Forex News & Analysis

Japan Currency US Dollar USD/JPY

USD/JPY Stalls Ahead Of 110.00, Solid Support Likely On Dips

There is scope for solid US PMI readings for August which should provide underlying support for the US currency, although it will still be...
UK Currency - GBP

GBP/USD Tests Support Below 1.2800, Traders Look To Punish Sterling Further

GBP/USD is likely to remain vulnerable in the short term as markets look to push Sterling weaker, although there is still scope for short-term...
UK Currency - GBP

EUR/GBP Continues To Grind Higher, Draghi In Focus

Sterling has remained under pressure over the past 24 hours with a steady grind higher in EUR/GBP amid negative UK sentiment. Buyers will look...
Canada Dollar USD/CAD

USD/CAD Slides After Retail Sales Data, Buyers Fight Back

Choppy trading in USD/CAD will continue, but there is the potential for further support on any approach to the 1.2500 area.USD/CAD hit resistance...
Euro Dollar EUR/USD

EUR/USD Fails To Hold Above 1.1800, Caution Ahead Of Draghi

Overall conviction surrounding the dollar remains weak, although short-term EUR/USD direction will be determined by rhetoric from ECB President Draghi.EUR/USD hit a peak around...
Japan Currency US Dollar USD/JPY

USD/JPY Recovers Ground, Rebound In Risk Appetite Curbs Yen Support

An easing of risk aversion will curb yen support, but the dollar will need a stronger catalyst in the form of higher yields to...
UK Currency - GBP

GBP/USD Slides To 6-Week Lows, Yield Support Remains Lacking

In the short term, Sterling is likely to be dependent on support from valuation grounds given a lack of yield support and lack of...
Australian Dollar AUD

AUD/USD Probes Resistance, North Korean Tensions Persist

The Australian currency will gain further support if risk conditions are benign and the US dollar remains under pressure, but there looks to be...
usd/cad

USD/CAD Fails To Recapture Ground, Wider US Losses Dominate

There were no positive fundamentals during Monday, but the Canadian currency made slight net gains as the US dollar registered wider losses. Nevertheless, there...
eur/usd
usd/jpy
aud/usd
gbp/usd
usd/cad
nzd usd
usd/chf
us dollar index

FOREX Forecast Newsletter

Get weekly FOREX forecast straight to your inbox, and become better informed on currency markets. We will never share your personal information with 3rd parties. You can unsubscribe at any time.

The Foreign Exchange Market is the world’s largest market. The global currency markets have reached trading volumes in excess of $5 trillion a day, equating to at least 200 times the size of any individual exchange. The market is traded 24 hours a day, except on weekends.

The market is commonly referred to as the currency market, foreign exchange market, or abbreviated to Forex.

Market Timing

The currency market opens on Sunday at 22:00 GMT and closes on Friday at 22:00 GMT.

As the market operates 24 hours a day, and carries high liquidity, it is less likely to see a gap in prices that is commonly seen in equity markets. The market carries different levels of volatility as it follows the clock around the world. The market open starts in Sydney Australia, after two hours, Asian trading starts to weigh in as markets open in Tokyo. An hour after Sydney markets close, London traders start their day, often triggering a period of elevated volatility, while New York traders add to the volatility in what is commonly known as the overlap.

The period between 12:00 GMT and 17:00 GMT tends to carry the highest level of volatility because the last half of European trading overlaps with the first half of North American trading.

Why is the Forex Market Different from Other Markets?

The foreign exchange market offers leveraged trading, meaning only a portion of the trade size is required as a deposit to initiate a trade. Brokers commonly offer leverage of 1:50 or 1:100, translating to a deposit requirement of 2% or 1% (respectively) of the total trading size. In recent times, leverage has been seen as high as 1:1000, meaning a trade can be initiated with a mere 0.1% deposit.

Leverage is commonly referred to as a double-edged sword. It has the potential to make a trader realize gains rapidly, but also to incur losses rapidly.

The forex market is decentralized, carrying both advantages and disadvantages. A centralized exchange involves middlemen, often increasing costs for the trader, while costs in trading generally only involve the difference in the spread of a pair. A disadvantage is that quotes differ between brokers. It is possible to see currency pairs trading at slightly different prices between brokers, or even in some cases during volatile events, a major difference in prices. These divergences can lead to a frustrating experience if a trader was stopped out because of a price spike that did not occur with other brokers, and can also impact technical analysis, and indicators.

How to Trade the Forex Market?

In the currency market, trades are made in pairs. When one currency is sold, another currency is bought, meaning that a trader will always have exposure to two different currencies.

The eight most traded currencies in the world are the US Dollar, Euro, Japanese Yen, British Pound, Swiss Franc, Canadian Dollar, Australian Dollar, and New Zealand Dollar.

  • As the US dollar is the highest traded currency in the world, the most common currency pairs in the Forex market are EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, NZD/USD, and USD/CAD. These seven currency pairs are referred to as the majors.
  • In addition to the seven majors, there are 20 pairs derived from the remaining seven currencies. These pairs are referred to as cross rates, or alternatively referred to as cross-currency pairs, minor currency pairs, or simply minors.
  • Aside from the majors, and cross rates, there are also exotics. These pairs include currencies from emerging markets or smaller economies. Generally, these currencies that are not as commonly traded.

The currencies can be paired with a major currency, or against another exotic currency. Common exotic currencies are the Swedish Krona, Norwegian Krona, South African Rand, Hong Kong Dollar, Indian Rupee, Singapore Dollar, Turkish Lira, and Mexican Peso. There are several more currencies, but as volumes tend to be low in exotic pairs, spreads or commissions tend to be high, making them less popular.

What Affects Forex Rates?

There are several factors that move the markets. Currencies are traded every day in tourism, international trade, investments, governments, and speculators to name a few. Supply and demand in these areas will move prices.

Monetary policy is a big driver to a currencies value due to sensitivity to interest rate fluctuations. Central banks play a big role in the market, and at times use currency intervention. A central bank may look to devalue its currency to help exports for example, or to combat low inflation. Political and economic instability also influence prices. And while rare, natural disasters also have an impact on currency values.

1,992FansLike
9,753FollowersFollow
1,495FollowersFollow

Live Forex Rates

FX PairsBidAsk
Live FOREX Rates by FXCM

Upcoming Economic Events

Other News

Japan Currency JPY

Japanese Foreign Bond Investment Declined ¥453.2 Billion in Latest Week

Capital flows into Japanese stocks bonds rose declined last week, data from the Ministry of Finance revealed Thursday.Foreign bond investment decreased by ¥453.2 billion in the...
nzdusd kiwi

New Zealand Trade Surplus Narrows to $85 Million in July Vs. $200 Million Deficit...

New Zealand’s trade surplus narrowed last month, although the decline was much less than expected, government data showed Thursday.The merchandise trade balance surplus to...
USA

Dow Jones (DJIA) Futures Backtrack After Biggest Rally in Four Months

The Dow Jones Industrial Average declined on Wednesday, giving back some of the prior session's gains as political uncertainty stoked a broad pullback in...
USA

S&P 500 Futures Sink as Trump Threatens to Shut Down Government

U.S. stocks traded lower on Wednesday after President Trump warned Congress he would shut down the government if his border wall with Mexico isn't...
baltic dry index ship

Baltic Dry Index Falls for Second Session, But More Upside Expected

The Baltic Dry Index fell for the second-straight session on Wednesday after finally snapped its impressive losing streak on Tuesday. On Wednesday, the BDI...