Week of Relief for US Currency

The US dollar posted gains against other major currencies this week as the positive macroeconomic data improved outlook for the US economy and helped to attract investors to the currency.

This week has brought good news for the US economy and currency, including the shrinking deficits of the trade balance and the federal budget, the rising import and export prices. These were a good signs, much needed after a wave of awful report in the previous weeks. The uncertainty about the debt situation in the European Union also helped the greenback.

There are plenty of dangers ahead for the dollar, though, and Forex traders should be careful when engaging in trades with this currency. Federal Reserve Chairman Ben S. Bernanke signaled that the Fed is going to maintain stimulus as the economy remains too weak. Economists forecast that next week the reports will show decline of the inflation, the retail sales and PPI. Overall, the economic environment in the US still looks far from good.

EUR/USD fell to 1.4346 from 1.4609 during this week. USD/JPY closed at 80.31, little changed from the opening rate of 80.23, after it slipped to the weekly low of 79.68. USD/CHF advanced to 0.8429 from 0.8348, following the drop to the record low of 0.8325. AUD/USD dropped to 1.0534 from 1.0716

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

Make Money in Forex

How You Make Money in Forex

In the forex 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:

Trader's Action	EUR	USD
You purchase 10,000 euros at the EUR/USD exchange rate of 1.1800	+10,000	-11,800
Two weeks later, you exchange your 10,000 euros back into U.S. dollar 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 a Forex 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:

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 1.51258 U.S. dollars 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 1.51258 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. In caveman talk, "buy EUR, sell USD."

You would buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

Long/Short

First, you should determine whether you want to buy or sell.

If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position." Just remember: long = buy.

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Just remember: short = sell.

"I'm long AND short."

Bid/Ask

"How come I keep getting quoted with two prices?"

All forex quotes are quoted with two prices: the bid and ask. For the most part, the bid is lower than the ask price.

The bid is the price at which your broker is willing to buy the base currency in exchange for the quote currency. This means the bid is the best available price at which you (the trader) will sell to the market.

The ask is the price at which your broker will sell the base currency in exchange for the quote currency. This means the ask price is the best available price at which you will buy from the market. Another word for ask is the offer price.

The difference between the bid and the ask price is popularly known as the spread.

On the EUR/USD quote above, the bid price is 1.34568 and the ask price is 1.34588. Look at how this broker makes it so easy for you to trade away your money.

If you want to sell EUR, you click "Sell" and you will sell euros at 1.34568. If you want to buy EUR, you click "Buy" and you will buy euros at 1.34588.

Cities with the Most Billionaires 2011

When the U.S. economy was riding high for most of the 20th century, it would have been impossible to imagine a foreign city--especially one in a Communist country--with more of the planet's very richest than New York, home of old-money Wall Street. But that indeed is the case. Today Moscow is the city with the most billionaire residents in the world.

The Russian capital boasts 79 billionaires, a stunning increase of 21 in just one year. That more than edges out No. 2 New York, with 59 billionaires, and No. 3 London with 41. Other cities in the top 15 include such rising stars as Mumbai, Taipei, Sao Paolo and Istanbul. Los Angeles manages a tie for No. 8.

The combined fortunes of Moscow's billionaire population top $375 billion, more privately amassed wealth than in any other city in the world.

In Pictures: Billionaire Cities

Despite New York's relegation to second place, the city remains a favored locale of billionaires, whose collective net worth is $221 billion. The Big Apple boasts some of the most expensive ZIP codes in the U.S., due in part to the real estate prices paid by billionaires in this city. Indeed, many Moscow residents own secondary homes in New York, including fertilizer and coal magnate Andrey Melnichenko, whose wife recently closed on a $12.2 million penthouse apartment. Even the world's richest man, Carlos Slim (home: Mexico City), snatched up a $44 million mansion on Central Park last year.

To compile our list, we tallied the primary residences of all 1,210 billionaires on the 2011 Forbes World's Billionaires list, our annual assessment of people sporting seven-figure or higher fortunes in U.S. dollars. We did not take secondary homes into account for this list.

In the U.S. we stuck strictly to city limits. For example, while a smattering of prominent media barons like Viacom founder Sumner Redstone and T.V. tycoon Haim Saban reside in Beverly Hills, they are not included in the pile of Los Angeles residents since Beverly Hills is its own city (although largely surrounded by Los Angeles).

Here are the the world's five top cities for billionaires:

Istanbul, Turkey scores No. 5. Photo: Thinkstock

No. 5: Istanbul
Number of Billionaires: 36
Total combined wealth: $60.5 billion

Billionaires include: Turkey's richest person, Mehmet Emin Karamehmet, chairman of mobile phone company Turkcell; Turkey's former richest, finance and retail scion, Husnu Ozyegin; and Macedonian-born Sarik Tara, founder of construction giant, ENKA.

Hong Kong scores No. 4. Photo: Thinkstock

No. 4: Hong Kong
Number of Billionaires: 40
Total combined wealth: $176.8 billion

Billionaires include: Greater China's richest person, Hutchison Whampoa chairman Li Ka-shing; the Kwok family, the brothers behind Hong Kong's largest real estate developer, SHKP; and Angela Leong, the controversial heiress of Stanley Ho's casino empire.

London scores No. 3. Photo: Thinkstock

No. 3: London
Number of Billionaires: 41
Total combined wealth: $164.3 billion

Billionaires include: Indian citizen Lakshmi Mittal, the world's sixth-richest man thanks to steel-maker ArcelorMittal; daredevil Virgin founder Richard Branson; and Philip & Christina Green, the married couple behind clothing company Topshop.

New York City scores No. 2. Photo: Thinkstock

No. 2: New York
Number of Billionaires: 59
Total combined wealth: $220.8 billion

Billionaires include: media mogul and current mayor Michael Bloomberg; fashion designer Ralph Lauren; and real estate developer-turned-reality T.V. celebrity Donald Trump.

Moscow scores No. 1. Photo: Thinkstock

No. 1: Moscow
Number of Billionaires: 79
Total combined wealth: $375.3 billion

Billionaires include: Russia's richest man, steel magnate Vladmimir Lisin; commodities investor and Chelsea soccer team owner Roman Abramovich; and venture capitalist and Facebook investor Yuri Milner.

Forex Trading Jobs

For those individuals with a desire to enter the Forex market, it is important to know the risks associated with the industry.

Included are the dangers of money loss (mostly due to inexperience), a volatile market, a fast-paced, high stress occupation, and, especially in these times, the lack of solid job security. Also, since Forex trading is international, it takes place 24 hours a day. Many firms do business around the clock; and it is not uncommon for a trader to work odd hours. This can lead to physical and mental exhaustion. If this doesn't deter you, though, then the Forex market can also be a profitable and rewarding career choice.

Trading Forex from Home

Forex trading is often promoted as an excellent work at home option, and almost anyone can do it. To get started you need only gain a deep understanding of the world currency markets, thoroughly understand how Forex works, and come to terms with the risks associated with this type of trading.

The other thing you'll need to do is create an account(s) with an online broker. There are many to choose from!

Keys to Success

Individuals with degrees and experience in the fields of economics, math, finance, accounting, and statistics usually find the Forex market a good fit for their skills.

Individuals in the Forex industry deal with a lot of professionals in the financial world, from a wide range of countries. For certain occupations in the field, a lot of time is spent communicating with these individuals over the phone or via electronic transmissions. Patience, time management skills, and a knack for handling stressful situations are crucial to employment in this field. Also required are strong math skills, an analytical mind, technical skills, and sometimes a fluency in a foreign language.

Entering the Forex Arena

Most financial institutions, and all the major ones, require a bachelor's degree in Economics, Finance, Math, and/or Statistics. At times, though, individuals with degrees in other fields can find work in the financial industry. For higher level positions as fund managers and analysts, an advanced degree and relevant industry experience is usually preferred. However, it is possible to work one's way up the ladder with the minimal requirements of a degree and experience. Many employers highly value a fluency in a foreign language. This is especially true for the Forex industry as professionals in this field communicate with dealers, brokers, and banking professional from foreign countries on a daily basis.

Remember, for those who acquire the necessary knowledge and understand the risks, trading Forex from home - as an independent trader - is the most common practice. To do you will need to create an account with an online broker.

How to Find a Reputable Forex Broker

One with the easiest and quickest approaches to find a Forex broker is by contacting your neighborhood licensing authority. They are accountable for issuing brokers their licenses so that they may be in business enterprise. If a prospective broker does not possess a license, steer crystal clear of dealing with them. Avoid the scam artists who pose as brokers and present wonderful offers that sound also superior to be true. Start out cautiously so that you don’t get taken benefit of before you receive some encounter.
Brokers Build Reputations
Good or poor, Forex brokers create reputations that can be uncovered both by performing investigation over the internet, by phrase of mouth and by contacting governing authorities to determine if any complaints have already been lodged. You may also seek the advice of other traders to see if they have any recommendations that you simply can investigation to come across a fantastic broker.
Protect Yourself
The Forex broker you decide to deal with should certainly have safeguards in location to defend their customers. You will desire to verify and see if they are regulated and by whom. In addition, see what sorts of monetary protections are in place in opposition to fraud and bankruptcy.
Take Advantage of Free Trial Offers
Many very good Forex brokers will give you the probability to take part in trial buying and selling for free. This “play” cash will provide you with an opportunity to notice out how the Forex trading program operates without having you risking any of a single’s money. If you earnings, you don’t really get any dollars, however it is really a secure way to get your ft wet. Forex brokers will from time to time offer coaching video clips and can work with you 1-on-one to tutorial you to successful trading. Service and communication are essential, and via a no cost trial it is easy to see how the prospective business treats consumers and the way they operate.
What Are The Benefits Of A Forex Broker
If you discover that you simply are dealing having a trustworthy broker, see what resources they provide, their processing service fees and investing suggestions pricing. Good Forex brokers will ordinarily present fundamental lessons to obtain you began, on-line investing along with a DVD How-To instruction that may instruct you the small business. As well, they will need to have a 24-hour client support facility study to answer any inquiries.
Forex Broker Costs
Forex brokers will need to be capable to quote costs inside the starting to ensure that there’s nothing hidden to slap you later on. They should be fully transparent in their operations and expenses, and countless good Forex brokers will even offer you deal deals for regular traders. When asking concerns, listen cautiously towards the answers. You must get crystal clear, concise and reliable answers to your concerns.
Comparing Forex Brokers
As it is with something, some Forex brokers are much better than other people, so before settling with any one, it pays to complete some comparison buying. There are internet websites that have comparison charts about the larger firms that allow you to see snapshots from the benefits and drawbacks of their offerings. For the smaller sized brokers, you’ll need to build charts yourself as a way to ascertain who is greater to go with. Consider the fees they assess – larger broker usually assess larger costs, while smaller brokers regularly give much more aggressive service fees.
Forex Brokers and Trading Platforms
One thing that is extremely fundamental to think of is the broker’s trading platform, currencies traded and also the differences in between the bidding/asking prices as properly as the spread. In purchase to figure this out, basically open apply investing accounts among the brokers you wish to evaluate, after which take a search at the variations and similarities of offerings. Finding an excellent Forex broker is often straightforward when you get time, obtain the finest details and perform top quality study prior to going with any of them. In the end, finding into the Forex market and discovering a trustworthy broker you need to work with will take action. The sooner you will get began, the sooner you’ll see a return in your investment. Why not get started these days and commence evaluating.

Interview with Caxton FX: “The Most Successful Traders are also the Most Knowledgeable”

Today’s interview is with Richard Driver, currency analyst of Caxton FX, a provider of various foreign exchange services and oft-quoted expert on currency issues. Below, Mr. Driver explains his firm’s approach to analyzing currencies and offers some insights on specific currency pairs, among other things.

Forex Blog: Could you briefly discuss your background, insofar as it brought you into the foreign exchange market? What services does CaxtonFX provide, and what is your role within the organization?

Prior to joining Caxton FX, my career history was primarily in banking – I initially studied economics at Southampton University. My position as the resident currency analyst entails a variety of roles: I develop the ‘house view’; I am available for clients to contact via email or the phone on currency movements and outlooks; I update the trading desk on developments; and I write daily, weekly and various monthly currency reports for corporates and private clients. I also work closely with our PR team, providing analysis and commentary for media purposes. Finally, I write a daily foreign exchange blog, discussing any issues of interest.

Forex Blog: What tools do you use to analyze currencies? Do you prefer fundamental analysis, technical analysis, or a mixture of both?

Currency analysis involves a mixture of both technical and fundamental but I must admit I prefer fundamental; I find economic data and current affairs much easier to relate than six-digit numbers. The psychology of market sentiment and confidence is what I find really interesting. Having said that, you cannot provide complete analysis without access to an array of charts – support and resistance levels are key, but they are often interlinked with market psychology.

Forex Blog: From your research reports, it looks like your main focus is on the Pound Sterling. Is this due primarily to geographic accident, or does it represent a strategic choice and reflect your expertise?

Our sterling-centric reports are  representative of our client-base. As a London-based company, 99% of our transactions involve sterling, and our reports reflect that. Caxton FX has ambitious plans and we intend to expand internationally; this would transform our client base and our reports would no doubt be adapted accordingly.

Forex Blog: In your April 2011 Outlook report, you projected that both the Pound and the Euro would be weaker against the US Dollar in one month’s time. Can you explain your thought process behind this forecast?

Like many others, we were expecting the single currency to run out of steam after the ECB delivered on its rate rise promise. With currency trends so closely aligned with monetary policy, rhetoric from central bankers like King, Trichet and Bernanke has become pivotal- the inclusion or omission of just a single phrase can have a huge impact on the monthly prospects of a currency. In his ECB press conference, Trichet triggered speculation that it would soon be raising rates once again, whilst the BoE and the Fed remain in wait for growth to take a firmer footing before tightening policy. This improved the outlook for the euro and it continued to build from there.
The US recovery was looking positive just a few weeks ago but has since faltered and its growth prospects for this year have endured substantial downgrades as a result. So as well as its ongoing QEII programme, this has made the greenback very unappealing. We have also been surprised by the market’s resilience to escalating peripheral debt issues, though Greek default concerns have finally dented the euro in the past week or so. The extreme strength of the euro/dollar pairing last month, almost breaching the $1.50 mark, dragged GBP/USD with it. Sterling’s strength against the dollar certainly wasn’t a reflection of positive sentiment towards the UK economy.

Forex Blog: Which currency do you think is most undervalued at the moment, relative to the British Pound and in general?

The Chinese yuan is the most undervalued currency; it is estimated to be 40% off its fair value. Admittedly, the Peoples Bank of China is tightening policy and allowing the yuan to appreciate in a bid to contain soaring inflation levels, but it remains very cheap. The Hong Kong dollar is also very undervalued.

Forex Blog: It appears that central banks are now the largest force in forex markets. Would you agree? How do you expect changes in interest rate differentials will bear on exchange rates in the medium-term?

I’d agree; no other factor consistently holds market focus like monetary policy. Interest rate differentials only take a back seat in times of major uncertainty, such as the Japanese earthquake and nuclear crisis, the political turmoil in the MENA region, and currently the debt crisis in the eurozone. Currencies linked to higher interest rates such as the kiwi and aussie dollars, the euro and the loonie to a lesser extent, are all ‘riskier’ currencies which means any periods of risk aversion cloud interest rate driven trends. If and when this Greek debt issue fades, I expect the euro to rebound, with the ECB highly likely to raise rates in July, and at least once more before the Fed raises rates early next year.

Forex Blog: Most of my readership are American traders. With this in mind, do you think that one’s approach to analyze the forex market should depend on their home country/currency? Do you think that a Dollar-centric approach to trading is misguided?

As the world’s reserve currency the dollar is at the heart of most forex markets drivers, so a dollar-centric approach will at least be a good starting point. I suppose it depends on what is being traded, if the greenback is one side of every transaction then of course a dollar-centric approach can be forgiven. Even when looking at EUR/GBP, the strength of the dollar will be a major factor, but it would help to be a little more flexible when looking at other geographical markets. Nonetheless, given the centrality of the dollar to the currency market, you are far safer in the US taking a dollar-centric view than a British trader would be in taking a sterling-centric approach.

Forex Blog: Do you think the rise in gold and other commodities prices suggests that investors are losing faith not just in the dollar, but in fiat currencies in general? Does this notion play any role in your analytical approach or advice to clients?

There are obviously lots of factors at work here, particularly high global inflation, but I think the rise in gold and silver could well be a result of investors turning their back on the greenback and other currencies. The past few years of financial uncertainty has had a huge psychological impact on investors, and it’s natural for them to target tangible assets which are far more likely to hold their value.

Forex Blog: Is it possible to adapt some of the advice you offer your corporate clients to retail traders (for the benefit of my readers)? Given prevailing market conditions, what advice would you offer traders that are struggling to beat the market?

Research. The most successful traders I know are the most knowledgeable; not just about the forex market, but other markets like bonds, commodities and equities. For retail traders just getting in to the area, setting up a demo account will allow you to try different strategies and find out what works best for you, it might also help you to think a little clearer without the pressure of losing money!