Economic stimulus plan likely to add to deficit
As the U.S. dollar retreats against the euro in forex trading, the news about the economy takes the forefront. Right now, there are estimates that a massive $1.2 trillion deficit is expected for fiscal year 2009.
Part of that figure includes the deficits that would result from the economic stimulus package that President-elect Barack Obama hopes to enact rather soon after he takes office.
There is speculation that such a deficit would undermine the U.S. economy further, damaging the fundamentals that support the U.S. dollar in forex trading.See Also
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Greenback falls in currency trading
The U.S. dollar rally that has been going fairly strong for the last couple of months is showing some signs of trouble. The greenback is falling in currency trading as news emerges about how confident the Fed is in the economy.
Indeed, with the latest FOMC meeting minutes released, it is clear that the Federal Reserve sees further contraction ahead. (Enter additional speculation regarding a 0% Fed rate.) At any rate, on the news regarding the economy, the U.S. dollar is pulling back against the euro in forex trading -- and against some of the other majors as well.
Other economic data that is weighing on the U.S. dollar includes:
- Increased jobs cuts.
- Consumer confidence.
- Housing market.
Many analysts and experts are wondering if recovery from the recession may take longer than many originally expected -- even with help from an economic stimulus plan recently unveiled by Barack Obama.See Also
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Forex trading trends can give you an idea of where a currency pair is headed
One of the keys to technical analysis when you are working out a currency trading strategy is looking for trends. Indeed, the whole point of technical analysis is to help you use current and past performance to find forex trading trends and get an idea of how a currency pair is likely to perform overall.
When you use technical analysis, it is possible to gauge the main direction of a currency pair, and then enter a position that allows you to take advantage of the fact that it is already moving in a certain direction.
While technical analysis can be useful, however, it is important to remember a these points of caution when using trends to determine currency trading positions:
- Past (and present) performance is not an indicator of future results. The FX market is volatile, and the direction could change, no matter what the technical analysis and the trends seem to reveal. This could result in loss -- sometimes very large losses.
- Currency trading is risky. Because of its volatility, it is important to remember that currency trading is very risky. Indeed, forex trading is considered one of the riskier forms of trading. Rather than being a true investment, it is actually speculation.
This means that you will need to do what you can to limit your risk. This can be done with stop loss orders, and by learning about retracements in technical analysis, and how to interpret them. But, as always, nothing is ever fullproof, and you should be careful not to hazard money in forex trading that you cannot afford to lose.See Also
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Sterling expected to recover faster in currency trading
Recently, the U.K. pound has been taking a beating at the hands of the U.S. dollar and the euro in forex trading. However, things are changing -- at least in terms of sterling currency trading performance against the euro.
Right now, the big worry for the euro zone is deflation. As a result, euro weakness in forex trading is becoming more pronounced. It is this weakness that is prompting many to speculate that the British economy will recover before the euro zone economy.
This belief that the British economy will soon recover is spurring gains by the sterling in currency trading, and sending the euro lower.See Also
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Recession cuts into investments in emerging markets
Emerging market currencies are suffering in FX trading on the currency market right now. As global recession forces wealthier nations and investors to make new decisions, overseas investments in emerging markets are decreasing.
Another factor is the riskiness of emerging market currencies. In forex trading, emerging markets represent greater risk, and that means that in the current climate of risk aversion, many traders are turning to the tried-and-true currencies of developed nations.
As emerging market currencies falter in FX trading, such currencies as the U.S. dollar continue to rally, since they are seen as more stable over the long run.See Also
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