Forex

EUR/USD Continues Way Up on Yesterday News

2009-03-20T00:59:00.000-07:00

EUR/USD continued its seemingly unstoppable growth today after the Federal Reserve pledged to buy the U.S. treasuries with the printed money yesterday. The fundamental releases were quite mixed today and couldn’t affect the dollar’s fate. EUR/USD is now trading near 1.3698.

Initial jobless claims were at 646k last week — down from 658k reported for a previous week and better than 655k expected.

Leading indicators index decreased by 0.4% in February, following 0.4% growth in January, but they still performed better than the expected decline by 0.6%.

Philadelphia Fed index rose from -41.3 to -35 in March. It was expected to move up to -39.

Tags: initial jobless claims, leading indicators, Philadelphia Fed

Archive for the 'Major Currencies' Category

2009-03-19T12:04:00.000-07:00

Swiss Bank Fulfills Promise of Forex Intervention, Franc Collapses

Mar. 17th 2009

Last week, the Forex Blog concluded a post on the Swiss Franc by suggesting that the Swiss National Bank (SNB) could artificially depress the value of its currency, which had “not just posted strong gains against the euro since late August but has gained 8% on a trade weighted basis.”

The very next day, the SNB followed its widely anticipated rate cut by announcing that it would indeed intervene in forex markets, “implementing” a decision to buy foreign currencies. The Swiss Franc immediately fell into a tailspin, falling 7 units against the Euro, and more than 3 against the Dollar. According to one trader, “the way this was communicated was intended at maximizing its shock value.” By the end of the week, the Franc had posted a record decline, as investors remained alert to the possibility of further invention.

This is the first ’solo’ intervention since 1992 by the SNB, which has “followed a noninterventionist policy when it came to its currency, occasionally hinting at interventions but never following it up. It remained on the sidelines in September 2001 when the euro traded even lower than its present rate, at 1.44 Swiss francs.” It is also the first intervention by any Central Bank since 2003, when Japan intervened unsuccessfully to try to halt the rise of the Yen.

Evidently, the SNB felt justified in its decision not only because of a deteriorating economy, but more importantly because of monetary conditions. Inflation is now projected to dissappear by 2010, and may even “slow to the point where prices broadly fall.” Traders also speculated that the move was designed to relieve downward pressure on Eastern European economies, whose economic woes are being compounded by the fact that much of their debt is denominated in Swiss Francs.

It is doubtful that Switzerland will receive much sympathy from other countries, nearly all of whom have thus far refrained from forex intervention in spite of widespread economic contraction and the risk of deflation. In the words of one analyst, “It is troubling that a country with a current surplus larger than 10% of GDP feels compelled to depreciate its currency.”

The greater concern is that this could ignite some kind of “currency war,” where Central Banks around the world compete with each other to see who can most debase their respective currency. Traders are already speculating that the Bank of Japan could be next: “The BoJ should pay close attention to the SNB’s actions, given that both central banks have expressed a desire to see their currencies weaken.”

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2007-12-25T04:35:00.000-08:00

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An Introduction to Forex

2007-12-25T04:34:00.002-08:00

The video above is an introduction to our six-film series. It explores the whys and wherefores of international financial markets with an emphasis on the FOREX currency market. The film introduces the main market participants and the factors which contribute to fluctuations in exchange rates. The film also explains how it's possible for anyone to buy and sell currency on Forex in order to make a profit. Our introduction to Forex trading contains a wealth of useful information presented in an engaging manner, and is ideal for the novice trader and anyone interested in the workings of the Forex market. Sign up for free in the Member Area to find other great films which will teach you how to trade on Forex.

Is Forex Trading Risky?

2007-12-25T04:34:00.001-08:00

The Forex market, just like any other financial market, can be risky if one does not follow a conservative trading strategy. Markets can move against you, just like in stocks or futures trading, and you can lose your entire investment. Therefore, you should not invest more than you can afford to lose. Forex Club does not recommend trading with a leverage of higher than 20:1, and invites you to follow our unique training program, which consists of 6 hours of online video training and practice trading on a demo account with 100,000 virtual dollars in it.

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What is Leverage?

2007-12-25T04:33:00.001-08:00

Global currencies constantly fluctuate, but these fluctuations are not always significant. To multiply the buying power, leverage is offered on the OTC Forex. Forex Club offers leverage of up to 100:1. This means that for every dollar you invest, you receive the purchasing (or selling) power up to 100 units of another currency.

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What is Forex?

2007-12-25T04:26:00.000-08:00

Forex (Foreign Exchange) is the market where national currencies are traded against one another.

Modern information technologies have enabled individual investors (like yourself) to trade Forex online, creating off-exchange or over-the-counter currency trading (OTC Forex).

Forex is one of the largest markets in the world. With 1 to 3 trillion US dollars traded every day, Forex trading volumes are 6 to 8 times larger than the trading volumes of all the stock exchanges worldwide combined.