Pound Continues Rally Versus Euro and Dollar

The pound is gaining again versus the euro and the dollar as services industry grew and U.K manufacturing jump beyond expectations in July, pushing the pound to the highest level in 9 months.
The pound sterling may be climbing its way to pre-crisis levels as positive news for the British economy appeared this week after months of consecutive shrinking numbers and political crisis in the British Isles. Today the pound is trading at the highest level in 9 months versus the greenback and the highest in one month versus the euro, fueled by British reports this week that indicated an increase in U.K. manufacturing and services industry figures, helping the pound to widen the gap versus the euro and rebound versus most of the 16 most traded currencies, losing only to extremely high-yielding options, like the Brazilian real.
Analysts affirm that the economic recovery in the U.K. is proving to be happening faster than in other parts of the Europe, which is boosting demand for the pound, and raising attractiveness for equities markets in London. If positive news continue to come in the U.K. it is likely that a rebound pattern will be set for the pound, which is likely to gain mostly versus the greenback and yen, considered refuge currencies and unattractive for the current economic scenario.
GBP/USD traded at 1.7016 as of 11:11 GMT from 1.6953 in the intraday comparison, being the current, the highest rate since last December.

Finance Minister Halts Canadian Dollar Rally

The Canadian dollar, which has gaining heavily versus several most traded currencies, finally stopped its rally after the national Finance Minister affirmed that eventual measures may be taken to damp the rising demand for the loonie, which is already jeopardizing Canadian exports.
The Canadian currency was one of the best performing ones since the world started to post more solid signs of economic recovery last month, creating a bullish pattern for high-yielding currencies fueled by a new wave of risk appetite. The current rise of the loonie, may already affect Canadian exporters negatively, since the national currency rose intensively, more than its Australian and New Zealand counterparts for example. Yesterday, Canadian Finance Minister Jim Flaherty stated that the rapid rise of the national currency is already a reason of concern, and measures may be taken to halt its continuation, affecting immediately the Canadian dollar, which dropped from a 10-month high level.
Analysts examine the loonie’s short term situation as an obstacle for Canada to grow, since a high loonie will affect Canadian’s exports and consequently different sectors of the economy. The Bank of Canada may indeed intervene in the currency market, being Flaherty’s declaration already an effective psychological measure that pushed the dollar down for the first time in a almost a week.
USD/CAD traded at 1.0763 as of 10:21 GMT from yesterday’s rate of 1.0681.

Yen Rebounds on Stocks Correction Movement

After gaining sharply for three days in a row, today stocks declined around the world, fueling demand and opening a profit opportunity with the currently weakened Japanese currency, which is witnessing its first significant climb in a week.
Today, Bayerische Motoren Werke AG, commonly known to the public as the BMW vehicle manufacturer, posted a 76 percent decline in its profits, causing European stock markets to open in the negative, consequently attracting stock traders to safer positions like those available in refuge currencies, benefiting the yen. In Europe, a report is likely to indicate that producer prices declined at a strong pace, damping demand for the European common currency. Emergent-market currencies like the South African rand, and Commodity-linked currencies like the Australian dollar, posted the sharpest losses versus the yen, as these currencies tend to have a higher volatility due to their riskier profile.
Analysts indicate today’s movement as a correction, and also a pause in the current rally that higher-yielding currencies are imposing versus the yen. A number of traders are selling their positions in emergent-markets to take profits from last week’s rally, but it does not mean that the yen is starting a recovering pattern, the outlook for the Japanese currency still remains very negative.
GBP/JPY traded at 160.29 as of 9:53 after topping at 162.17 hours earlier. EUR/JPY traded at 136.11 from 137.69.

Canadian Dollar Climbs Fueled By Stocks Rally

The Canadian dollar reached a 10-month high versus its U.S. counterpart as corporate earnings, mainly in North America, but also in Asia and Europe, posted better-than-expected numbers, pushing investors to the already attractive Canadian currency.
The crude oil price rally during the past weeks has been favoring the Canadian dollar massively, since one of the main national exports to the U.S. is the oil, which experiences an increase on its price as demand for energy tends to grow in a recovering economy. Corporate earnings this week in the U.S. and Asia helped high-yielding currencies to gain even further, as the greenback and the yen tumbled to the lowest levels in more than a year. Manufacturing in China figures published yesterday, indicated the highest climb in a year, suggesting that the Asian nation is also being helped by global signs of economic recovery, as a higher demand influences its industrial production.
Analysts state that equities market gains have still a reasonable range to continue, and that the Canadian dollar is very likely to follow these movements. The crude oil may also help the Canadian dollar to climb, and it is not impossible that the loonie will be traded one-to-one versus its U.S. counterpart before the end of the year.
USD/CAD traded at 1.0697 as of 9:13 GMT from a previous rate yesterday of 1.0780.

Euro Climbs on U.S. Data Speculations

The euro has been trading near a two-month high versus the dollar during most of the past week, and may climb to higher levels today on a U.S. manufacturing report that is likely to show the highest production in a twelve-month period, raising risk appetite among investors and affecting the greenback negatively.
The dollar is losing constantly versus the Eurozone currency since the global economy has been posting more solid signs of recovery, three weeks ago, which is helping the euro outlook to climb as its riskier profile, compared to the dollar, is luring investors back to European equities markets, consequently pushing the bloc’s currency up. The euro also climbed versus the yen, as former Federal Reserve Governor Alan Greenspan stated that the economic recovery may come earlier than expected, which affected negatively the yen, being the latter a refuge currency for stormy financial markets periods.
According to analysts, the euro is climbing mostly versus refuge currencies, but against other higher-yielding options, it continues rather stable. A very strong euro is not seen positively in Europe, as the region exports are affected in competitiveness by a stronger currency, nevertheless, the euro is liked to continue its rally versus the greenback and the yen.
EUR/USD traded at 1.4285 as of 11:08 GMT from an equal opening rate around the 1.4300 level. EUR/JPY traded at 135.63 from 135.19.

Manufacturing Report Keeps U.S. Dollar Under Pressure

The U.S. dollar started another week with optimism weighing negatively on its outlook, as a report is likely to indicate the highest manufacturing level in the United States in almost a year, attracting investors to higher-yielding currencies.
The U.S. dollar is posting losses versus its Canadian and Australian counterparts today after former Federal Reserve Governor Alan Greenspan said that the worst recession in decades is likely to be ending, decreasing attractiveness for the safety profile of the greenback, and attracting investors to yield. The Dollar Index was near this year’s low before a U.S. manufacturing report which is likely to reach the highest levels this year, rectifying evidences that the global slump is becoming a surpassed event, bringing investors to equities markets and emergent countries currencies. In Asia, currencies were favored by a report in the end of last week showing that South Korea grew at the fastest pace in six years.
The world is showing multiple signs of recovery, this time steadily, and this is dollar-negative, according to specialists. Oddly enough, favorable news in the U.S. economy are being interpreted as a sign of global economic recovery, pushing the dollar down, even if the nation’s economy is recovering.
USD/CAD fell to 1.0730 as of 10:15 GMT from an opening rate yesterday of 1.0775. EUR/USD is being traded at 2-month high levels at 1.4286 after topping at 1.4310 hours earlier.

Forex News Trading

Traders on the Foreign Exchange market, Forex market for short, can potentially make thousands of dollars based on the volatility and fluctuations of a country’s currency. To better themselves and have a leading advantage over other traders, some Forex traders and investors participate in a practice known as news trading. The risks are very high, but the potential gains can be worth thousands of dollars and many traders and investors use this technique.
The technique of news trading is quite simple. It is the trading of foreign currency immediately before or after an important economic news announcement. After such announcements, there is a high possibility that market prices will fluctuate, either for the better or worse, depending on the announcement. For example, if the U. S. Federal Reserve announces another increase of the interest rate, many traders might invest in the U.S. dollar as it is expected that its value will appreciate. The main advantage of news trading is the potential for a country’s currency to make huge gains or losses in very little time. Within minutes of an economic announcement, a country’s currency can gain or lose one hundred points almost instantly. The potential of huge profits attracts Foreign Exchange traders and investors, however there are various risks associated with news trading.
Like any investment, there is always a risk, and news trading on the Forex market is no different. Though the potential profits are huge, the losses are also equally as large. The dangers of news trading come from the fact that a trade must be made quickly or else you are going to lose. If you are caught on the bad side of a trade, your money will be gone quicker than you can blink your eye. You will lose money so fast that there won’t even be time for you to manually close your trades, leaving you with nothing. Stop-loss orders are also potentially dangerous as there is a high probability of slippage because of the sudden price fluctuation.
Though some investors and traders might get lucky trading news, there is only a small probability that you will make a profit. Even if you are an expert news trader, you should still be very, very cautious when participating in this practice. Successful news trading depends solely on how you get your news. The most successful news traders are the ones with the fastest news feeds and those that are able to quickly place their trades immediately after an announcement has been made. Even using other forms of news trading, such as placing orders above or below the market price is still a guessing game, and those traders in the market who base their trades on guesses, won’t have much money after a short time.
For many Forex traders and investors, their trades are dictated by technical indicators and price indexes. Hours are spent researching every indicator, taking every risk into account and then making a decision based on everything they have studied. However, for a Forex news trader, none of this matter, and the only thing they take into account is economical news announcements.
News trading is possible because the Forex market is always open, unlike many financial markets. In a financial market, securities trades of certain stocks are suspended when an important company announcement is being made. These announcements are usually made after the market has closed for the day. However, because the Foreign Exchange market is open 24 hours, any economic announcement will have direct affects on the currency of that country, and maybe others as well. In the Forex market, there are eight major currencies that are traded, as well as over seventeen derivatives to be traded as well. This means that on any given day, there will always be economic announcements from any of the major traded currencies. The major trader currencies are as follows:
U.S. Dollar (USD)
Great British Pound (GBP)
Euro (EUR)
Japanese Yen (JPY)
Australian Dollar (AUD)
Swiss Franc (CHF)
Canadian Dollar (CAD)
New Zealand Dollar (NZD)
Because of the availability of each currency, currency pairs, and its derivatives, such as USD/JPY, EUR/USD, AUD/USD, as well as several others, each currency can be traded at any given time because these currencies are globally traded.
Any Forex news trader or news investor will have to have the latest most up to the moment news announcements. Even if the news announcements are only a couple of minutes old, this can have devastating effects for any trader who has risked any sum of money. Most news traders like to keep an eagle eye on any news regarding economical activity, but most importantly news dealing with interest rates changes, FOMC rate decisions, retail sales figures, inflation indicators such as the consumer price index (CPI), producer price index (PPI), unemployment figures, industrial production announcements, boost in business and consumer confidence, as well as business sentiment surveys. Manufacturing sector surveys, trade balance release details, and foreign purchases of U.S. Treasuries may also prove useful for a news trader to better make decisions regarding when or when not to trade.
However, it should be remembered that these news announcements can have ranging impacts on a country’s currency, and after an announcement, the volatility of a currency may greatly fluctuate. It is important to take advantage of news that creates movements in volatility that will last for a few minutes or even hours. Trading on the Forex market based solely on news is a difficult and sometimes dangerous practice. However, there are some indicators that can make a news trader’s job easier, such as breakout indicators (Bollinger bands, breakout of a candlestick bar, or a price bar). Research has proved that news announcements can impact a currency’s value quite severely, in some cases it can gain or lose anywhere from 33 pips to 124 pips, opening up the ideal trading opportunity looked for by news traders. If a news trader is able to act quickly enough, even the smallest news release can be turned into a potential profit of thousands of dollars. However, it is important to remember the volatility of such announcements, and although the profits seem endless, the losses can happen too.