Friday, 26 August 2011

Foreign Exchange Insight: GBP USD Poised ahead of Jackson Hole Symposium EUR Gains on Hope For Stability

The Pound Euro exchange rate (GBP EUR) is 1.1305. The Pound Dollar exchange rate (GBP USD) is 1.6324. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5550.

The pound sold off yesterday against most of the world's most actively traded currencies with CBI figures showing a slowing in demand in the UK economy. This has not helped in setting the tone into trade this morning with the headline Q2 GDP revised figures due for release today.

The UK Q2 GDP figures are not expected to be altered and will serve as a harsh reminder that the outlook for the UK economy is still bleak with any chance of the BOE raising interest rates being highly unlikely until the latter part of 2012.

The Jackson Hole Economic Symposium will take centre stage today as markets attempt to second guess whether Bernanke will hint at a requirement for further stimulus for the US economy. A third round of Quantitative Easing could help speed up the US economic recovery however is looking increasingly unlikely with markets buying into the USD aggressively yesterday.

It is somewhat unlikely that Bernanke will use the QE3 terminology at the Jackson Hole Economic Symposium, this would adversely affect the markets, more likely is that Bernanke may comment on aid packages to improve the functioning of struggling asset classes, fortifying liquidity and boost growth.

Markets will pay close attention to comments made from both key speakers Bernanke and Jean Claude Trichet. Traders will be looking for reassurance over financial stability in markets that have been dominated by uncertainty in the past couple of weeks. It is clear that conditions are worsening in the Eurozone and with ECB president Trichet attending some might hope for talks of a co-ordinated effort to try and resolve the current global instability. 

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USD To Face Sideways Price Action Ahead Of Major Event Risks

DJ FXCM Dollar Index
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index

USD_To_Face_Sideways_Price_Action_Ahead_Of_Major_Event_Risks_body_ScreenShot054.png, USD To Face Sideways Price Action Ahead Of Major Event Risks

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is 0.92% lower from the open after moving 98% of its average true range, and the reserve currency may continue to give back the advance from earlier this week as investors raise their appetite for risk. As the relative strength index pushes into oversold territory, the sharp decline may gather pace throughout the remainder of the day, and the index could fall back towards near-term support around 9405 as it gives back the advance from earlier this week. However, the USD may consolidate in the days ahead as we have the Federal Open Market Committee meeting minutes paired with the U.S. Non-Farm Payrolls report on tap for the following week, and the slew of event risks could heavily influence the greenback as market participants weigh the outlook for future growth.
USD_To_Face_Sideways_Price_Action_Ahead_Of_Major_Event_Risks_body_ScreenShot053.png, USD To Face Sideways Price Action Ahead Of Major Event Risks

Indeed, Fed Chairman Ben Bernanke talked down speculation for another round of quantitative easing, stating that central bank is not promoting new steps to stimulate the ailing economy, and the committee looks as though it will preserve a wait-and-see approach throughout the remainder of the year as policy maker expect the recovery to gather pace over the coming months. As Mr. Bernanke encourages Congress to support the real economy, the government may face increased pressures to employ additional fiscal stimulus, but the Fed may keep the door open to expand monetary policy further as the FOMC is expected to hold a ‘fuller discussion’ of tools as the rate decision next month. In turn, the USD may continue to consolidate in the week ahead, and the greenback may trade within a broad range until we get an clearer picture on what the central bank intends to do over the medium-term.
USD_To_Face_Sideways_Price_Action_Ahead_Of_Major_Event_Risks_body_ScreenShot055.png, USD To Face Sideways Price Action Ahead Of Major Event Risks

All four components advanced against the greenback, let by a 1.37% advance in the Australian dollar, and the high-yielding currency may continue to appreciate over the near-term as the central bank talks down expectations for lower borrowing costs. As Reserve Bank of Australia Governor Glenn Stevens continues to endorse the ‘mildly restrictive’ policy, it seems as though we will see the benchmark interest rate staying at 4.75% for the remainder of the year, and the central bank head may retain a neutral tone heading into 2012 as board members see a limited risk for inflation. In turn, the near-term rebound in the AUD/USD could gather pace in the days ahead, and the exchange rate may continue to retrace the sharp decline from earlier this month as the RBA remains fairly optimistic towards the economy. Nevertheless, market participants still see borrowing costs falling by more than 125bp over the next 12-months according to Credit Suisse overnight index swaps, and speculation for lower interest rates may continue to drag on the exchange rate as the economic docket shows a slowing recovery in the isle-nation.

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Is Forex suitable for me ?

If you would like to enter the planet of foreign exchange however take into account yourself as a uncertain starter, this piece of data can surely be of nice use to you.

Before we have a tendency to browse any longer, it's necessary for you to know that lack of understanding in context of the fundamentals of foreign exchange can lead you nowhere and you'll solely be risking your hard-earned cash. Forex coaching is an absolute should for each existing and potential trader and you're surely not an exception if you would like to form it huge within the world of foreign exchange.

For this, you'll access forex coaching books and foreign exchange guides or perhaps ask for help from an skilled and successful trader to urge abreast of the most recent forex market trends and learn the art of creating the correct choices at the correct time and place while not obtaining emotional regarding your investments.

It is additionally counseled that you simply strive forex trading with a demo account and not an everyday forex trading account so you gain some expertise before investing huge and taking huge risks. Besides data, you furthermore may ought to be in a very fine condition and match. will be} as a result of emotional stress and alternative conditions can seriously dent your forex prospects while not you even realizing it.

Patience could be a nice virtue to achieve success in forex trading as {there can|there'll} be times when your trades will show very little or no movements and you will even be losing out. you'll ought to pay quality time in understanding forex charts, trading platform, and market behavior. If you tend to travel greedy once many wins, you've got a high probability of losing because the greed issue will land you into a trade when it's not the most effective time as a result of you will suppose that alternative traders are creating huge cash and you would like to affix them too. If you worry regarding failure, you're sure to face losses as worry can typically induce you to form emotional and wrong choices. Forex could be a technical and scientific business and you only can't be emotional regarding it.

The best factor that you simply will do is to trade with alittle quantity for 5-8 months and put on to an everyday forex trading account after you see profits returning your method and losses reducing on an everyday basis. As so much as your health thinks about, you wish to bear medical examinations on an everyday basis and keep an in depth check on endocrine hormones like Thyroid, Adrenaline, and Noradrenalin. Practicing mind-calming techniques like Yoga, Hypnotism, and Meditation could also be helpful to remain centered and aloof from worldly tensions. so as to stay a check on the greed issue, you wish to watch a high sense of discipline and mind management. you wish to prevent trading once a certain time or limit, no matter whether or not you're winning or losing.

If you're thinking that that you simply will have answers to those issues and act accordingly, Forex trading is all for you else it's time for you to try to to a rethink and leave forex for a short time before things are corrected.
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Forex History

What is forex trading? The creation of the gold commonplace financial system in 1875 marked one among the foremost vital events within the history of the forex currency market. As countries every hooked up an quantity of their currency to be equal to an oz of gold the changing worth of gold between 2 currencies became the primary standardized suggests that of currency exchange in history.
World War I brought with it the breakdown of the gold commonplace thanks to the most important European powers not having enough gold to exchange for all the currency that the governments were printing off at the time so as to finish massive military comes. The gold commonplace was used once more between the wars, however by the beginning of World War II most countries had once more dropped it, but gold never lost its spot because the final sort of financial worth.
In 1944 the Bretton Woods System was implemented and led to the formation of mounted exchange rates that resulted within the U.S. greenback replacing the gold commonplace because the primary reserve currency. This additionally meant that the U.S. greenback became the sole currency that may be backed by gold. In 1971 the U.S. declared that it'd now not exchange gold for U.S. bucks that were held in foreign reserves, this market the tip of the Bretton Woods System.
It was this break down of the Bretton Woods System that ultimately led to the principally international acceptance of floating foreign exchange rates in 1976. This was effectively the “birth” of the present foreign currency exchange, though it did become widely electronically traded till concerning the mid Nineties.
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Most Traded Forex Currencies

1. United States dollar = 84.9%
2. Euro = 39.1%
3. Japanese yen = 19.0%
4. Pound Sterling = 12.9%
5. Australian dollar = 7.6%
6. Swiss franc = 6.4%
7. Canadian dollar = 5.3%
8. HongKong dollar = 2.4%
9. Swedish Krona =2.2%
10. New Zealand = 1.6%
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What is Forex trading ?

Forex trading because it relates to individual retail investors and traders is that the speculation of the speed of a selected currency try. for instance, traders who assume that the speed of the EURUSD will go up may decide to buy, or go long, the EURUSD in the forex market. If a trader thinks the currency rate or price will go down they will sell, or go short, the actual currency try they are interested in. All forex trading  done by retail traders and investors must be facilitated by a forex broker, there are several broker’s available on the net, an easy Google seek for the term “forex broker” will offer you several to pick from.
Typically, forex trading strategies can take variety of various forms, and it's extremely up to the individual trader to pick the strategy that works the most effective for them. However, these are a few of the additional widespread forex trading methods:
Indicator primarily based trading strategies – these trading strategies involve analyzing “lagging” indicators to do and predict future price movement of a forex currency try.
Robot trading systems – Forex trading “robots” have recently become quite widespread on the net, these robot trading systems are basically computer programs that tell you specifically where to enter and exit and drastically cut back the need for human interaction.
Scalping – this is a short-term trading strategy where traders jump in and out of the market quickly for little profits.
Price action primarily based directional speculation – The trading method of price action may be a forex trading strategy that involves analyzing a “clean” or indicator-free price to chart build one’s trading decisions. This method of trading can be learned through a high quality price action forex trading course.
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Who is involved is Trading currencies ?

Daily turnover inside the world's currencies comes from 2 sources:

Foreign trade (5%). companies get and sell product in foreign countries, and convert profits from foreign sales in to domestic cash.
Speculation for profit (95%).
Most traders target the foremost necessary, most liquid cash pairs. "The Majors" embrace US dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian dollar and Australian dollar. In fact, over eighty fifth of each day foreign exchange trading happens inside the most important cash pairs.
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What is Forex ?

"Forex" stands for foreign exchange; it is also referred to as FX. during a forex trade, you get one currency while simultaneously selling another - that's, you're exchanging the sold currency for the one you're shopping for. The foreign exchange market is an over-the-counter market.

Currencies trade in pairs, just like the Euro-US dollar (EUR/USD) or US dollar / Japanese Yen (USD/JPY). in contrast to stocks or futures, there is not any centralized exchange for forex. All transactions happen via phone or electronic network.
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