In our live Trading Webinars we often refer to finding out which currencies are the strongest and which are the weakest. By making that determination we can pair the currencies so that we have a strong versus a weak or a weak versus a strong. By doing that we are creating a “trading edge” for ourselves. If we trade a currency pair in which both currencies are fairly equal in strength, we give up the edge because either currency can “take control” since they are of equal strength.
By matching up a strong with a weak, however, we can have a bit more confidence in knowing the direction of the likely move. Then, if we match the direction of that potential move with the direction of the trend on the Daily chart, we have a clear trading edge.
For example, currently the USDCHF pair is in a downtrend on the Daily chart. Based on a strong/weak analysis we see that the USD is weak and the CHF is strong. So selling that pair in the direction of the Daily trend is a higher probability trade.
Briefly, here is how I go about doing a strong/weak analysis…
I use a 4 hour chart with a 200 SMA (Simple moving average) on it. On a sheet of paper, a legal pad or an Excel spreadsheet, I list the currencies (not the pairs but the currencies themselves) in a vertical column. For example, EUR, USD, CHF, etc.
Now, let’s say the pair in question on the 4 hour chart is the EURUSD. If it is trading above the 200 SMA that means that the EUR is stronger than the USD at that point in time. I make a note of that next to the EUR and the USD in the vertical column…EUR gets an up arrow and the USD gets a down arrow. Then I go to the next currency and go through the same process. (All in all I bring up about 25 pairs on the charts each day before the open of the New York session and it takes less than 15 minutes.)
When I am done with the above process, I tally all the “up arrows ” and “down arrows” for the EUR against the other currencies and then I can tell where the EUR ranks strength-wise relative to each of them. For example, if the EUR has 5 up arrows and 2 down arrows and the JPY has 3 up arrows and 4 down arrows, that means that the EUR, overall, is stronger than the JPY. (It doesn’t get much more simple than that!) When I have all the currencies in which I am interested evaluated in this way, I then have an overview of how they all relate to each other based on strength/weakness.
Next, I match the strongest with the weakest and go to the charts and look for a technical reason, such as a break of support or resistance, to enter the trade in the direction of the trend. A pair that has a strong currency paired against a weak currency would be a candidate for a buy in a Daily uptrend. On the other hand, a weak paired against a strong would be a candidate for a sell in a Daily downtrend.
As far as the pairs that I personally look at, I run this analysis on all combinations of the following currencies: USD, EUR, GBP, JPY, AUD, NZD, CHF and CAD.
The process is very basic, straightforward and quite boring…but it works.
As a side benefit, while I am going through the process of checking the 4 hour chart on each pair, I really get a sense for what is going on in the market at the time. And that information serves me well as the trading day progresses.
No, there are countless other trading strategies. You must find a trading strategy that suites your trading style. However, most successful trading strategies are similar in how they manage risk and leverage. Managing risk, using positive risk-reward ratios, and limiting leverage, have been shown to increase a traders success. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
A currency's strength is determined by the interaction of a variety of local and international factors such as the demand and supply in the foreign exchange markets; the interest rates of the central bank; the inflation and growth in the domestic economy; and the country's balance of trade.... read more › (Video) How To Identify Strong And Weak Currencies? How do you know if a currency is strong or weak in forex?What exactly does it mean for a currency to be “strong” or “weak?” A currency is “strong” if it is becoming more valuable relative to another country's currency. Conversely, a currency is considered “weak” if it is becoming less valuable versus another country's currency.... view details ›
(Video) How to Identify Currency Strength and Weakness to Find High Probability Setups How do you know which currency is stronger?What Makes a Currency Strong or Weak? A currency is classified as strong when it is worth more than another country's currency – in other words, if the American dollar was worth half a pound, the pound would be considerably stronger than the dollar.... view details ›
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(Video) How to identify strong and weak currencies in Forex trading (Forex - Planning & Trading) What makes a currency stronger than another?Supply, demand, inflation, and other economic factors will cause changes to a currency's relative price. It is these changes that ultimately determine the strength of a currency.... see more ›
(Video) why I STOPPED USING THE CURRENCY strength meter - DO this instead Why is USD so strong?The factors roiling the global economy partly explain why the dollar has suddenly become so much stronger. As central bankers around the world try to tame inflation by raising interest rates, the Federal Reserve is moving more quickly and more aggressively than most.... continue reading ›
(Video) How To Find The Best Currency Pair To Trade How do I know when to buy or sell in forex?Knowing when to buy and sell forex depends on many factors, such as market opening times and your FX trading strategy. Many traders agree that the best time to buy and sell currency is generally when the market is most active – when liquidity and volatility are high.... continue reading ›
(Video) IDENTIFYING A CURRENCIES STRENGTH OR WEAKNESS...#forex Who benefits from a weak dollar?There are other benefits to a weaker dollar for large U.S. exporters. For starters, they can raise their domestic currency prices, which translate to the same price overseas. Higher prices equal higher profits.... continue reading ›
(Video) 3 Steps to Choosing Best Currency Pairs to Trade in Forex 👍 What is a weak currency?A weak currency refers to a nation's money that has seen its value decrease in comparison to other currencies. Weak currencies are often thought to be those of nations with poor economic fundamentals or systems of governance.... see details ›
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(Video) Currency Strength Meter Secrets [Increase your profit chances)#forexindia #forexsalary What is the weakest currency in the world?1. Venezuelan Bolivar- The Weakest Currency Of The World. The Venezuelan Bolivar ranks as the weakest currency of the world with some of the highest exchange rates. Venezuela is situated at the north end of the South American region.... view details ›  What makes a currency higher?Currencies increase in value when lots of people want to buy them (meaning there is high demand for those currencies), and they decrease in value when fewer people want to buy them (i.e., the demand is low).... read more › Is Euro stronger than dollar?1. Euro: 1 EUR = 1.07 USD. As of May 2022, the euro (EUR) to U.S. dollar (USD) exchange rate was about 1 euro for $1.07. The U.S. dollar generally strengthened against the euro in 2020 and 2021.... continue reading › How strong is USD today?
When should you not trade forex?The 3 Worst Times to Trade Forex (And When to Trade Instead)
What is the best time to trade USD JPY?Best Time to Trade USD/JPY That said, the ideal window for USD/JPY trading is generally 12:00-15:00 GMT, when market activity is at its highest level. Both the New York and London markets overlap with this window, and trading activity tends to be at a high level even though the Tokyo market isn't open for the day.... view details › What is the best time to trade forex?The forex market runs on the normal business hours of four different parts of the world and their respective time zones. The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities.... view details › How do you profit from a weak dollar?Taking advantage of currency moves in the short term can be as simple as investing in the currency you believe will show the greatest strength against the U.S. dollar during your investment timeframe. You can invest directly in the currency, currency baskets, or exchange-traded funds (ETFs).... view details › What happens when dollar goes up?Positively, a rising dollar is cutting import prices, keeping a check on inflation. While the U.S. unemployment remains low, limiting capacity to absorb extra demand without generating some inflation, a higher dollar may effectively transfer demand from the U.S. economy to economies globally.... see more › When should I buy U.S. dollars?Generally, the best thing to do is to begin checking around at least a month before your scheduled trip. Doing so can give you sufficient time to figure out when it's best to purchase US Dollars. Because of how the market changes, it's sometimes difficult to determine the value of a US Dollar in the coming months.... see more › What happens when a currency is too strong?When a strong currency becomes a problem. If a currency appreciates, then it can lead to a fall in domestic demand. Exports are less competitive, imports are cheaper. For an economy which is already growing slowly, a strong currency will worsen this economic slowdown.... read more › When the U.S. dollar is weak?A weak dollar refers to a downward price trend in the value of the U.S. dollar relative to other foreign currencies. The most commonly compared currency is the Euro, so if the Euro is rising in price compared to the dollar, the dollar is said to be weakening at that time.... view details › Which currency is the highest in the world?1. Kuwaiti Dinar (KWD)- Highest Currency in the World. The highest currency in the world is none other than Kuwaiti Dinar or KWD. The currency code for Dinars is KWD.... view details › How do you compare two currencies?There are several ways you can compare the relative strength of currencies:
What is the easiest forex pair to trade?What is the Easiest Currency Pair to Trade? EUR/USD is not just the easiest, but also the most stable currency pair to trade. It is the best choice not only among beginners but also for professional traders. This is one of the most traded currency pairs due to tight spreads and liquidity.... see more › How do you choose best currency pairs in forex?The criteria for choosing currency pairs Each currency pair has the time when it is most active. This is the time when trade volumes are the largest, and the price might move significantly. For example, USD/JPY, AUD/USD, and NZD/USD are active in the early morning, during the Asian session.... continue reading › Which forex pairs should I trade?The four most popular and best currency pairs to trade in the forex market are: EUR/USD (Euro/US dollar) USD/JPY (US dollar/Japanese yen) GBP/USD (British pound/US dollar)... continue reading › Which currency is the highest in Africa?The Tunisian Dinar is the strongest currency in Africa and one of the best-performing currencies globally. It ranks first for being most stable against foreign inflation rates and having low volatility compared to other currencies.... continue reading › Which country has cheapest currency?Yet again, the Iranian rial remains the lowest currency in the world in 2022, with a value of over 42 thousand IRR to $1 USD. The rial has remained the weakest currency as a result of sanctions that prevent Iran from exporting petroleum into the global market, partially due to political instability in the region.... view details › What is the strongest currency in the world 2022?Kuwaiti Dinar (KWD) Kuwaiti Dinar is ranked the top highest currency in the world in 2022. It's also considered the highest and strongest in the world today. Kuwait is a country known for its great exploits in the oil industry.... see more › What makes a currency stronger or weaker?A currency's strength is determined by the interaction of a variety of local and international factors such as the demand and supply in the foreign exchange markets; the interest rates of the central bank; the inflation and growth in the domestic economy; and the country's balance of trade.... read more › What makes a currency weak?What Is a Weak Currency? A weak currency refers to a nation's money that has seen its value decrease in comparison to other currencies. Weak currencies are often thought to be those of nations with poor economic fundamentals or systems of governance.... see more › How do you compare two currencies?There are several ways you can compare the relative strength of currencies:
Who benefits from a weak dollar?There are other benefits to a weaker dollar for large U.S. exporters. For starters, they can raise their domestic currency prices, which translate to the same price overseas. Higher prices equal higher profits.... read more › What is the weakest currency in the world?1. Venezuelan Bolivar- The Weakest Currency Of The World. The Venezuelan Bolivar ranks as the weakest currency of the world with some of the highest exchange rates. Venezuela is situated at the north end of the South American region.... read more › What happens when a currency is too strong?When a strong currency becomes a problem. If a currency appreciates, then it can lead to a fall in domestic demand. Exports are less competitive, imports are cheaper. For an economy which is already growing slowly, a strong currency will worsen this economic slowdown.... read more › What causes money to lose value?Inflation is an element that plagues every traditional money. Since more cash is still continuously being printed, it can decrease its value in a simple case of supply and demand with the worst possible scenario being hyperinflation.... see details › Is a weak dollar good?A weakening dollar means that imports become more expensive, but it also means that exports are more attractive to consumers in other countries outside the U.S. Conversely a strengthening dollar is bad for exports, but good for imports.... see details › Who benefits from a strong currency?A strong dollar is good for some and relatively bad for others. With the dollar strengthening over the past year, American consumers have benefited from cheaper imports and less expensive foreign travel. At the same time, American companies that export or rely on global markets for the bulk of sales have been hurt.... see details › How do you know when to buy or sell in forex?Knowing when to buy and sell forex depends on many factors, such as market opening times and your FX trading strategy. Many traders agree that the best time to buy and sell currency is generally when the market is most active – when liquidity and volatility are high.... see more › How do you choose currency pairs in forex?5 Steps to Choosing the Right Currency Pair
How do I learn to trade forex?Forex trading is the process of speculating on currency prices to potentially make a profit. Currencies are traded in pairs, so by exchanging one currency for another, a trader is speculating on whether one currency will rise or fall in value against the other.... see more › How do you trade with currency strength?Use the currency strength meter and pair the strongest currency with the weakest one — so you get a strong trending market. For example, look at the currency strength meter below… You can see GBP is the weakest and JPY is the strongest. And when paired together, you get GBP/JPY which is in a strong downtrend…... see details › A look at some of the factors involved in a fully convertible rupee as India gains economic power and broadens foreign investment collaboration. In this article, we look at the current state of Indian markets within the existing partial rupee convertibility scenario, what a change could mean for India and the world, and the pros and cons of rupee convertibility.. Convertibility is the ease with which a country's currency can be converted into gold or another currency through global exchanges.. Making the rupee a fully convertible currency would mean increased liquidity in financial markets, improved employment and business opportunities, and easy access to capital.. Convertibility is the ease with which a country's currency can be converted into gold or another currency through global exchanges.. Currencies that aren't fully convertible, on the other hand, are generally difficult to convert into other currencies.. Currency convertibility is an important part of global commerce because it opens up trade with other countries. Having a convertible currency allows a government to pay for goods and services in a currency that may not be the buyer's own.. Until the early 1990s (pre-reform period), anyone willing to transact in a foreign currency would need permission from the Reserve Bank of India (RBI), regardless of the purpose. People wanting to engage in foreign travel, foreign studies, the purchase of imported goods, or to get cash for foreign currencies received (like with exports) were all required to go through the RBI.. Exporters and importers were allowed to exchange foreign currencies for the trade of unbanned goods and services, there was easy access to forex for studying or traveling abroad, and a relaxation on foreign business and investments with minimal (or no) restrictions depending on the industry sectors.. Although there is a lot of freedom to exchange local and foreign currency at market rates, the Indian rupee is a partially convertible currency, meaning the exchange of higher amounts is restricted and still needs approval.. Current account convertibility implies that the Indian rupee can be converted to any foreign currency at existing market rates for trade purposes for any amount.. Capital account convertibility allows freedom to convert local financial assets into foreign financial assets and vice-versa.. It includes easy and unrestricted flow of capital for all purposes which may include free movement of investment capital, dividend payments, interest payments, foreign direct investments in domestic projects and businesses, trading of overseas equities by local citizens and domestic equities by foreigners, foreign remittances , and the sale/purchase of immovable property globally.. Trading of the INR is still far lower than other currencies such as the euro. In 2021, INR contracts traded against the dollar an average of 16,784 times per day compared to 162,338 contracts converted from Euro to USD. Making the rupee fully convertible would enable greater trades and global flow of the Indian currency, helping national markets with improved liquidity, better regulatory purview, and reduced dependence and risks from offshore market participants.. Despite economic progress being made by India on many fronts, there have been regular challenges at both the global and local levels including the global financial crisis of 2008-09 , a lack of inflation control, and rising NPAs—all of which have delayed full convertibility of the rupee. It may take another three to five years for India to fully prepare itself for full rupee convertibility. Understanding which forex pairs that correlate can add a whole new level to your trading routine and potentially help you identify trades a lot easier. A Correlation of currency within the forex consist of a positive or negative type of relationship between two different pairs of currency.. For Example – Currency pairs that include the US Dollar would frequently be more active and dynamic during the hours of US Market like 12 pm – 9 pm (UK Timing and currency pairs with a pound or Euro will prove to be more mobile between 8 am & 4 pm (UK Timing) – when the British and the European markets are open.. The forex pairs correlation table shows the examples of correlations among currencies that are highly traded in the world.. The forex currency pair correlation table shows the correlations that were calculated over a period of one month.. However, we can note that over an even longer period of time – a year – we can see stronger correlations: Examples of Strong Positive Correlations (Over a Yearly Time Frame)EUR/USD & GBP/USD (+ 0.81)EUR/USD & AUD/USD (+ 0.79) Examples of Strong Negative Correlations (Over A Yearly Time Frame)EUR/USD & USD/CHF (- 0.54)USD/CAD & AUD/USD (- 0.67). As you already know about the forex majors pairs and minor, you will notice that the USD is paired with the majority of the currency pairs.. As you know by now, currency pairs move in a correlated way, however, it is possible for them to have a perfect negative correlation.. This means whenever a currency pair moves upwards, the perfect negative correlation currency pair moves downwards – pip for pip.. Currency correlations can be a strong tool one could utilize for developing a forex pair correlation strategy of high-probability.. By entering the currency pair, time frame, and a number of periods, the forex pair correlation calculator can be used to calculate correlations between currency pairs that are major and exotic over multiple time frames .. Not only this, but you can also use it to confirm the trend if the USD is strengthening, then all positively correlated forex pairs should be moving downwards and the negatively correlated pairs moving upwards. The world's strongest currency is the Kuwait Dinar. Its high value comes from Kuwait’s booming oil industry, which accounts for 80% of the country’s exports. It is also the highest valued currency pegged to the US Dollar. In fact the top 10 most traded currencies pairs all include either the U.S. Dollar or the Pound Sterling and the two together devise the most traded currency pair: GPB/USD .. Currency strength is measured by the amount of goods and services that can be bought and the amount of foreign currency received in exchange for one unit of the national currency.. A currency’s strength is determined by many factors including the inflation and growth in its country’s economy and the amount of foreign currency that can be exchange for one unit of said currency.. In forex trading, a currency’s strength is relative to another foreign currency in the given pair.. The U.S. Dollar and the Euro ( EUR ) are the two currencies with the largest reserves around the world and therefore are among the most impactful currencies on the forex market.. This can be seen immediately in how currency pairs are displayed, with the stronger currency listed first and the weaker currency listed second.. Major currency pairs are the most frequently traded and usually include the U.S. Dollar as either the base or quote currency.. Examples of exotic currency pairs include a major and exotic currency like the Pound Sterling and Swedish Krona ( GBP/SEK ) or two exotic currencies such as the Norwegian Krone and Krona ( NOK/SEK ). The currency strength indicator is the secret weapon of successful trading. Through this trading guide, our team of industry experts will reveal how to use currency strength meter Using currency strength meters, currency strength indicators, and other useful trading tools can help forex traders improve their strategies and remain ahead of the global market.. As the name suggests, the currency strength indicator is an MT4 custom-made indicator that is designed to reveal the strength of a particular currency pair against other peers.. When using the currency strength meter, we analyze each currency individually rather than currency pairs.. The whole idea is to identify the strongest currency and the weakest currency so you can choose the right currency pair to trade.. Understanding the connection between individual currencies and currency pairs will be crucial for anyone using the currency strength meter, or who is forex trading in general.. We use the currency strength indicator to pair the strongest currency against the weakest currency, so you can take advantage of the momentum from both sides.. This currency strength indicator will automatically determine if one currency is stronger or weaker relative to another currency.. The currency strength index, the currency strength meter, and other currency strength indicators will directly affect your ability to determine whether a relative value change is likely to occur. How do forex pairs interact with each other – and with other asset classes such as commodities and equities? Find out in this in-depth article. Currency pair correlation is the measure to which the movement of currency pairs in forex are related to each other but can also describe how forex pairs and markets such as stocks and commodities are linked too.. Any relationship between the price of one currency pair with another, or with other markets, can help traders make sense of forex movements and assist them in their decision making.. For example, if a pair has a currency coefficient of 0.9, that is a strongly correlated pair, while a coefficient of -0.9 will be weakly correlated.. When it comes to the relationship between USD and gold , a strengthening dollar relative to other major currencies often means a falling gold price, as can be seen in the image below.. This is because many companies in the index make a large proportion of their profits in US dollars. Highest Currency in the World - Check out the list of the most expensive currency in the world along with their exchange rates in INR. Visit Thomas Cook for FOREX services. This assures profitable exchange rate compared to when you do so with your own country’s currency.. Highest Currency in the World Value of In INR (in Jan 2020) 1 The United States Dollar 1 USD 71 INR2 Swiss Franc 1 CHF 74 INR3 Cayman Island Dollar 1 KYD 85 INR4 Euro 1 EUR 79 INR5 Gibraltar Pound 1 GIP 87 INR6 British Pound 1 GBP 93 INR7 Jordanian Dinar 1 JOD 100 INR8 Omani Rial 1 OMR 184 INR9 Bahraini Dinar 1 BHD 188 INR10 Kuwaiti Dinar 1 KWD 233 INR Despite being in high demand when it comes to conversion, US Dollar stands far behind in the list of strongest currencies in the world.. Right now, value of 1 Dollar is equal to 74.22 INR and the rate keeps oscillating regularly.. Also, it is counted in the list of the highest currency in the world in 2018 and 2019.. The value of 1 Euro is equal to 87.79 INR.. Being in circulation since 1934, it is one of the strongest currencies in the world with trade value similar to USD.. Commonly mentioned as JOD, Jordanian Dinar has been ranked as the 4th strongest currencies in the world.. 1 OMR value is equal to 184.25 INR which makes the exchange rate very profitable among the expats living and working there.. Before 1940, Oman used to have INR as its local currency which was soon replaced by a better stronger currency.. KWD has the highest currency in the world against Indian rupee as 1 Kuwaiti Dinar is equal to 242.67 INR.. Irrespective. of the country you are visiting, we will help you find the best currency exchange rates .. 1 CHF is equivalent to 1.03 USD and 0.93 Euros.. Thomas Cook offers easy currency exchange services, no matter the country you are traveling to or the currency you desire to exchange. What are Forex trading sessions? What is the difference between the schedule of Forex trading sessions in summer and winter? Why is it better to trade in the American and European trading sessions, rather than in the Asian session? Well, the market is really open 24 hours, but this does not mean that you can trade at any time.. When should I trade?. There are various trading sessions on the Forex market.. The Sydney trading session; Tokyo (Asian) trading session; London (European) trading session; New York (us) trading session.. The tables above show that in some countries there are differences in the opening and closing times of trading sessions.. During the Tokyo trading session, news traders can focus on trading currencies such as AUD, NZD and JPY, because it is during the Asian trading session that news about these currencies is received.. The volatility of most currency pairs during this session is usually very high.. The London trading session intersects with two other major trading sessions – the Tokyo session at its close and the new York session at its opening.. During the London trading session, you can choose any currency pairs to trade on Forex, because during this session there is a huge volume of trading.. Another reason to stick with these pairs is that news reports about these currency pairs usually come during a given session, increasing their volatility even more.. As we remember, the Tokyo session is known as the Asian session, the London session is known as the European session, and the new York session is also called the American trading session.. As for volatility, the new York trading session is after the London one.. If you are just starting to trade on the Forex market, then the American trading session will be more preferable, since its volatility is not as high as during the European session, and not as low as in the Asian session.. Now you know that the greatest volatility is observed during the European trading session, and at this time you can trade any major currency pairs.. The highest increase is observed trading at the close of the Tokyo and London sessions opening and closing the opening of the London and new York trading sessions. A currency carry trade is a strategy that involves using a high-yielding currency to fund a transaction with a low-yielding currency. A currency carry trade is a strategy whereby a high-yielding currency funds the trade with a low-yielding currency.. The most popular carry trades have involved buying currency pairs like the Australian dollar/Japanese yen and New Zealand dollar/Japanese yen because the interest ratespreads of these currency pairs have been quite high.. Currency Carry Trade The currency carry trade is one of the most popular trading strategies in the currency market.. The most popular carry trades involve buying currency pairs like the AUD/JPY and the NZD/JPY, since these have interest rate spreads that are very high.. As for the mechanics, a trader stands to make a profit of the difference in the interest rates of the two countries as long as the exchange rate between the currencies does not change.. The funding currency is the currency that is exchanged in a currency carry trade transaction.. Investors borrow the funding currency and take short positions in the asset currency, which has a higher interest rate The central banks of funding currency countries such as the Bank of Japan (BoJ) and the U.S. Federal Reserve often engaged in aggressive monetary stimulus which results in low-interest rates.. But a period of interest rate reduction won't offer big rewards in carry trades for traders.. A currency carry trade is a strategy whereby a high-yielding currency funds the trade with a low-yielding currency.. As an example of a currency carry trade, assume that a trader notices that rates in Japan are 0.5 percent, while they are 4 percent in the United States.. Assume the current exchange rate is 115 yen per dollar and the trader borrows 50 million yen.. An effective carry trade strategy does not simply involve going long a currency with the highest yield and shorting a currency with the lowest yield. Get the Forex Forecast using fundamentals, sentiment, and technical positions analyses for major pairs for the week of July 11, 2022 here. This set up on Tuesday and produced a losing trade of 0.65%.. The murder of Abe had little effect upon the Yen.. The US stock market is still in a bear market, but rose quite firmly last week, although the US yield curve remains inverted, and US stocks rose over the week.. The US Dollar Index rose very strongly over the week, closing at a new 20-year high.. Australia Cash Rate & Rate Statement – as expected, the RBA hiked rates by 0.5% to 1.35%.. Canadian Employment data – Canada saw a net loss of jobs, but its unemployment rate fell from 5.1% to 4.9%.. The coming week in the markets is likely to be even more volatile than last week, as there are several high-impact data releases scheduled this week, including highly important US CPI data.. Bank of Canada’s Overnight Rate, Rate Statement, and Monetary Policy Report. This is significant as breaks to new high closes suggest the price will rise further over the coming days.. However, it is important to note that the daily chart saw the week conclude with a strong and bullish pin bar , suggesting we may be about to see a rise in the price.. Last week saw a strong advance by the US Dollar, but the Japanese Yen was also strong, meaning the price of the USD/JPY currency pair advanced little.. However, having seen reversals in the Dollar’s major counterparties the EUR/USD and the GBP/USD, it may be that further Dollar strength will be expressed against other currencies such as the Japanese Yen .. I am prepared to take a long trade in this currency pair if we get a daily (New York) close above ¥136.66 (ideally above the round number at ¥137.00).. Get the Forex Forecast using fundamentals, sentiment, and technical positions analyses for major pairs for the week of July 11, 2022 here. Learn how to use supply and demand in your trading with a Free supply and demand Forex trading Strategy with Free PDF guide download. Supply and demand in the Forex markets is a super important factor and with your price action charts you also have the ability to see supply and demand through your charts.. Fear and greed are the reason why market bubbles and crashes exist and the same reason why traders can make money and lose it in the same day.. The simple reason we can see price go to extreme highs or lows and we can see price go on massive runs when normally we would expect a retrace back is because of fear and greed and also the supply/demand equation.. As more and more traders recognize this trend, more and more traders pile into this market looking to make money from the move higher.. Before you know it, the demand is super weak and the market has gone very quickly from a strong demand situation in the uptrend, to now having a huge oversupply of traders wanting to sell with super low demand and price quickly falls lower.. Price action trading and supply and demand is all about being contrarian and taking setups at the best times and from value areas in the market.. It is no good entering at a really strong level, but entering from an extreme high or low where the market is about to burst and reverse against you.. Because there was now such a huge demand, but a small supply, the price went to over 10 x their normal prices in that short space of time, which is a clear example of supply and demand in action.. This supply and demand in action with every day goods is also how supply and demand controls the prices in the Forex markets.. Traders looking to make trades from the key supply and demand levels can use high probability reversal trigger signals such as the pin bar and engulfing bar, but the super important point is that these need to be played from the correct swing points.. Where traders can often get confused and mix up both supply/demand levels and trying to ensure that they look for their trades from the correct swing points is when reversal trades form at a supply or demand point on the chart, but they DO NOT form at a correct swing point.. After these large moves, the big money will look to take some profit and this will cause the market to pause or retrace back higher slightly and possibly create a small pin bar, but by entering the market at this time you are entering when the big guys are just getting out. Increasingly, many businesses have dealings in foreign currencies and, unless exchange rates are fixed with respect to one another, this introduces risk. There are three main types of currency risk as detailed in this article Although raw materials might still be imported and affected by exchange rates, other expenses (such as wages) are in the local currency and not subject to exchange rate movements.. If the exchange rate moves between agreeing the contract in a foreign currency and paying or receiving the cash, the amount of home currency paid or received will alter, making those future cash flows uncertain.. A forward exchange contract is a binding agreement to sell (deliver) or buy an agreed amount of currency at a specified time in the future at an agreed exchange rate (the forward rate).. In practice there are various ways in which the relationship between a current exchange rate (spot rate) and the forward rate can be described.. You will always be given the exchange rate which leaves you less well off, so here you will be given a rate of 1.2022, if changing £ to euros now, or 1.2014 if using a forward contract.. Because the money is changed now at the spot rate, the transaction is immune from future changes in the exchange rate.. Basis risk can arise for both interest rate and exchange rate hedging through the use of futures.. The right to sell a currency at a set rate is a put option (think: you ‘put’ something up for sale); the right to buy the currency at a set rate is a call option. “Our belief is in the second half of the year, focus would move back towards growth where India stands favourably compared to the rest of the world, growth in India has been far more resilient. That is how we are approaching the entire macro situation at this point in time.” Now specifically within private and PSU banks, our preference lies with the private sector banks simply because banks which are the larger private banks have been gaining market share in loans and deposits and they also have a significant share of retail deposits in their overall liability franchise which bodes well in this current interest rate environment.. In comparison, current interest rates are still fairly favourable and net-net affordability levels have improved.. I think both the central bank as well as from a fiscal and a government policy perspective, measures would be taken to ensure that the currency movement is fairly stable in the sense that currency volatility would be managed.. But when we look at the cyclicals pack and three segments – manufacturing, industrials and infrastructure – there are still opportunities where valuations are fairly reasonable, especially compared to historic average levels.. However, private sector capex has not yet picked up in a big way.. We believe that where industrials and manufacturing as a segment is concerned, growth will possibly remain fairly robust and core industrial capex will gradually recover.. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Popular posts You might also like Latest Posts
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