This article was written by Dwayne Buzzell, a financial analyst with more than two years experience in Forex
Forex
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Read this Term trading and private investing.
Chaos
There has been massive chaos in the financial industry due to the pending interest rate hike decision by the Fed.
In the last FOMC meeting minutes, Fed members offered almost nothing to investors in terms of information. Investors are overly cautious about the current market sentiment since there remains a 67.3% chance of an interest rate hike in December.
Keeping with this scenario, there has been a sharp fall in the price of the euro, and the EUR/USD pair managed to hit a seven month low against the US dollar on Friday. This sharp fall was fueled by the ECB press conference. The press conference clearly signalled to investors the current weakness of the eurozone, and investors are in fear that this might be a prolonged phenomenon in the market if the US hikes its interest rate.
The sharp fall in the price of euro against the dollar helped the ICE US Dollar Index to rise 0.2% to 98.52. This index is one of the most important parameters and one that traders all over the world carefully observe, since it’s the measure of the overall strength of the greenback against the world's six most prominent currencies.
The index hit a high of 98.61 on Thursday which is its most noticeable increase since early February. This helped the dollar to a great extent to push the price of euro lower. To be precise, one of the heaviest currency pairs, the EUR/USD, lost extensively due to the bearish sentiment of the eurozone.
EUR/USD
The sharp fall in the EUR/USD pair was marked by investors after hitting the $1.0891 (-0.3934%) mark on Thursday in the New York session since it’s the lowest level since mid of the March.
This sudden sharp fall in the price of the EUR/USD has changed market sentiment to being much more bearish for the upcoming week. Euro investors are in fear of buying the euro against the USD even though the US economy is struggling at the moment.
The extensive bearish move in the EUR/USD pair on Thursday was intensified by ECB President Mario Draghi's speech indicating that the bond-buying program might extend beyond March 2017, which is the most suitable time to end the quantitative easing program.
The sharp fall of the euro was further intensified by the statement saying that the ECB is ready to trim the size of asset buying in order to initiate fresh sellers in the euro.
This is going to play a very important role in the EUR/USD pair's next move since the euro is most likely to fall further if manufacturing PMI data comes in negative in the coming months before the trimming of assets buying.
During the press conference on Thursday, EUR/USD investors were washed away by the massive spike in both directions due to massive confusion in the mind of investors regarding Draghi’s speech.
Upon the payback of North American dealers, the euro traded to lows which challenged even those caused by the Brexit
Brexit
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Read this Term vote of 24th June 2016. The Brexit is considered to be the most shocking event in modern economics, very much similar to the extreme volatility caused by the SNB crisis of January 2015.
The euro traded with a low level of volatility from the start of this week, but Draghi's speech created a new level of volatility in the euro market.
According to the ECB press conference, ECB policymakers are cautiously waiting for the full technical overview from the eurozone monetary authority to decide which policy will best suit the eurozone in the upcoming days.
Investors are in fear since this might extend the bond-buying program to a great extent causing an extensive drawdown in the EUR/USD pair. According to top economic researchers, this might fuel the asset purchasing program for the next six months, which might even be extended. If there is an extension in the program then the fall of the eurozone will be smooth and buyers will have a hard time finding a suitable position to enter long into the EUR/USD pair.
Though the overall phenomenon is getting clearer day by day, the euro might find a strong foundation in its free fall if the Fed comes up with a dovish statement in December regarding its rate hike decision.
Conclusion
The European economy is struggling at the moment and investors are overly cautious about buying the EUR/USD pair.
The long-chaotic condition of the US economy due to the Fed's decision is still ongoing, and trained economic experts are suggesting a 67.3% probability of a hike in December.
Though the current situation of the U.S economy doesn’t fully support a rate hike, if the greenback displays more strength then the Fed could decide on a solid hawkish hike.
This article was written by Dwayne Buzzell, a financial analyst with more than two years experience in Forex
Forex
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Read this Term trading and private investing.
Chaos
There has been massive chaos in the financial industry due to the pending interest rate hike decision by the Fed.
In the last FOMC meeting minutes, Fed members offered almost nothing to investors in terms of information. Investors are overly cautious about the current market sentiment since there remains a 67.3% chance of an interest rate hike in December.
Keeping with this scenario, there has been a sharp fall in the price of the euro, and the EUR/USD pair managed to hit a seven month low against the US dollar on Friday. This sharp fall was fueled by the ECB press conference. The press conference clearly signalled to investors the current weakness of the eurozone, and investors are in fear that this might be a prolonged phenomenon in the market if the US hikes its interest rate.
The sharp fall in the price of euro against the dollar helped the ICE US Dollar Index to rise 0.2% to 98.52. This index is one of the most important parameters and one that traders all over the world carefully observe, since it’s the measure of the overall strength of the greenback against the world's six most prominent currencies.
The index hit a high of 98.61 on Thursday which is its most noticeable increase since early February. This helped the dollar to a great extent to push the price of euro lower. To be precise, one of the heaviest currency pairs, the EUR/USD, lost extensively due to the bearish sentiment of the eurozone.
EUR/USD
The sharp fall in the EUR/USD pair was marked by investors after hitting the $1.0891 (-0.3934%) mark on Thursday in the New York session since it’s the lowest level since mid of the March.
This sudden sharp fall in the price of the EUR/USD has changed market sentiment to being much more bearish for the upcoming week. Euro investors are in fear of buying the euro against the USD even though the US economy is struggling at the moment.
The extensive bearish move in the EUR/USD pair on Thursday was intensified by ECB President Mario Draghi's speech indicating that the bond-buying program might extend beyond March 2017, which is the most suitable time to end the quantitative easing program.
The sharp fall of the euro was further intensified by the statement saying that the ECB is ready to trim the size of asset buying in order to initiate fresh sellers in the euro.
This is going to play a very important role in the EUR/USD pair's next move since the euro is most likely to fall further if manufacturing PMI data comes in negative in the coming months before the trimming of assets buying.
During the press conference on Thursday, EUR/USD investors were washed away by the massive spike in both directions due to massive confusion in the mind of investors regarding Draghi’s speech.
Upon the payback of North American dealers, the euro traded to lows which challenged even those caused by the Brexit
Brexit
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Read this Term vote of 24th June 2016. The Brexit is considered to be the most shocking event in modern economics, very much similar to the extreme volatility caused by the SNB crisis of January 2015.
The euro traded with a low level of volatility from the start of this week, but Draghi's speech created a new level of volatility in the euro market.
According to the ECB press conference, ECB policymakers are cautiously waiting for the full technical overview from the eurozone monetary authority to decide which policy will best suit the eurozone in the upcoming days.
Investors are in fear since this might extend the bond-buying program to a great extent causing an extensive drawdown in the EUR/USD pair. According to top economic researchers, this might fuel the asset purchasing program for the next six months, which might even be extended. If there is an extension in the program then the fall of the eurozone will be smooth and buyers will have a hard time finding a suitable position to enter long into the EUR/USD pair.
Though the overall phenomenon is getting clearer day by day, the euro might find a strong foundation in its free fall if the Fed comes up with a dovish statement in December regarding its rate hike decision.
Conclusion
The European economy is struggling at the moment and investors are overly cautious about buying the EUR/USD pair.
The long-chaotic condition of the US economy due to the Fed's decision is still ongoing, and trained economic experts are suggesting a 67.3% probability of a hike in December.
Though the current situation of the U.S economy doesn’t fully support a rate hike, if the greenback displays more strength then the Fed could decide on a solid hawkish hike.
