Forex Investment and Currency Trading

Where do most foreign exchanges take place?
About 32 percent of all currency trades are handled through financial institutions in the United Kingdom, even though the British pound is not as a widely traded as some of the other key currencies, such as the U.S. dollar, the Euro, the Japanese yen, and the Swiss franc. U.S. financial institutions rank second in the volume of foreign exchange transactions handled, but that’s a distant second – just 18 percent of foreign exchange transactions are handled by U.S. institutions. Japanese financial institutions rank third, with 8 percent of the transactions passing through their doors. [...]

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Forex is actually a short way of saying foreign exchange currency trading. Today the Forex market is by far the largest and most liquid market in the world. On average more than US$ 1.9 trillion is traded each day in the foreign exchange market. That’s several times more than the daily volume in the world’s second-largest market – the U.S. government securities market. In fact, Forex trading volume translates to more than US$200 in foreign exchange market transactions every business day of the year for every man, woman, and child on Earth!
Not only is the total volume hard to fathom [...]

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USD consolidated the losses suffered following yesterday’s US rate decision, with DXY trading around 0.5% lower than pre-FOMC levels at around 79.2. A moderate pick-up in risk appetite was observed overnight with AUD/JPY rallying up to 103.71 and EUR/JPY reaching a new all time high of 169.05. With yesterday’s FOMC rate announcement out of the way, markets will return to data-watching mode with the calendar heavily skewed to US releases. Today’s US GDP revisions should not be market moving leaving the focus on the May existing home sales report (cons. 4.95mn, 1.2%m/m), weekly jobless claims data (cons 375k), and Fedspeak [...]

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Yesterday’s FOMC statement kept rates on hold and shifted toward greater inflation risk and less economic risks, but with both roughly balanced there was no hint of an imminent tightening and the dollar was sold aggressively to EUR 1.5670.  Early London traders sold Euro to the 55 day moving average around 1.5625 but continued softening of US yields sparked Euro buying to near 1.5740 resistance.  The 2 year USD swap spread has now dipped 30 bps from near 4% in mid-June, yesterday representing a key reversal day which suggests more USD downside.  The Dow’s negative open, now -200, reflects continued [...]

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