By: Ben Finance
Currency markets are getting jittery – there is no doubt about that. There are a number of factors combining at the moment which make the foreign exchange or forex markets more interesting if you are the owner of a financial spread betting or CFD (contracts for difference) trading account.
Many widely-traded currencies are currently involved in what some analysts describe as "a race to the bottom" – the governments and central banks responsible for them are printing money (called ‘quantitative easing’ by economists) making their currencies cheaper than other leading currencies. This will help them to export goods more cheaply, and might even help to create jobs.
For a long time now, China has been the workshop of the world, and Chinese factories and exporters have been busy filling the shelves of shops in Europe and North America. However, in the wake of financial crisis in 2008, developed countries have suddenly found themselves in need of jobs and exports. With interests rates as low as they can go, central banks have also started printing money.
The most popular currencies for traders are traditionally the US dollar, the euro, the Japanese yen, and the British pound. The major currency to sell over the spring and summer months has been the euro, as the European Central Bank and eurozone politicians have struggled to contain the fall-out from the Greek debt crisis.
The trick with currency trading is picking the currency you want to ‘buy’ against the currency you want to sell. In the case of the euro, many traders opted to buy US dollars and sell euro. With a spread betting or CFD trading account, this would involve a currency ‘pair’ like EUR/USD. This would show you how many US dollars it takes to buy a euro. If you wanted to ‘sell’ the euro, you would choose to make a sell order on this currency pair, as you would expect the number of dollars it takes to buy a euro to go down as the euro weakens.
You don’t need to see a USD/EUR currency pair: if you want to back the euro against the dollar, you buy EUR/USD. If you want to support the dollar instead, you would sell it.
Of course, now the euro has strengthened against the dollar again, but all governments in the developed world are becoming concerned about domestic unemployment, trade balances, and a lack of proper economic growth. While the euro has been recovering over the last couple of months, the dollar has been ailing, sinking in value against other major currencies.
Another popular trade has been selling the dollar against the Japanese yen. The appreciating yen has got the Bank of Japan nervous, however, and on 15 September the bank sold two trillion yen in an effort to make its currency cheaper. The yen had already risen to its highest level against the dollar since 1995, showing what a good trade it was for spread betters.
The move by a central bank to try to devalue its currency has caused a sharp intake of breath on trading desks around the world. Why? Because this intervention by a central bank is unpredictable. Usually banks restrict themselves to carefully scheduled announcements about interest rates and borrowing, but to catch the market out, the buying and selling of large amounts of currency by a major player like
I'm love trading amongst other things. Spread betting & CFD Trading are passion. A leading UK Financial spread betting & CFD Trading provider with an user friendly trading platform.
Article Source: http://www.ArticleBiz.com
Currency markets are getting jittery – there is no doubt about that. There are a number of factors combining at the moment which make the foreign exchange or forex markets more interesting if you are the owner of a financial spread betting or CFD (contracts for difference) trading account.
Many widely-traded currencies are currently involved in what some analysts describe as "a race to the bottom" – the governments and central banks responsible for them are printing money (called ‘quantitative easing’ by economists) making their currencies cheaper than other leading currencies. This will help them to export goods more cheaply, and might even help to create jobs.
For a long time now, China has been the workshop of the world, and Chinese factories and exporters have been busy filling the shelves of shops in Europe and North America. However, in the wake of financial crisis in 2008, developed countries have suddenly found themselves in need of jobs and exports. With interests rates as low as they can go, central banks have also started printing money.
The most popular currencies for traders are traditionally the US dollar, the euro, the Japanese yen, and the British pound. The major currency to sell over the spring and summer months has been the euro, as the European Central Bank and eurozone politicians have struggled to contain the fall-out from the Greek debt crisis.
The trick with currency trading is picking the currency you want to ‘buy’ against the currency you want to sell. In the case of the euro, many traders opted to buy US dollars and sell euro. With a spread betting or CFD trading account, this would involve a currency ‘pair’ like EUR/USD. This would show you how many US dollars it takes to buy a euro. If you wanted to ‘sell’ the euro, you would choose to make a sell order on this currency pair, as you would expect the number of dollars it takes to buy a euro to go down as the euro weakens.
You don’t need to see a USD/EUR currency pair: if you want to back the euro against the dollar, you buy EUR/USD. If you want to support the dollar instead, you would sell it.
Of course, now the euro has strengthened against the dollar again, but all governments in the developed world are becoming concerned about domestic unemployment, trade balances, and a lack of proper economic growth. While the euro has been recovering over the last couple of months, the dollar has been ailing, sinking in value against other major currencies.
Another popular trade has been selling the dollar against the Japanese yen. The appreciating yen has got the Bank of Japan nervous, however, and on 15 September the bank sold two trillion yen in an effort to make its currency cheaper. The yen had already risen to its highest level against the dollar since 1995, showing what a good trade it was for spread betters.
The move by a central bank to try to devalue its currency has caused a sharp intake of breath on trading desks around the world. Why? Because this intervention by a central bank is unpredictable. Usually banks restrict themselves to carefully scheduled announcements about interest rates and borrowing, but to catch the market out, the buying and selling of large amounts of currency by a major player like
I'm love trading amongst other things. Spread betting & CFD Trading are passion. A leading UK Financial spread betting & CFD Trading provider with an user friendly trading platform.
Article Source: http://www.ArticleBiz.com
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