Posted by Daytrader on October 28, 2009 under Daily Forex review | 
USD Dollar (USD)
The Dollar strengthen during yesterday trading session as Confidence among U.S. consumers unexpectedly fell in October for a second month. The Conference Board’s confidence index dropped to 47.7 from a revised 53.4 in September. NASDAQ decreased by 1.2% and Dow Jones slightly rose by 0.14%. Crude oil rose by 1% closing at 79.55$ a barrel after a volatile trading session as investors wait for the oil inventories today. Gold (XAU) weakened by 0.7% closed at 1035.4$ an ounce. Today, Core Durable Goods Orders are expected at 0.6% vs. -0.3% prior, New Home Sales are expected to rise from 429K to 443K.
EURO (EUR)
The Euro weakened versus the Dollar for the third day in a row on concern a rally in stocks and commodities can’t be sustained. M3 Money Supply came out worse than expected at 1.8% vs. 2.1% forecast. Overall, EUR/USD traded with a low of 1.4770 and with a high of 1.4926. Today, German Prelim CPI is expected at 0.1% vs.-0.4% previously.
EUR/USD – Last: 1.4811
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Resistance
|
1.4824
|
1.4927
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1.5046
|
|
Support
|
1.4770
|
|
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British Pound (GBP)
The Pound strengthened against the Dollar after the Confederation of British Industry\’s distributive trade\’s survey reported sales balance rose to +8 in October from +3 in September, better than economists\’ forecasts of a rise to +5. This is the fastest pace of growth since December 2007. Overall, GBP/USD traded with a low of 1.6285 and with a high of 1.6438. No economic data expected today.
GBP/USD – Last: 1.6358
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Resistance
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1.6438
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1.6636
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1.6693
|
|
Support
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1.6286
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1.6250
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Japanese Yen (JPY)
The Yen rose against the Dollar for the first time in 6 days as a plunge in Treasury yields after the record $44 billion auction in two-year notes made the Dollar less attractive to Japanese investors. USD/JPY traded with a low of 91.70 and with a high of 92.32. Retail sales came out at -1.4% vs. -1.5% forecast. No economic data expected today.
USD/JPY-Last: 91.18
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Resistance
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91.57
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92.19
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92.32
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Support
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90.77
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90.48
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Canadian dollar (CAD)
The Canadian Dollar appreciated from a three-week low, gaining for the first time in four days amid speculation its decline was too big to be sustained after it reached a key technical level. Overall, USDCAD traded with a low of 1.0626 and with a high of 1.0716. Today, BOC Gov Carney Speaks.
USD/CAD – Last: 1.0664
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Resistance
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1.0696
|
1.0717
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|
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Support
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1.0630
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1.0500
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1.0450
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Research by http://www.ufxbank.com
Posted by Arthur on July 15, 2009 under Forex Trader Review |
Economic exposure or operating exposure in Forex trading relates to the effect of unexpected rates of exchange on the future operating cash flows of the company. In the management of finance, a firm is valued by the net present value of the future cash flows. A change in the rate of exchange may bring about changes in the cash flows of the company directly by reflecting its revenues as well as costs and indirectly by affecting its competitiveness by the action of its consumers as well as competitors. As a result, the net present value may differ from the one anticipated.
The economic exposure in Forex trading is less clearly perceived but has wider ramification with far reaching effects than the accounting exposure. Accounting exposure of trading Forex is more readily seen and provided for. Economic exposure in forex trading is insidious, more difficult to measure as well as more difficult to manage.
Economic exposure in Forex online, we talk of unexpected changes in the rates of exchange because the expected changes are reflected in the quotations of market in the form of forward margin as well as it is taken note by the companies. In budgeting for the future, a company with Forex online exposure will base its calculations on the forward rates and not on the spot rates. Therefore, it is only the unexpected movements in the rates of exchange that affect the cash flows anticipated in trading Forex.
Real trading online rate of exchange between two currencies is the nominal rate of exchange adjusted for difference in the rate of inflation in the countries concerned. If the power of purchasing parity holds, the currency of the countries with inflation higher will depreciate in nominal terms, but the relating power of purchasing of the currencies will remain the same. In other words, the real trading online rate of exchange will not change.
If the trading online rate of exchange remains static, even though there is a change in the nominal rate of exchange, the cash flows of the company will not be affected. This is because the relative powers of purchasing of the currencies remain the same. There is no change in the competitiveness of the product due to price fluctuations.
In certainty, it is seen that the power of purchasing parity holds only in the long run. In the short run, the rates of exchange tend to vary in real terms giving rise to economic exposure.
Thus, the exact impact the rate of exchange change will have on the cash flows of the company is dependent on so many factors, measuring economic exposure becomes difficult. Many are the factors over which the company has no control. All that is possible is to estimate with certain basic assumptions regarding the impact likely on each item of the cash flow of the company. Following are the some of the assumptions of trading online that can be made:
- Costs will decrease or increase; sales price remains constant.
- Volume of the sales will decrease or increase; sales costs and price remains constant.
- Price of the sales decreases or increases; costs will also decreases or increases but by a lesser degree.
- Price of the sales decreases or increases; costs will remain the same.
- All variables remain the same.
