Forex trading has been gaining in popularity since the beginning of the financial crisis. Indeed, in 2008, forex trading rose by 37%. The proportion of electronic forex trading has also increased, up to 53% in 2008 from 44% in 2007. FX Street reports on the popularity of forex trading on the currency market:
Investors seem to have flocked into electronic forex trading in a quest for liquid markets, as a recent research by Greenwich Associates shows a 37% increase on electronic trade, outpacing the 13.0% increase in total FX Trading Volume.
With the ease of forex trading, plus the advent of mini forex accounts and other tools, not to mention the fact that in currency trading someone, somewhere always gains (even if it isn't you), there is the hope that money can be made. Indeed, even when other markets are faltering, there is always money to be made in currency trading -- provided you are careful (there is still always the risk of loss).
Germany Poised to Takeover Toxic Assets
Europe's largest economy has been floundering as banks suffer from the problem of toxic assets. Even though the euro is gaining in forex trading right now, problems with Germany's economy could lead to a reversal. The euro zone is rather dependent on German performance to keep things moving. The Financial Times reports on how the current draft of Germany's toxic asset plan is supposed to work:
The draft bill coming before cabinet, a copy of which was obtained by the Financial Times, foresees the creation of several, institute-specific “bad banks” in which any bank that chooses to will be able to park its least liquid assets – and the risks associated with them – for the next 20 years.
In exchange, these special-purpose vehicles would issue the bank with a bond whose value would be guaranteed by Soffin, the federal authority that manages the government’s bank rescue fund created last October.
It remains to be seen what the final incarnation is, and whether it helps the euro in forex trading.
Inflation: Consequence of Dollar Weakness
As the global economy begins its recovery (although there has been some back tracking in the European economy), the U.S. dollar is expected to fall in forex trading. Dollar weakness is an expected side effect of an improving economy, and that itself will lead to other issues. Indeed, GFT's Kathy Lien points out in FX360 that dollar weakness is likely to lead to inflation:
The biggest consequence of a weaker dollar is inflation. Commodity prices have been on a tear lately and that is a direct consequence of a weaker dollar. Producer and consumer prices are due for release this week and we expect inflation pressures to be on the rise. Tomorrow’s import price report will be the first clue on the degree of inflation over the past month. If commodity prices continue to rise, the threat of runaway inflation becomes more real.
With commodity prices often moving inversely to the U.S. dollar, it is no surprise that they are expected to make solid gains as the dollar falls into weakness in forex trading. When global economic growth picks up again, it is likely that inflation will follow.
Canadian Dollar Falls on Oil Prices, Risk Aversion
The Canadian dollar is falling in forex trading on the currency market today as economic optimism fades away. Along with other risk currencies, the loonie is suffering from a decision to seek safe havens right now in currency trading.
Another factor affecting the Canadian dollar right now in forex trading is the price of oil. Oil prices are falling back in commodities trading on the news that oil demand is going to fall sharply this year. Oil demand has already taken a hit, but the prospect of a longer recession continues to weaken oil.
As a commodity currency, the loonie is dependent upon the global economy for support in currency trading. Canada is a major oil exporter, and the loonie often follows oil prices.
Euro Up In Forex Trading, Despite GDP Data
The euro is back up in forex trading after a brief retreat earlier this morning. German GDP data came in at the worst in four decades, and this news caused a pullback for the euro in forex trading on the currency market. The German economy, the largest in Europe, is vital to the euro zone and exerts a great deal of influence over the direction of the euro in forex trading.
However, this data has been relegated to second concern behind the latest news out of the U.S. manufacturing data and other economic data is showing some positive signs that point to an end to the recession at some point in the latter half of 2009. On hopes of overall improvement in the U.S. and for the global economy, forex traders are considering riskier currencies.
As a result, the euro is up as forex traders seek higher returns above the safe haven of the U.S. dollar. This sort of action is likely to continue as long as there is confidence in the coming end to the U.S. recession.
FOREX stands for Foreign Exchange - which means currency market. The Forex market is where currencies are sold, bought, in the form of parity. On the Forex market, all currencies are traded in real time, 24h/24h, 7J/7J. The Forex is open since few years to individuals, single investors wishing to diversify their investments or pure speculators. The access to foreign exchange market for individuals is offered through Forex Brokers.
BEWARE: FOREX is a market made volatile by the leverage which is offered to you. Consequently, a risk of important financial losses is always present. Tribuforex provides his internauts some trade ideas and analysis, but will not be responsible in case of losses. The main goal of www.tribuforex.fr is to offer a tool allowing traders to share forex between them.
