Forex School: 2010

A noteworthy jump in forex market volatility expectations suggests that the Euro, US Dollar, and Japanese Yen will continue to see moderate price swings in the week ahead. http://ow.ly/2GZqY

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9:04 AM |

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USD/JPY Remains Scalping Target with FOMC Ahead. http://ow.ly/2GWaZ

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3:37 AM |

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Crude Oil Struggles to Bounce after 4-Day Slide, Gold Approaches $1300. http://ow.ly/2GJLa

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Friday, September 17, 2010

8:59 AM |

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The U.S. dollar was sold aggressively today on growing concern that the Federal Reserve could resort to additional monetary easing. http://ow.ly/2FSFI

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6:12 AM |

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Eurozone Construction Output Falls For the First Time Since February. http://ow.ly/2FLij

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4:01 AM |

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Rare CAD/CHF Sell Emerging. http://ow.ly/2FHOC

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12:39 AM |

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Crude Oil Slide for Slides for a Third Day, Gold Reaches Yet Another Record. http://ow.ly/2FEfW

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Thursday, September 16, 2010

9:37 PM |

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Dollar, Anchored by Aimless Risk Trends, Looks to Fridayâ€™s CPI and Confidence Figures. http://ow.ly/2FBKa

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11:24 AM |

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The Bank of Japan unexpectedly intervenes in currency markets yesterday in an attempt to de-value the Yen. http://ow.ly/2FoqS

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8:34 AM |

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U.K. Retail Sales unexpectedly Declines For the First Time Since January. http://ow.ly/2FhP5

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Wednesday, September 15, 2010

11:04 PM |

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Kiwi Stands Out Ahead of European Trade; Yen Finding Renewed Bids. http://ow.ly/2F2fl

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1:17 AM |

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China will pay close attention to the $39 billion bid that top global miner BHP Billiton is making for the world's biggest fertilizer maker. http://ow.ly/2Es0u

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1:13 AM |

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Price action in early Asian trade has been all about the Yen, with all other major currencies taking a backseat after the Bank of Japan finally moved to actively intervene in the FX market. http://ow.ly/2ErUv

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Tuesday, September 14, 2010

11:33 AM |

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The NZD/USD was sunk in early trading by a unexpected decline in retail sales which added to the case for an RBNZ rate hold as tomorrowâ€™s policy meeting. http://ow.ly/2E9YB

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7:51 AM |

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Risk aversion looks to have regained its footing during the overnight trade as most major currencies pushed lower against the Japanese yen. http://ow.ly/2E0Hi

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3:41 AM |

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All of the focus in Tuesday trade thus far has been on the Japanese DPJ election, with the result sure to have an influence in the direction of the Yen. http://ow.ly/2DRVd

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Monday, September 13, 2010

7:50 AM |

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All major currencies pushed higher against the greenback ahead of the monthly budget statement from the worldâ€™s largest economy. http://ow.ly/2DoDl

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3:43 AM |

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U.S. debt fund shuns Dubai World debt deal: report http://ow.ly/2DfWX

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2:06 AM |

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Euro Shines in Early Monday Trade; All Major Currencies Higher Against Buck http://ow.ly/2DeeW

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Sunday, September 12, 2010

8:39 PM |

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Euro Wonâ€™t be able to Hold Back the Fundamental Tide for Much Longer
http://ow.ly/2D9kz

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Friday, September 10, 2010

7:00 AM |

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European Currencies Bounce Back To Maintain Narrow Range

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Thursday, September 9, 2010

12:09 AM |

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Crude oil is little changed in overnight trade as the commodity awaits a much-anticipated report on U.S. petroleum inventories on Thursday

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Wednesday, September 1, 2010

2:51 PM |

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EURUSD Remains Capped by the 20-Day SMA Ahead of the ECB Rate Decision

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Tuesday, August 31, 2010

6:45 AM |

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Euro-Zone Unemployment Remains at a 12 Year High, U.K. Total Net Lending Disappoints

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Monday, August 30, 2010

8:43 PM |

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Oil Tumbles while Gold Holds as Risk Aversion Lacks a Fundamental Stabilizer

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8:39 PM |

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Dollar Advances for the First Time in Four Days as Speculative Uncertainty Crowds Out Positive Data.

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Market Commentary from Boris Schlossberg

9:03 AM |

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Market Commentary from Boris Schlossberg

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Forex Commentary | FX Charts | Fundamental Analysis | Forex | Currency Trading - FX360®

8:58 AM |

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Forex Commentary FX Charts Fundamental Analysis Forex Currency Trading - FX360®

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Tuesday, August 24, 2010

4:05 AM |

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The lack of economic releases in Monday trade was certainly a good proxy for the way things went.

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Monday, August 23, 2010

10:21 AM |

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The USD/JPY continues to trade in a tight range following its test of major support despite the recent flight to safety.

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Thursday, April 8, 2010

Forex School - Forex Education for Free... FOREX FOR LIFE... !!!!

12:40 PM |

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Forex School - Forex Education for Free... FOREX FOR LIFE... !!!!

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Tuesday, March 30, 2010

2:49 PM |

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Crude oil prices continue to oscillate in a familiar range above the $80 level eyeing a convincing break in risk trends

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Friday, March 19, 2010

Lesson One on Forex

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LESSON ONE

Introduction to The Forex Market

Welcome to this, your first lesson in our Free Forex Course. We hope you find the content interesting, informative and helpful to your trading future. In this first lesson you will learn about all the basic information regarding the Forex market.

What is Forex?

The Foreign Exchange market, also referred to as the "FOREX" or "Forex" or "Retail forex" or "FX" or "Spot FX" or just "Spot"

What is traded on the Foreign Exchange market?

The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the euro and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

Until the late 1990's, only the "big guys" could play this game. The initial requirement was that you could trade only if you had about ten to fifty million dollors to start with! Forex was originally intended to be used by bankers and large institutions - and not by us "little guys". However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to 'retail' traders like us. Offering you from one dollor (yes!! Only from one dollor, you can start trading in Forex) to million of dollors

All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.

Before start learning Forex, why not we take a look at the birth of Forex market, how the Forex market came into existance and the history of Forign Exchange.

The historical background which gave birth to the Forex market is made by the same milestone which compose the history of broader international regime.

History of Forex

Centuries ago, the values of goods were expressed in terms of other goods. This sort of economics was based on the barter system between individuals. The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.

The FOREX (FOReign EXchange) Market is a cash-bank market established in 1971 when the US went off the gold standard adopted in the 1930's. At that time the US had to drop the gold standard after the 1929 crash and the British Pound became the currency of choice and the world's currency.

There have been other times before in Western History when paper money could be exchanged for gold. Throughout most of the 19th century and up to the outbreak of WW1, the world was on so-called "Classical Gold Standard" with all major countries participating in it. A gold standard meant that the value of a local currency was fixed at a set exchange rate to gold ounces. This allowed unrestricted capital mobility as well as global stability in currencies and trade

The participating countries were required to observe some rules: for example, it was particularly important that no country would impose restrictions on the importation or exportation of gold as a commodity nor a payment method. This was a guarantee for a free capital mobility based on supply and demand conditions.

Under this model, in which most central banks backed their paper money with gold, the currencies were supposed to enter in a new phase of stability, without the danger of an arbitrary manipulation of its value to increase inflation.

The Bretton Woods Accord:

The first major transformation, the Bretton Woods Accord, occurred toward the end of World War II. The United States, Great Britain and France met at the United Nations' Monetary and Financial Conference in Bretton Woods, New Hampshire to design a new economic order. The British Pound had been the major currencies by which most currencies were compared. This changed when the Nazi campaign against Britain included a major counterfeiting effort against its currency. In fact, WWII vaulted the US dollar from a has been currency after the stock market crash of 1929 to the benchmark by which most currencies were compared. The Bretton Woods Accord was established to create a stable environment by which global economies could re-establish themselves. The Bretton Woods Accord established the pegging of currencies and the International Monetary Fund ("IMF") in hopes of stabilizing the global economic situation.

Major Currencies were pegged to the US dollar. These currencies were allowed to fluctuate by one percent on either side of the set standard. When a currency's exchange rate would approach the limit on either side of this standard, the respective central bank would intervene, thus bringing the exchange rate back into the accepted range. In addition to this, the US dollar was pegged to gold at a price of $35 per ounce. Pegging the dollar to gold and the pegging of the other currencies to the dollar brought stability to the world Forex situation.

The Bretton Woods Accord lasted until 1971. Ultimately, it failed but did accomplish what its charter set out to do, which was to re-establish economic stability in Europe and Japan.

The Bretton Woods Accord lasted until 1971. Ultimately, it failed but did accomplish what its charter set out to do, which was to re-establish economic stability in Europe and Japan.

After the Bretton Woods Accord came the Smithsonian Agreement in December of 1971. This agreement was similar to the Bretton Woods Accord but allowed for greater fluctuation band for the currencies. In 1972, the European community tried to move away from their dependency on the dollar. The European Joint Float was established by West Germany, France, Italy, the Netherlands, Belgium and Luxemburg. This agreement was also similar to the Bretton Woods Accord, and allowed a greater range of fluctuation in the currency values.

Both agreements made mistakes similar to the Bretton Woods Accord and, by 1973, collapsed. The collapse of the Smithsonian agreement and the European Joint Float in 1973 signified the official switch to the free-floating system. This occurred by default as there were no new agreements to take their place. Governments were now free to peg their currencies, semi-peg or allow them to freely float. In 1978, the free-floating system was officially mandated.

The major currencies today move independently of other currencies. The currencies are traded by anyone who wishes. This has caused a recent influx of speculation by banks, hedge funds, brokerage houses and individuals. Central banks intervene on occasion to move or attempt to move currencies to their desired levels. The underlying factor that drives today's Forex markets, however, will remain to be supply and demand.

Now come to the topic in our First lesson, we will analyze and discuss the every aspect of Forex trading, from how it was formed, the main participants, advantages and disadvantages of trading the Forex market, how the Forex market compares to futures and equity markets and all concepts related to Forex trading.

Good luck!

Forex Market

The Forex market is an acronym of The Foreign Exchange Market also called The Currency Market also referred to as the "FOREX" or "Forex" or "Retail forex" or "FX" or "Spot FX" or just "Spot"

What is a Spot Market?

A spot market is any market that deals in the current price of a financial instrument.

Who trades currencies, and why?

Daily turnover in the world's currencies comes from two sources:

Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.

Speculation for profit (95%).

Currencies are bought and sold freely. This is the simultaneous buying of one currency and the selling of another.

For instance, you have some inside information that leads you to think that the Euro will go up, you want to buy the Euro pair (or EUR/USD). When you buy the EUR/USD pair you are actually buying the EUR and selling the US dollar. When you buy the EUR it is also said that you are “long” the EUR. When you sell the EUR it is also said that you are “short” the EUR.
More than 80% of the volume is generated by what we call the seven major currencies:
• The US dollar (USD)

• The Euro (EUR)

• The British Pound (GBP)

• The Swiss Franc (CHF)

• The Canadian dollar (CAD)

• The Australian dollar (AUD)

• The Japanese Yen (JPY)

Which Currencies Are Traded?

The most popular currencies along with their symbols are shown below:

Symbol Country Currency Nickname

USD United States Dollar Buck

EUR Euro members Euro Fiber

JPY Japan Yen Yen

GBP Great Britain Pound Cable

CHF Switzerland Franc Swissy

CAD Canada Dollar Loonie

AUD Australia Dollar Aussie

NZD New Zealand Dollar Kiwi

Forex currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency.

When Can Currencies Be Traded?

The spot FX market is unique within the world markets. It’s like a Super Wal-Mart where the market is open 24-hours a day. At any time, somewhere around the world a financial center is open for business, and banks and other institutions exchange currencies every hour of the day and night with generally only minor gaps on the weekend.

The foreign exchange markets follow the sun around the world, so you can trade late at night (if you’re a vampire) or in the morning (if you’re an early bird). Keep in mind though, the early bird doesn’t necessarily get the worm in this market - you might get the worm but a bigger, nastier bird of prey can sneak up and eat you too…

Time Zone New York GMT

Tokyo Open 7:00 pm 0:00

Tokyo Close 4:00 am 9:00

London Open 3:00 am 8:00

London Close 12:00 pm 17:00

New York Open 8:00 am 13:00

New York Close 5:00 pm 22:00

Where do all trades take place?

Unlike other financial markets, there is no physical location where all trades take place in the Forex market. All transactions are conducted via telecommunications (phone, online platforms, etc.) between banks, large institutions, investors, trader, etc. This is called an Over the Counter market or OTC.

The Forex market (OTC)

The Forex OTC market is by far the biggest and most popular financial market in the world, traded globally by a large number of individuals and organizations. In the OTC market, participants determine who they want to trade with depending on trading conditions, attractiveness of prices and reputation of the trading counterpart.

The chart below shows global foreign exchange activity. The dollar is the most traded currency, being on one side of 89% of all transactions. The Euro’s share is second at 37%, while that of the yen is at 20%.

Why Trade Foreign Currencies?

There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market:

• No commissions.

No clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for their services through something called the bid-ask spread.

• No middlemen. Spot currency trading eliminates the middlemen, and allows you to trade directly with the market responsible for the pricing on a particular currency pair.

• No fixed lot size.

In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot Forex, you determine your own lot size. This allows traders to participate with accounts as small as $250 (although we explain later why a $250 account is a bad idea).

• Low transaction costs.

The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. Of course this depends on your leverage and all will be explained later.

• A 24-hour market.

There is no waiting for the opening bell - from Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.

• No one can corner the market.

The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.

• Leverage.

In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

• High Liquidity.

Forex market is by far the most liquid financial market in the world with nearly 3.4 trillion dollars traded every day according to the Bank of International Settlements. Because the Forex Market is so enormous, it is also extremely liquid. This means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (a limit order), and/or close a trade if a trade is going against you (a stop loss order).

• Free “Demo” Accounts, News, Charts, and Analysis. Most online Forex brokers offer 'demo' accounts to practice trading, along with breaking Forex news and charting services. All free! These are very valuable resources for “poor” and SMART traders who would like to hone their trading skills with 'play' money before opening a live trading account and risking real money.

• “Mini” and “Micro” Trading:

You would think that getting started as a currency trader would cost a ton of money. The fact is, compared to trading stocks, options or futures, it doesn't. Online Forex brokers offer "mini" and “micro” trading accounts, some with a minimum account deposit of $300 or less. Now we're not saying you should open an account with the bare minimum but it does makes Forex much more accessible to the average (poorer) individual who doesn't have a lot of start-up trading capital.

What Tools Do I Need to Start Trading Forex?

A computer with a high-speed Internet connection and all the information on this site is all that is needed to begin trading currencies.

What Does It Cost to Trade Forex?

An online currency trading (a “micro account”) may be opened with a couple hundred bucks. Do not laugh – micro accounts and its bigger cousin, the mini account, are both good ways to get your feet wet without drowning. For a micro account, we'd recommend at least $1,000 to start. For a mini account, we’d recommend at least $10,000 to start.

Forex versus Stocks

Forex versus Stocks Advantages

Advantage Forex Stocks

24-hour Trading YES NO

Commission Free Trading YES NO

Instant Execution of Market Orders YES NO

Short-Selling without an Uptick YES NO

24-Hour Market

The Forex market is a seamless 24-hour market. Most brokers are open from Sunday at 2PM EST until Friday at 4 PM EST with customer service available 24/7. With the ability to trade during the U.S., Asian, and European market hours, you can customize your own trading schedule.

Commission Free Trading

Most Forex brokers charge no commission or additional transactions fees to trade currencies online or over the phone. Combined with the tight, consistent, and fully transparent spread, Forex trading costs are lower than those of any other market. The brokers are compensated for theirs services through the bid/ask prices.

Instantaneous Execution of Market Orders

Your trades are instantly executed under normal market conditions. You also have price certainty on every market order under normal market conditions. What you click is the price you get. You’re able to execute directly off real-time streaming prices. There's no discrepancy between the displayed price shown on the platform and the execution price to enter your trade. Keep in mind that most brokers only guarantee stop, limit, and entry orders are only guaranteed under normal market conditions. Fills are instantaneous most of the time, but under extraordinarily volatile market conditions order execution may experience delays.

Short-Selling without an Uptick

Unlike the equity market, there is no restriction on short selling in the currency market. Trading opportunities exist in the currency market regardless of whether a trader is long or short, or which way the market is moving. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. So you always have equal access to trade in a rising or falling market.

More Reasons to Like Forex

No Middlemen

Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located in between the trader and the buyer or seller of the security or instrument traded will cost them money. The cost can be either in time or in fees. Spot currency trading does away with the middlemen and allows clients to interact directly with the market-maker responsible for the pricing on a particular currency pair. Forex traders get quicker access and cheaper costs.

Buy/Sell programs do not control the market

How many times have you heard that "fund A" was selling "X" or buying "Z"? Rumor had it that the funds were taking profits because of the end of the financial year or because today is "triple witching day", all as an explanation of why this stock is up or the market in general is down or positive on the session. The stock market is very susceptible to large fund buying and selling.

In spot trading, the liquidity of the Forex market makes the likelihood of any one fund or bank to control a particular currency very slim. Banks, hedge funds, governments, retail currency conversion houses and large net-worth individuals are just some of the participants in the spot currency markets where the liquidity is unprecedented.

Analysts and brokerage firms are less likely to influence the market

Have you watched TV lately? Heard about a certain Internet stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as "buy" when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it.

IPO's are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses that need the companies as clients. That catch-22 will never disappear.

Foreign exchange, as the prime market, generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in foreign exchange don't drive the deal flow, they just analyze the forex market.

8,000 stocks versus 4 major currency pairs

There are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. Which one will you trade? Got the time to stay on top of so many companies? In spot currency trading, there are dozens of currencies traded, but the majority of the market trades the 4 major pairs. Aren’t four pairs much easier to keep an eye on than thousands of stocks? I’d say so.

Forex versus Futures

Forex versus Futures Advantages

Advantage Forex Futures

24-hour Trading YES NO

Commission Free Trading* YES NO

Up to 400:1 Leverage YES NO

Price Certainty YES NO

Guaranteed Limited Risk YES NO

How You Make Money Trading Forex

In the FX market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

Example of making money by buying euros

Trader's Action EUR USD

You purchase 10,000 euros at the EUR/USD exchange rate of 1.18 +10,000 -11,800*

Two weeks later, you exchange your 10,000 euros back into US dollars at the exchange rate of 1.2500. -10,000 +12,500**

You earn a profit of $700. 0 +700

*EUR 10,000 x 1.18 = US $11,800

** EUR 10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read an FX Quote

Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:

GBP/USD = 1.7500

The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).

When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound.

When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.7500 U.S. dollars when you sell 1 British pound.

The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.

You would buy the pair if you believe the base currency will appreciate (go up) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (go down) relative to the quote currency.

End of lesson one:

in next lesson we will learn and discuss the basic terms used in Forex and how to practice them. Be remember …..

Forex Trading is not a Get-Rich-Quick Scheme!

Forex trading is a SKILL that takes TIME to learn.

HAPPY LEARNIG WITH FOREX SCHOOL

http://fxschool.ning.com/

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Dollar Ends the Week with a Full Blown Rally as the Dow Drops the First Time in 9 Days

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Dollar Ends the Week with a Full Blown Rally as the Dow Drops the First Time in 9 Days

Despite a very light US economic calendar for the end of the week, the dollar managed an impressive advance that spanned its market. With the combined influence of a downturn in investor sentiment and an unexpected boost to interest rate expectations, the Dollar Index would advance for the first back-to-back climb in a month – though Friday’s progress was slightly less assertive than the previous days. Yet, this seemingly reserved improvement would fail to properly reflect the meaningful developments the currency realized through the end of the week. Though the trade-weighted index is heavily influenced by EURUSD (the most liquid pair), the exchange rate has managed to produced three consecutive daily advances for the greenback which has put the pair within ‘follow-through’ distance of 10-month lows. For some of the other majors, the session was even more remarkable. Both AUDUSD and NZDUSD put in for the sharpest declines in two-weeks; and the former would made significant strides towards reversing a six-week bull trend. However, for sheer momentum, GBPUSD’s drop was easily the standout move.

Where would sudden burst of volatility and vitality for the greenback come from? Largely from risk trends. While there weren’t too many particularly new catalysts to rouse fear amongst the speculative crowd, the pressure has been building for some time now. This past week, we have seen Moody’s warn that the US and UK were moving closer to losing their top credit rating, Greece provide an ultimatum and deadline for the European Union to spell out a financial aid package, and more than a few instances of policy authorities rolling back stimulus for the economy and markets. And yet, despite this unfavorable build up for investors, growth and yield-sensitive markets maintained their bullish bearing. While speculation may deviate from fundamentals for a time, one eventually reconciles to the other. Friday, we would see sentiment buckle as Fitch add its own warning to top sovereign credit ratings, EU officials voice differing opinions on its rescue efforts, and a Bank of England central banker warn of major disruptions and a possible double dip recession or his own economy. It is worth noting that this break in bullish pace would come after the Dow Jones Industrial Average marched to 17-month highs while the dollar has resisted an unfavorable break of its own. This points to a general development in the dollar’s bearing on risk trends. With a tempered advance in sentiment (most of what we have seen these past few weeks) the dollar slowly loses ground. However, with a drop in risk appetite, the dollar leverages its value as a safe haven currency. Where is this realignment to investor sentiment coming from? Interest rate expectations.

When gauging a currency’s association to risk trends, there are a few considerations that help define its position on the spectrum (growth potential, fiscal health, etc.). However, no factor has more influence on a speculative bearing than interest rate potential. While the a hike from the Federal Reserve is still a considerable ways off, the timing and pace of US monetary policy is arguably more hawkish than many of its counterparts. Such a qualification can be made despite the FOMC’s vow to keep rates “exceptionally low” for an “extended period” in efforts like today’s announcement that exemptions for banks aimed at supporting mortgage liquidity and the expiration of term facility programs at the end of this month. Despite the near-term embargo on rate hikes, the market’s are still pricing in approximately 90 basis points of tightening over the coming 12 months – the most hawkish outlook in over a month.

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Market Commentary from Boris Schlossberg

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Lesson One on Forex

Dollar Ends the Week with a Full Blown Rally as the Dow Drops the First Time in 9 Days

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