Month: November 2010

According to its new accommodation policy, the US Fed Reserve is going to buy the treasuries to the sum of $600B.

The Fed Reserve reports that it is going to spend $75B every month to purchase the long-term treasury bonds. Such a measure may have a negative impact on the creditworthiness of the United States.

At the same time the Fed Reserves keeps devaluing USD.

In such a situation the British Pound currency rate at Forex is demonstrating positive dynamics.

Having broken through the high, the GBPUSD rate keeps on growing while developing short wave a (C ) /C.
Should the downward retracement come out of the MF Sloping Channel and break through the MF pivot at 1.6051, the wave started at 1.5961 will be completed. The pivot at 1.5961 is now defending the whole wave from 1.5651.

Today’s news (Nov 4^th – GMT):
12:00     GBR – Bank of England Rate Decision
12:30     USA – Jobless claims, Nonfarm Productivity, Unit Labor Costs
12:45     EU – European Central Bank Rate Decision
13:30     EU – ECB Press Conference

Levels of Resistance and Support:
1.6364 – 138.2% + 176.4%
1.6307 – 161.8% + 161.8%
1.6226 – 123.6% + 138.2% + 200%
1.6183 – the current price
1.6108 – MF pivot
1.6051 – MF pivot
1.6000 – Oanda’s buy limits

You are free to discuss this article here:   forum for traders and investors

Text: Ivan Zhigalov, an expert of the Department of studying Masterforex-V trading system
– Ask it here »

The term Forex (FX) stands for foreign exchange. Basically it is a special financial market assigned for foreign exchange. Roughly translated it means a decentralized market wherein currencies of the numerous countries of the world are exchanged. This over the counter exchange allows two countries to be engaged in business with one another, and the ability to pay each other in the countries’ respective currencies. For example, if India and USA are engaged with each other in business, then USA pays India in rupees the equivalent of dollars. The exchange of currency is a very attractive feature for the companies that operate on both levels. A number of factors have made the Forex a much better trading market that the other financial markets of the world. It is because, it has accessibility of traders in nearly all currencies, heightened sensibility to a large and continuously changing number of factors, that the Forex scores over the other financial markets of the world.

The history of currency can be traced back to the middle Ages to people, who devised the plan of this foreign exchange. It began to take place when the merchants discovered the “bills of exchange” that allowed third party payments and therefore lent flexibility to the trading market and market deals. The twentieth century found the development of a steady and contemporary foreign exchange scenario, due to relative stability.

It was during the 1930s that London had a firm foothold in the world economy, and all the currencies of the world were quoted against the British pound. It served as a reserve to keep money. Since during those days telex machines or cables were used in order to make foreign exchanges, the British pound was nicknamed Cable. It was after World War II, when the British economy was completely destroyed, USA dollars became the prominent currency of the world market. As USA was the only country left unscarred by war, it has finally risen to become one of the leading economies in the world and the currencies of the other countries are quoted against the US dollars.

Due the allowance of the free flow of currency against each other, the Forex market has experienced a growth in volume. This particular form of trading is mostly performed in a decentralized manner, and only the currency future and options serve as exceptions. The main factors that influence the growth of volume in foreign exchange are interest rate volatility, Business Internationalization, Increasing of Corporate Interests, and Increasing of Trader’s Sophistication, Developments in Telecommunications, and Computer and Programming Development.

The Forex Online Trading has become one of the easiest ways for trading currency. Online FX Advantage is now available. Today anyone can have a Live Trading Account and can understand forex with ease.

Today there are a lot of forex brokers who can make life easy for you and your investments.

About the Author

http://www.fxcentral.net/

*Note: this is a back to basics article..!*

If you’ve ever heard your forex trader or anyone in the finance department talk about “counter currencies”, “majors” or even more specifically “EUR/USD” pairs then it is quite likely that they are talking in forex speak about currency pairs. In this article we have a brief look at the formulation of a currency pair, how they are used and the most widely used currency pairs.

A currency pair is another way of looking at exchange rates between two different currencies. Two currencies are used to give a ratio of value based on the conversion of one currency into the other. They are comprised of two parts – the base currency and the counter currency – but there is no better way of exploring this than looking at an example!

EUR/USD 1.240

Above you will see the currency pair known as the “Fibre”. More on why it is called a fibre later..! Firstly we can see that there are two currencies involved – the Euro and the American Dollar. The above pretty much says the following:

“1 unit of the base currency Euro will get you 1.24 units of the counter currency USD”

Pretty simple! The base currency is the Euro and the counter currency is the American dollar. When we trade 1 Euro we expect to get 1.24 dollars based on the ratio/quotation. If the quote changes to 1.26 then the Euro has increased in relative value. If the quote drops to 1.22 then the Euro has slipped in value.

Whilst the concept is simple the formulation of currency pairs still falls to quite a stringent structure. There are rules for forming a currency pair although they are more an established priority list rather than set by a body or organisation. Historically they were the result of ranking according to relative value with respect to one another however the introduction of the Euro changed the formulation. In 1999 the European Central Bank ensured that the Euro would have first precedence as a base currency when used in a currency pair. As such the priority list goes a little something like this…

euro

pound sterling

Australian dollar

New Zealand dollar

United States dollar

Canadian dollar

Swiss franc

Japanese Yen

Usually currency pairs are created in a hierarchical order – for example when talking about the rate between the USD and Canadian dollar you would use the following: USD/CAD 1.04. Or if looking for a pair of Australian dollar to British pound you would use GBP/AUD 1.59. The base currency is dictated by the hierarchy. The most widely used currency pairs are known as “Majors” and include the following currency pairs.

EUR/USD

EUR/USD

GBP/USD

AUD/USD

USD/CHF

Other currencies (the Minors) are generally quoted against one of the major currencies. Currency pairs that do not involve the USD are known as cross currency pairs with the exception of Euro pairs which are known as Euro Crosses.

By now I’m sure you are thinking about how to use these new found pairs in general conversation or shock horror in a trade conversation. There are three additional terms to think about – the spot rate (usually the rate of exchange based on the pair for that given moment in time), the spread and the pip. The spread and the pip are terms used by the forex trader. During a trade a currency is often offered at a sale price or “ask price” – the trader then puts in a “bid” price based which they hope is lower than the ask. The difference between the two rates is known as “the spread” and the quantity is known as a “pip”. If the pair quote for GBP/USD is 1.5709 at the bid rate but 1.5704 then the spread is 0.0005 GBP or 5 pips. Ideally you want to get as many pips as possible. Trading in large quantities is thus important when making money from trades but can obviously present some associated risks! Unsurprisingly a “bureau de change” makes their money from exchanges like this by ensuring the spread is wide.

So why is EUR/USD called a “fibre”? Some say that “fibre” probably follows the trend of other currency pair nicknames like the GBP/USD’s “cable” moniker. Cable was derived from the way in which data was transferred between the two countries (i.e. a huge cable under the Atlantic Ocean that synchronized the GBP/USD quote). It is quite possible that fibre reflects the fibre optic age of communications.

About The Author

Corporate FX is a privately owned company. Registered in 2001 and based on Cornhill in the City of London since 2007,
we are a market leader in supplying commercial forex trading services and
hedging strategies including trading Spot Forex.

By CountingPips.com

U.S. jobless claims increased by more than expected in the week that ended on October 30th, according to a release by the U.S. Labor Department today. Weekly initial jobless claims rose by 20,000 workers to a total of 457,000 unemployed workers. The 4-week moving average of unemployed workers decreased by 2,000 workers from the previous week to a total of 456,000.

Market forecasts were expecting jobless claims to number 440,000 workers following the prior week’s 437,000 revised number of claims.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending October 23rd decreased for the week. Continuing claims fell by 42,000 workers to a total of 4,340,000 unemployed workers. The 4-week moving average of continuing claims dropped by 42,750 workers to a total of 4,410,750.

By CountingPips.com

The day after the Federal Reserve decision to buy $600 billion of long-term treasuries through June 2011 has found the US dollar on the defensive across the board against the major currencies. The dollar has declined against the euro, British pound sterling, Swiss franc, Canadian dollar, Japanese yen, Australian dollar and the New Zealand dollar in today’s trading.

The US stock markets have been riding high today with the Dow Jones higher by over 150 points, the NASDAQ rising above 30 points and the S&P 500 increasing by over 15 points at about the halfway point of today’s session.

In commodities, gold has surged higher by $43.70 to trade at the $1380.80 level while oil has increased by $1.74 to level at the $86.43 mark.

Currencies hit notable highs vs. Dollar

• The euro has ascended today in the fx markets versus the dollar to trade above the 1.4200 exchange rate and has reached its highest trading level since January.

• The Australian dollar is trading at its all-time high against the American currency and has gone beyond parity as the AUD/USD trades over the 1.0125 level.

• The British pound sterling, like the euro, has also reached its highest rating level since January 2010 and as the pair touched the 1.6305 exchange rate.

• The New Zealand dollar trades at its highest level against the US dollar since the first half of 2008 and the NZD/USD is approaching the 0.8000 exchange rate

FOREX: AUD/USD Monthly Chart – The Aussie continues to fly high against the US Dollar in forex trading and today hit its all-time highest exchange rate since the currency floated freely in 1983.

By FxNewsIndia – The Indian rupee has increased against the US dollar to a six-month high point in today’s forex trading action. One day after US Federal Reserve announced a new round of quantitative easing and two days after the Reserve Bank of India raised interest rates, the Indian rupee has touched its highest exchange rate since late April 2010.

The USD/INR currency pair reached the 44.20 rupee per 1 US dollar exchange rate today for the first time since April 25th, according to currency data from Oanda. The dollar had exchanged as high as 47.57 rupee on September 7th before trending lower.

The US dollar has been under renewed pressure in the forex markets today after yesterday’s announcement that the Federal Reserve will be buying $600 billion in long-term treasury securities and reinvesting up to $300 billion of the proceeds from previous mortgage purchases in attempt to stimulate the US economy.

The Reserve Bank of India raised their interest rates on November 2nd to help fight the countries inflationary pressures. The rate hike was by 25 basis points and brought the lending repo rate to 6.25 percent and the reverse repo rate to 5.25 percent.

USD/INR – The US dollar falling to a little over six month low against the Indian rupee in forex.

About the Author

Article by FxNewsIndia.com

Another breakout alert Forex peeps! But this time it’s for the British pound! Chart-wise, the Cable or the GBPUSD pair has recently broken out from a cup and handle continuation pattern. A cup and handle pattern, as the name suggests, takes the shape of a cup (a bowl-like price action) with a small handle to its left. The price would most likely head higher especially now that it is able to move past the 1.6000 resistance (where the cup’s rim or the neckline also lies). So judging by the height of the cup and projecting it from the point of breakout (1.6000), the pair could at least reach 1.6700.

On the fundamental side, the US’s Fed’s decision yesterday to buy an additional $600 billion of Treasuries until June of next year to improve the country’s labor market and to prevent deflation has weakened the greenback. While the Fed’s previous expansive monetary policy had helped save the US from having a second great depression, the economy’s recovery since then has noticeably been anemic. Jobless rate still remains at a high of 9.6% while inflation only rise by a pale 0.1% in September (1.1% year-over-year). These purchases, according to the central bank, should enhance economic growth through lower borrowing costs. Having a low interest rate or borrowing costs, of course, lessens the attractiveness of the USD compared to the other major currencies.

On the UK’s side, the Bank of England also had their monetary policy decision today. But unlike the US Federal Reserve, the BOE decided not to follow the move of its US counterpart to do another round of government debt-buying. Rather, it just kept its interest rate unchanged at 0.50% and its asset purchase facility at £200 billion ($324 billion). The BOE reasoned that the UK’s economic condition is at a better state compared to the US with the former having a relatively high inflation reading of 3.1% year-over-year in September. The move not to follow the Fed had investors buying up the Sterling pound in exchange for the greenback. Note that the recent CPI reading exceeds the market’s 3.0% consensus. Therefore, the combination of a possible BOE rate hike in the future due to inflation and the Fed’s move to make interest rates in the US closer to zero would make the pound more appealing than the greenback.

More on LaidTrades.com …

By Forex Pros – The European Central Bank kept its benchmark interest rate unchanged for the 18th consecutive month in November, it announced on Thursday.

The bank said it was maintaining the benchmark interest rate at 1.00%, in a widely expected move.

ECB president Jean-Claude Trichet was to comment on the decision at a press conference later in the day.

Following the release of the data, the euro was up against the U.S. dollar, with EUR/USD gaining 0.77% to hit 1.4246.

Meanwhile, European stock markets were broadly higher. The EURO STOXX 50 soared 1.98%, France’s CAC 40 jumped 1.83%, Germany’s DAX leaped 1.58%, and the FTSE 100 climbed 1.71%.

About the Author

ForexPros.com
Forex Pros offers a diverse set of professional tools for trading in forex, futures and CFDs. These include real-time data streams, technical and fundamental analysis by in-house experts, and a widely used economic calendar.

By Russell Glaser – Following an upward correction in the value of the USD/CHF, the pair is resuming its long term down trend. The long term trend line from the last bearish trend is now serving as a support level. A breach below this could signal further weakness in the pair.

Looking at the USD/CHF daily chart, the pair underwent a bullish correction during the last two weeks of October. The pair broke the previous downward sloping trend line and rose as high as 0.9970 but failed to close above the resistance level at 0.9930.

From this point the pair has renewed its downward trend and yesterday made a close below the short term rising trend line of the bullish correction. This may signal an end to the upward movement in the pair and further gains for the Swiss franc.

Momentum is to the downside as shown by both the sharp decline in price over the last 3 days and the Momentum (14) line that has a negative slope and is now crossing below the 100 level which can be interpreted as a sell signal.

Support for the pair is found at the previous long term bearish trend line at 0.9650. A close below the previous trend line could propel the pair to the swing low on the daily chart at 0.9460.

Resistance is found at the pivot of 0.9730, the 50-day simple moving average at 0.9815, and in a range between the pivot at 0.9930 and the height of the correction at 0.9970.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.