THE BIRTH OF FOREX

Forex is a relatively new market and came about in the 1970s, and it is a direct result of various international agreements concerning world currencies. Specifically these were the Bretton Woods Agreement of 1944, the Smithsonian Agreement of 1971 and the European Joint Float of 1972.

Bretton Woods Agreement
44 nations were involved in drafting the Bretton Woods Agreement. Their brief was to pave the way to post-war economic recovery. An essential aspect of this was to devise a sustainable way of enabling efficient currency exchange and encouraging international trade to avoid the protectionist attitudes following WW1 that had eventually led to the Great Depression. The outcome was the birth of the International Monetary Fund (IMF) and the World Bank. All the currencies of participating nations would be tied to the defined parities (plus or minus 1%) with the US dollar which itself would be tied to the value of gold. Outside these, exchange rates could only be changed if agreed by the IMF. For a while this worked, but there were problems. The system was found to be too restrictive on nations that wished to follow their financial policies and exchange rates and as a result, currency flows were distorted. This came to a head in 1971 when the US government suspended the convertibility of gold and the dollar and introduced a surcharge of 10% on imported goods.

Smithsonian Agreement
The problems with the Bretton Woods Agreement necessitated a change in international currency regulations and the agreement was modified to allow increased levels of fluctuation of currency values to plus or minus 2.25% of the value of the US dollar. The Smithsonian Agreement worked for a short period of time but it was recognisably flawed.

European Joint Float
This new approach which came about in 1972 was known as the European Joint Float. This meant that European currencies could float as a block against the dollar, but parity would be maintained between them. This eventually developed into the European Monetary System (EMS).

Eventually even the mechanisms of the European Joint Float failed and nowadays the values of currencies fluctuate without any restriction. This provides an exciting opportunity for currency trade and is the basis for Forex which is currently experiencing a significant amount of exposure as a result of people capitalising on the fluctuating currency exchange market.

HOW TO READ FOREX QUOTES

10/08/09 | 0 Comments

When reading a quote of Forex, you need to look for two specific numbers, the base and the quote.
Typically, a Forex quote will appear in the following format:
USD JPY 1/97.42
The number on the left of the slash is the base number. The base is always “1″ and represents, in this case, the US Dollar. The [...]

WHY TRADE ON THE FOREX MARKET?

29/04/09 | 0 Comments

Trading on the Forex market can be used to create a sizable investment by learning about the market and making smart trades through the duration of the investment.
There are many reasons why the Forex market is so popular and many people have chosen to trade on it. These reasons are:
The Forex market offers a [...]

LEARNING TO TRADE IN THE FOREX MARKET

12/04/09 | 0 Comments

Learning to trade in the Forex market does not have to be difficult. There are a variety of principals that should be learned and of course the market should be researched beforehand by studying trends, current predictions and rates within the global economy, but making the trade is the easy part of trading in the [...]

FOREX TRADING

FOREX TRADING: OPEN ALL HOURS

Unlike other equities markets, the foreign exchange markets are a 24 hour trading platform, following the trading hours of each of the world’s major financial centres as the world turns.

Whilst each of the major Forex trading floors, in Sydney, Toyko, London and, New York are individually only open for nine hours a day, their opening hours overlap to create a seamless 24 hour trading cycle.

In truth, the bulk of the trading takes place when the London and New York centres are open for business, London being the busier of the two, handling around 32% of Forex trades.

Sydney opens trading at 10pm (GMT) although little activity takes place until the Tokyo market opens at midnight, signalling the bulk of far-Eastern currency trades.

With Sydney closing 7:00am (GMT), Tokyo is left to trade alone before London opens at 8:00am.

As the trades pick up, Tokyo closes its doors at 9:00am to leave London as the sole trading floor until New York opens at 1:00pm. It is that overlap between the New York trading floor opening and the London floor closing at 5:00pm when the bulk of Forex trading takes place.

New York then closes at 10:00pm, just in time for the opening of the Sydney exchange at 10:00pm.

WORLD FOREX

WORLD FOREX: Dollar Recovers Vs Yen, But Euro Pushes High

NEW YORK (Dow Jones)--The dollar struck back against the yen Friday after briefly touching a one-month low, on a day when traders leaned towards higher-yielding currencies.

The euro saw gains against the dollar and yen, spurred by an uptick in crude oil futures and modestly bullish remarks from Federal Reserve Chairman Ben Bernanke at an annual economic symposium in Jackson Hole, Wyo.

As a risk-sensitive currency, the euro is usually bid up when positive economic news feeds risk appetite.

http://dowjoneswebservices.com/chart/view/2632

Lingering concerns about the the sustainability of the global economic recovery and light summer trading ...

FOREX-Euro hits two

FOREX-Euro hits two-week low on risk aversion, stocks drop

* Euro hits 2-week low against dollar and yen

* Global shares, oil prices stumble, denting risk demand

* NY factory activity surges but consumer worries persist

* Japan Q2 GDP up; China cuts Treasury holdings

(Adds details; updates prices)

By Vivianne Rodrigues

NEW YORK, Aug 17 (Reuters) - The euro hit a two-week low against the dollar and neared a one-month trough against the yen on Monday as world stock markets fell and doubts about a U.S. recovery prompted investors to cut exposure to risk.

The yen rallied across the board as investors bought it as a safe haven, while a slide in oil prices hit currencies such as the Australian dollar, which retreated from recent 10-month highs against the greenback.

A multimonth equity rally started to sputter late last week after data showed U.S. consumer sentiment declined for a second straight month. Stocks in Asia responded Monday by falling more than 3 percent and the sell-off continued in Europe and on Wall Street.

Data showing Japan's economy grew between April and June for the first time in five quarters was largely ignored, and a surge in New York state factory activity had only a modest effect.

"People have started to feel that the market rally moved well ahead of the actual economic improvement," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

"The rebound in the S&P has been its fastest in the post-war (period), and so people are getting nervous that things have come too far, too fast," said Rob Minikin, senior currency strategist at Standard Chartered in London.

In late afternoon trading in New York, the euro was down about 0.9 percent at $1.4079 EUR=, just above a two-week low. It was down 1.5 percent at 132.81 yen EURJPY= after hitting its lowest level since July 22. The dollar fell 0.5 percent to 94.45 yen JPY=.

A pullback in risk appetite in the near term should favor the dollar, Brian Kim, a currency analyst at UBS AG said in a note.

Sterling hit a one-month low earlier and was last down 1.2 percent at $1.6337 GBP= while the Australian AUD= and New Zealand dollars NZD=each fell sharply against the greenback. Continued...

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WORLD FOREX

WORLD FOREX: Dollar Hits August High Vs Euro, Low Vs Yen

NEW YORK (Dow Jones)--The dollar rose to it highest level this month against the euro on Monday but fell to an August-low versus the yen, as investors sought the safety of lower-yielding assets amid a drop in global stock indices.

The appetite for risk retreated after disappointing U.S. data releases last week and another U.S. bank failed over the weekend.

This has dragged down world stocks and sent traders back to the currencies in which they typically use to fund riskier bets - the dollar and yen. As a result, the euro declined to $1.4045 - its lowest level since ...

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Learn how to make money with forex trading. Become a successful trader in the worlds most powerful financial market. Foreign Exchange, FX or Forex in short, is the largest financial market in the world. It is a market that until recently has been out of reach for private individuals and only available for big institutional investors and corporations. It is now possible to enter the giant forex market and get a slice of the profits, but that is most likely not something your broker och bank has told you, because most people are unaware of the possibilities.

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Forex Trading World

Enter the world of forex trading

Learn how to make money with forex trading. Become a successful trader in the worlds most powerful financial market. Foreign Exchange, FX or Forex in short, is the largest financial market in the world. It is a market that until recently has been out of reach for private individuals and only available for big institutional investors and corporations. It is now possible to enter the giant forex market and get a slice of the profits, but that is most likely not something your broker och bank has told you, because most people are unaware of the possibilities.

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Forex Trading

The Risk Today:

EurUsd After a brief look above 1.4291 to the next resistance at 1.4338, the pair fell back and closed the 4 hourly bar yesterday evening at 1.4289. This pattern has been repeated a couple more times overnight so there is plenty of supply at that level as mentioned yesterday. The medium term trend is still up, but there is a distinct 10 day downtrend on the 60 minute chart so expect a range bound consolidation period between 1.4240 and 1.4338 with 1.4178 providing major support and 1.4445 as major resistance. Only a break of 1.4034/51 would ruin this medium term uptrend and put the bears in control.

GbpUsd Rangebound behavior to continue for the pair between 1.6435 and 1.6663. Massive long attention expected should we make it down to 1.6381, confirmed a couple of days back with the queue jumping to 1.6391 in big size. A break there has 1.6272 as the final frontier before a swift 3 cent drop to 1.5947 but for now this trend remains up.

UsdJpy Well one can never claim that FX is not volatile enough but when a major pair is fighting between a 2 year downtrend it is to be expected. The pair is starting to look increasingly bearish with lower highs and lower lows being printed all day yesterday and it is likely there will be more analysis to come on USD JPY this afternoon. The stops below 95.16 have been triggered already this morning and there is another level at 94.78 that should put a floor under any damage for the time being. The bulls really need to clear 96.57 to make any sort of recovery but for the time being it looks like the 5 week uptrend is over and if this picture stays the same for much of the day then expect the pair to start attracting an army of short sellers with the Dec 08 - present uptrend not kicking in until 93.865

UsdChf 1.0692 and 1.0707 are looking like good long entry points with 10 day uptrend channel and a fairly decent support level. If there is an uptrend to be continued then the entry can not get much better than those levels with an initial target of the 4 day downtrend at 1.0764 / 77. Stops expected at 1.0670.

Daily forex news

Forex - No Shift in Trading Themes.....Yet

Forex News and Events:

As the week comes to a close, we have yet to see any definitive signs that markets have shifted from a risk appetite to a growth differential theme. In fact, the thin evidence available this week, the market’s reaction to economic data and fx correlation to equity and yield changes, points to a world unchanged from pre-NFP. However, the positive economic data from the Eurozone and disappointing data from the US tempered investor’s optimism around the USD. Yesterday, both Germany and France surprised to the upside and registered 0.3% q/q for preliminary Q2 GDP.

In addition, French and German GDP releases imply that household consumption is holding up, while exports also recovered from their lows in the last two Qs. This set the stage for a better than expected Flash Eurozone Q2 GDP, which printed at -0.1% q/q vs -0.5 % q/q decline. While pundits hailed the end of the European recession, we are still looking at that massive contraction and are disturbed that at this rate it will take years to return to pre-crisis levels.

And later that day, on the other side of the pond, US retail sales dropped, despite the success of the “cash for clunkers” auto sales program. Nominal retail sales fell 0.1% vs. +0.8%, while ex autos sales were even weaker at -0.6% vs. 0.1%. In addition, initial jobless claims rose slightly to 558k. While still at an elevated level, the 4-week average is trending lower. The FX majors are stuck in unexciting ranges during Asian trading, with EURUSD trading between 1.4255-1.4305 and the USDJPY between 95.05-95.50.

The commodity bloc continues to perform well, as RBA Governor Stevens delivered his semi-annual testimony to Parliament, which had a clear tone of cautious optimism regarding the domestic economy. In New Zealand, after six consecutive quarterly declines, retail sales came in 0.1% m/m higher for June vs. -0.3% exp. Today, the important news would be the CPI reading from the Euro Zone and the US, which could prove decisive over the status of the stimulus packages and whether the central banks would review the QE program in their next meetings. Also released would the University of Michigan Consumer Confidence, which could help determine the status of the consumer mentality over their outlook of the economy as job cuts continue to rise despite recovery measures.

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WORLD FOREX: Yen Gains Vs Dollar

By Robert Flint and Rob Copeland

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The yen advanced against the dollar and euro Tuesday as investors opted for safety ahead of Wednesday's Federal Reserve policy announcement.

Disappointing Chinese economic data and weak stock prices on China's exchanges soured risk appetite early in the global session. The Japanese currency got a lead on its major rivals that it never yielded throughout the session, while the euro and dollar fought to a standstill.

The greenback continued to rally against its commodity-based counterparts such as the Australian, New Zealand and Canadian dollars, though it gave back an early edge against the euro. Any signal that China's economy may not be doing as well as some hope tends to weigh on growth-sensitive and export-dependent currencies.

Investors are struggling with several currency market themes and appeared unwilling to make bold wagers before hearing what the Federal Open Market Committee has to say about the economy in its statement at the conclusion Wednesday of the Fed's two-day policy meeting.

Markets will look to the FOMC statement for good news about the economy, which could trigger a sell-off in low-risk currencies such as the dollar and yen.

Although the Fed isn't expected to raise rates from the current zero baseline, investors remain wary about what the U.S. central bank will do after the Bank of England's surprise decision to extend its quantitative easing last week.

"If the Fed comes out and says they're seeing weaker-than-expected growth ... look out, that'll be a huge move," said Andrew Busch, chief foreign-exchange strategist for BMO Capital Markets in Chicago.

On the other hand, traders will watch for hints of a possible timetable for the Fed to end its easy-money stance. Any such signals might spook investors who believe the U.S. economy's recovery is still too nascent to withstand a rise in borrowing costs.

With so much uncertainty, the dollar rally that began Friday stalled on Tuesday as many investors remained on the sidelines, resulting in low liquidity and sometimes volatile movements within narrow ranges.

In late afternoon trading, the dollar had fallen to ??95.93 from ??97.11 late Monday, according to EBS. The euro was at $1.4154 from $1.4142 late Monday and was at ??135.74 from ??137.32. The dollar declined to 1.0816 Swiss francs from 1.0853 Swiss francs, while the pound was at $1.6478 from $1.6461.

The Canadian dollar's recent downward correction intensified Tuesday, sending the currency to its lowest levels in nearly three weeks as part of a more general paring back of positions in riskier currencies in favor of the U.S. dollar.

The greenback was trading at C$1.1012 late Tuesday from C$1.0879 late Monday. The Canadian dollar along with other currencies was a victim of an overall intensification of risk aversion, an environment that also saw most global equity markets dive lower and prices for commodities such as oil also backslide.

This tendency has been in effect since Friday, when news of more moderate U.S. job losses in July rekindled optimistic speculation about an accelerating U.S. economic recovery and an earlier move to higher U.S. interest rates.

This new note of uncertainty has led currency players to at least temporarily shy away from typically riskier and less liquid currencies in favor of the more widely traded U.S. dollar and Japanese yen.

"It wasn't Canada in isolation, but in conjunction with other commodity currencies and risk proxies that have been sold off as the market unwinds short positions in the U.S. dollar and Japanese yen," said Jack Spitz, managing director of foreign exchange at National Bank in Toronto. "The U.S. non-farm payrolls number Friday created a number of uncertainties and has been enough of a catalyst to get people shortening up on risk."

(Paul Evans in Toronto contributed to this article.)

WORLD FOREX: Dlr

WORLD FOREX: Dlr, Euro Dn Vs Yen On Weak Chinese Stock

OKYO (Dow Jones)--The dollar and euro fell against the yen in Asia Tuesday as weak Chinese stock prices stifled players' risk appetite and prompted them to buy the safe-haven Japanese unit.

The two currencies may fall further if European and U.S. stock prices fall later in the global day, but their fall is likely to be limited ahead of a two-day Federal Open Market Committee meeting.

The Shanghai Composite Index, the main Chinese benchmark on shares, fell 0.8% to 3258.40 during the Tuesday session, while Japan's benchmark Nikkei 225 Stock Average ended the morning session up 0.2% at 10,544.93. But currency players took the Shanghai Composite Index's fall more seriously than the Nikkei's rise, selling risk-sensitive units such as the euro.

"I think the Chinese economy is more important than the Japanese economy as a leading force in the recession-hit global economy," said Shinichi Hayashi, a senior dealer at Shinkin Central Bank. "Asian investors, for this reason, are recently paying more attention to Chinese share markets than they do to Japan's."

The greenback fell to Y96.65 from Y97.11 in New York Monday, and is expected to decline further if European and the U.S. shares also show poor performance later in the day, Hayashi said. The euro also declined to Y136.61 from Y137.32.

The Dollar Index - which measures the value of the U.S. currency against six major units - fell to 79.15, compared with 79.24 late Monday in New York.

But their downside against the yen will likely be limited for now as players are unwilling to make aggressive bets ahead of the release of the statement from the FOMC Wednesday.

A Dow Jones poll of economists forecasts the committee will leave its rates unchanged, but players are divided on the tone of the statement.

"Some players say it will be hawkish, but I'm skeptical about that view because I think the U.S. economy isn't that strong yet," said Hiroshi Maeba, a senior dealer at Nomura Securities. "It's hard to make moves ahead of the statement's release."

Elsewhere, Bank of Japan Gov. Masaaki Shirakawa will meet the press later in the day to lay out the bank's latest view on the Japanese economy. But the market's reaction may be limited because surprise comments are unlikely, dealers said.

Earlier in the day, the BOJ left its rates unchanged at 0.10%.

The euro, meanwhile, was at $1.4134 from $1.4142 in New York. Dealers said it will remain in a tight $1.4100-$1.4200 range for now because not many players are present due to summer vacation and the market lacks fresh trading cues.

Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT                           Latest     Previous   %Chg   Daily   Daily    %Chg  Dollar Rates                        2150 GMT          High    Low      12/31  USD/JPY Yen              96.66-69   97.14-19   -0.49  97.14   96.56    +6.69  EUR/USD Euro             1.4136-38  1.4135-41  +0.01  1.4158  1.4124   +1.13  GBP/USD Sterling         1.6480-84  1.6461-66  +0.12  1.6527  1.6449  +12.68  USD/CHF Swiss Franc      1.0855-58  1.0854-59  +0.01  1.0864  1.0840   +1.74  USD/CAD Canadian Dlr     1.0908-12  1.0881-86  +0.25  1.0908  1.0868  -10.33  AUD/USD Australian Dlr   0.8338-42  0.8376-81  -0.45  0.8381  0.8322  +17.88  NZD/USD New Zealand Dlr  0.6735-41  0.6764-69  -0.43  0.6769  0.6732  +15.42  EUR/JPY Yen              136.66-69  137.35-39  -0.50  137.40  136.46   +7.91   

-By Takashi Mochizuki, Dow Jones Newswires; 813-6895-7554; takashi.mochizuki@dowjones.com

News by Currency

News by Currency

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