The term ‘Forex’ stands for Foreign Exchange. Broadly speaking, exchanging one form of currency against the other is known as Forex trading. But in reality, Forex trading goes much deeper than this. Forex trading is the trading of one currency against the other (like USD vs Euro) with one known as base currency and the other known as the counter currency. The trade is conducted on whether you think the base currency will rise or fall in price against the counter currency. The trade is conducted in terms of ‘lots’. These represent 100,000 units of a currency. The profit is calculated on the 4th decimal point of change against a pair, with a single change in the 4th decimal point known as a change in 1 pip (percentage in points).
Look away from China
One of the main players in the Forex market at present is China. With a bustling economy and cheap workforce, China has played major roles in the world economy for a very long time. However, the forex reserves fell to its lowest point in 5 years this September at $3.17 trillion. This continues the decline in the world’s largest currency bank for 3 months in a row. The move was a result of China spending its forex reserves to keep the value of yuan stable. However, the Chinese government is already taking steps to remedy this. The primary move has been to crack down on illegal investments and ventures. While this is likely to impact overseas trade, the Chinese government has reassured investors that the move is aimed towards curbing down illegal trades only. Authorized overseas ventures are most welcome in every form. It’s always a good idea to consult with experts if you are considering using the news to invest. Talk to one of the guys at www.trustedbinaryreviews.net to get the lowdown on the latest forex tips.
Indian Financial Troubles on the Horizon
In another news, India is seeing pressure from the heavy fall in the value of pound sterling. As a result of this, according to RBI, the reserves stand at $367.647 billion on October 7, falling by $4.377 billion in the first week of October. India is expected to see further pressure in the coming months as well, according to experts. This is expected due to a projected $26 billion outflow in the next 2 months since a special scheme raised under FCNR-B in 2013 is maturing.
Canada recovering from Loss
On a positive note, Bank of Canada (BOC) has seen a sharp reversal of losses following their comments of injection of fresh capital into the economy. This was positively noticed on the USD/CAD pair. As BOC has revealed, the risk incurred due to inflation is roughly balanced. This has profound implications for the Canadian market and shows a dovish market. Combined with the new housing measures being put into place, the economy may settle down over time into a more comfortable position.
Oil & Precious Metals
However, the same cannot be said on projected oil prices. The main reason is the uncertainty of the OPEC accord in the Vienna meeting due to be held in November.
- The current oil prices seem to be hovering around $50/bbl a week back.
- To ease the pressure on the short term, Saudi Arabia has opted to follow in Qatar’s footsteps of selling government bonds outside their country.
- On the context of a weak overall price, the price of gold is benefitting from a weak USD effect. This happened after news came in from China regarding a boost in credit giving hope for metals.
- The latest London Bullion Market Association meeting at Singapore also indicated that prices of gold are expected to rise by around 7% while that of silver should rise by close to 18%.
Last but not the least, the current patterns in trading show a clear breakthrough above the levels indicated by Ichimoku Cloud, a long-term indicator of trends. While short term trades continue to be a bit risky (trade with caution here), medium term trades are certainly looking to be much better.