Currency trading may be affected by the proposal of Ichiro Ozawa, a contender for leadership of the ruling party in Japan, who said he would implement measures to prevent rapid appreciation of the yen.
Those who engage in online Forex trading might become more risk averse if it was suspected measures to control the Japanese currency would impact upon its value in world markets.
However, rapid expansion of the Asian money can be challenging for export companies, whose goods become less competitive globally as the nation's currency continues to rise.
Steps taken to rein in the yen have been successful earlier this week, resulting in a 1.2 per cent gain on the Nikkei 225 index, as CFD brokers and others gained confidence from the stabilising currency, as well as good financial data emerging from Australia and China, Reuters reported.
Ozawa will go head to head with prime minister Naoto Kan on September 14th in a fight for leadership, as voted for by members of the party
wolcome
Wednesday, September 1, 2010
Global crisis slows growth in forex trading
The pace of growth in global forex trading slowed in the three years through to April as volatility and restricted credit reduced appetites for risk, according to the latest Bank for International Settlements currency market report.According to the group, forex trading volumes increased by 20 per cent to around $4 trillion a day on average, a substantial slowdown when compared to the 75 per cent growth seen over the preceding three years.Speaking to Bloomberg, Kevin Rodgers, London-based global head of foreign-exchange derivatives at Deutsche Bank AG, the world's largest currency trader, said there has been "complete chaos" in forex markets since the crisis began."Though [volatility] has come off, it remains historically high. The market is a very much jumpier, less-liquid place than it was pre-crisis," he explained.There have also been sharp movements from risky currencies to haven assets; in 2009, Brazil's real was the top-performing currency, while currently the Swiss franc and the yen are trading at the their highest levels in more than a decade.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site.
Investors preferred Bonds than Shares
Unpleasant surprises in international markets reserved for the last month of summer, as there were strong concerns about a new recession of the U.S economy with all the consequences that would follow. European stocks suffered the worst monthly decline since May as the FTSEurofirst 300 index to lose during the last month about 2% of its value, while to the other side of the Atlantic the Dow index recorded a loss of around 4% showing the largest decline – during any August month – since August 2001. Losses of more than 4% were recorded to the S&P 500.
Tokyo’s Nikkei index dropped by 7.5% during August, while an overall assessment of the MSCI World shares Index indicate the worst monthly performance in over three months, with losses of 4.1%. Under pressure was also the crude market, which expanded its losses in August to 6.5%, recording the biggest monthly decline since May. Concerns about the state of the global economy dominated yesterday the stock markets, as the Nikkei index in Tokyo showing the biggest one-day drop in three months of 3.6% since the first attempt of the central bank of Japan to stop further rise of the yen.
Losses of more than 1% displayed as well in Europe during the early stock market sessions, but eventually – in the wake of positive data on U.S. consumer confidence and housing prices- markets closed with positive sign.
Good news for the U.S economy as the consumer confidence index strengthened in August while housing prices rose more than expected in June, providing a little breathing space to those who are worried about the state of the U.S. economy. In the foreign exchange market, the yen was once again near 15 years high against the dollar and the euro touched a record low against the Swiss franc. The sterling fell 2% against the Swiss franc, to the lowest levels in nine months.
The 10-year German yields of government bonds recorded a new low record while at the same time, Reuters survey showed that investors showed a preference for bonds in August, slightly reducing their investments in shares.
Tokyo’s Nikkei index dropped by 7.5% during August, while an overall assessment of the MSCI World shares Index indicate the worst monthly performance in over three months, with losses of 4.1%. Under pressure was also the crude market, which expanded its losses in August to 6.5%, recording the biggest monthly decline since May. Concerns about the state of the global economy dominated yesterday the stock markets, as the Nikkei index in Tokyo showing the biggest one-day drop in three months of 3.6% since the first attempt of the central bank of Japan to stop further rise of the yen.
Losses of more than 1% displayed as well in Europe during the early stock market sessions, but eventually – in the wake of positive data on U.S. consumer confidence and housing prices- markets closed with positive sign.
Good news for the U.S economy as the consumer confidence index strengthened in August while housing prices rose more than expected in June, providing a little breathing space to those who are worried about the state of the U.S. economy. In the foreign exchange market, the yen was once again near 15 years high against the dollar and the euro touched a record low against the Swiss franc. The sterling fell 2% against the Swiss franc, to the lowest levels in nine months.
The 10-year German yields of government bonds recorded a new low record while at the same time, Reuters survey showed that investors showed a preference for bonds in August, slightly reducing their investments in shares.
Foreign exchange market
The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.[1]
The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.[2]
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of its
huge trading volume, leading to high liquidity
geographical dispersion
continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday
the variety of factors that affect exchange rates
the low margins of relative profit compared with other markets of fixed income
the use of leverage to enhance profit margins with respect to account size
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, as of April 2007.
The $3.21 trillion break-down is as follows:
$1.005 trillion in spot transactions
$362 billion in outright forwards
$1.714 trillion in foreign exchange swaps
$129 billion estimated gaps in reporting
The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.[2]
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of its
huge trading volume, leading to high liquidity
geographical dispersion
continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday
the variety of factors that affect exchange rates
the low margins of relative profit compared with other markets of fixed income
the use of leverage to enhance profit margins with respect to account size
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, as of April 2007.
The $3.21 trillion break-down is as follows:
$1.005 trillion in spot transactions
$362 billion in outright forwards
$1.714 trillion in foreign exchange swaps
$129 billion estimated gaps in reporting
USD Lower after ADP Shows 10K Jobs Cut
Today's release from Automatic Data Processing Inc.'s (ADP) employment estimate has shown that the US private sector cut 10,000 jobs this past month. The figure serves to highlight the current general trend of the US economy, which has been showing signs that the economic recovery is undergoing a modest slow-down.
In response to the worse-than-expected figures, the US dollar has taken a minor dip against a basket of its primary currency rivals. The EUR/USD has risen from 1.2660 to as high as 1.2830 in today's trading. The USD/JPY also plummeted towards 83.80. Fueling this burst of risk appetite was also a series of news events this morning which showed positive growth in China and Australia.
Ominously, this depressing result for the US private sector may be outdone by Friday's NFP report. ADP's figure does not include hirings and firings from the federal government for the 2010 Census, meaning an addition of those figures will only serve to show an even deeper decline in US employment for the month of August. This no doubt is putting additional downward pressure on the greenback.
In response to the worse-than-expected figures, the US dollar has taken a minor dip against a basket of its primary currency rivals. The EUR/USD has risen from 1.2660 to as high as 1.2830 in today's trading. The USD/JPY also plummeted towards 83.80. Fueling this burst of risk appetite was also a series of news events this morning which showed positive growth in China and Australia.
Ominously, this depressing result for the US private sector may be outdone by Friday's NFP report. ADP's figure does not include hirings and firings from the federal government for the 2010 Census, meaning an addition of those figures will only serve to show an even deeper decline in US employment for the month of August. This no doubt is putting additional downward pressure on the greenback.
Challenges over forex market desk with CFTC regulation
James Bibbings explains his thoughts in an interesting article about the changes the new CFTC regulation released a couple of days ago will introduce in the brokers industry while thousands of tourists walk around financial district in New York, taking photos close to the Wall Street Bull or Tiffany's building. "Are the Final Rules as devastating to the industry as the proposed rules, published by the CFTC in January of this year," Bibbings ask us, "were thought to be?"
Life continues definitely, but how the new rules will affect the Forex market after the October 18th date? And in this case, will be the traders able to operate with non-US brokers? Key questions over the desk.
Bart Mallon writes in his Forex Law Blog about the same topic while the Chicago Board of Trade and the CME continue with their operations after the rules. He considers as “ not probable” the possibility that US traders will be able to move their accounts overseas.
After US President Barack Obama signed the Dodd−Frank WS Reform, the CFTC was asked to propose rules to run this act. Now the regulator has released its guidelines: No more leverage above 50:1 in majors and 20:1 in minors; Any brokers, advisors, money Managers, retail traders must register with CFTC and they have to pass an exhaustive exam; It is possible that traders won't be able, by law, to operate with non-US firms.
Related to registrations, Bart Mallon, from Mallon P.C, says that "Forex managers would need to be registered by October 18, 2010." The effect of this rule is that "firms who provide investment advice with respect to retail forex will need to cease providing such advice unless the managers are registered with the NFA."
About Leverage, a key point, 50:1 is not low as 10:1 level proposed in January 2010, but it means a reduction from the 100:1 previous level. Remember that it is another cut from the original 400:1 which was in force before May 2009. "Leverage will have maximum boundaries of 50:1 on major currency pairs and 20:1 on exotic currency pairs," says James Bibbing, CEO at Turnkey Trading Partners. "These parameters will, however, be monitored by the CFTC, as well as NFA, and from time to time may be lower than these prescribed levels," points Bibbings.
According to InterbankFX, US traders will not be able to operate with overseas firms: "The new rules will impact thousands of U.S. customers with millions of dollars invested in overseas brokers," says Interbank in a press release. "Beginning October 18, 2010, overseas brokers will no longer be able to service U.S. customers. These rules ensure U.S. customers will receive the protections afforded by U.S. regulations." Mallon agrees with that, he considers with a “not probable” the possibility that US traders will be able to move their accounts overseas.
Too many challenges over the Forex market desk, US new regulations on financial markets have arrived finally to Forex, life continues, but with changes. The discussion is open, stay tuned
Life continues definitely, but how the new rules will affect the Forex market after the October 18th date? And in this case, will be the traders able to operate with non-US brokers? Key questions over the desk.
Bart Mallon writes in his Forex Law Blog about the same topic while the Chicago Board of Trade and the CME continue with their operations after the rules. He considers as “ not probable” the possibility that US traders will be able to move their accounts overseas.
After US President Barack Obama signed the Dodd−Frank WS Reform, the CFTC was asked to propose rules to run this act. Now the regulator has released its guidelines: No more leverage above 50:1 in majors and 20:1 in minors; Any brokers, advisors, money Managers, retail traders must register with CFTC and they have to pass an exhaustive exam; It is possible that traders won't be able, by law, to operate with non-US firms.
Related to registrations, Bart Mallon, from Mallon P.C, says that "Forex managers would need to be registered by October 18, 2010." The effect of this rule is that "firms who provide investment advice with respect to retail forex will need to cease providing such advice unless the managers are registered with the NFA."
About Leverage, a key point, 50:1 is not low as 10:1 level proposed in January 2010, but it means a reduction from the 100:1 previous level. Remember that it is another cut from the original 400:1 which was in force before May 2009. "Leverage will have maximum boundaries of 50:1 on major currency pairs and 20:1 on exotic currency pairs," says James Bibbing, CEO at Turnkey Trading Partners. "These parameters will, however, be monitored by the CFTC, as well as NFA, and from time to time may be lower than these prescribed levels," points Bibbings.
According to InterbankFX, US traders will not be able to operate with overseas firms: "The new rules will impact thousands of U.S. customers with millions of dollars invested in overseas brokers," says Interbank in a press release. "Beginning October 18, 2010, overseas brokers will no longer be able to service U.S. customers. These rules ensure U.S. customers will receive the protections afforded by U.S. regulations." Mallon agrees with that, he considers with a “not probable” the possibility that US traders will be able to move their accounts overseas.
Too many challenges over the Forex market desk, US new regulations on financial markets have arrived finally to Forex, life continues, but with changes. The discussion is open, stay tuned
Safe-Harbor Dollar Wilts Vs Rivals On Good Global Data
NEW YORK (Dow Jones)--The dollar slumped against its higher-yielding rivals Wednesday after positive global economic data encouraged investors to dip into currencies closely tied to global growth.
Better-than-expected U.S. manufacturing figures added fuel to the rally in currencies closely tied to global growth, helping the Australian dollar push more than 2% higher against the U.S. currency, while the euro racked up a gain of more than 1%.
Amid a recent stream of weakening U.S. data--including a worse-than-expected U.S. jobs report released Wednesday--the positive surprise in U.S. manufacturing could mean the U.S. economic picture is "not as gloomy as had been feared," said Jane Foley, senior foreign-exchange strategist at Rabobank in London, helping the dollar to rebound against the yen and giving riskier assets room to climb even higher.
Still, investors aren't likely to plow too much further into higher-yielding currencies, Foley said, ahead of Friday's U.S. non-farm payrolls report, considered a key gauge of an economy many have feared is slipping.
"Given the gloomy backdrop that we still have, it's still quite possible to argue that the rally we've seen [Wednesday] in the risky assets will need to see something more significant," such as an upside surprise to Friday's payrolls numbers, Foley said, to keep going.
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Ecomagination from GE - with innovation, there will be more clean water for everyone Late Wednesday morning, the euro was at $1.2827 from $1.2673. The dollar was at Y84.56 from Y83.83, while the euro was at Y108.45 from Y106.25. The U.K. pound was at $1.5464 from $1.5346. The dollar was at CHF1.0148 from CHF1.0147.
The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.393 from 83.104.
The U.S. manufacturing sector unexpectedly rebounded in August, with employment rising strongly, according to data released Wednesday by the Institute for Supply Management. The ISM's manufacturing purchasing managers' index rose to 56.3 in August, from 55.5 in July; economists had expected an August reading of 52.5.
"It's not in isolation in and of itself enough to change one's view of the world," said Ronald Leven, currency strategist at Morgan Stanley in New York, of the U.S. manufacturing report. "It's still part of a mixed bunch of data, but it definitely helps."
The U.S. manufacturing report added to momentum triggered overnight by figures showing China's manufacturing activity expanded in August.
"As a new month dawns, investors are comforted by signs of life in China's economy," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. "The almost audible sigh of relief has ignited a rally in risk assets," he said.
Australia also reported economic growth was at its fastest quarterly pace in three years in the second quarter of 2010 as a recovery in household spending and a mining boom spurred activity. This is increasing expectations that the central bank will need to raise interest rates again, potentially before the end of the year, sending the Australian dollar soaring to $0.9087 from $0.8904 late Tuesday.
The euro also gained sharply against the dollar, jumping about 1.15% after euro-zone manufacturing PMI remained in expansionary territory.
The dollar had ticked down against the yen after a U.S. jobs report earlier Wednesday came in worse than expected, but reversed its losses against the yen after the positive U.S. manufacturing report.
The U.S. currency is likely to remain in a tight range against the Japanese currency after Ichiro Ozawa, a power-broker in the ruling Democratic Party of Japan who will challenge Prime Minister Naoto Kan for party leadership, said he advocated market intervention to stem yen strength.
"We will boldly take all measures, including market intervention, to counter the yen's steep gains down the track," Ozawa said in a statement on his policy goals, Kyodo News reported. The remarks contrasted with Kan's less direct rhetoric against yen strength.
Better-than-expected U.S. manufacturing figures added fuel to the rally in currencies closely tied to global growth, helping the Australian dollar push more than 2% higher against the U.S. currency, while the euro racked up a gain of more than 1%.
Amid a recent stream of weakening U.S. data--including a worse-than-expected U.S. jobs report released Wednesday--the positive surprise in U.S. manufacturing could mean the U.S. economic picture is "not as gloomy as had been feared," said Jane Foley, senior foreign-exchange strategist at Rabobank in London, helping the dollar to rebound against the yen and giving riskier assets room to climb even higher.
Still, investors aren't likely to plow too much further into higher-yielding currencies, Foley said, ahead of Friday's U.S. non-farm payrolls report, considered a key gauge of an economy many have feared is slipping.
"Given the gloomy backdrop that we still have, it's still quite possible to argue that the rally we've seen [Wednesday] in the risky assets will need to see something more significant," such as an upside surprise to Friday's payrolls numbers, Foley said, to keep going.
Advertisement
Ecomagination from GE - with innovation, there will be more clean water for everyone Late Wednesday morning, the euro was at $1.2827 from $1.2673. The dollar was at Y84.56 from Y83.83, while the euro was at Y108.45 from Y106.25. The U.K. pound was at $1.5464 from $1.5346. The dollar was at CHF1.0148 from CHF1.0147.
The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.393 from 83.104.
The U.S. manufacturing sector unexpectedly rebounded in August, with employment rising strongly, according to data released Wednesday by the Institute for Supply Management. The ISM's manufacturing purchasing managers' index rose to 56.3 in August, from 55.5 in July; economists had expected an August reading of 52.5.
"It's not in isolation in and of itself enough to change one's view of the world," said Ronald Leven, currency strategist at Morgan Stanley in New York, of the U.S. manufacturing report. "It's still part of a mixed bunch of data, but it definitely helps."
The U.S. manufacturing report added to momentum triggered overnight by figures showing China's manufacturing activity expanded in August.
"As a new month dawns, investors are comforted by signs of life in China's economy," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. "The almost audible sigh of relief has ignited a rally in risk assets," he said.
Australia also reported economic growth was at its fastest quarterly pace in three years in the second quarter of 2010 as a recovery in household spending and a mining boom spurred activity. This is increasing expectations that the central bank will need to raise interest rates again, potentially before the end of the year, sending the Australian dollar soaring to $0.9087 from $0.8904 late Tuesday.
The euro also gained sharply against the dollar, jumping about 1.15% after euro-zone manufacturing PMI remained in expansionary territory.
The dollar had ticked down against the yen after a U.S. jobs report earlier Wednesday came in worse than expected, but reversed its losses against the yen after the positive U.S. manufacturing report.
The U.S. currency is likely to remain in a tight range against the Japanese currency after Ichiro Ozawa, a power-broker in the ruling Democratic Party of Japan who will challenge Prime Minister Naoto Kan for party leadership, said he advocated market intervention to stem yen strength.
"We will boldly take all measures, including market intervention, to counter the yen's steep gains down the track," Ozawa said in a statement on his policy goals, Kyodo News reported. The remarks contrasted with Kan's less direct rhetoric against yen strength.
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