The US Forex Market: A Round-Up


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Forex: the global market where the entirety of the world’s currencies trade. Renowned as the largest trading market in the world, exceeding a trading volume of $5 trillion on a daily basis, there are no stock markets that even come close to the sheer grandeur of foreign exchange. Due to the incredibly important role that Forex plays, the amount of news we face on a daily basis is expected, but important to keep track of for those trading within these markets.

With there being many ways for people to trade nowadays, including using a demo trading account to replicate the market through simulated conditions, the industry is becoming available for more and more people and keeping up to date with the latest changes has become even more paramount for seasoned and new traders alike.

So, what is the latest?

The Euro And The US Dollar

Last week, the euro was close to its biggest rise in over four months, as the US dollar has weakened and been stuck in a $1.12-$1.15 range for the previous three months. This has occurred due to the growing anticipations about the likeliness that the European Central Bank will end its motivation before long. However, over the course of the week, the euro has risen to $1.1581, which is the biggest shift it has seen for a considerable period of time.

Regardless of the fact that the euro has increased, weak economic data from Germany and France have put increasing force on the currency, particularly in the light of the US Dollar’s comparative value.

The US Dollar And The Pound

Due to the uncertainties of Brexit, the British pound is currently the weakest of currencies compared to the US dollar, but with the deal facing the all-important vote mid-January, there is a slight chance that things could change for the better. However, with it looking unlikely that the deal will be accepted by parliament, the future still remains fairly uncertain.

Due to the intense uncertainties of the Brexit deal by Theresa May being approved by parliament, the British pound has experienced profound effects as a result.

Since the Referendum took place in June 2016, there has been little growth in business investment, which makes many concerned about the future of the UK economy. Now more than ever, households are borrowing money as opposed to saving and UK stocks have performed significantly worse since the vote.

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Source: Thomson Reuters Datastream

 

USA And China  

Trade talks between China and the USA have been extended in Beijing, which ultimately has caused a rise in oil prices thanks to the Yen and US Dollar’s close-knit operation. Figures show that the US dollar was down 0.63 percent at 108.5 compared to the yen. As China grows to become the world’s new superpower, America are having to fight an increasingly difficult battle, particularly in the light of recent government shutdowns and political unrest. Whether this settles and the US dollar regains it’s power has yet to be seen, but should prove to provide an exhilarating few months for traders. However, China has been seeing some unrest of their own, with economic downfall on the horizon. For this reason, the yen is struggling to stand up against other currencies, including the Australian dollar and the Kiwi dollar.

China vs. Australia and New Zealand

Both the Kiwi dollar and the Australian dollar have fallen more than 0.4 percent, due to fears of the slowdown in China’s economy. With the East Asian country renowned for being the second-largest economy globally, the drop in its December exports hasn’t put it in good light for 2019. With China being Australia’s biggest trade partner, the country is feeling the effects of China’s economic downfall and the data pulled from the recent lack of success in China resulted in both the Australian and Kiwi dollar taking a detrimental fall.

As mentioned before, in addition to having an effect on the Australian and Kiwi dollar, China directly affects the US dollar as it fixes the value of the yuan to the dollar. China’s fixed exchange rate is different to the floating exchange rate that other countries, including the USA, use.

How Exactly Do Changes To China’s Economy Affect The Dollar?

With 80% of new investors in the forex market operating from or within Chinese markets, the prices are currently unstable. So much so, that trading with the yen can prove risky. However, China is still the second biggest stock trading centre in the world to the USA, though it has a difficult challenge of slowing down economic growth in order to evade inflation.

The country is investing in US dollars in order to escape the threat of a financial crisis, as well as not allowing the value of the yen to get too high, in case the economy slows down and proves to cause a problem.

So with the future of the country’s economic system appearing to be very temperamental, the pound has taken a hard hit and become the weakest currency, with the US dollar not far off. 

With currencies dropping and rising frequently it can be hard to keep up to date with the movements. Hopefully, this round-up has bought you up to speed and has given you an insight into how the referendum has had a profound effect on the UK stocks, as well as how China’s economic change has altered Australia and New Zealand’s dollar.

The US dollar is perhaps the most active and arguably strong currencies in the globe, but in the light of political unrest and market uncertainty, it’s unclear as to whether it will remain that way in the future.

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