A brief look at one of the most popular moves in currency tradingOne of the most popular moves in currency trading is the carry trade. The carry trade is popular because it is so easy to execute, and because it can be a way to make money in forex trading. However, the carry trade is also quite risky.

The carry trade works when one uses a currency with a low yield (like the Swiss franc or the Japanese yen) to fund the purchase of a currency with a higher rate (like the Australian dollar or the euro). Money is made on the difference in interest rates.

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• Learn About Currency Trading
  Make money forex trading

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Sterling drops in currency tradingThe forex trading forecast for the UK pound is one that is likely to mean weakness in the coming weeks. The sterling is dropping in currency trading as the economy slows down.

After keeping rates on hold yesterday, speculation is rife over when the BOE will have to start cutting interest rates. Bloomberg reports on the UK economy, and the UK pound in forex trading:

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• Forex Trading with the UK Pound
  Currency trading on the FX market

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Yen gains as carry trade unwindsForex trading strategy involving the Japanese yen should consider that the carry trade — which keeps the yen lower in currency trading — depends on risk appetite. Right now, though, risk aversion is running higher, pushing the yen higher on the FX market.

With stocks declining, risk aversion is back in vogue in currency trading, and that means that carry trade is unwinding. Low yielding currencies, like the Japanese yen, are making gains as traders leave the carry trade.

See Also

• Forex Trading with the Japanese Yen
  Currency trading on the FX market

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Greenback struggles in currency tradingThe US dollar is mixed in forex trading this morning, showing confused signals and unsure of where to go next. After yesterday’s interest rate decisions from the Bank of England and the European Central Bank, things have been a little volatile for the greenback in currency trading.

However, the edge is starting to go against the US dollar in forex trading as oil prices surge and stock markets decline.

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• Greenback in Currency Trading
  Forex trading with world currencies

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Loonie gets help in currency trading from jobs dataYesterday, housing data prompted a drop for the Canadian dollar in forex trading on the currency market. Today, even though the loonie is still slightly down against the US dollar in currency trading, it has recovered most of its losses.

Help came for the Canadian dollar in the form of jobs data. Other than manufacturing, the slowdown in the US economy has not really affected the Canadian economy that much. Oil prices are also helping provide some support to the Canadian dollar.

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• Loonie in Currency Trading
  Forex trading on the currency market

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As the U.S. and European economies turn expect more volatile numbers…

News from Europe:

March                                                    Forecast    Actual
French Industrial Production         (MoM)    - 0.4%     - 0.8%
French Industrial Production          (YoY)    +1.6%      +1.0%
French Manufacturing Production   (MoM)    - 0.5%     - 1.5%
French Manufacturing Production    (YoY)    +1.8%      +0.4%

The beginning of the year made it look as if the European economy had shrugged off any negative impact of the turmoil seen in the final months of last year. However, the past few weeks have brought a series of disappointing numbers and the French industrial production numbers for March add to that series.

Vehicle production was down for the second month in a row and manufacturing output is suffering on the back of a steadily lower order book, a trend that doesn’t look likely to change.

The following economic releases are due today:

March U.S. Trade Balance   USD -61.4bn

There is just the U.S. trade balance to be released later it is a bit tough to get overly enthusiastic about the prospects of frenetic European and States sessions. Without a doubt the market’s obsessive hate complex with the Dollar was pretty much left as a memory this week and while any sustainable recovery in the greenback is hardly likely to be direct, the scene is now set for a very different H2 than we experienced last year.

Indeed, as this week closes we have probably completed the bulk of the first recovery. There may be a little more to go early next week, but while recent numbers have been better from the States there does remain two areas which will remain as detractors from outright bullishness.

The housing market is nowhere close to recovery and this will no doubt take another 9-10 months until next year’s seasonal upswing around March time. Employment remains on the defensive and this will still cause moments of concern, but this time not blind panic. With oil above $120pb and food shopping taking up a larger share of household spending consumers are unlikely to be dancing in the street.

So the market may, once again, be getting a little ahead of itself in pushing the Dollar higher. Choppy times are most likely over the next 2-3 months as economic releases more likely to be volatile during this period of transition.

Note important support and resistance areas:

           USDJPY       EURUSD       USDCHF       GBPUSD
Res:  104.30-70    1.5549-93    1.0623-65    1.9637-68
Res:  103.50-70    1.5475-14    1.0513-40    1.9570-00

Spt:   102.66-84    1.5390-20    1.0400-26    1.9500-23
Spt:   101.83-18    1.5283-20    1.0353-73    1.9413-53

See Also

• The foreign exchange market
  Read about the largest and most liquid global market

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