Forex Investment and Currency Trading

Trading in cable presents its own set of challenges, because the pair is prone to sharp price movements and seemingly chaotic price action. But it’s exactly this type of price behavior that keeps the speculators coming back – when you’re right, you’ll know very quickly, and the short-term results can be significant.
Trading fundamentals of GBP/USD
The UK economy is the second largest national economy in Europe, after Germany, and the pound is heavily influenced by cross-border trade and mergers and acquisitions (M&A) activity between the United Kingdom and continental Europe. Upwards of two-thirds of UK foreign trade is conducted with EU [...]

[Read more →]

AUD/CAD has found stability around 0.80 after plunging 20% between July and October. Global equities followed a similar trend, suggesting that equities might have supplanted rate spreads as a key driver of AUD/CAD. Indeed, the correlation between equities and AUD/CAD has increased significantly through Oct 2008. However, this tighter correlation did not come at the expense of interest rate spreads but rather reflected a critical underlying concern that was driving both the equity sell-off and the narrowing AU-CA spread: fear of a protracted global recession. Not surprisingly, the correlation between AU-CA 2-yr spreads and the MSCI world equity index increased [...]

[Read more →]

Throughout October USD/CAD was essentially a one-way bet with the pair trading higher all the way from 1.05 levels to 1.30. Two key themes pushed the USD/CAD inexorably higher: rising global risk aversion (and as a consequence, a flight to quality and a bid for the USD) and a continued plunge in commodity prices. Equities have acted as a good proxy for the global risk sentiment theme with the S&P 500 index down 17% in October. Meanwhile, concerns over a
slowing global economy - and likely recession - in 2009 continues to have a material impact on the commodity price outlook. [...]

[Read more →]

EUR fundamentals are poor. As the economy slows rapidly, interest rates must fall further for much longer and short end rate spreads move further against it. The exposure of European banks to emerging markets is another concern, bigger than US exposure in Asia and Latin America and much bigger in emerging Europe, where countries like Hungary bring global crisis within EU borders. Also worry about structural EUR weaknesses. One currency with multiple fiscal policies is a crack in the foundations that only matters in times of acute stress – like now. The ‘Most Ugly’ global FX baton has already passed [...]

[Read more →]