Analysis Of The Forx Market

Page 3: Introduction to the Financial System Page 7: Commercial Banks Page 12: The Share Market and the Corporation Page 15: Corporations Issuing Equity into the Share Market Page 19: Investors in the Share Market Page 24: Short-term Debt Page 28: Medium- to Long-term Debt Page 32: Interest Rate Determination and Forecasting Page 37: The Foreign Exchange Market Page 40: Factors that Influence the Exchange Rate Page 42: Futures Contracts and Forward Rate Agreements Page 47: Options

The financial crisis of 2008 has been described as the worst financial crisis the world has seen since the great depression, but there are now murmurings of the potential for an even greater financial crisis, a currency crisis, caused by the demise of the US Dollar. The Dollar has been the reserve currency of the world since it took over from the Pound at the end of world war two, but we examine if it is about to crash spectacularly?

In the similar time period Japanese Yen has been in the third position with a turnover position of 20.8% in the year 2005. The overall financial market currency structure has seen a decline in the turnover position of the US Dollar to 85% from a strong position of 88%. Similarly a decline has been in the position of the Japanese Yen to 17.2% from an acceptable turnover position of 20.8%. While considering the trend of these two currencies during the period starting from 2007 and ending at 2010, it is to be noted that minute changes were seen in the two different currencies with regards to their share in foreign currency market. The US Dollar witnessed a continued fall to 84.9% from its previous 85.6% however, the Japanese Yen saw a rise from its previous position of 17.2% to an increase of1.8% that is 19%. During the same time period the US dollar and Japanese Yen were the second most traded paired currencies and was traded at around 14% of the overall foreign currency market second to the US Dollar and Euro pair. Conclusion The foreign exchange market has seen considerable changes owing to the global financial crisis. It is to be seen how different factors like economy and global politics further impact strong currencies like the US Dollar and other competing currencies such as the Japanese Yen.

The year of 2015 for the United States left people basically feeling nothing, no joy nor any pain. The economy seemed was considered to be in a twilight zone between the boom of the economy and the bust of the economy. Financial markets were flat in 2015 only growing at .2% for the first three months of the year (Irwin, April 2015). The growth increased during the second quarter, but quickly dropped to 1.5% during in third quarter (Gillspie, 2015). During 2014, stocks, bonds, real estate and other financial assets were at the high end of their historical values; this was considered the boom. With the European Central Bank pumping money into the market, the economic slowdown in China, sharp drops in the stock markets, and a long- awaited interest rate increase by the Federal Reserve, financial assets were halted from climbing more and creating a bubble (Irwin, April 2015). The Federal Reserve bought $3.5 trillion in bonds from 2009 to 2014 to encourage investors to purchase riskier investments; this led to an increase in stock market prices faster than the rise of earnings for companies (Irwin, 2015). While this did work in getting investors to take risks, it didn 't completely create economic expansion. When 2015 hit, this growth slowed down and left the 2015 economy to be stagnant.

“The combination of the weakness in energy weighing on investment along with high levels of indebtedness keeping consumer spending modest puts the weight on the external side of the economy to much of the lifting of growth in the period ahead. The combination of a recovering U.S. economy and the more competitive currency are showing early signs of a bounce in exports, a trend that is needed to continue in the year ahead for overall economic growth to accelerate.”( Craig Wright, RBC economic

Keep an eye on capital spending going forward and until we see it rise and demand for durable goods pick up we can expect to continue with this moderate to slow economy for a while longer.

elsewhere, tracking the movements of the Swiss franc (CHF) in the last few months and the world

?The increased importance being attached to exchange rates is a result of the globalisation of modern business, the continuing growth in world trade relative to national economies, the trend towards economic integration and the rapid pace of change in the technology of money transfer.? (Copeland, Laurence S. 2014). In 21th July 2005, Chinese authority announced that the exchange rate system changed, from the dollar peg to the floating basket peg system. Recently, since the volatility in the forex market is growing, which makes there is increase concern about forecasting of exchange rate movements. (Schnabl, 2008).

That is for the reason that the world of forex trading, just as is the case with many other fields, keeps on changing right from how things are done to the kind of technology and tools that are used. A perfect example of that are the many strategies that are used in trading currencies today. There are many of them and vary in many ways. They are developed by different developers and, in most cases; they are updated from time to time. This calls for any dedicated trader to be updated on any changes as well.

Financial investors and traders are always faced with the option on deciding which trading instrument to choose: blue chip stocks or forex. Most likely, the choice will be dependent on the trader’s style and risk tolerance. Investors who buy for the long term are more suited in stock markets; while, those that want to earn on the short term, would be swing and day scalpers, who would opt to go into the more volatile forex markets.

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When compared to other realms of investing, forex is well noted for its extreme levels of volatility. This degree of volatility is only kicked up a notch during important news events, largely because spreads will increase during such time. What this also means is that you are going to need to have your wits about you,

A typical mistake made by brokers in the remote trade money markets is to attempt to effectively focus on the tops and bottoms in the market before they are unmistakably framed. This methodology has crushed

past several years. Total cross-border securities holdings among residents of the United States, Europe, and Japan are estimated to have risen to $ 2.5 trillion in 1991, about evenly split between fixed-income securities and equities. Over the past decade, the volume of international equity transactions increased by an average of around 15 percent per year. In nearly all major countries the percentage of domestic government debt owned by foreigners has increased substantially, and in some cases dramatically. Mainly as a result of those trends, and of more active management of portfolios, the worldwide volume of foreign exchange transactions is estimated to have tripled in the last six years, reaching an estimated US $

While buying and selling forex, make certain to hold an in depth log of all of your alternatives and transactions. This is vital due to the fact now not handiest is it