Forex Trading - Forex Resources

What is the Producer Price Index (PPI)?

Mon, 12 Jan 2009 16:44:45 -0800

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Learn more about the Producer Price Index (PPI)

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The Producer Price Index (PPI) determines the average change in prices which are received by local manufacturers for their output. It can also be termed as weighted index of prices which are calculated at the wholesale level or producer level. National statistical agencies calculate a number of indices and the Producer Price Index is one of them. Weight of PPI is being spoiled by the steady decline in manufactured items as a share of spending.

The PPI is generally meant to confirm the movement in the wholesale markets, commodities markets and manufacturing industries. It includes all of the physical goods-producing industries making the economy of a country but imports are not incorporated in it.

The PPI release consists of three headline index figures which include PPI Commodity Index (Crude), PPI Stage of Processing (SOP) Index (Intermediate) and PPI Industry Index (Finished). PPI Commodity Index normally indicates the average price variation for the commodities like crude oil, steel scrap, coal, etc from the last month.

The goods incorporated in the PPI Stage of Processing Index (Intermediate) are being produced at some level but these goods will be put up for sale to other manufacturers in order to generate the finished product. A couple of examples of Stage of Processing (SOP) products are cotton, lumber, and diesel fuel. The PPI Index (Finished) indicates the last phase of manufacturing and forms the source of the foundation of PPI.

The core PPI figures are the most important source of attracting the traders’ attention. It is calculated by subtracting the food and energy components from the finished goods index. The food and energy components are eliminated due to their instability and unpredictability. The variation in the PPI should always be represented on a percentage basis because small amendment in the PPI can be deceptive. The traders mostly utilize PPI for predicting the value of CPI.

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What are the Most Important Economic Indicators to Track in Forex? Important leading economic indicators?

Fri, 10 Oct 2008 03:57:34 -0700

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Leading Forex Reports Stack

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The traders buying and selling in the forex market rely largely on the information contained in the economic reports released from time to time. They give different indications to the market about the improvement or decline in the country’s economic health. The forex trader has to follow these reports closely, in order to improve his trade. All of these economic reports serve a specific purpose and can be of use in one situation or the other. However, some of the more important economic reports are:

1. The Gross Domestic Product (GDP): GDP is considered as the most important measure of the country’s economy. The two reports which are issued a couple of months before the final figures of GDP are very important. These include the advance report and the preliminary report. They are given a lot of significance by the forex traders.

2. Retail Sales: This report gauges the sum receipts of all retail stores in the entire country. This calculation is commonly developed from a diverse sample of retail stores throughout the nation.

3. Industrial Production: Industrial report depicts the change in production of mines, factories and utilities within a nation. The traders who closely follow this report are normally concerned with utility production.

4. Consumer Price Index (CPI): The CPI is a measure of the average price level paid by urban consumers for a fixed bunch of goods and services. A range of user fees and taxes directly connected with the costs of specific goods also form part of the CPI.

Most important economic indicator to track is undoubtedly Gross Domestic Product (GDP), as agreed by most of the economists. Other key indicators comprise Industrial Production, Purchasing Managers Index (PMI), Producer Price Index (PPI), Consumer Price Index (CPI), Durable Goods Orders, Employment Cost Index (ECI), Retail Sales and Housing Starts.

These economic indicators are essential for the forex traders as they measure the condition of the economy of any given country and an experienced trader judges the future trends in the economic market by studying these indicators.

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What is Gold? What influences the price of Gold (XAU)?

Fri, 10 Oct 2008 03:50:23 -0700

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Gold Bullion XAU

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The Gold is commonly termed as XAU index in economic markets. It is an index which expresses the volume of shares of companies which are mining gold and silver and are listed on the Philadelphia Stock Exchange. It includes a number of companies which are involved in the gold and silver mining industry. It is an index which means that its mere a figure calculated on the price of a set of individual stocks. In other words, we can say that it is a way by which the over all gold and silver mining industry is tracked.

XAU is the most extensively trailed stock index of gold stocks. XAU can not be directly bought or sold, however its future value can be bought or sold. With the ever-escalating universal interest in the gold trade, it is time to take another look at gold and the Philadelphia Stock Exchange Gold and Silver Index from a short-term perception.

There are some brilliant proprietary gold stock indices created by a variety of analysts, but none have yet triumphed in the battle for widespread admiration and following. Gold XAU acts as a barrier against the inflation.

The price of Gold XAU is also connected with the price of crude oil. Since the spike in the crude oil prices over the last a few months, it has been noticed that the price of Gold XAU has also increased a lot. The conflict between Iran, which is the fourth largest crude oil producer and the Western countries, has created world wide concern, thus increasing the price of oil and gold at the same time.

Gold is considered as an alternative to the world’s reserve currency – the US Dollar. It means that the Gold and US Dollar are inversely proportional. It clearly deduces that when the gold prices rise, the dollar goes down.

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What is the Australian Dollar? What influences the Australian Dollar?

Fri, 10 Oct 2008 03:42:06 -0700

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Australian Dollar coin

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Australian Dollar is the official currency of the Commonwealth of Australia including several islands under its influence. Its ISO official code is AUD but it is also commonly written as the dollar sign with the letters AU. At present, it is estimated to hold the sixth place on the list of world’s most traded currencies. It shares about 5% of the world wide foreign exchange business.

The foreign currency traders all over the world like to trade in Australian Dollars because of the high interest rates in Australia. It is also greatly exposed to Asian economic markets and the commodities cycle. The general stability of the economic and the political system of the country also attracts the investors to invest in Australian Dollar.

Australia has a gigantic metal mining industry. Thus when the metal prices tend to go up, Australian Dollar also sees an upward trend. The Australian economy is highly facilitated by strong domestic economic activity. The economy of Australia is mainly dependent on the policies of the West. It’s a capitalist economy and has the GDP per capita income at par with the four leading economies of Western Europe.

Australia has reinforced its relations with China over the recent years. This association has helped a great deal in strengthening the economy of the country, thus escalating the value of Australian Dollar.

One thing which has affected the Australian Dollar in a negative way is the country’s trade deficit which went bad due to famine in some areas of the country and strong requirement to import. Another point of concern is the brisk increase in the domestic housing prices. This has raised the prediction that the Central Bank will have to increase the interest rates to keep the prices and inflation under control. This will stop the crisis from aggravating further and will help the economy to be secure.

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What is the Swiss Franc? What influences the Swiss Franc?

Fri, 10 Oct 2008 03:33:09 -0700

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Swiss Franc Coin

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As clearly indicated by the name - the Swiss Frank is the currency of Switzerland. It is also used in Liechtenstein. It is commonly known as "the Swissy". CHF is the official ISO code of the Swiss Frank to be used by the banks and other financial institutions, however many users of the currency, including stores and advertisers, abbreviate it as Swf or SFr for their own convenience. Mainly Swiss Franc is traded with US Dollar in pair.

It is collectively agreed that Swiss Frank is the only currency in the countries of the Euro zone which has the potential to do better than the Euro, in the case of any dissension between the member countries. It is very strongly backed by the gold and is commonly known as the safest currency to trade in.

There are some factors which influence the Swiss Frank. The top of the list is inflation of the economy. Other major factors include economic contraction, excessive economic growth and political instability. It is carefully termed as a “safe haven currency”. Virtually it has no or zero inflation at all. Another reason for the muscle of the Swiss Frank is a legal necessity that at least 40% is supported by the gold reserves.

Higher the prices of gold in the international market, the stronger the Swiss Frank will be. We know that when a country increases its interest rates, the value of its currency also strengthens. It is because of the fact that the foreign investors are magnetised by the higher interest rates. For example, if the banks raise the interest rates in Switzerland, the shareholder may choose to get rid of other currencies and buy more Swiss Francs. In this case, the Swiss Franc will rise as compared to the other currencies. It is considered as a very stable currency in foreign exchange markets of the world.

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What is the Canadian Dollar? What influences the Canadian Dollar?

Fri, 10 Oct 2008 03:20:48 -0700

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Canadian dollar coin

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The Canadian Dollar is the currency of Canada. In foreign exchange trade, it is also termed as "The Loonie". It is issued by the Bank of Canada which is also responsible for making economic and financial policies for the nation. Many central banks around the world keep Canadian Dollars as the reserve currency.

A major decline was observed in Canadian Dollar against US Dollar during the technological boom of the 1990s that was focused on United States. From that time on, it has made a strong place for itself in the international foreign exchange trading markets.

It has risen against all the major currencies, primarily because of the high prices of commodities, which are exported by Canada. Canada also holds one of the major crude oil reserves on the globe. The main costumer of Canada is United States of America. Thus if the oil prices increase, the Canadian Dollar is also strengthened.

In 2007, the Canadian Dollar rose sharply against the US Dollar because of the constant muscle of the Canadian economy and the weakness of the US currency on the world foreign exchange markets. Since most of the export and import businesses of Canada are linked with United States, so the main interest of the Canadians in the value of its currency against US Dollars is understandable.

Although the Canadian Dollar tends to move along US Dollar in the international markets, yet Canadian Dollar is considered to be more stable than its US counterpart. The swift growth in the value of the Canadian Dollar lifts the price of Canadian exports to the United States, which make up a large part of the economy. With the increase in the Canadian Dollar, it becomes easier for the Canadian industries to buy foreign material and businesses.

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What is the British Pound Sterling? What influences the British Pound?

Fri, 10 Oct 2008 03:15:45 -0700

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British Pound coin

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The British Pound Sterling, commonly known as the POUND is the official currency of the United Kingdom and the Crown Dependencies. When the Euro Zone countries introduced Euro as a single currency, the Pound Sterling became the oldest currency of the world being used. At the moment, it holds the world’s third largest share of global currency reserves after US Dollar and Euro.

On the list of world's most-traded currencies, British Pound Sterling holds the fourth place. The Pound is openly traded in the foreign exchange markets all over the world. Its value fluctuates in relation to the other currencies. It can be said that the value of Pound rises when the traders buy pounds and it falls when the traders sell pounds.

Despite of the fact that Pound Sterling is not fixed to Euro for trading, mostly they move in sync with each other. When the inflation increases and the government decide to increase the interest rate, the value of Pound also boosts against Euro and other currencies. Following the repeated increase in the interest rates in 2006 and 2007, the Pound hit a high against US Dollar for a long time in April 2007.

The pound is largely influenced by the oil production. The oil production by the Britain in North Sea greatly affects the British economy which in turn affects the pound. This clearly indicates that Britain has energy reserves and whenever the oil prices hike, the British pound also amplifies. The Bank of England may need to keep a check on inflation, if the oil prices rise. This will also affect the consumer spending badly.

The British Pound is also largely influenced by the European currency, Euro. If Euro strengthens, the Pound is likely to become weak. Thus, trading Euro with Pound can turn out to be quite a liquid trading relationship.

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What is the Euro? What influences the Euro?

Fri, 10 Oct 2008 03:04:51 -0700

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As the name depicts, Euro is the official currency of the European Union. 15 member states of the organization are currently using Euro for trade. These states include France, Germany, Italy, Greece, Austria, Finland, Cyprus, Belgium, Ireland, Portugal, the Netherlands, Spain and Slovenia. Euro is also used in five other countries with formal agreements which are Monaco, San Marino, Vatican City, Mayotte and Saint Pierre and Miquelon. Without any type of agreements, Euro is also under circulation in six other countries including Andorra, Kosovo, Montenegro, Akrotiri and Dhekelia.

European Union introduced Euro in 2002. At present, Euro is one of the strongest contenders against the US Dollar. The European Standard Bank is the principal bank that makes a decision on the monetary policies like rise in interest rates, keeping inflation checked, etc. Keeping in view its past record (when despite the slow economic growth it kept the interest rates steady) we can say that Euro is less likely to face adjustments in exchange rate.

The influences of Euro are many. It has made many lives simpler by eliminating the currency exchange phenomenon from their daily lives, thus enabling easy payments and allowing to compare prices in a convenient way. At the same time, the negative aspects of the single currency include higher prices and more importantly, the lack of an autonomous economic policy.

Euro is mostly traded in pair with US Dollar. It means that when the US Dollar rises against the Euro, the Euro will fall. For example, if inflation is high and the Federal Reserve lifts the interest rates, this will result in upward trend of the US Dollar and thus Euro will slightly fall. Similarly, as the majority of world oil trade is done in US Dollars, so when the oil prices move higher, the Dollar also strengthens, thus affecting the Euro to decline. Euro is largely dependent on the manufacturing industry of the countries included in Euro Zone. Better production in these countries would increase the strength of Euro.

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Which Forex Currency Tracks What?

Fri, 27 Jun 2008 18:10:37 -0700

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Forex Currency

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The US Dollar is the most common currency that is commonly quoted in trade across the globe. It is one of the most popular currencies in the world. However, there are several other currencies that are actually not affected by the US Dollar movements in the forex market. These currencies may not be as popular as the US Dollar; nevertheless, they hold their own importance and are backed by several factors in their own countries that make them hold their ground strongly, in case of Dollar fluctuations.

The Euro:

European Union decided to have its own currency in 1999 and introduced it in the forms of coins and notes by the year 2002. Since then, the Euro has been one of the strongest contenders against the US Dollar. The EU consists of Austria, Belgium, Greece, Germany, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Socialist countries, which are also the largest countries of EU, hold the reigns of government budget deficits. The ECB or the European Central Bank is the lead bank that decides the monetary policies and aims to keep a check on inflation rather than keeping a check on economic contraction. The ECB has kept steady interest rates in past when there had been an economic slow down. Thus interest rates or adjustments in Euro exchange rates are less frequent.

The Japanese Yen:

Japan is a net importer of goods. However, the US and Europe are its major customer for its machinery and other production. Japan especially needs crude oil to keep its economic machinery running like clockwork. Bank of Japan faced one of the major deflationary crises in 1990s when it was compelled to switch to zero interest policy. At this time, Yen experienced the carry trade – when an entity buys a currency at zero interest rate and parks it in another account with high interest rates. In 1990s, the US treasury bonds and German bunds witnessed many such transactions. This means that the Japanese Yen shall always trade lower against the Euro and US Dollar which gives Yen/Euro trade as a viable pair. The only contention offered to this trade is the Chinese Yuan. China is one of the biggest competitors of Japan. Since china also artificially floats its currency, it may weaken the Yen’s value eventually.

The British Pound:

Britain has oil production in North Sea which can influence its economy. This means that Britain has energy reserves and thus, whenever the oil prices have gone high in past, so has the British pound. However, Britain has been experiencing a net increase in its demand for natural gas which has made it as a net importer of natural gas. This means that if there are any outrageous price spikes in the commodity, it would lead Britain to economic exposure. If oil prices start to head north rapidly, Bank of England may need to keep inflation in check and consumer spending may be severely affected. The British pound is also susceptible to strengthening of European currency. Thus, trading Euro with Pound can be quite a liquid trading relationship.

The Canadian Dollar

It is also referred to as "the Loonie" as it has the bird, huard, on its coin. Loony is the French for huard. Bank of Canada is country’s central bank that dictated the monetary policies for the nation. It holds eight meetings in a year to decide upon the interest rates policy. Canada is also world’s second largest reserve for crude oil with more than 175 billion barrels of reserves. The US is its main customer and if there is an increase in the oil prices, they would further strengthen the Canadian Dollar.

The Swiss Franc

It is commonly known as the "the Swissy". It is one currency that is capable of outperforming the Euro if there is dissention between the EU members. It is backed by gold thus is considered one of the safest currencies. Inflation, economic contraction, political stability and excessive economic growth are some of the factors that affect performance of the Swissy.

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Keys to Forex Trading Success

Tue, 22 Apr 2008 19:24:11 -0700

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Forex trading can be a profitable business and there are a few personal characteristics that most successful forex traders have in common. The following personal characteristics lead to a profitable career as a Forex Trader.

Honesty

Some people believe that to make a sale or make a topic more interesting, they need to exaggerate and make things interesting in order to sell something. These people never go over the bad points, but tend to brush them aside. As a Forex trader, an absolutely essential quality is that of complete honesty. Honesty in Forex trading is a high commodity; it helps build strong business relationships, promotes trust, and earns security from clients. If you are trading your own money - be very honest to yourself and your own personal trading position.

Keep Your Word and Follow the Rules

The saying, “your only as good as your word” is never more true than in this business. When a Forex Trader promises something, it better come true. If a commitment is made, then it needs to be kept.

Its also very important that all Forex Trading rules are followed thoroughly. In the beginning this might be time consuming, but as the Trading continues, the process will become easier to follow and even automatic.

Listen, then Think then Take action

Most people are terrible listeners, interrupting when they shouldn’t, not listening to the full story, and then realizing that they made a terrible mistake because they didn’t listen. In Forex trading it is absolutely essential to listen, then analyze what has been said, and only then take action.

Good Forex traders are known for their listening skills, and thinking abilities. They do not react to what they are listening to before analysing it. Once they have thoroughly thought out the consequences, they will express their ideas and possible solutions

There is No Room For the Ego in Business

The worst business decisions and especially in Forex Trading are based on Pride. Decisions based on pride or arrogance, are the worst decisions that can ever be made. A successful Forex trader is going to base his decision on facts and not based on his previous successes or failures.

Forex Trading Goal Setting

People that are successful in the financial world know how to set goals. They are persistent and unyielding until they do what they set out to do. Setting goals gives you a basic outline of what your total aim is. Many people set goals everyday but the sad part is they never follow through, with not even one of those goals.

Forex Physics

The truly intelligent and successful Forex trader will not overlook the laws of physics. Laws which state that negative feelings promote negative outcomes, and positive outlooks promote positive outcomes. This law known as “The Law of Attraction” states that when a person believes in a positive outcome, he will be surrounded by positive people, positive outcomes, and be successful, but when a person does not believe in himself or that he deserves positive things in his life, that is exactly what will happen. He won’t have anything positive happen in his life!

The first step in becoming a successful Forex trader is developing the right personal characteristics, before learning the technical skills needed in Forex trading. People must develop their personal characteristics before wanting to be exceptional traders.

Forex: The Cash Machine of the World

Mon, 21 Apr 2008 19:58:13 -0700

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Forex (FOReign EXchange) is the cash machine of the world. The international forex market offers the active trader the opportunity to access an interesting investing asset class which offers a large amount of leverage and a market open for trade 24 hours a day.

The cash machine of the world is opened by New Zealand and Australian trading on their Monday morning (while it is Sunday in USA) and close on Friday afternoon in USA (Saturday in Oceania and Asia). Forex is a very exciting market to actively trade.

A forex position is expressed in terms of the first currency in the pair. For example, if you went long on the Euro and short on the US Dollar you would have traded the EUR/USD currency pair.

It is widely reported that the Forex market has a volume of some $1.5 trillion daily, which makes the Foreign Exchange market the largest and most liquid trading market in the world. Because of the sheer volume, the trader can enter and exit their forex trade at any time with minimal execution risk. Also, because of the huge cash machine, no one person, company or entity can control the market. Not even a central bank can control the market price (Of course this has certain exceptions - e.g. the Chinese Yuan, a currency which is still artificially fixed to a certain extent).

The forex market has no fixed address or exchange unlike other worldwide exchanges. The forex trading market operates through an electronic network of banks, corporations and other parties.

How To Succeed In Forex Trading

Mon, 18 Feb 2008 20:11:07 -0800

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As personal technology continues to advance, the more traders participate in forex trading. Forex trading is also becoming a career alternative for many individuals. It offers forex traders with flexible hours, the option to work at home and the potential to earn a very large income.

Despite these benefits, there are also negatives just like any other business venture. Forex trading is like having a business in a sense that many fail. Failure can happen for a number of reasons, such as under capitalization, poor trading plan, poor management and a lack of discipline. Any one of these can cause your venture to collapse.

How do you succeed in Forex Trading? First of all, you need to have developed your own Forex Trading Plan. This plan is what you must follow at all times as it helps you avoid emotional trading, which in the long run will ruin your success in Forex Trading. To succeed in Forex Trading, a plan is essential since those who work through the humble trial and error method will experience limited success in Forex Trading. To increase you knowledge in order to develop your Forex Trading plan, visit our forex trading tips index. This index has pretty much everything a novice trader needs to develop and succeed in Forex Trading. Another good source of information is our Free and official Easy Forex Ebook.

The important tip is to ALWAYS TRADE WITH RISK CAPITAL, which also means to invest with the money your willing to lose.

Easy Forex provides easy access to the necessary technology needed in order to succeed in Forex Trading. In comparison to owning a business, the start up costs for Forex Trading is minimal. How to Succeed in Forex Trading? To succeed, you need to research and develop your knowledge in forex trading, create a forex trading plan and alongside knowledge, develop your trading discipline.

Just like in basketball, you must be in the game to win the game. In order to succeed in Forex Trading, you must be in it to win it also. Any ‘win’ will be well earned. Join us in Forex Trading today!

Top Ten Forex Trading Strategies

Tue, 05 Feb 2008 21:07:38 -0800

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Forex trading is sometimes a very volatile form of investment, with many people losing significant amounts during the trade. This article will address ways to ensure that success will come to you during forex trading. These top ten forex trading strategies will help you on your way to forex trading success!

Top Ten Forex Trading Strategies!

First of all, you need to find out how much money you are willing to lose. It is extremely important to trade within your means. In forex trading, it is inevitable that you will lose parts of your funds at times. There it is crucial that you invest the money that you are only willing to lose. A good way of approaching this is to set aside a certain amount of your savings which is only dedicated to forex trading.

Secondly, you have to implement a forex trading strategy. It is recommended that you develop a forex trading system which you can stick with because having an okay strategy is not good enough on its own. You should initiate this by creating a schedule of when you will participate in the forex trading market. After that, you should set out an organized budget in order to keep in track of the inflow and outflow of funds. Just like the economic and business cycle, forex trading will have its own upturns and downturns. It is important to stick to your forex trading strategy during these movements in order to maximize profits in the long term.

Third, it is important that you focus on the most commonly traded pairs in forex trading. This also means trading alongside the Major Currencies which include the US Dollar (USD), The Euro (EUR), The British Pound (GBP), The Swiss Franc (CHF), Japanese Yen (JPY), The Canadian Dollar (CAD) and the Australian Dollar. These major currencies make up the most common pairs such as GBP/USD, EUR/USD, AUD/USD, USD/JPY, USD/CHF, and USD/CAD.

Fourth, learn how to read and trust trends in forex trading. There will always be slight fluctuations while trading, but currencies generally move in one direction. If you have no idea where to position yourself during a trade, it is usually a safe forex trading strategy to stick with the trend.

Next, you should be prepared to make losses in forex trading. It doesn’t matter how extensive your knowledge is in forex trading, there will always be times where you encounter certain amounts of losses. You need to expect losses from time to time and learn how to put them aside in order to focus on acquiring bigger profits in the future.

Connected with the last paragraph is the importance to avoid emotional trading. You must stick to your forex trading strategy and not deviate due to hunches or ‘gut feelings’. You need to exit forex trading once the signals show that the market is about to swing at an unfavorable direction.

An important tip is to avoid forex trading strategies that you don’t understand. You should invest your time in researching in order to acquire information from forex guides and tutorials. It is extremely important to be aware of forex trading scams. Sometimes, offers pop out telling you that certain companies can make no risk trades to earn profit for you. Anything that sounds too good to be true must be avoided. There is also no such thing as no risk in the forex market. Profits which you attain during forex trading will be well earned if you invest your time developing your own forex trading strategy. The important thing is that you know your strategy well from back to front and are comfortable with the risks and benefits whether you trade on your own or with a broker.

Determine and set yourself a limit to how much you are going to invest! NEVER ever surpass the limit in which you have set for yourself.

Next, you must have an exit strategy. Small losses are a normal occurrence in forex trading, but you must realize when the trend is really going at an unfavorable direction. It is important to recognize these situations and exit the market.

This is similar to the paragraph above. It is important that you cut your losses once you realize that the trade isn’t going your way!

Forex trading is a very volatile market. But if you follow these top ten forex trading strategies and invest time in research, you will be on your way to becoming a successful part-time or full-time forex trader! Download this free ebook to start off. We also have a forex resources section intended to help you about the art of forex trading. If you believe you are ready to try out forex trading, join us here on easy-forex!

What is a currency carry trade?

Wed, 13 Jun 2007 22:10:35 -0700

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What is a currency carry trade? The currency carry trade, known simply as carry trading is a strategy where the investor sells a currency with a relatively low borrowing rate and uses the borrowed funds to purchase another currency with a higher interest rate differential. An investor using this strategy attempts to take advantage of the interest rate differential.

A good example of a currency susceptible to carry trades is the Japanese Yen,whose borrowing rate is at 0.5 percent.

Eg. A trader borrows 2,000 Yen from a Japanese Bank the converts it to Australian Dollars then buys a bond for the equivalent amount. Assuming that the bond pays 5 percent and the Japanese interest rate is 0.5 percent, the trader expects a 4.5 percent profit under the condition that that the exchange rate between the two nations don't change.

Carry trading is risky due to volatile movements of the exchange rates. Using the above example, if the Australian Dollar depreciates against the Japanese Yen, the trader is set to make a loss. Carry trade transactions are usually done with leverage, therefore a small movement in exchange rates would result in massive losses of funds.

The Japanese Yen in recent years had been susceptible to carry trade due to its relatively low borrowing rates.

The European Central Bank

Sat, 07 Apr 2007 22:49:07 -0700

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The European Central Bank is one of the most important central banks in the world, taking responsibility for the monetary policy of the 13 countries of the Eurozone. The ECB was set up on June 1, 1998 and its headquarters are situated in Frankfurt, Germany. It is one of the components of the European System of Central Banks (ESCB) and also the national banks of all 27 member states of the European Union.

The primary objective of the European Central Bank is the ‘maintenance of price stability’ by keeping inflation low with the inflation target at about less than 2 percent. The bank must also support the economic policies of the European Union, which was established in order to sustain high employment levels and non-inflationary economic growth.

In order to fulfill these objectives the ECB maintains monetary policy through main financing operations, deposit facility, marginal lending facility, the conduct of foreign exchange and the promotion of the smooth operation of payment systems. Further tasks in which the ECB is involved in include the issuance of banknotes within the Euro area, collecting statistical information, the smooth conduct of policies which maintain the stability of the financial system and finally working with relationships with relevant institutions of the in the European Union and the international community.

Forextradinghq is dedicated to bringing the most important, up to date news regarding the European economic and financial condition and also its major counterparts in the ‘Major Currencies’ section of the website.