Tug Of War Sparks Volatile Trading In EURUSD

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Tug Of War Sparks Volatile Trading In EUR/USD

Dollar Sinking Ahead Of FOMC Meeting

The dollar has been losing ground in recent weeks on improvements in global economies and weaker than expected data in the US. The combination has packed a one-two punch to the dollar that has the dollar index trading at multiyear lows. With the FOMC meeting just a few days away, and volatility in the world’s top traded pair, traders are asking themselves what to expect next week.

First, what the hell is going on with the EUR/USD? The pair saw a major rally form just a few week’s ago with the release of minutes from the last ECB meeting. The bank indicated it was about ready to begin altering the public’s perception of policy stance and did that very thing with the news. Traders rushed into euro denominated pairs with the expectation the bank was on a path to tightening.

Now the EUR/USD is trading at long term highs and facing resistance for two reasons. The first is that, while sounding a bit more hawkish, this comments from Mario Draghi following the ECB’s policy release didn’t quite ring true. He says the bank is ready to begin tightening, but only when the timing is right and it isn’t right now, and it isn’t expected to be right for a long time. The second is that US President Donald Trump, refuting the media’s coverage of comments from Steve Mnuchin, says he likes a strong dollar, wants a strong dollar and sees the dollar gaining strength on the back of US economic growth.

This has left the EUR/USD trading in limbo. Is it going to strengthen, will the ECB embark on the path of policy tightening or will the US remain the leading economic power? We know for a fact the FOMC is on path of tightening, it only makes sense such a move would strengthen the dollar and send the EUR/USD lower, the problem is such a move has long been factored into the market. What we as traders are looking for in the FOMC statement is a change from the previous statement and/or a variation from expectations.

There is a bit of data due out between then and now but none save one with the power to move this market. In the US consumer spending is due out on Monday and could influence general outlook but is not a driver of FOMC expectations. Likewise, the employment cost index and home sales will influence outlook and may move the dollar but only if they are way, way off expectations. The one data point that could move the pair, other than the FOMC meeting, is EU GDP.

EU GDP is due out Tuesday mornings and could spur hawkish sentiment for the ECB and the euro. The problem is that EU data has been positive but much of it has been only as expected or below expectations, a condition that does not inspire confidence. For now, the EUR/USD is trapped inside a newly formed near term trading range between 1.2400 and 1.2500 while the market tries to decide which economy is stronger and which central bank will make the next move. The ECB is not expected to raise rates for at least a year, at least, but may indicate such a move soon. The FOMC is expected to raise 3 times this year, and could do more if the data were to pick up.

One of the Most Essential Tools in Foreign Trading – The Currency Calculator

You are quite confident that your company has a strong financial standing. Foreign trading has crossed your mind, so you decide to give it a try. Before leaping in the Forex market, there are several things you should know, such as how helpful keeping a currency calculator is. As well as many resources online that may help, here are different gains of having the calculator.

In figuring out the amount being spent on global transactions, the currency calculator is indemnuable. You may be taking money from your business accounts in order to pay for advertising, or you may be using the funds to pay an international business partner for service rendered. Whatever the case, you’ll need to know how to balance your company’s budget, and the calculator will tell you when to spend and when to hold off on a transaction.

Keep in mind that you will need to factor in more than simply the exchange rate for international trading; there are taxes and fees involved, and the amount of taxes taken out of the total transaction amount will vary based on the country you are trading monies or services with. The currency calculator will help you to figure this out as well, so that you will not be surprised by additional fees that may show up on your company’s bank statement.

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Since the economy is constantly changing, you’ll need to keep the calculator nearby so that you can keep up with any declines or increases in the value of certain monies around the world. Take for example, so you know the amount to invest if you are considering purchasing stock in a predestined London company, it will be necessary to put you currency calculator to use figure out the rate of exchange of British pounds to United States dollars. While committing to an investment that will evidently be quite profitable in the future, stay knowledgeable of the rate daily so that you have the ability to assert the stability of your company’s budget.

You can go to sites such as iForex, if you are unfamiliar to foreign trading and you wish to find out more on learning to use your currency calculator. On the site you can look up the glossary to find meanings of terms for a better understanding and the step-by-step guidebook fully explains the process of trading.

Sites such as CNN and Forbes are qualified resources to obtain information on specific companies and to learn which business niches are prosperous worldwide. You’ll also find stock market stats and exchange rates on the site as you read the articles.

U.S.-Japan Tug of War Keeps Yen Traders on Their Toes This Month

(Bloomberg) — A tug-of-war between Japanese and American traders has been keeping yen watchers busy in October, according to a pattern which has emerged in daily price moves for the currency several times this month.

On those days, the yen has shown a tendency to strengthen during U.S. trading hours, as stock market volatility sparks a flurry of haven bets, before weakening again in the Asian session as domestic flows take precedence and the bullish traders back off.

“Global financial markets are starting to rotate around U.S. equities as rising U.S. yields are having an impact, weighing on the dollar-yen,” said Naohiro Nomoto, manager of FX trading at MUFG Bank in Tokyo. “But when trading shifts to Asia, dollar-yen short positions tend to be squeezed.”

Traders anticipating Japanese stocks will follow U.S. peers lower at the Asian open may short the dollar-yen currency pair, only to cover positions if moves are muted, Nomoto said. Then, buying from real money such as Japanese importers sets in temporarily to underpin the pair. Positions are unwound toward the U.S. trading session and the dollar-yen starts to edge down again, he said.

Some market participants may also be using the Cboe Volatility Index, a gauge of equity volatility, as a trigger to place and unwind positions, said Shuntaro Ikeshima, chief manager for FX and financial products trading at Mitsubishi UFJ Trust & Banking in Tokyo.

The Japanese currency has been a haven during the recent sell-off in U.S equities — the dollar-yen is down 1.6 percent since Oct. 2 with the S&P Index down about 9 percent. The pair declined 0.6 percent during the February correction when the American benchmark dropped over 10 percent.

Still, there doesn’t seem to be an imbalance overall in positions favoring either the dollar or the yen, keeping both more or less neutral, according to MUFG Bank’s Nomoto. While leveraged funds continue to hold a net short position on the Japanese currency, they have been cutting bearish bets over the last two weeks, according to the latest Commodity Futures Trading Commission data.

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