Euro Currency Profile (Part III)

By Ahmad Hassam

ECB publishes monthly bulletin detailing analysis of economic conditions. This bulletin can give important signals to changes in the monetary policy. Forex market participants widely watch the comments by the members of the Governing Council of ECB. These comments frequently tend to move the Euro.

Now EUR/USD cross is the most liquid currency. All major euro crosses are highly liquid. The movements of EUR/USD currency pair are used as the primary gauge to judge the health of both European and the United States health. Euro is also known as the anti-dollar since it is the dollar fundamentals that have dictated the movements in the EUR/USD pair from 2003-2008.

EUR/JPY and EUR/CHF are very liquid pairs too and are used to judge the health of the Japanese and Swiss economies. EUR/USD and EUR/GBP are great trading currencies as they have tight spreads, make orderly moves and rarely gap.

Euro is still a new currency. It was launched in 1999. Euro has unique risks. There are number of risks unique to the Euro. The most important is the exposure to the economic, political and social development of 15 member countries in the EU.

Although more countries are expected to join EMU, however, if a member country drops Euro and reverts back to its original national currency because it believes that ECB actions are not in its best interests, it could affect the stability of the entire region.

ECB has the power to determine monetary policy for its 15 member countries. With that comes the political pressure of 15 governments. Making monetary policy is a challenging task to do for one country what to talk of a group of 15 countries. This political pressure frequently tests the actions of ECB. We can say Euro is a currency without a country.

The present global financial crisis is unlike any in the past. It is deep and may continue for some more years. It started from the sub-prime markets in the US and then spread to the rest of the world. Many big banks became the victims of this financial crisis. However, the rapid response of ECB to the present global financial crisis in the shape of deep liquidity injections has transformed its reputation. The spread between 10 year US Treasuries and 10 year bunds can indicate Euro sentiment.

Another important interest rate is the Euro Interbank Offer Rate (Euribor). This is the rate offered from one large bank to another on interbank term deposits. Traders tend to compare the Euribor futures rate with the Eurodollars futures rate.

Lower spreads make the European assets less attractive. Higher spreads between the two rates makes the European fixed income assets more attractive. Merger and Acquisition activities between US and European multinationals have important implications for EUR/USD pair. Large deals if in cash have often significant short term impact on EUR/USD.

Important indicators for Euro are Harmonized Index of Consumer prices (HICP), M3, German Unemployment, Preliminary GDP that includes France, Germany and Netherlands, German Industrial Production, Individual country budget deficit. The largest countries in EMU are Germany, France and Italy. Study of the economic data of these three large countries is also important. - 23305

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Investors Await Confidence Boost

By Jennifer McClelland

The United States is coming into a much wanted financial upturn. The worst of the recession is finished. Regrettably, the financial frame of mind deteriorated last week as investors began to question whether the fresh perk up was early. They were in addition warned about British government debt which raised concerns regarding how much capital the U.S. government owes, assorted with the longstanding concern that we are borrowing entirely too much money from China and other countries.

Since stocks rallied, starting in early March, investors were able to discover signs of optimism in information that showed a still stressed financial system. As the recovery is falling, investors are pretty anxious going into this trading week, that will see through to two reports on April house sales and the latest assessment of consumer confidence. Unite that with a potential June 1 Chapter 11 bankruptcy filing by General Motors, and you have investors all over the country ?sitting on pins and needles?.

What is frightening investors at the moment is the sum of out of work numbers that are still growing. What investors don't grasp is that there are two forms of economic indicators: leading and falling behind. Leading indicators are economic events that foretell an upward moving economy. Falling behind indicators are financial actions that react gradually to economic changes, therefore leaving no prophetic worth. Out of work numbers are a lagging sign due to the piece of information that jobs are not formed by most corporations until funds are obtained or accounted for that prop them.

Out of work numbers are not going to climb until all the primary indicators, that are exceptionally strong right now, manifest themselves in the way of firm economic upturn. Economic upturn can and will not happen rapidly because a strong rally occurs gradually as a concrete base is fashioned under each phase. The economy will shake a little with each perk up followed by a short decline as that slow recovery has solidarity formed under it. You are also guaranteed to see a few more struggling businesses, especially in the financial market, hit Chapter 7 insolvency, shut down, and be purchased by stronger businesses. At which time that happens, there is nowhere to go but ahead since there are fewer weak businesses to hold back and weaken the rally.

Chief leading indicators ended out with an improvement last week. The Dow Jones industrial average increased 0.1 %, at the same time as the Standard & Poor?s 500 index finished the week up 0.47 percent. The first test of capacity to erect on these gains occurs Tuesday, at which time the Conference Board releases its May consumer confidence index which should provide some insight into consumers? enthusiasm to expend. Ron Weiner, head and chief executive of RDM Financial in Westport, Conn., says that while any optimistic information about consumers is appreciated, the market is probably to have just a short-range upward movement. ?We want the consumer to be out there, we need them to spend,? Weiner said. ?For the majority, however, we don?t observe patrons going to pull us out of this market because they are also paying down debt at the same time.? Investors are also concerned about retail due to the Commerce Department?s unsatisfactory retail sales information for April, which took the marketplace by revelation May 13 and sent stocks dropping.

Analysts say further stabilization in the lodging industry is needed for a recovery to occur. A government report is also due this week on U.S. home prices during the first quarter of 2009. The housing data could be a big force in shaping investors? attitudes. A housing rally is critical to helping increase consumer confidence and to let banks to save some reservations regarding eroding asset principles. - 23305

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Find out more regarding economic indicators and acquire some Investing Advice while you're there.

Which Way To Choose A Forex Course

By Arnold Waterborn

With a wide variety of currency trading courses available in forex markets, it is really challenging to find one that contains all the vitally important elements, with the help of which you are supposed to have any success in forex markets.

Technical indicators should not be the main parameters to dwell upon in any well designed forex currency trading system. The efficiency of the trading system needs to be augmented by such technical indicators usage. The vital part is the simplicity. The availability of data sources is plenty but relaying on large number of technical indicators will only have a negative effect.

The best forex trading systems take into account only 3 or 4 technical indicators and those that uses more than this, should be treated with suspicion as it will be too complicated while being effective. A few technical indicators when combined together can identify a solid trading opportunity, and then it is really a characteristic of a very good trading system adopted.

The vital feature if any forex training course should not be that it is cent percent mechanical. If Market interpretation is not allowed by any trading system than it is meant as mechanical. The agility of any complete course is its capability to provide a larger picture and judgment is allowed for taking up a trading decisions. A signal to buy may be given by a mechanical system but at the same time a machine cannot give a whole picture. To say simply, a forex trading system which does not facilitate to use good judgment need to be abhorred.

Trending forex pair needs to be diagnosed by a good method that follow simple indicators which in turn gives us an opportunity to trade better with a sizable profit and less risk.

To conclude, clarity and objectivity should be there in a good forex trading system to enable you to implant discipline in your trades. Emotions circumvent clarity and objectivity in the principles used by many traders in making their decisions. Good decisions and profitability will flow in trading when a good set of trading rules are followed and it will as well diminish the risk.

Clarity, simplicity and objectivity should dwell upon your trading rules during its implementation along with provisions for judgment and interpretation.

The success rate will be higher when these three criteria is applied to any forex trading system. To gather more information is a precursor for selecting a top rated course. - 23305

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You can find out more by going to Forex Trading Platform Reviews

US Dollar (Part III)

By Ahmad Hassam

Prior to September 11, US Dollar was considered one of the premier safe haven currencies in the world because the risk of severe US instability was considered to be very low. United States was known to have one of the safest and the most developed capital markets in the world.

This allowed United States to attract investments from all over the world at a discounted rate of return. Almost 76% of the global currency reserves were in US Dollar. Post 9/11, foreign investors and the Central Banks are not so sure about the US Dollar due to the increased US uncertainty like the present recession and decreasing interest rates.

China pegs its currency to US Dollar. China has been accused by the United States many times of using this practice to keep its national currency artificially weak in order to boost its exports. There are many other developing and emerging countries that peg their local currencies to US Dollar. China is a very active participant of the global currency markets because its maximum float per day is controlled within a narrow band based on the previous days closing US Dollar rates. Any fluctuations beyond this band will invite intervention by the Chinese Central Bank that may include buying and selling US Dollars. Important countries that peg their currencies to US Dollar are China and Hong Kong.

EU represents a market as large as US with its own single currency Euro. The emergence of Euro is also threatening the US Dollar as the worlds premier reserve currency. Euro has provided an alternative to the US Dollar. With the passage of time, it is feared that Euro will emerge as a strong challenger to the dominance of US Dollar. Recently a group of countries like China, France and others have called for the introduction of a new global reserve currency by the IMF that should replace the US Dollar. If this happens in the next few years, it may have far reaching implications of the US Dollar and the US economy.

Many analysts fear a major devaluation of US Dollars in the near future due to the present financial crisis in the United States. Many central banks have already begun to diversify their foreign exchange reserves by reducing their US Dollar holdings and increasing their holdings in Euro and the gold. The US markets are the largest markets in the world and the investors all over the world are very sensitive to the yields offered by the US assets. Money flows where the returns are high. Interest rate differentials can be a very strong indicator of potential currency movements. The interest rate differentials between the US Treasuries and foreign bonds are followed by the professional forex traders with keen interest.

Market participants also closely watch the US Dollar Index as an indicator of overall US Dollar strength or weakness. The USDX is a futures contract traded on the New York Board of Trade (NYBOT). It is important to follow this index because when the market analysts are talking of general US Dollar weakness, they are referring to this index.

The US Stock and Bond markets also impact US Dollar. Cross border merger and acquisitions involve big forex transactions and are also very important for forex traders to watch.

The following economic indicators are important for the US Dollar: Employment, Nonfarm payrolls, Consumer Price Index, Produced Price Index, GDP, International Trade, Employment Cost Index, Industrial Production, Consumer Confidence, Retail Sales, TIC Data etc. - 23305

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!