacity is considered even larger than the equity and treasury markets.
Currency trading is the chief work undertaken in this market and thus, great risk factors are involved with them. It is also said that it reflects the true financial and economic condition of the country in a defined way. Moreover, currency trading also highlights the factors connected with the assets that country store.
It is generally said that forex is a very volatile market and prices fluctuate very quickly in fraction of seconds. So, while trading meticulous concentration should be paid so that you do not miss out any prominent moment where price has gone steeply upwards. This is considered as the most important forex trading strategy which can bring you huge sums of profits.
Forex is also considered the economic indicator of economy and help to ascertain the financial picture of the nation. Also, forex market is the biggest financial and economical market of the world. Its money capacity is considered even larger than the equity and treasury markets.
Currency trading is the chief work undertaken in this market and thus, great risk factors are involved with them. It is also said that it reflects the true financial and economic condition of the country in a defined way. Moreover, currency trading also highlights the factors connected with the assets that country store.
It is generally said that forex is a very volatile market and prices fluctuate very quickly in fraction of seconds. So, while trading meticulous concentration should be paid so that you do not miss out any prominent moment where price has gone steeply upwards. This is considered as the most important forex trading strategy which can bring you huge sums of profits.
Understanding the Trends of Forex Market-2
As per the different forex trading signals, emphasis must be paid upon the mediums through which you can get instant information. Thus, internet and mobile phones can serve the purpose in the most appropriate way. These different forex trading signals can get you access to the forex alerts all 24/7. This makes them highly convenient and hassle free service mediums.
Forex strategy system works on the economic driving force of demand and supply concept. Once the demand f any product increases steeply, it directly influences the supply side. On the overall picture of the forex trading system, it highlights the profitability of the forex market.
Forex alerts are also needed for the awareness about the changes that take place in the financial market of forex forex signals so that economic feasibility of that country can be determined accordingly. This in turn helps the economists for analyzing the different trends that influence the market. They after bring the new theories of economics that can help in understanding the forex strategy system in a better way.
Forex strategy system works on the economic driving force of demand and supply concept. Once the demand f any product increases steeply, it directly influences the supply side. On the overall picture of the forex trading system, it highlights the profitability of the forex market.
Forex alerts are also needed for the awareness about the changes that take place in the financial market of forex forex signals so that economic feasibility of that country can be determined accordingly. This in turn helps the economists for analyzing the different trends that influence the market. They after bring the new theories of economics that can help in understanding the forex strategy system in a better way.
Understanding the Trends of Forex Market-3
Forex alerts are also needed for the awareness about the changes that take place in the financial market of forex forex signals so that economic feasibility of that country can be determined accordingly. This in turn helps the economists for analyzing the different trends that influence the market. They after bring the new theories of economics that can help in understanding the forex strategy system in a better way.
Currency trading also help in exchanging the most used currency in which most of the trades of the country can be undertaken. In case, company wants to trade with any other country, at that time it requires its currency so that it can further undertake the business. Also, currency trading forms a vital part of investment that can help to earn profits.
Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading are all important components often market of forex and influence the financial position of a country in a big way. So, Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading should be studied in details so that you can trade in the financial markets in the most appropriate way.
Currency trading also help in exchanging the most used currency in which most of the trades of the country can be undertaken. In case, company wants to trade with any other country, at that time it requires its currency so that it can further undertake the business. Also, currency trading forms a vital part of investment that can help to earn profits.
Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading are all important components often market of forex and influence the financial position of a country in a big way. So, Forex signals, forex strategy system, forex trading signal, forex alerts, forex signal and current trading should be studied in details so that you can trade in the financial markets in the most appropriate way.
Money In Forex Trading
The question would be not whether she could but rather would she enter the Forex trading market. The Forex day trading arena is a veritable snake pit ripe for scam artists to bilk money out of unwary investors. On the other hand, it is a forum for educated traders with the correct education, tools, and trading strategy to make a handsome income.
Becoming a successful Forex trader basically comes down to four things; 1) attaining the correct education, 2) using Forex tools which 3) use your own personal trading strategy, and 4) finding the correct Forex broker to fulfill your requirements. Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
Becoming a successful Forex trader basically comes down to four things; 1) attaining the correct education, 2) using Forex tools which 3) use your own personal trading strategy, and 4) finding the correct Forex broker to fulfill your requirements. Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
UK sovereign
The way the UK is dealing with the staggering expense-to-revenue situation is by printing more money but anybody with half a brain cell in their head knows that's not an answer to the problem. In a perfect and honest world the UK's debt rating would have already been reduced to at least emerging market levels (BBB) even though their budget, expense-to-revenue, and debt-to-GDP ratios rival that of any third world country. At this point Great Britain's monetary and fiscal situation reminds me of another island, Haiti.
According to the latest UK debt figures, the DMO will need to raise an additional £197 billion in public debt in 2010, £154 billion in 2012 and 2013, and £125 billion in 2013 and 2014. So, what does all this mean for us as Forex traders, especially for those that trade the pound? It's very simple, and it won't matter what your chart or your techs say, should Standard and Poors, Moodys, or Fitch drop the triple-A rating on Gilts, the pound sterling will be brutalized, end of story.
According to the latest UK debt figures, the DMO will need to raise an additional £197 billion in public debt in 2010, £154 billion in 2012 and 2013, and £125 billion in 2013 and 2014. So, what does all this mean for us as Forex traders, especially for those that trade the pound? It's very simple, and it won't matter what your chart or your techs say, should Standard and Poors, Moodys, or Fitch drop the triple-A rating on Gilts, the pound sterling will be brutalized, end of story.
Treasury bull bubble
This week the Treasury is set to auction $101 billion worth of new debt. I'm not even sure why they are referring to these events that involve the Fed buying US debt as a "Treasury auction"... it would be the equivalent of me listing a product on ebay, borrowing money from a bank at 0% interest, bidding up my own product, and then buying it myself with the bank's money and promising the bank I'll repay them when I re-sell my product again sometime in the future.
There's not even any logical sense in this sham the Fed and Treasury are running and it's going to end up backfiring on them because this type of manipulation will burst the bull bubble in Treasuries, it will send the yield on the 10-year far above the 3.00% level and that will put downside pressure on mortgage lending rates making it even harder for potential homeowners to borrow which will even further cap home prices and prevent them from rising. Yeah, that sounds like a great plan to me... and then we have the whole issue for how this sham floods the money-supply which I don't even have time to get in to right now.
There's not even any logical sense in this sham the Fed and Treasury are running and it's going to end up backfiring on them because this type of manipulation will burst the bull bubble in Treasuries, it will send the yield on the 10-year far above the 3.00% level and that will put downside pressure on mortgage lending rates making it even harder for potential homeowners to borrow which will even further cap home prices and prevent them from rising. Yeah, that sounds like a great plan to me... and then we have the whole issue for how this sham floods the money-supply which I don't even have time to get in to right now.
UK sovereign
The way the UK is dealing with the staggering expense-to-revenue situation is by printing more money but anybody with half a brain cell in their head knows that's not an answer to the problem. In a perfect and honest world the UK's debt rating would have already been reduced to at least emerging market levels (BBB) even though their budget, expense-to-revenue, and debt-to-GDP ratios rival that of any third world country. At this point Great Britain's monetary and fiscal situation reminds me of another island, Haiti.
According to the latest UK debt figures, the DMO will need to raise an additional £197 billion in public debt in 2010, £154 billion in 2012 and 2013, and £125 billion in 2013 and 2014. So, what does all this mean for us as Forex traders, especially for those that trade the pound? It's very simple, and it won't matter what your chart or your techs say, should Standard and Poors, Moodys, or Fitch drop the triple-A rating on Gilts, the pound sterling will be brutalized, end of story.
According to the latest UK debt figures, the DMO will need to raise an additional £197 billion in public debt in 2010, £154 billion in 2012 and 2013, and £125 billion in 2013 and 2014. So, what does all this mean for us as Forex traders, especially for those that trade the pound? It's very simple, and it won't matter what your chart or your techs say, should Standard and Poors, Moodys, or Fitch drop the triple-A rating on Gilts, the pound sterling will be brutalized, end of story.
Treasury bull bubble
This week the Treasury is set to auction $101 billion worth of new debt. I'm not even sure why they are referring to these events that involve the Fed buying US debt as a "Treasury auction"... it would be the equivalent of me listing a product on ebay, borrowing money from a bank at 0% interest, bidding up my own product, and then buying it myself with the bank's money and promising the bank I'll repay them when I re-sell my product again sometime in the future.
There's not even any logical sense in this sham the Fed and Treasury are running and it's going to end up backfiring on them because this type of manipulation will burst the bull bubble in Treasuries, it will send the yield on the 10-year far above the 3.00% level and that will put downside pressure on mortgage lending rates making it even harder for potential homeowners to borrow which will even further cap home prices and prevent them from rising. Yeah, that sounds like a great plan to me... and then we have the whole issue for how this sham floods the money-supply which I don't even have time to get in to right now.
There's not even any logical sense in this sham the Fed and Treasury are running and it's going to end up backfiring on them because this type of manipulation will burst the bull bubble in Treasuries, it will send the yield on the 10-year far above the 3.00% level and that will put downside pressure on mortgage lending rates making it even harder for potential homeowners to borrow which will even further cap home prices and prevent them from rising. Yeah, that sounds like a great plan to me... and then we have the whole issue for how this sham floods the money-supply which I don't even have time to get in to right now.
abysmal headline growth
The headline numbers really didn't matter, especially to those that move markets. It was the underlying fundamentals contained within the GDP report that sent money-flows into risk markets like equities, crude, gold, and non-risk averse currencies such as the euro, pound sterling, and Aussie, and out of the dollar, yen, and US Treasuries. When it comes to using the fundamentals to gauge market direction, sentiment, and where money-flows will go, the thing I do is breakdown the entire GDP report to get a full and well rounded view for how markets should react.
So, what I'm going to do here is go through what I saw in the GDP fundamentals that explain why the markets reacted the way they did; this is the exercise I go through in my mind whenever we get a major piece of fundamental data that will cause strong price action volatility. And GDP is certainly one of those fundamentals that impact money-flows and sentiment
So, what I'm going to do here is go through what I saw in the GDP fundamentals that explain why the markets reacted the way they did; this is the exercise I go through in my mind whenever we get a major piece of fundamental data that will cause strong price action volatility. And GDP is certainly one of those fundamentals that impact money-flows and sentiment
Prices and inflation
As we've talked about several times the past few weeks in the updates, prices and price inflation are a major catalyst that either drive markets up or drive them down, it's a very simple correlation. Here's what today's GDP data revealed about 2008 Q4 and 2009 Q1 prices/inflation:
GDP price index for domestic purchasing:
-3.9% in Q4 2008
-1.0% in Q1 2009
GDP price index for domestic purchasing ex food and energy:
+1.2% in Q4 2008
+1.4% in Q1 2009
GDP price index for domestic purchasing:
-3.9% in Q4 2008
-1.0% in Q1 2009
GDP price index for domestic purchasing ex food and energy:
+1.2% in Q4 2008
+1.4% in Q1 2009
cousins of Forex
The final two days last week while I was trading the yen crosses I noticed an interesting correlation shift between the yens and their majors, specifically between the EUR/JPY and its cousin, the EUR/USD and the GBP/JPY and its cousin, the GBP/USD. I'll get to that part in a moment, but before we dissect that potential correlation shift we need to put some things in perspective in regards to the Japanese yen.
Overall, the JPY put in a rather strong week, especially against the USD, even in the face of equities that were able to rally after selling-off earlier in the week. Under "normal" market conditions, the exact opposite would have been the case as riskier appetites send their money-flows into equities and out of the yen, and based on that fairly solid and steady market correlation, the yen crosses would have been driven higher as the S&P 500 and Dow made back their losses.
That wasn't exactly the case for one of the two yen crosses... earlier in the week I gave a GJ support level of 141.50 which did manage to hold solid all week, but there was a definite shift in the correlation between the GU, GJ, and equities... both the EUR/USD and GBP/USD managed to put in a rather strong performance on Thursday and Friday, however, the GBP/JPY sold-off to a much larger degree than the EUR/JPY even though they generally follow each other when equities are strong and their cousins remain well supported, which was the case at the end of last week.
On Friday the EUR/JPY made its high for the day and remained well supported to the upside just as the EUR/USD was putting in the same exact performance. The GBP/USD also remained fairly supported yet the GBP/JPY was sold-off with conviction. As the euro was testing the 1.3300 level its cousin was testing the 129.00 level, which were their top of the range highs, correspondingly, while the pound sterling was testing its highs at the 1.4770 level and was able to remain supported above 1.4700, the GJ was plummeting down to the 142.50 level which was 200-points lower than its high. Within the GJ's price action it showed zero signs it should be bought and was screaming "sell me" from the time NY opened and right through the close.
Overall, the JPY put in a rather strong week, especially against the USD, even in the face of equities that were able to rally after selling-off earlier in the week. Under "normal" market conditions, the exact opposite would have been the case as riskier appetites send their money-flows into equities and out of the yen, and based on that fairly solid and steady market correlation, the yen crosses would have been driven higher as the S&P 500 and Dow made back their losses.
That wasn't exactly the case for one of the two yen crosses... earlier in the week I gave a GJ support level of 141.50 which did manage to hold solid all week, but there was a definite shift in the correlation between the GU, GJ, and equities... both the EUR/USD and GBP/USD managed to put in a rather strong performance on Thursday and Friday, however, the GBP/JPY sold-off to a much larger degree than the EUR/JPY even though they generally follow each other when equities are strong and their cousins remain well supported, which was the case at the end of last week.
On Friday the EUR/JPY made its high for the day and remained well supported to the upside just as the EUR/USD was putting in the same exact performance. The GBP/USD also remained fairly supported yet the GBP/JPY was sold-off with conviction. As the euro was testing the 1.3300 level its cousin was testing the 129.00 level, which were their top of the range highs, correspondingly, while the pound sterling was testing its highs at the 1.4770 level and was able to remain supported above 1.4700, the GJ was plummeting down to the 142.50 level which was 200-points lower than its high. Within the GJ's price action it showed zero signs it should be bought and was screaming "sell me" from the time NY opened and right through the close.
abysmal headline growth
The headline numbers really didn't matter, especially to those that move markets. It was the underlying fundamentals contained within the GDP report that sent money-flows into risk markets like equities, crude, gold, and non-risk averse currencies such as the euro, pound sterling, and Aussie, and out of the dollar, yen, and US Treasuries. When it comes to using the fundamentals to gauge market direction, sentiment, and where money-flows will go, the thing I do is breakdown the entire GDP report to get a full and well rounded view for how markets should react.
So, what I'm going to do here is go through what I saw in the GDP fundamentals that explain why the markets reacted the way they did; this is the exercise I go through in my mind whenever we get a major piece of fundamental data that will cause strong price action volatility. And GDP is certainly one of those fundamentals that impact money-flows and sentiment
So, what I'm going to do here is go through what I saw in the GDP fundamentals that explain why the markets reacted the way they did; this is the exercise I go through in my mind whenever we get a major piece of fundamental data that will cause strong price action volatility. And GDP is certainly one of those fundamentals that impact money-flows and sentiment
Prices and inflation
As we've talked about several times the past few weeks in the updates, prices and price inflation are a major catalyst that either drive markets up or drive them down, it's a very simple correlation. Here's what today's GDP data revealed about 2008 Q4 and 2009 Q1 prices/inflation:
GDP price index for domestic purchasing:
-3.9% in Q4 2008
-1.0% in Q1 2009
GDP price index for domestic purchasing ex food and energy:
+1.2% in Q4 2008
+1.4% in Q1 2009
GDP price index for domestic purchasing:
-3.9% in Q4 2008
-1.0% in Q1 2009
GDP price index for domestic purchasing ex food and energy:
+1.2% in Q4 2008
+1.4% in Q1 2009
cousins of Forex
The final two days last week while I was trading the yen crosses I noticed an interesting correlation shift between the yens and their majors, specifically between the EUR/JPY and its cousin, the EUR/USD and the GBP/JPY and its cousin, the GBP/USD. I'll get to that part in a moment, but before we dissect that potential correlation shift we need to put some things in perspective in regards to the Japanese yen.
Overall, the JPY put in a rather strong week, especially against the USD, even in the face of equities that were able to rally after selling-off earlier in the week. Under "normal" market conditions, the exact opposite would have been the case as riskier appetites send their money-flows into equities and out of the yen, and based on that fairly solid and steady market correlation, the yen crosses would have been driven higher as the S&P 500 and Dow made back their losses.
That wasn't exactly the case for one of the two yen crosses... earlier in the week I gave a GJ support level of 141.50 which did manage to hold solid all week, but there was a definite shift in the correlation between the GU, GJ, and equities... both the EUR/USD and GBP/USD managed to put in a rather strong performance on Thursday and Friday, however, the GBP/JPY sold-off to a much larger degree than the EUR/JPY even though they generally follow each other when equities are strong and their cousins remain well supported, which was the case at the end of last week.
On Friday the EUR/JPY made its high for the day and remained well supported to the upside just as the EUR/USD was putting in the same exact performance. The GBP/USD also remained fairly supported yet the GBP/JPY was sold-off with conviction. As the euro was testing the 1.3300 level its cousin was testing the 129.00 level, which were their top of the range highs, correspondingly, while the pound sterling was testing its highs at the 1.4770 level and was able to remain supported above 1.4700, the GJ was plummeting down to the 142.50 level which was 200-points lower than its high. Within the GJ's price action it showed zero signs it should be bought and was screaming "sell me" from the time NY opened and right through the close.
Overall, the JPY put in a rather strong week, especially against the USD, even in the face of equities that were able to rally after selling-off earlier in the week. Under "normal" market conditions, the exact opposite would have been the case as riskier appetites send their money-flows into equities and out of the yen, and based on that fairly solid and steady market correlation, the yen crosses would have been driven higher as the S&P 500 and Dow made back their losses.
That wasn't exactly the case for one of the two yen crosses... earlier in the week I gave a GJ support level of 141.50 which did manage to hold solid all week, but there was a definite shift in the correlation between the GU, GJ, and equities... both the EUR/USD and GBP/USD managed to put in a rather strong performance on Thursday and Friday, however, the GBP/JPY sold-off to a much larger degree than the EUR/JPY even though they generally follow each other when equities are strong and their cousins remain well supported, which was the case at the end of last week.
On Friday the EUR/JPY made its high for the day and remained well supported to the upside just as the EUR/USD was putting in the same exact performance. The GBP/USD also remained fairly supported yet the GBP/JPY was sold-off with conviction. As the euro was testing the 1.3300 level its cousin was testing the 129.00 level, which were their top of the range highs, correspondingly, while the pound sterling was testing its highs at the 1.4770 level and was able to remain supported above 1.4700, the GJ was plummeting down to the 142.50 level which was 200-points lower than its high. Within the GJ's price action it showed zero signs it should be bought and was screaming "sell me" from the time NY opened and right through the close.
United States Currency Policy
This time, each problem was feeding directly off of the others. The Vietnam Conflict had drained our gold reserves heavily. By 1970, Fort Knox only held US$12 Billion.The growth of the oil business and the increase in foreign trade caused a boom in the demand for US dollars in foreign banks. Over US$ 47 Billion was sitting in overseas banks.On paper, our gold reserves were over-leveraged by almost 4 to 1. As a nation, we did not know how to react to such an overbearing assault on our currency. Then along came the invention of the Eurodollar to make our nightmare worse.Foreign banks with US dollars would make low-interest loans in US dollars to importers and exporters. Although the dollars were never repatriated, the US was still on the hook to exchange these “credit”-created dollars for the gold we kept on reserve.Then came a miracle in disguise . The Bretton Woods Agreement collapsed. In the over-leveraged gold-dollar environment, many countries began to feel frustrated with the artificial peg.In blatant defiance to the agreement in 1971, Germany declared that they would float the Deutsche mark. They were tired of the artificial peg that was keeping their economy depressed.In the first hour of trading, over US$1 billion were exchanged for Deutsche marks. For the first time, the public had voiced their opinion against being so heavily weighted with dollars.With Germany completely ignoring the Bretton Woods Agreement by floating their currency, the US government had nothing left to do but put the final nail in the coffin of the U.S.'s currency policy.
United States Currency Policy
This time, each problem was feeding directly off of the others. The Vietnam Conflict had drained our gold reserves heavily. By 1970, Fort Knox only held US$12 Billion.The growth of the oil business and the increase in foreign trade caused a boom in the demand for US dollars in foreign banks. Over US$ 47 Billion was sitting in overseas banks.On paper, our gold reserves were over-leveraged by almost 4 to 1. As a nation, we did not know how to react to such an overbearing assault on our currency. Then along came the invention of the Eurodollar to make our nightmare worse.Foreign banks with US dollars would make low-interest loans in US dollars to importers and exporters. Although the dollars were never repatriated, the US was still on the hook to exchange these “credit”-created dollars for the gold we kept on reserve.Then came a miracle in disguise . The Bretton Woods Agreement collapsed. In the over-leveraged gold-dollar environment, many countries began to feel frustrated with the artificial peg.In blatant defiance to the agreement in 1971, Germany declared that they would float the Deutsche mark. They were tired of the artificial peg that was keeping their economy depressed.In the first hour of trading, over US$1 billion were exchanged for Deutsche marks. For the first time, the public had voiced their opinion against being so heavily weighted with dollars.With Germany completely ignoring the Bretton Woods Agreement by floating their currency, the US government had nothing left to do but put the final nail in the coffin of the U.S.'s currency policy.
Currency World
the 30 years since the collapse of the last gentlemanly agreement on currency rates, many momentous events have occurred that have affected currencies worldwide. The Japanese yen gained prominence because of Japan's heavy export relationship with the United States. The USSR collapsed. We have had several undeclared wars, the south Asian economies have risen and collapsed, and several investor bubbles have come and gone.Each time, currencies have come away with a newly earned respect by the masses. There has also been a constant element of surprise that keeps you guessing what's next.Current conditions, such as the United States' perpetual war on “terror”, the permanent introduction and dominance of the euro currency, the steady O.P.E.C. increases in oil prices, and gold's renaissance as a store of value, will likely have a tremendous impact on the future of what it means to trade currencies.
Currency World
the 30 years since the collapse of the last gentlemanly agreement on currency rates, many momentous events have occurred that have affected currencies worldwide. The Japanese yen gained prominence because of Japan's heavy export relationship with the United States. The USSR collapsed. We have had several undeclared wars, the south Asian economies have risen and collapsed, and several investor bubbles have come and gone.Each time, currencies have come away with a newly earned respect by the masses. There has also been a constant element of surprise that keeps you guessing what's next.Current conditions, such as the United States' perpetual war on “terror”, the permanent introduction and dominance of the euro currency, the steady O.P.E.C. increases in oil prices, and gold's renaissance as a store of value, will likely have a tremendous impact on the future of what it means to trade currencies.
FOREX BUSSINESS
Presently Forex market is a global telecommunication network of banks and different financial organizations. It does not have any fixed trading place and time restrictions - the trade starts on Monday morning in New Zealand and closes on Friday evening in USA
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity: no exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality: everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity: no exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality: everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
FOREX BUSSINESS
Presently Forex market is a global telecommunication network of banks and different financial organizations. It does not have any fixed trading place and time restrictions - the trade starts on Monday morning in New Zealand and closes on Friday evening in USA
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity: no exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality: everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity: no exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality: everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
Wednesday, May 27, 2009
London consolidates lead in global foreign exchange markets-3
Analysts estimate that almost £30bn flowed out of the UK after Mrs Thatcher's decision to drop the controls. However, the liberalisation has subsequently enabled the UK to cash in on its geographical position as a bridge between the US, Europe and the Far East.
IFSL said the UK had a string of additional advantages as a centre for foreign exchange trading. They include: a large fund management sector; a large number of investment banks and brokers; easy access to global markets combined with a tradition of welcoming foreign firms; high-quality professional services; efficient telecoms infrastructure; and the use of the English language.
In addition, Mr Maslakovic said that while some domestic financial services companies believe the City of London is over-regulated, foreign currency traders' "perception [is] of a proportionate approach in the regulatory climate".
IFSL said the UK had a string of additional advantages as a centre for foreign exchange trading. They include: a large fund management sector; a large number of investment banks and brokers; easy access to global markets combined with a tradition of welcoming foreign firms; high-quality professional services; efficient telecoms infrastructure; and the use of the English language.
In addition, Mr Maslakovic said that while some domestic financial services companies believe the City of London is over-regulated, foreign currency traders' "perception [is] of a proportionate approach in the regulatory climate".
London consolidates lead in global foreign exchange markets-2
This year, deals transacted in London will account for 32.4 per cent of all foreign exchange trading, according to IFSL's analysis. The UK's market share is almost twice as high as the next biggest player, the US, which has 18.2 per cent of all currency trading. Japan, with 7.6 per cent, and Singapore, with 5.7 per cent, are the next most important currency exchange markets but lag considerably behind Western competitors.
The US and Japan have actually lost ground on the UK over the past two years, the IFSL's figures show, with their market shares slipping from 19.2 per cent and 8.3 per cent respectively in 2004. Britain's share has moved up from 31.3 per cent over the same period.
Mr Maslakovic said the UK had developed into the ideal centre for currency trading since Margaret Thatcher's newly elected Conservative government abolished exchange controls in 1979.
Until then, foreign investors were almost entirely prevented from buying sterling unless doing so would benefit Britain's balance of payments figures. UK residents, meanwhile, were not allowed to buy foreign currency for investment purposes, unless the purchases were funded with the sale of existing overseas assets. There were also tight restrictions on UK residents' ability to hold foreign currency in deposit accounts.
The US and Japan have actually lost ground on the UK over the past two years, the IFSL's figures show, with their market shares slipping from 19.2 per cent and 8.3 per cent respectively in 2004. Britain's share has moved up from 31.3 per cent over the same period.
Mr Maslakovic said the UK had developed into the ideal centre for currency trading since Margaret Thatcher's newly elected Conservative government abolished exchange controls in 1979.
Until then, foreign investors were almost entirely prevented from buying sterling unless doing so would benefit Britain's balance of payments figures. UK residents, meanwhile, were not allowed to buy foreign currency for investment purposes, unless the purchases were funded with the sale of existing overseas assets. There were also tight restrictions on UK residents' ability to hold foreign currency in deposit accounts.
London consolidates lead in global foreign exchange markets
Britain's dominant grip on the global foreign exchange market has tightened to such an extent over the past 12 months that almost a third of the world's currency trading transactions now take place in this country.
Average daily turnover on the UK's foreign exchange market reached $1.1 trillion (£587bn) in April 2006, the last month for which figures are available from an annual survey by International Financial Services London (IFSL).
The trade body, which promotes the UK's financial services industry, said this represented 41 per cent growth on the same month in 2005. The UK expanded more quickly than any other foreign exchange market, with the whole of the world market rising in size by 38 per cent last year.
"The rapid growth in the volume of foreign exchange turnover over the past two decades reflects the continuing growth of international trade and expansion in global finance and investment," said Mark Maslakovic, the senior economist at IFSL. "The UK, and London in particular, is by far the largest global market for foreign exchange trading, well ahead of the US and Japan."
Average daily turnover on the UK's foreign exchange market reached $1.1 trillion (£587bn) in April 2006, the last month for which figures are available from an annual survey by International Financial Services London (IFSL).
The trade body, which promotes the UK's financial services industry, said this represented 41 per cent growth on the same month in 2005. The UK expanded more quickly than any other foreign exchange market, with the whole of the world market rising in size by 38 per cent last year.
"The rapid growth in the volume of foreign exchange turnover over the past two decades reflects the continuing growth of international trade and expansion in global finance and investment," said Mark Maslakovic, the senior economist at IFSL. "The UK, and London in particular, is by far the largest global market for foreign exchange trading, well ahead of the US and Japan."
A mountain of reserves-china's forex
At the start of the reform era at the end of 1978, China's foreign exchange reserves were minimal, but enough to cover the requirements of a country with a very small import bill.
In the early 1980s, export growth contributed to an initial rise in reserves to a peak of US$17.4bn by 1984. High trade deficits in 1985 and 1986 eroded the reserves in those years.
In 1987 the surplus on trade in services slightly exceeded the merchandise trade deficit, producing a small current-account surplus, and a comfortable net capital inflow helped push up reserves to US$16.3bn. The reserves were held above this level for another two years.
The economic slowdown of 1989-91 produced a sharp fall in imports in 1990, while exports continued to rise, producing a merchandise trade surplus for that year of US$9.2bn, which was gradually eroded in the next three years as imports rose faster than exports. By 1993 the trade and current accounts were in deficit, but the acceleration in inward FDI flows kept foreign exchange reserves rising for most of the rest of the decade.
Joining the World Trade Organisation (WTO) in 2001 contributed to rapid growth in imports, but exports also expanded at a fast pace, while FDI inflows exceeded US$60 billion a year by 2004-2006.
In October 2006, China's foreign exchange reserves exceeded USD1 trillion for the first time. By the end of September 2008, the reserves topped USD 1.9 trillion, equal to nearly USD1,500 per head for the entire population of China. It remained around this level until the end of 2008 as trade growth slowed and foreign investment inflows declined.
In the early 1980s, export growth contributed to an initial rise in reserves to a peak of US$17.4bn by 1984. High trade deficits in 1985 and 1986 eroded the reserves in those years.
In 1987 the surplus on trade in services slightly exceeded the merchandise trade deficit, producing a small current-account surplus, and a comfortable net capital inflow helped push up reserves to US$16.3bn. The reserves were held above this level for another two years.
The economic slowdown of 1989-91 produced a sharp fall in imports in 1990, while exports continued to rise, producing a merchandise trade surplus for that year of US$9.2bn, which was gradually eroded in the next three years as imports rose faster than exports. By 1993 the trade and current accounts were in deficit, but the acceleration in inward FDI flows kept foreign exchange reserves rising for most of the rest of the decade.
Joining the World Trade Organisation (WTO) in 2001 contributed to rapid growth in imports, but exports also expanded at a fast pace, while FDI inflows exceeded US$60 billion a year by 2004-2006.
In October 2006, China's foreign exchange reserves exceeded USD1 trillion for the first time. By the end of September 2008, the reserves topped USD 1.9 trillion, equal to nearly USD1,500 per head for the entire population of China. It remained around this level until the end of 2008 as trade growth slowed and foreign investment inflows declined.
China's Balance of Payments
The SAFE recently released China's Balance of Payments Statement for the year 2008. The statistics reveal that the current account and the capital and financial account posted a "twin surplus" in 2008, and international reserves maintained a growing momentum.
In 2008, China's surplus under the current account totaled USD 426.1 billion, an increase of 15% year on year. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD 360.7 billion, USD 31.4 billion, and USD 45.8 billion, respectively, whereas the deficit in services amounted to USD 11.8 billion.
Meanwhile, China's surplus under the capital and financial account totaled USD 19 billion in 2008, a decrease of 74% year on year. In particular, the net inflows of direct investments and portfolio investments amounted to USD 94.3 billion and USD 42.7 billion respectively, whereas the net outflows of other investments reached USD 121.1 billion.
Furthermore, China's international reserves continued to grow. At the end of 2008, China registered a total of USD 1.946 trillion in foreign exchange reserves, an increase of USD 417.8 billion over that at the end of 2007.
In addition, the BOP Analysis Team of the SAFE released China's Balance of Payments Report for the year 2008 in order to facilitate understanding of the data and analysis of China's balance of payments among all groups in the society.
In 2008, China's surplus under the current account totaled USD 426.1 billion, an increase of 15% year on year. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD 360.7 billion, USD 31.4 billion, and USD 45.8 billion, respectively, whereas the deficit in services amounted to USD 11.8 billion.
Meanwhile, China's surplus under the capital and financial account totaled USD 19 billion in 2008, a decrease of 74% year on year. In particular, the net inflows of direct investments and portfolio investments amounted to USD 94.3 billion and USD 42.7 billion respectively, whereas the net outflows of other investments reached USD 121.1 billion.
Furthermore, China's international reserves continued to grow. At the end of 2008, China registered a total of USD 1.946 trillion in foreign exchange reserves, an increase of USD 417.8 billion over that at the end of 2007.
In addition, the BOP Analysis Team of the SAFE released China's Balance of Payments Report for the year 2008 in order to facilitate understanding of the data and analysis of China's balance of payments among all groups in the society.
xmEurope-2
Unlike many other markets, foreign exchange transactions are not actually undertaken on an �exchange� eg stocks and shares are sold via the �London Stock Exchange�. Large foreign exchange transactions are undertaken by Banks and other Market Makers between themselves over the telephone or via an electronic dealing systems. This type of system is often referred to as ��Over the Counter� or OTC and forms the �interbank� market for foreign exchange.
There are two main reasons for buying or selling currency. The first is bought speculatively for trading with a hope of making a profit. This forms a staggering 95% of the market. The second reason is for physical settlement. These are mainly businesses that are buying or selling for the purposes of settling foreign invoices or converting their foreign revenue streams into their local currency.
This site does not aim to cover foreign exchange services that engage in speculative trading but will aim to guide the reader to understand the essential basics required to secure a good deal when buying or selling currency for their own pocket!
There are two main reasons for buying or selling currency. The first is bought speculatively for trading with a hope of making a profit. This forms a staggering 95% of the market. The second reason is for physical settlement. These are mainly businesses that are buying or selling for the purposes of settling foreign invoices or converting their foreign revenue streams into their local currency.
This site does not aim to cover foreign exchange services that engage in speculative trading but will aim to guide the reader to understand the essential basics required to secure a good deal when buying or selling currency for their own pocket!
xmEurope-1
XMeurope.com was set-up as a comprehensive guide to buying and selling foreign exchange for the �infrequent� private or business user. Its aim is to provide individuals with limited experience of the foreign exchange market the ability to understand some of the essential basics.
The foreign exchange aka. �Forex� of �FX� market is still one of the most liquid markets in the world with over $1.9 trillion pouring through on a daily basis. It is an exciting market that captures the interest of a huge variety of people across the world involved in Business Finance, International Trade, Private Investors through to holidaymakers wanting to know how much spending money they will have!
Like many other markets, foreign exchange prices are forced up and down, depending on a number of externally influencing factors. Some of these factors include supply and demand, interest rates and a great deal of other economic and political circumstances which are forever changing. Hence, the market can sometimes be referred to as �volatile�, as prices can move considerably inside of even one day.
The foreign exchange aka. �Forex� of �FX� market is still one of the most liquid markets in the world with over $1.9 trillion pouring through on a daily basis. It is an exciting market that captures the interest of a huge variety of people across the world involved in Business Finance, International Trade, Private Investors through to holidaymakers wanting to know how much spending money they will have!
Like many other markets, foreign exchange prices are forced up and down, depending on a number of externally influencing factors. Some of these factors include supply and demand, interest rates and a great deal of other economic and political circumstances which are forever changing. Hence, the market can sometimes be referred to as �volatile�, as prices can move considerably inside of even one day.
Do you know your pesos from your euros?
Do you know your pesos from your euros? Not sure what currency you'd need for a trip to Brazil? Don't worry, we're here to help. American Express Foreign Exchange Services offers a range of products that provide the convenience and security you demand.
We regularly stock more than 60 Foreign Currencies as well as Travellers Cheques to help make your trip safe, enjoyable and affordable.
Online Ordering
You can also order Travellers Cheques and foreign cash online with FX4You and collect your order from over 3,000 Australia Post & American Express locations Australia wide.
Take a look at a few reasons why you should let American Express Foreign Exchange Services handle your travel currency needs ...
Australian Presence
Find an American Express Foreign Exchange office in Australia
Global Presence
With more than 1,700 locations** in 130+ countries worldwide, American Express is recognized and respected around the world for quality, customer-oriented products and top levels of service. Regardless of where your business or personal travels take you, we're there every step of the way.
English-Speaking Assistance
So you don't speak Polish, Thai or Greek? Don't worry - all American Express Foreign Exchange offices worldwide employ English-speaking representatives to help meet your foreign exchange needs.
Not Limited to Cardmembers
All travellers can take advantage of most American Express Foreign Exchange products and services.*
If you want to know how many rupees you'd need to spend a week in India, or how many euros for a weekend in Paris, please check out our currency converter. This helpful tool will give you an idea of what to bring on your cross-cultural excursions.
When planning your next business trip or holiday, look no further than American Express Foreign Exchange Services - the single source provider for all your travel currency needs.
We regularly stock more than 60 Foreign Currencies as well as Travellers Cheques to help make your trip safe, enjoyable and affordable.
Online Ordering
You can also order Travellers Cheques and foreign cash online with FX4You and collect your order from over 3,000 Australia Post & American Express locations Australia wide.
Take a look at a few reasons why you should let American Express Foreign Exchange Services handle your travel currency needs ...
Australian Presence
Find an American Express Foreign Exchange office in Australia
Global Presence
With more than 1,700 locations** in 130+ countries worldwide, American Express is recognized and respected around the world for quality, customer-oriented products and top levels of service. Regardless of where your business or personal travels take you, we're there every step of the way.
English-Speaking Assistance
So you don't speak Polish, Thai or Greek? Don't worry - all American Express Foreign Exchange offices worldwide employ English-speaking representatives to help meet your foreign exchange needs.
Not Limited to Cardmembers
All travellers can take advantage of most American Express Foreign Exchange products and services.*
If you want to know how many rupees you'd need to spend a week in India, or how many euros for a weekend in Paris, please check out our currency converter. This helpful tool will give you an idea of what to bring on your cross-cultural excursions.
When planning your next business trip or holiday, look no further than American Express Foreign Exchange Services - the single source provider for all your travel currency needs.
Margin FX
 |
If you are interested in foreign exchange margin trading, we suggest contacting CMC Markets for FX Contracts for Difference (CFDs).
FX CFD trading is the simultaneous buying of one currency and selling of another. FX CFDs are traded on margin, which means that you only allocate a small proportion of the value of the position but gain full exposure to the market - increasing your profit (and loss) potential.
CMC Markets offer tight dealing spreads over Spot and Forward FX CFDs.
Visit CMC Markets to find out more about their services or to open an account.
Open a CMC Markets account
OzForex does not provide any form of margin trading facilities and cannot offer any advice or information in relation to foreign exchange margin trading.
Foreign Exchange for Business
 |
OzForex offers excellent rates on foreign exchange for businesses. Whenever you make a purchase or sale in a foreign currency, OzForex will save you money through better exchange rates and low (or often no) fees. OzForex offers an easy and convenient system to view live rates, store your beneficiary details, lock in deals and view details of past transactions.
Having access to dedicated analysts and dealers is out of the question for most small businesses. However, OzForex will provide you with an expert dealer to discuss your foreign exchange needs and to help formulate strategies to reduce your foreign exchange risk. The OzForex system is extremely transparent and allows you to view the interbank rate and the rate you receive. There are no commissions or hidden fees.
For a fresh approach to your currency needs call OzForex now to speak to one of our foreign exchange specialists. Our toll free numbers are:
Australia 1300 300 524
United Kingdom 0845 686 1950
New Zealand 0800 161 868
Monday, May 25, 2009
London consolidates lead in global foreign exchange markets
Britain's dominant grip on the global foreign exchange market has tightened to such an extent over the past 12 months that almost a third of the world's currency trading transactions now take place in this country.
Average daily turnover on the UK's foreign exchange market reached $1.1 trillion (£587bn) in April 2006, the last month for which figures are available from an annual survey by International Financial Services London (IFSL).
The trade body, which promotes the UK's financial services industry, said this represented 41 per cent growth on the same month in 2005. The UK expanded more quickly than any other foreign exchange market, with the whole of the world market rising in size by 38 per cent last year.
"The rapid growth in the volume of foreign exchange turnover over the past two decades reflects the continuing growth of international trade and expansion in global finance and investment," said Mark Maslakovic, the senior economist at IFSL. "The UK, and London in particular, is by far the largest global market for foreign exchange trading, well ahead of the US and Japan."
This year, deals transacted in London will account for 32.4 per cent of all foreign exchange trading, according to IFSL's analysis. The UK's market share is almost twice as high as the next biggest player, the US, which has 18.2 per cent of all currency trading. Japan, with 7.6 per cent, and Singapore, with 5.7 per cent, are the next most important currency exchange markets but lag considerably behind Western competitors.
The US and Japan have actually lost ground on the UK over the past two years, the IFSL's figures show, with their market shares slipping from 19.2 per cent and 8.3 per cent respectively in 2004. Britain's share has moved up from 31.3 per cent over the same period.
Mr Maslakovic said the UK had developed into the ideal centre for currency trading since Margaret Thatcher's newly elected Conservative government abolished exchange controls in 1979.
Until then, foreign investors were almost entirely prevented from buying sterling unless doing so would benefit Britain's balance of payments figures. UK residents, meanwhile, were not allowed to buy foreign currency for investment purposes, unless the purchases were funded with the sale of existing overseas assets. There were also tight restrictions on UK residents' ability to hold foreign currency in deposit accounts.
Analysts estimate that almost £30bn flowed out of the UK after Mrs Thatcher's decision to drop the controls. However, the liberalisation has subsequently enabled the UK to cash in on its geographical position as a bridge between the US, Europe and the Far East.
IFSL said the UK had a string of additional advantages as a centre for foreign exchange trading. They include: a large fund management sector; a large number of investment banks and brokers; easy access to global markets combined with a tradition of welcoming foreign firms; high-quality professional services; efficient telecoms infrastructure; and the use of the English language.
In addition, Mr Maslakovic said that while some domestic financial services companies believe the City of London is over-regulated, foreign currency traders' "perception [is] of a proportionate approach in the regulatory climate".
Average daily turnover on the UK's foreign exchange market reached $1.1 trillion (£587bn) in April 2006, the last month for which figures are available from an annual survey by International Financial Services London (IFSL).
The trade body, which promotes the UK's financial services industry, said this represented 41 per cent growth on the same month in 2005. The UK expanded more quickly than any other foreign exchange market, with the whole of the world market rising in size by 38 per cent last year.
"The rapid growth in the volume of foreign exchange turnover over the past two decades reflects the continuing growth of international trade and expansion in global finance and investment," said Mark Maslakovic, the senior economist at IFSL. "The UK, and London in particular, is by far the largest global market for foreign exchange trading, well ahead of the US and Japan."
This year, deals transacted in London will account for 32.4 per cent of all foreign exchange trading, according to IFSL's analysis. The UK's market share is almost twice as high as the next biggest player, the US, which has 18.2 per cent of all currency trading. Japan, with 7.6 per cent, and Singapore, with 5.7 per cent, are the next most important currency exchange markets but lag considerably behind Western competitors.
The US and Japan have actually lost ground on the UK over the past two years, the IFSL's figures show, with their market shares slipping from 19.2 per cent and 8.3 per cent respectively in 2004. Britain's share has moved up from 31.3 per cent over the same period.
Mr Maslakovic said the UK had developed into the ideal centre for currency trading since Margaret Thatcher's newly elected Conservative government abolished exchange controls in 1979.
Until then, foreign investors were almost entirely prevented from buying sterling unless doing so would benefit Britain's balance of payments figures. UK residents, meanwhile, were not allowed to buy foreign currency for investment purposes, unless the purchases were funded with the sale of existing overseas assets. There were also tight restrictions on UK residents' ability to hold foreign currency in deposit accounts.
Analysts estimate that almost £30bn flowed out of the UK after Mrs Thatcher's decision to drop the controls. However, the liberalisation has subsequently enabled the UK to cash in on its geographical position as a bridge between the US, Europe and the Far East.
IFSL said the UK had a string of additional advantages as a centre for foreign exchange trading. They include: a large fund management sector; a large number of investment banks and brokers; easy access to global markets combined with a tradition of welcoming foreign firms; high-quality professional services; efficient telecoms infrastructure; and the use of the English language.
In addition, Mr Maslakovic said that while some domestic financial services companies believe the City of London is over-regulated, foreign currency traders' "perception [is] of a proportionate approach in the regulatory climate".
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With the dollar limping along behind the once-lowly euro in recent weeks, the leading minds in the foreign exchange industry are grappling with the question of whether or not the greenback has entered a long period of decline.
Sunday, May 24, 2009
China needs reforms for growth mode shift
China should reform its social security system in a bid to boost domestic demand and transform the growth mode that relies too much on exports, economists said in Beijing Tuesday.
Vivek Arora, IMF's chief representative in China, told a financial forum that China will have to rely more on domestic consumption if it seeks to repeat its economic miracle over the past 30 years.
Exports, the pillar of China's growth, collapsed late last year as the major markets, including the United States, Japan and the European Union, entered recession.
Economists warned that it is not easy to revive Chinese economy by boosting domestic demand as many citizens are unwilling to spend because of the lack of sufficient social security.
"China should carry out social security reforms, such as in medical care, pension fund and education, to reduce economic uncertainty and boost higher spending," Arora said at the two-day China Finance Summit, which ends Wednesday.
He acknowledged that China's economic data for March and April has shown signs of recovery as its 4-trillion-yuan ($586 billion) stimulus package fed through the economy.
The infrastructure-focused government spending could ease the slowdown in the short term, but it might not be the solution in the long run, Arora stated.
Pier Carlo Padoan, deputy secretary of the OECD, told Xinhua that many countries need to change their growth models and in China, the government should improve social security for that purpose.
Padoan added that he is convinced that China will succeed in transforming the growth mode to rely more on domestic consumption.
Eric Maskin, the 2007 Nobel Prize Laureate in Economics, told reporters that he anticipated the high saving rate in China to turn into more domestic consumption.
China's saving rate rose to 49.9 percent in 2007 from 37.5 percent around 1998, compared with 4.2 percent in the United States in February this year.
Arora added that China should encourage major banks to provide more funding to small and medium-sized enterprises (SME) to help them ride out of the crisis.
Chinese banks usually lend to big state-owned enterprises and infrastructure projects while shying away from SMEs for fear of bigger bad loan risk.
Arora said that despite the slowdown, China might continue to be the largest contributor to the world's economic recovery because many other major economies see their GDP contracting.
The IMF official said the global economy will not repeat the Great Depression in the 1930s as the countries worldwide have taken forcible and coordinated efforts to tackle the crisis.
Maskin said the global financial crisis might come to an end by the end of the year and the financial market will return to normal again next year. However, he admitted that it will take longer for the real economy to recover.
The Monetary Breakdown of the West
How to return to the Golden Age? The sensible thing to do would have been to recognize the facts of reality, the fact of the depreciated pound, franc, mark, etc., and to return to the gold standard at a redefined rate: a rate that would recognize the existing supply of money and price levels. The British pound, for example, had been traditionally defined at a weight which made it equal to $4.86. But by the end of World War I, the inflation in Britain had brought the pound down to approximately $3.50 on the free foreign exchange market. Other currencies were similarly depreciated. The sensible policy would have been for Britain to return to gold at approximately $3.50, and for the other inflated countries to do the same. Phase I could have been smoothly and rapidly restored. Instead, the British made the fateful decision to return to gold at the old par of $4.86. [2] It did so for reasons of British national "prestige," and in a vain attempt to re-establish London as the "hard money" financial center of the world. To succeed at this piece of heroic folly, Britain would have had to deflate severely its money supply and its price levels, for at a $4.86 pound British export prices were far too high to be competitive in the world markets. But deflation was now politically out of the question, for the growth of trade unions, buttressed by a nationwide system of unemployment insurance, had made wage rates rigid downward; in order to deflate, the British government would have had to reverse the growth of its welfare state. In fact, the British wished to continue to inflate money and prices. As a result of combining inflation with a return to an overvalued par, British exports were depressed all during the 1920s and unemployment was severe all during the period when most of the world was experiencing an economic boom.
How could the British try to have their cake and eat it at the same time? By establishing a new international monetary order which would induce or coerce other governments into inflating or into going back to gold at overvalued pars for their own currencies, thus crippling their own exports and subsidizing imports from Britain. This is precisely what Britain did, as it led the way, at the Genoa Conference of 1922, into creating a new international monetary order, the gold-exchange standard.
The gold-exchange standard worked as follows: The United States remained on the classical gold standard, redeeming dollars in gold. Britain and the other countries of the West, however, returned to a pseudo-gold standard, Britain in 1926 and the other countries around the same time. British pounds and other currencies were not payable in gold coins, but only in large-sized bars, suitable only for international transactions. This prevented the ordinary citizens of Britain and other European countries from using gold in their daily life, and thus permitted a wider degree of paper and bank inflation. But furthermore, Britain redeemed pounds not merely in gold, but also in dollars; while the other countries redeemed their currencies not in gold, but in pounds. And most of these countries were induced by Britain to return to gold at overvalued parities. the result was a pyramiding of U.S. on gold, of British pounds on dollars, and of other European currencies on pounds--the "gold-exchange standard," with the dollar and the pound as the two "key currencies."
Now when Britain inflated, and experienced a deficit in its balance of payments, the gold standard mechanism did not work to quickly restrict British inflation. For instead of other countries redeeming their pounds for gold, they kept the pounds and inflated on top of them. Hence Britain and Europe were permitted to inflate unchecked, and British deficits could pile up unrestrained by the market discipline of the gold standard. As for the United States, Britain was able to induce the U.S. to inflate dollars so as not to lose many dollar reserves or gold to the United States.
The point of the gold-exchange standard is that it cannot last; the piper must eventually be paid, but only in a disastrous reaction to the lengthy inflationary boom. As sterling balances piled up in France, the U.S., and elsewhere, the slightest loss of confidence in the increasingly shaky and jerry-built inflationary structure was bound to lead to general collapse. This is precisely what happened in 1931; the failure of inflated banks throughout Europe, and the attempt of "hard money" France to cash in its sterling balances for gold, led Britain to go off the gold standard completely. Britain was soon followed by the other countries of Europe.
Britain, China strike stock market deal
China and Britain agreed on Monday to prioritize opening China's stock markets to foreign companies and to arrange for more Chinese firms to list on London exchanges.
No timetable has been set for opening China's stock markets but British officials said HSBC was at the forefront of negotiations. They emphasized an urgency to make it easier for Chinese firms to float in London within months.
"We have agreed actions to support British companies listing in China and Chinese companies listing in the UK," British finance minister Alistair Darling told reporters after meeting Chinese Vice Premier Wang Qishan in London.
There are about 70 Chinese firms listed on London's stock exchanges and Britain wants to raise that total to 100 by 2010.
"We'll consider opening the foreign exchange control when foreign companies are allowed to list and trade," Hu Xiaolian, head of China's State Administration of Foreign Exchange, told reporters.
"But we also have to consider the overall balance of foreign currency flows."
Boosting trade
Britain and China have a bilateral trade target of $60 billion by 2010 and Wang highlighted sectors such as aerospace, biotechnology, pharmaceuticals, electronics and environmental protection as areas that were key to achieving that goal.
"Are we reaching the bottom of the crisis yet? No one I have spoken to can confidently say so. This is because the credit markets have not restored their confidence," he said.
Hu, who is also a vice governor of the People's Bank of China, said there were still "elements of uncertainty" in the global economy.
"Although there are signs of recovery, it is yet to be concluded whether these are the results of governments' stimulus measures or the outcomes of a systematic recovery," she added.
"For China, it's a different story. Our banking system remains healthy," she said.
Darling said his talks with Wang showed the importance of the UK-China relationship.
The two pledged to push ahead with promises made at the London G20 crisis summit in April to do whatever is necessary to restore growth, to expand the International Monetary Fund's emergency funds and to overhaul the financial system.
"We urge the IMF and World Bank to expedite governance structure reform, work out an explicit timetable and roadmap," they said in a joint statement outlining their agreements.
Wang also held talks with British Prime Minister Gordon Brown, focusing on world trade negotiations, climate change and G20 commitments.
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Friday, May 22, 2009
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US Dollar / Swiss Franc/ Canadian Dollar/ Japanese Yen
The USDJPY is approaching 93.50…a break below there would completely clear the head and shoulders top that has formed since March. The triangle count that I have presented in recent days is still valid but becoming less probable by the day. At this point, remaining below 96.71 keeps the near term trend pointed down.
Big picture, there are 5 waves up from the 2007 low of .9050. The decline from 1.3068 is the correction (either a b wave of a 2nd wave) of that advance. The first level of potential support is the former 4th wave extreme at 1.1459. Fibonacci support is then at 1.1060 and 1.0590. I wrote yesterday that “a drop below 1.1475 could complete a double zigzag (7 waves). The new low would create divergence with RSI as well so a low and reversal is possible within the next several days.” Although there is not enough evidence to suggest that a low is in place yet, strength is what I am looking for. If near term structure confirms a low (5 waves up), then I’ll turn bullish.
Whereas the EURUSD has yet to exceed its March high of 1.3742, the USDCHF has already dropped below its March low of 1.1157. In other words, minimum expectations have been met for wave Y. One more low could complete 5 waves down from 1.1265 and give way to a bottom and reversal. A rally above 1.1087 would suggest that a low is already in place.
Big picture, there are 5 waves up from the 2007 low of .9050. The decline from 1.3068 is the correction (either a b wave of a 2nd wave) of that advance. The first level of potential support is the former 4th wave extreme at 1.1459. Fibonacci support is then at 1.1060 and 1.0590. I wrote yesterday that “a drop below 1.1475 could complete a double zigzag (7 waves). The new low would create divergence with RSI as well so a low and reversal is possible within the next several days.” Although there is not enough evidence to suggest that a low is in place yet, strength is what I am looking for. If near term structure confirms a low (5 waves up), then I’ll turn bullish.
Whereas the EURUSD has yet to exceed its March high of 1.3742, the USDCHF has already dropped below its March low of 1.1157. In other words, minimum expectations have been met for wave Y. One more low could complete 5 waves down from 1.1265 and give way to a bottom and reversal. A rally above 1.1087 would suggest that a low is already in place.
Australian Dollar / US Dollar-New Zealand Dollar / US Dollar
I wrote yesterday that “wave v of C (and therefore wave C) as well as the entire rally from the October low is close to complete. The risk of a top and reversal is high.” I favor weakness and there is short term resistance at .7720. Coming under the ii-iv support line would significantly increase the likelihood that a top is in place.
The NZDUSD is lagging the AUDUSD. That the NZDUSD has not made a new high and the AUDUSD has may mark a non-confirmation…a divergence. There is divergence as well with daily RSI. Structurally, the NZDUSD rally from .5831 may be a truncated 5th wave (wave v of C in this case). I am on the lookout for a top and reversal.
The NZDUSD is lagging the AUDUSD. That the NZDUSD has not made a new high and the AUDUSD has may mark a non-confirmation…a divergence. There is divergence as well with daily RSI. Structurally, the NZDUSD rally from .5831 may be a truncated 5th wave (wave v of C in this case). I am on the lookout for a top and reversal.
Euro / US Dollar
I wrote yesterday morning that “the complex correction count, in which wave Y is underway from 1.2884, is the more likely candidate at this point. Near term, the decline from 1.3722 was confirmed as corrective (3 waves) when 1.3667 was exceeded. Near term structure is bullish above 1.3583. Coming under there would signal a bearish opportunity.” The EURUSD reached 1.3838 (an Elliott Wave extension is at 1.3840) in European trading before coming back slightly. Looking at very short term structure, one more high (just above 1.3838) looks likely in order to complete 5 waves up from 1.3420. Since neither wave 1 or 3 of the impulse is extended (wave 3 is slightly longer than wave 1 though), wave 5 could extend as high as high as 1.4100 (where wave 5 would = 1.618 x wave 1). Either way, I am on the lookout for a top and reversal IF price rallies above 1.3838. A drop below 1.3658 would suggest that a top is already in place at which point a bearish bias would be warranted against the high.
EURUSD
With a break and close above its key overhead resistance located the 1.3720/38 levels, Mar 04’09/May 13’09 highs seen on Wednesday, resumption of its short term uptrend off the 1.2456 level, its Mar 04’09 high has been triggered. This development now leaves the pair targeting higher prices towards its Jan 05’09 high at 1.3964.Beyond the latter will call for further strength towards the 1.4363 level, its Dec 29’08 high. Its daily/weekly studies have turned higher and are bullish suggesting further strength. On the contrary, correcting lower will suggest a move towards the 1.3720/38 levels initially with an invalidation of there paving the way for more lower prices towards the 1.3446 level which is the location of its 200 daily emaand then the 1.3385 level, its April 30’09 high ahead of the 1.3213 level, its May 04’09 low. We envisage its eroded resistance at 1.3720/38 zone to reverse roles and provide support. On the whole, having resumed its ST uptrend, the pair now looks to head further higher
Support/Comments
1.3446 Daily 200 ema
1.3385 April 30’09 high
1.3213 May 04’09 low
Resistance/Comments
1.3720/38 Mar 04’09/May 13’09 highs
1.3964 Jan 05’09 high
1.4363 Dec 29’08 high
Support/Comments
1.3446 Daily 200 ema
1.3385 April 30’09 high
1.3213 May 04’09 low
Resistance/Comments
1.3720/38 Mar 04’09/May 13’09 highs
1.3964 Jan 05’09 high
1.4363 Dec 29’08 high
USDJPY
Having reversed its recovery gains,USDJPY is now seen challenging its key support at the 94.55 level, its May 18’09 low. Ultimately invalidating that level will suggest further declines towards the 93.54 level, its Mar 19’09 low and then its Feb 09’09 high at 92.40. Its daily RSI continues to support this view. Supports are located at the 95.62 level, its April 28’09 low and the 96.69 level, its May 19’09 high followed by the 99.73 level, its May 07’09 high and then the 101.43 level, its April 06’09 high. On the whole, with the 94.55 level almost invalidated, risk continues to point to the downside
Support/ Comment
94.55 May 18’09 low
93.54 Mar 19’09 low
92.40 Feb 09’09 high
Resistance/ Comments
95.95 Mar 30’09 low
97.62 Daily 200 ema
99.73 May 07’09 high
Support/ Comment
94.55 May 18’09 low
93.54 Mar 19’09 low
92.40 Feb 09’09 high
Resistance/ Comments
95.95 Mar 30’09 low
97.62 Daily 200 ema
99.73 May 07’09 high
Britain thrown to the pigs
The British pound is recovering from an earlier belly-ache brought on by the specter of a loss of its AAA credit rating. According to Standard & Poor's, there is a one-in-three chance that the government's incessant spending to stave off recession will end in a loss of its ranking. In that case it would be the fifth west European nation to lose its crown and would join the so-called PIGS of Europe – Portugal , Ireland , Greece and Spain . The pound fell to $1.5515 at its weakest point today after a New York close of $1.5753. By 10:00am in New York today the pound has recovered to back above $1.5700.
Britain is singled out as a basket case by the ratings agency on account of its rising debt burden, which is reaching 100% and the agency thinks that this might be more like a medium term event than anything else. The jolt today sent stocks in London down alongside the price of British gilts as well as the cost of insuring against gilt defaults.
S& P announced a reduced outlook on Britain moving its outlook from ‘stable' to ‘negative.' While four nations have already been stripped of AAA status, it's probably a simple function of the recession and to not reflect the deterioration in public finances across the western world would likely make a mockery of the already-tarnished ratings agencies. The industry has in the past been criticized for moving too little, too late to reflect weakening fundamentals at companies.
Britain is singled out as a basket case by the ratings agency on account of its rising debt burden, which is reaching 100% and the agency thinks that this might be more like a medium term event than anything else. The jolt today sent stocks in London down alongside the price of British gilts as well as the cost of insuring against gilt defaults.
S& P announced a reduced outlook on Britain moving its outlook from ‘stable' to ‘negative.' While four nations have already been stripped of AAA status, it's probably a simple function of the recession and to not reflect the deterioration in public finances across the western world would likely make a mockery of the already-tarnished ratings agencies. The industry has in the past been criticized for moving too little, too late to reflect weakening fundamentals at companies.
Canadian Dollar Could Break Recent Highs vs. US Dollar on Canadian Retail Sales Report
USD/CAD continued its consolidation above 1.1350 on Thursday, and on Friday morning the release of Canadian retail sales could offer a boost to the Loonie as spending is anticipated to have risen for the third straight month in March at a rate of 0.5 percent. Indeed, Canadian data has generally been better-than-expected latest, as the Canadian economy surprisingly added on employees during April and Ivey PMI rose above 50 - signaling an expansion in business activity - for the first time since October 2008. If the indicator rises in line with or more than expectations, the Canadian dollar could rally, but if retail sales actually fall, the currency could tumble.
Euro, British Pound Rally Continues Despite UK Outlook Downgrade by S&P
The British pound fell sharply this morning versus most of the majors, pushed GBP/USD down roughly 250 points toward 1.5550 and EUR/GBP up over 150 points toward 0.8850 on news that S&P lowered its outlook on UK debt to "negative" from "stable," but ultimately affirmed their long-term credit rating at AAA. Negative news for the currency also came from the UK's Office for National Statistics, which said that business investment contracted for the third straight quarter in Q1 at a rate of -5.5 percent, marking the steepest drop since Q1 2004 when investment plunged 21.38 percent. A breakdown of the report shows that manufacturers and non-manufacturers alike cut back on their investments, though construction firm reductions were less than in recent quarters at -9.0 percent. Ultimately, a lack of investment indicates a lack of confidence in future demand and the potential for further job cuts down the line. Positive news came in the way of a 0.9 percent rise in UK retail sales for the month of April, the second straight increase.
By the time the US trading session got going, though, a steady and steep plunge in the US dollar across the majors propelled both GBP/USD and EUR/USD above Wednesday's highs while EUR/GBP eased back down toward 0.8750. Now, daily charts of GBP/USD show that RSI is in overbought territory while EUR/USD is nearing that point, suggesting we could see reversals in the near-term, though another spike higher may not be out of the question.
By the time the US trading session got going, though, a steady and steep plunge in the US dollar across the majors propelled both GBP/USD and EUR/USD above Wednesday's highs while EUR/GBP eased back down toward 0.8750. Now, daily charts of GBP/USD show that RSI is in overbought territory while EUR/USD is nearing that point, suggesting we could see reversals in the near-term, though another spike higher may not be out of the question.
US Dollar Plummets as US Assets Lose "Safe Haven" Luster, Japanese Yen Mixed Ahead of BOJ Announcement
The combination of the plunge in the US dollar and Treasuries, vast drops in FX carry trades, the equity markets, and oil, along with a jump in the CBOE's VIX volatility index tells us one thing: the greenback and US assets in general may be losing their luster as "safe haven" assets. Following S&P's downgrade of the UK's economic outlook from "stable" to "negative" due to "deteriorating public finances," there has been increased discussion of the same thing happening to the US as national debt levels soar in light of the government's efforts to bail out Main Street and Wall Street. However, the Japanese yen did, to a certain degree, maintain its link with risk trends.
Meanwhile, the release of the US Labor Department's jobless claims report reflects very little change in the employment outlook, as initial claims fell by 12,000 during the week ending May 16 to 631,000 while continuing claims jumped by 75,000 during the week ending May 16 to another record high of 6,662,000. Indeed, these moves suggest that while the pace of job losses, as reflected by non-farm payrolls (NFPs, will slow further, the unemployment rate is likely to continue climbing higher. This was something projected by the Federal Reserve during their April policy meeting, as the FOMC meeting minutes showed that the range of forecasts shifted from 8.0 percent - 9.2 percent up to 9.1 percent - 10 percent.
In more positive news, the Conference Board's leading economic index jumped 1.0 percent in April, the first increase since June 2008 and the biggest increase since November 2005. The improvement was led by components such as average workweek, jobless claims, consumer goods orders, stock prices, interest rate spread, and consumer expectations. Also, the Philadelphia Fed's manufacturing activity index rose to -22.6 in May from -24.4, signaling a slower contraction.
Meanwhile, the release of the US Labor Department's jobless claims report reflects very little change in the employment outlook, as initial claims fell by 12,000 during the week ending May 16 to 631,000 while continuing claims jumped by 75,000 during the week ending May 16 to another record high of 6,662,000. Indeed, these moves suggest that while the pace of job losses, as reflected by non-farm payrolls (NFPs, will slow further, the unemployment rate is likely to continue climbing higher. This was something projected by the Federal Reserve during their April policy meeting, as the FOMC meeting minutes showed that the range of forecasts shifted from 8.0 percent - 9.2 percent up to 9.1 percent - 10 percent.
In more positive news, the Conference Board's leading economic index jumped 1.0 percent in April, the first increase since June 2008 and the biggest increase since November 2005. The improvement was led by components such as average workweek, jobless claims, consumer goods orders, stock prices, interest rate spread, and consumer expectations. Also, the Philadelphia Fed's manufacturing activity index rose to -22.6 in May from -24.4, signaling a slower contraction.
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