FOREX AVENGER

AUD and NZD Decline on Reduced Risk Appetite 2012

2011-12-28T16:49:00.001-08:00

The Australian and New Zealand Dollars headed for their first weekly loss against the USD this month as well as their first weekly decline versus the Yen in three weeks as Asian equities extended a global slump, reducing demand for higher yielding assets. Putting further pressure on the South Pacific currencies was the release of weak U.S economic data which signaled sluggishness in the recovery of the world’s largest economy, reducing risk appetite further.

The New Zealand Dollar was at 73.07 U.S. cents from 73.11. It has dropped 1.7 % this week. Australia’s dollar was at 91.88 U.S. cents, heading for a 1.4% weekly drop. It slid 1.2% Thursday as a drop in equities discouraged carry trades. In carry trades investors buy higher yielding assets with assets from countries with relatively low interest rates, namely Japan and currently the U.S as well. Borrowing costs are near zero in the U.S. and 0.1% in Japan while interest rates are 3.5% in Australia and 2.5% in New Zealand; this disparity attracts investors to the South Pacific nations’ assets.

Australia’s currency has risen 51% in the past 12 months against the greenback, the top performing currency against the Dollar as the Reserve Bank of Australia became the first central bank to increase borrowing costs twice this year. However, investors are becoming more skeptical as to the chances of a 3rd consecutive increase this December, putting more strain on the AUD.

source: forexyard.com

Concerns over Local Currencies’ Strength Boost Dollar 2012

2011-12-28T16:49:00.000-08:00

Indications from around the globe of a more restrictive official stance toward capital flows and currency volatility have been contributing to a reduction in risk appetite in trading recently. Concerns in countries outside the U.S. and China are mounting over the weak Dollar and Yuan. Recently several emerging-market central banks have taken measures seen as an attempt to control their currency’s appreciation versus the Dollar. The link of the Yuan to the weakening Dollar continues to push the Chinese currency down, adding to pressure from China’s export competitors to let the Yuan appreciate.

Brazil, South Korea and Indonesia have unveiled this past week various measures and forms of capital control to help better manage foreign exchange risks and imbalances. These measures are seen as attempts to limit their respective currencies’ appreciation versus the Dollar.

As the U.S is the world’s largest importing economy and China is the world’s largest exporting economy the continuous weakness in these currencies is hurting exporters in competing countries. The exporters suffer both from erosion in profits as well as extreme competition from China which hinders global economic recovery.

This concern over the strength of local currencies aided the USD during Thursday’s trading and if the restrictive stance is set to continue, these one sided interferences with the exchange rate might provide a much needed boost to the Dollar.

source: forexyard.com

Crude Oil Prices Set to Decrease 2012

2011-12-28T16:48:00.002-08:00

Crude oil rose above$80 a barrel on Wednesday as the dollar weakened, prompting investors to once again buy into commodities. However, as I will demonstrate below, Crude Oil may very well be heading for a reversal later today. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

• The indicators used are the Slow Stochastic, RSI and MACD.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: The MACD indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future.

Crude Oil 4-Hour Chart

source: forexyard.com

U.S Unemployment Claims to Impact the dollar 2012

2011-12-28T16:48:00.001-08:00

- It’s the primary gauge of consumer spending, which accounts for a majority of overall economic activity.

- British retail sales have stayed unchanged in the past 2 months, disappointing the Pound. This time, they’re expected to rise by 0.6%. Like in every country, this is a major release; any number will move the market.

13:30 GMT U.S Unemployment Claims

- The number of individuals who filed for unemployment insurance for the first time during the past week.

- This is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes.

16:00 GMT EUR ECB President Trichet Speaks

- The president of the European Central Bank sometimes slips a worried call that shakes the markets, although he’s been rather mild in the last rate decision.

- This week, he speaks in three events: the first was on Wednesday at 8:40 GMT, the second, that focuses on monetary policy, will take place Today at 16:00 GMT is of higher importance, and the third one is about the exit strategy to the crisis, and will happen on Friday at 10:30 GMT – probably the most important speech.

- As head of the ECB, which controls short term interest rates, he has more influence over the EUR value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.

source: forexyard.com

The EUR Turns Bearish on Waning Risk Appetite 2012

2011-12-28T16:48:00.000-08:00

The single Euro-Zone currency slid broadly on Thursday as investors’ revived safe-haven demand for the U.S. and Japanese currencies accelerated the EUR losses. The EUR weakened as equity and commodity markets fell encouraging investors to pare back exposure to risk and buy back the U.S and Japanese currencies against perceived riskier currencies. On Wednesday, the EUR climbed more than half a percent against the dollar but struggled on Thursday to break back above $1.5000.

The European currency fell 0.4% to $1.4911 vs. the U.S dollar on speculation the German economy could face a double-dip recession in late 2010 or early 2011 as extra public spending are withdrawn. The EUR currency also slid to a more than 2 week low against the Japanese yen, although later rebounding to 132.58 yen. However it was still down 0.9% for the day in volatile trading with almost 2 yen separating the day’s high and low.

The British pound depreciated for the first time in 5 days against the EUR, weakening 1% to 89.50 pence. The Pound also dropped vs. the U.S dollar 0.7% to $1.6644 today.
The Sterling fell for a 3rd day versus the U.S dollar after the Daily Telegraph said U.K. lenders are in a worse state than those elsewhere, citing the world’s largest credit-checking company. Analysts said that there are ongoing concerns about the state of the banking sector in the U.K., and that is weighing on Sterling.

source: forexyard.com

Potential Reversal for GBP/CHF 2012

2011-12-28T16:47:00.000-08:00

The GBP/CHF pair provides strong signals for a possible change of trends. The pair is reaching towards a support level at the moment. If the level is breached, the downward move is likely to extend.

• The chart below is the GBP/CHF 4-hour chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The chart provides a very distinct bullish channel. However, the chart is touching its lowest border.
• A bearish cross on the Slow Stochastic has successfully predicted the modest bearish correction that we’re currently experiencing, which led the pair to the 1.6974 level.
• Currently, both the MACD and the RSI are on the verge of indicating a bearish reversal. If the MACD will indeed perform a bearish cross, and the RSI will drop below the 70 line (both marked in red), it will be a string sign for a significant drop.
• There are 3 consecutive support levels that can be observed at the moment. The support levels are placed at the 1.6950, 1.6800 and the 1.6650 prices. If a certain level will be breached, the pair is likely to reach towards the next support level.

source: forexyard.com

The USD Rebounds from a 15-Month Low 2012

2011-12-28T16:46:00.002-08:00

The U.S dollar advanced against 10 of its 16 most-traded counterparts after Federal Reserve Chairman Bernanke said yesterday central bank policy will ensure that the dollar remains strong.

The greenback managed a brief rally off Monday’s lows after Federal Reserve Chairman Ben Bernanke said the U.S. central bank is attentive to changes in the currency. The USD immediately jumped off the day’s lows with investors finding it unusual for a Fed chairman to talk on the Dollar. A temporary spike in the U.S. currency after the Fed chief’s comments helped it offset some of its session losses to the EUR but was quickly reversed. The USD turned negative as the Fed’s Chairman failed to convince investors that the U.S. would take action to shore up the greenback.

In Tuesday trading the U.S dollar was slightly up versus majors after the previous session’s sharp drop, supported by waning risk appetite as most Asian stock markets slumped. The U.S currency remained under pressure as U.S. equities advanced before Industrial production report which probably rose for a 4th consecutive month in October, signaling manufacturing is leading the rebound in U.S economy. The positive data suggests improvement in the U.S. economy and may embolden investors to move toward riskier assets and away from the relative safe-haven status of the greenback.

source: forexyard.com

Concerns over Strong Exchange Rate may Support USD vs. NOK 2012

2011-12-28T16:46:00.001-08:00

It looks as if the USD may be getting some support against the Norwegian Krone as the Norwegian government plans to begin withdrawing its stimulus. According to the Finance Minister, Sigbjoern Johnsen, “Norway must remove government stimulus or risk faster interest rate increases that would strengthen the Krone and stifle an export recovery”. As a country that is mainly an exporting country, a very strong exchange rate erodes the exporters’ profits and hinders recovery and economic growth.

Norway’s economy is growing quite well and the government continues to stimulate the economy which supports the Krone further; the reason for it being that investors expect the central bank to continue raising interest rates. This expectation has helped the Krone to be the best performer of the 16 most tracked currencies since the end of June. The Krone gained 7.8% against the EUR and 15% against the USD in that period.

The trend receives support from technical analysis as well as can be seen below

• The chart below is the 2-hour USD/NOK chart by ForexYard.

• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI), and Williams Percent Range.

• There is a fresh bullish cross on the Slow Stochastic which suggests that a bullish movement is building.

• The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• The Williams Percent Range is testing the lower border at the -100 mark, which merely highlights some added upward pressure.

USD/NOK 2-Hour Chart

source: forexyard.com

Dollar Stabilizes before GDP data 2012

2011-12-28T16:46:00.000-08:00

The U.S dollar rose Tuesday as a decline in stocks and dimming expectations about the U.S. economic recovery increased demand for U.S currency perceived as safer. Some investors buy the Dollar, seen as a safe haven, against other higher-yielding currencies and sell assets like stocks and commodities when economic optimism diminishes.

The greenback also climbed on speculation traders exited bets against the dollar before the U.S. Thanksgiving holiday. Analysts said that risk aversion is back in the markets supporting the greenback and putting pressure on high-yielding currencies like the EUR. In the current environment a weak U.S. Gross Domestic Product (GDP) number weighs on sentiment. Traders are a little more sensitive to sentiment changes because they want to get out of positions ahead of the long U.S. weekend.

The Commerce Department will release its second estimate of 3rd quarter GDP at 13:30 GMT today. The data may show the world’s largest economy expanded at a 2.8% annual rate, compared with the 3.5% estimated last month, according to economists. Traders will keep on eye on the advance estimates on corporate profits to be released together with the GDP report. The U.S. economic data have become more mixed and a further poor U.S. economic data and a general desire to reduce risk ahead of year-end are likely to interact to support the U.S dollar.

The Federal Reserve will also release minutes of its Nov. 3-4 meeting at 19:00 GMT, which will include economic projections for the next two years. Market players will particularly focus on the Fed’s forecasts for unemployment in the U.S.

source: forexyard.com

Scandinavian Economies Leading Europe out of Recession?

2011-12-28T16:45:00.002-08:00

Following last week’s employment data from the United States it appears as if the US Dollar has entered a free-fall and many other global currencies are reaping the benefits. The Scandinavian currencies have largely entered bullish trends against the greenback, but also surprisingly against the EUR.

While some analysts were concerned about a swift Swedish recovery due to the Baltic crisis, most countries in the northerly region have seen strong and steady growth. Norway’s economy has benefited largely from climbing Crude Oil prices and Denmark’s debate about entry into the EU’s legal regulations has helped its economy find direction.

The NOK, SEK and DKK have all climbed to 2-week highs versus the USD, as well as a near-2-week high against the EUR. Following Norway’s decision to hike interest rates recently, the region appears to be on the receiving end of recent risk appetite. If this continues, Scandinavia may find itself leading the broader region out of this economic downturn.

Technical Analysis

- The chart below is the 2-hour EUR/SEK chart by ForexYard.

- The indicators used are the Relative Strength Index (RSI) and the Stochastic (slow).

- Point 1: The RSI shows that this pair is currently over-sold and experiencing upward pressure.

- Point 2: The Stochastic (slow) shows a deep bullish cross followed by an upward cascading price movement. This suggests that there is momentum behind the current upward correction.

source: forexyard.com

Dollar Gains on U.S. Unemployment Data 2012

2011-12-28T16:45:00.001-08:00

The dollar rose against most of it major currency pairs on Thursday after U.S. weekly jobless claims came in lower than expected.The weekly report has had greater impact on trading in recent months because of investor concern that the U.S. economic recovery will be tepid and creates few new jobs to replace those lost during the recession.

The USD/JPY cross is actually currently trading higher by 80 pips today at 90.47. However, against the EUR, the Dollar is trading higher by 150 pips at 1.4855, as we see a sharp correction in the pair’s behavior. The GBP/USD pair is level today at 1.6550, as market volatility seems to have slowed down as late night trading approaches.

As for tomorrow, many impacting economic indicators are expected from the U.S. economy. Traders are advised to pay special attention to two leading indicators, the U.S Trade Balance and Prelim UoM Consumer Sentiment. A positive result from both this indicators might boost the Dollar towards another day of rising trends.

source: forexyard.com

Swedish Krona Continues to Gain on the Dollar 2012

2011-12-28T16:45:00.000-08:00

The Swedish krona continues to be one the strongest performing currencies against the dollar. Since the beginning of the month, the krona has climbed over 2.5% on the greenback. Last week the outlook for the economic recovery in Sweden was updated as signs the global economic crisis is weakening. This was a catalyst for the krona as the currency further strengthened, particularly against the dollar.

The economic output of Sweden is predicted to fall by 4.9% this year while growing by 2% in the following year. This is according to the Sweden Ministry of Finance. The previous forecasts were slated to be a contraction of 5.2% for the current year and growth of 0.6% in the following year. Unemployment forecasts were also reduced for next year to 10.7% from 11.4%.

The revised forecasts were followed by strong comments from the Swedish Finance Minister, Anders Borg. Borg would like to see further economic policy enacted to assist in the expansion of the Swedish economy. Along with a government stimulus package and spending on new infrastructure projects, the government is in the position to further cut taxes.

These economic measures bode well for the Swedish economy and in particular the krona. It may explain why traders have bid up the price of the krona in recent trading. As the dollar continues to fall against the major currencies and the Swedish government continues to submit favorable legislation on the part of the economy, being short on the USD/SEK is preferred.

source: forexyard.com

EUR’s Trends to be Set by German ZEW Economic Sentiment 2012

2011-12-28T16:44:00.001-08:00

The EUR’s trends for the upcoming day are likely to be set by the outcome of the German ZEW Economic Sentiment publication at 10:00 GMT. The forecast is 58.9, versus the 56.9 previous result. A result matching the forecast, or even better is likely to boost the EUR. Therefore, we could see the EUR/USD cross surpass the 1.5050 level. However, a result worse than this could lead to a very bearish EUR indeed. Traders, it is highly recommended that you open your positions in the EUR’s main crosses as soon as possible.

source: forexyard.com

EUR/USD Hits $1.50 level 2012

2011-12-28T16:44:00.000-08:00

European’s currency rose against a broadly weaker U.S. dollar yesterday after the Group of 20 promised to keep stimulus policies in place until the global economic recovery was assured. The EUR is trading about 1% higher against the U.S. dollar amid general risk appetite for high-yielding assets on Tuesday.

The European currency’s strength was in line with other global currencies that took advantage of renewed risk appetite that suggested U.S. interest rates will stay low for some time; particularly after last week’s soft U.S. jobs data

source: forexyard.com

The U.S Dollar Slips after Fed Decision 2012

2011-12-28T16:43:00.002-08:00

The USD lost some ground against major counterparts Wednesday after the Federal Reserve left Interest Rates unchanged and made only slight changes to its monetary statement. The greenback slid 0.9% to $1.4860 per EUR from $1.4724 yesterday.

It touched $1.4902, the weakest level since Oct. 27. The U.S dollar suffered a broad-based decline, trading lower against every major foreign denomination except the Japanese yen. The Dollar advanced 0.8% to 91.03 yen, from 90.33.

As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. The central bank said it would buy $175 billion of agency debt, down from prior plans to purchase $200 billion, as there was a limited availability of the securities.

The Dollar was not forecast to gain any serious ground to the EUR for many more months or at least until the U.S. Federal Reserve decides the time is right to raise rates. A decision and statement later Wednesday from the Fed should confirm that will not come for some time.

source: forexyard.com

U.S. Unemployment Claims to Set the Pace of the USD 2012

2011-12-28T16:43:00.001-08:00

The U.S. Unemployment Claims Report will set the pace of the USD today. Despite the Dollar diving against the GBP so far today, in the coming hours there is some mouthwatering data that is set to be released from the U.S. Britain kept her rates unchanged earlier today, as the Bank of England (BoE) revealed that its quantitative easing will conclude sooner rather than later. This is why the GBP/USD cross is set for a 3 day winning streak. The pair is already up by over 100 pips today at the 1.6618 mark.

However, in the coming few hours, the leading currencies, such as the GBP/USD cross will be under much pressure from the Dollar, as a string of data is set to be released from the U.S. At 13:30 GMT, the Unemployment Claims, Prelim Nonfarm Productivity and the Prelim Unit Labor Costs will all be published simultaneously from the U.S. Surrounding these releases; there will be very high volatility in the forex market. Thus to open big positions in the U.S. Dollar now will be the wisest decision that you make this week.

source: forexyard.com

USD/JPY on Course for Bearish Correction 2012

2011-12-28T16:43:00.000-08:00

USD/JPY sustained upward movement has finally pushed its price into the over-bought territory on the hourly chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

USD/JPY Hourly Chart

source: forexyard.com

USD/ZAR Looks to Drop towards the 7.60 Level 2012

2011-12-28T16:42:00.001-08:00

After stretching the Fibonacci Retracement lines, it becomes very clear that the pair is testing a very significant support level at the moment. If the pair will breach this level, the next support level looks to be located at 7.60.

• The chart below is the USD/ZAR chart by ForexYard.

• The technical indicators used are the Bollinger Bands, the Relative Strength Index (RSI), the Slow Stochastic and the MACD/OsMA. The Fibonacci Retracement lines are used as well.

• The Slow Stochastic shows a sequence of bearish crosses, and has recently located below the 20 line. This indicates that the pair’s downtrend could extend.

• The MACD provides a clear bearish signal as a bearish cross has recently taken place. The MACD is pointing directly down, strengthening the bearish indication.

• The pair is currently traded around the 50% line located at the 7.74 level. It seems that if the pair will breach the 7.725 level, a sharp drop could take place with potential to reach the 7.60 level – the 38.2% line, the next significant support level.

• The RSI is currently located near the 30 line. If the RSI will drop below this line, this will state that the pair has reached the Over-Sold zone, and could put extra bearish pressure on the pair.

source: forexyard.com

USD/NOK Expected to Rebound Today 2012

2011-12-28T16:42:00.000-08:00

In yesterday’s trading, the USD/NOK cross experienced much bearishness, as it now stands at 5.6840. However, it seems that this trend may be coming to an end. I will illustrate below that the USD/NOK may very well be heading for a reversal. Forex traders have the opportunity to wait for the upward breach on the hourlies and go long in order to ride out the impending wave.

• The technical indicators that are used are the Williams Percent Range and Slow Stochastic.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The Williams Percent Range indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

USD/NOK 4-Hour Chart

source: forexyard.com

EUR/USD Channel Line 2012

2011-12-28T16:41:00.001-08:00

A long term perspective may be taken with an existing channel line and an opportunity for entering the market may exist for the EUR/USD pair.

The original trend line (1) has been drawn, connecting with yesterday’s closing price of 1.4732. A parallel channel line (2) has been drawn from the prominent peak of 1.3630. Notice the pair has dropped down to the original trend line at yesterday’s close and is now proceeding upward. This may present an opportunity for entering into the market with a new long position.

source: forexyard.com

Impending Bearishness for GBP/USD 2012

2011-12-28T16:41:00.000-08:00

The GBP/USD cross has experienced a bullish trend for the past day. However, it seems that this trend may be coming to an end, as described below. Forex traders can take advantage of this imminent downward movement by entering short positions at an excellent entry price.

• The technical indictors used are the Slow Stochastic, Relative Strength Index (RSI) and Williams Percent Range.

• Point 1: Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-bought territory, indicating downward pressure.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Williams Percent Range also supports the downward direction.

GBP/USD Hourly Chart

source: forexyard.com

M 2012

2011-12-28T16:40:00.000-08:00

1.

M1

Money supply component which consists of all cash in circulation, plus all of the money held in checking accounts, as well as all the money in travelers checks.

2.

M2

Money supply component which consists of M1 plus all of the money held in money market funds, savings accounts, and small Certificates of Deposits.

3.

M3

Money supply component which consists of M2 plus all of the large Certificates of Deposits.

4.

Maintenance

A set minimum margin that a customer must maintain in his margin account. See also: Maintenance Margin

5.

Maintenance Margin

The minimum margin that must be available in an account to support all open trades.

6.

Make A Market

A dealer makes a market by providing a two-way quote a bid and ask price in which they stand ready to buy or sell. In this way, dealers are also known as market makers.

7.

Managed Float

Exchange rate policy where central banks regularly intervene to stabilize and/or steer the direction of their currency.

8.

Manual Trader

A trader that inputs his/her trades manually without an API.

9.

Margin

The minimum deposit required to maintain an open position. For example, with an open position of $250,000 and a leverage of 50, the required margin would be $5000.

10.

Margin Account

An account that allows leverage buying and short selling on credit.

11.

Margin Call

A notification that more funds must be deposited into an account because the value of the account has fallen below the minimum margin needed to cover the size of existing positions.

12.

Mark-To-Market

For an open position, what its value would be if it were closed out at the current market rates.

13.

Market Close

In the 24-hour forex market, the market never closes. For administrative purposes, many banks institute 5pm EST as the market close in order to differentiate between value dates, as well as More…

14.

Market Maker

A dealer who provides a two-way quote a bid and ask price in which they stand ready to buy or sell. In this way, dealers are also known as market makers.

15.

Market Order

An order for immediate execution at the best available price.

16.

Market Rate

The most current quote for a currency pair.

17.

Market Risk

The risks that occur when demand and supply pressures in the market cause the value of an investment to fluctuate.

18.

Martingale System

A betting strategy where the gambler doubles his/her bet after every loss, so that the first win recovers all previous losses plus wins a profit equal to the original stake. This strategy More…

19.

Maturity

The date on which payment of a financial obligation is due.

20.

Maximum Leverage

The biggest position that a margin deposit would cover. At a leverage of 50, one could enter a maximum leveraged position of $100,000 by depositing $2,000 worth of margin.

forexglossary.com

Q 2012

2011-12-28T16:39:00.003-08:00

1.

Quantitative Analysis

A technique used to analyze an observed behavior by employing complex mathematical and statistical modeling, measurement, and research.

2.

Quantitative Easing

Quantitative easing is a monetary tool used by central banks to encourage spending within an economy. One of the most well-known instances of quantitative easing remains the Bank of More…

3.

Quote

When both a bid and ask price are provided for a currency pair.

4.

Quote Currency

The second currency of two in a currency pair. For the EUR/USD, USD is the quote currency. The exchange rate quoted is how many units of the second currency you will receive for one unit of More…

forexglossary.com

P 2012

2011-12-28T16:39:00.002-08:00

1.

Par

The official value of a currency.

2.

Par Spread

The term used to describe the situation where the bid and ask prices for a forward spread rate are identical.

3.

Paris

Nickname for the US Dollar-French Franc currency pair before the French Franc was converted to the Euro.

4.

Parity

See Purchasing Power Parity.

5.

Partial Lot

Some brokerages allow trading in partial lots, which are fractions of 100,000 units that normally make up a full lot.

6.

Pegged

A system where a currency’s value is tied with that of another currency. For example, the Chinese yuan with the US dollar. Most pegs are allowed to deviate within a small band.

7.

Petrodollars

Refers to the forex reserves as a result of oil sold by oil producing nations.

8.

Pip

The smallest upward or downward price movements quoted in forex. In EUR/USD, a movement of 0.0001 is one pip (for example, from 140.005 to 140.004 euro). In USD/JPY, a movement of 0.01 is More…

9.

Point & Figure Charts

Technical analysis graphs that focus solely on price without any consideration of time.

10.

Political Risk

Changes in government policy or to a wider extent, government instability that might have negative effects on the currency.

11.

Position

A trade that is still in effect. See Open Position and Closed Position.

12.

Premium

See Carry.

13.

Premium Spread

Refers to the situation where the bid price of a forward spread rate is greater than the ask price.

14.

Price

The cost of purchasing a second currency in terms of a first currency.

15.

Price Transparency

The ability of all market participants to trade at the same price.

16.

Principal Value

The original amount invested.

17.

Principals

Refers to the major currencies that are traded.

18.

Producer Price Index

An economic indicator that gauges the month-to-month price change that producers receive for their output.

19.

Profit Taking

Closing a position in order to realize a gain.

20.

Purchasing Power Parity

Refers to functional equivalency. It is the relationship between the amount of currency needed to buy a common good in one country and the amount needed to buy the same good in the second More…

forexglossary.com

N 2012

2011-12-28T16:39:00.001-08:00

1.

OCO

See also: One Cancels the Other Order

2.

Odd Lot

A non-standard transaction size. In forex, a standard lot is usually 100,000 units of a particular currency.

3.

Off-Shore

A business entity that may or may not be physically located in a country, but whose operations and regulation fall outside the country, primarily because it is incorporated elsewhere.

4.

Offer

Also known as the Ask Price, it is the price at which a seller is willing to sell.

5.

Offer Price

See Offer.

6.

Old Lady

Term for the central bank of England.

7.

Omnibus Account

An account that one futures commission merchant carries for another in which the transactions of multiple individual account holders are combined. The identities of the individual account More…

8.

One Cancels the Other Order

Two orders that are submitted simultaneously. If either one is executed, the other one is automatically canceled.

9.

Open Order

Buy or sell order that does not expire until canceled. In theory the order does not expire. However, it usually does so at the end of the trading month rather than lasting forever.

10.

Open Position

A position whether long or short that is subject to market fluctuations and thus profits or losses. See also: Closed Position

11.

Options

The right, but not the obligation, to buy (long call) or sell (long put) an underlying asset.

12.

Order

Instructions to buy or sell.

13.

Oscillators

Technical analysis tools that provide buy and sell signals, characterized by a signal that oscillates between overbought and oversold levels.

14.

Out of the Money

When the strike price of the option is more expensive than the underlying asset’s current price.

15.

Over the Counter

Refers to trading that is not done over a formal exchange. Traditional forex is traded over the counter, meaning traders entered into forex transactions with one another over telephones or More…

16.

Overbought

A currency pair is overbought when its price rises much more quickly than usual in response to net buying. Once overbought, the pair is then expected to make a contrarian move, meaning its More…

17.

Overheated Economy

An economy with inflation and high interest rates.

18.

Overnight

Trades that extend past the current trade day into the next.

19.

Overnight Limit

The maximum amount of a net long or short position that a dealer can carry over into the next dealing day.

20.

Overnight Position

A dealer’s net position that is carried into the next trading day.

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