Thwarting US Employment Figures

Due to Presidents’ Day Holiday, today the US trade session will stay quiet and that indicates calm week opening. Therefore, there are not many responses to be expected from the US market on the last week events and data releases.

The major topic are liable to stay the current substantial edginess witnessed transversely worldwide asset marketplace and the probable timing and view of ‘exit strategies’, subsequent to the termination of previous week’s G7 authorities and the Central Bank officials.

The future policy outlook and the trading inflow for UK would be the imminent issue released by the BOE in their recent Quarterly Report on Wednesday. The traders participating in the Forex will be looking forward for the details of the Inflation report to have an overview about the Asset Purchase Facility in the coming Forex session.

USD sustained its current intensifying trading because the stock market drop down further on Friday due to the dissatisfactory US job reports failed to infuse the traders confidence in the Forex condition.

The Non-farm Payroll of January dropped to -20k as compared to the expectation of around 5k. The figures of January Unemployment Rate dropped to 9.7% from 10% due to loosing confidence of the citizens in seeking jobs.

If we look at the US stocks S&P is trailing with +3 points and closing at 1066, NASDAQ moving with +15 points and closed at 2141 and DJIA trailing with +10 points and closed with 10012.

Currency pair of EUR/USD trailing at the Forex trading platform with a lower level  of 1.3586 and a high level of 1.3746 before closing at the level of 1.3652.

On the other hand, the currency pair of USD/JPY traded at the firm support of 89 but at the same time, the pair found the resistance at the level of 90.

Overall, the market kept trying to sustain a desirable trend at the Forex trading platform and the currencies showed the fluctuations in their prices as the signs of the data releases and their impact on the trading.

Tags: Currency pair, Forex, forex online, Forex Trading, Forex trading platform

Learn about Forex Forward Contracts

The Forex forward contracts are used to hedge a future payment in a foreign currency entails delivery of a certain amount of one currency in exchange for certain amount of another currency at a certain future date.

The more general definition of FX forward contract is- it is a fixed-price contract made today for delivery of a certain pre-settled amount of a currency at a specified future date and than the specified date is the forward trade settlement date with the agreed upon price called forward rate.

Features of Forward Contract Forex trading:

• No money changes hands today

• Currency pair exchange takes place on future date

• It also stipulates that the full payment need not to be exchanged on the settlement date.

• The main purpose is to hedge against the changes in the exchange rates occurred at the Forex trading platform, only the difference between the forward rate and the spot rate prevailing on the settlement date will be paid.

Uses or Applications of forward contracts:

1. It is used to hedge future import payment and export receipts.

2. Used selectively by the companies and traders to implement view on currency pair trade-flow that is for speculating the Forex trading strength.

3. A bank engage in a forward contract as a service to a customer the bank will hen offset the forward seeking profit from the spread between currency bought and currency sold.

4. At forex trading platform, Forex traders uses forward contracts to arbitrage between instruments denominated in one currency and similar instruments denominate in another currency. A forward combined with a financial asset or liability can effectively transform the currency of one denomination of that asset or liability, thus creating synthetic securities.

5. The financial market participants seek to take advantage of an apparent inefficiency in currency pair exchange.

Overall, these Forward contracts are amazingly versatile available in two-dozen or more currencies and for securities ranging from one week to several years. Yet many traders shun them because of the default-risk existence in the forward contracts as it entails commitment for future performance and one or the other party may be unwilling or unable to honor that commitment.

In that case, what would have either party have to gain from the non-performance of the other party? The answer is that the on the settlement date, one party is in effect owes the other party a net amount.

The net amount, and who owes whom, cannot be determined in advance, as it depends on the Forex trading trend flow or direction of the market and the extent to which the currency pair involved in contract has moved in the interim.

Thus, the basic aim of utilizing forward contract is to hedge against the uncertainties of the fluctuation of the currency pair exchange rates and the difference in between the spot price of the currency and the future agreed-upon price is paid to the engaged party.

Tags: Forex, Forex info, Forex Trading, Learn forex