The Price Of Forex

Foreign exchange trading is a 24-hour transaction involving currencies bought and sold concurrently. Traders do not need an office to conduct their dealings. Although the major dealers in the foreign exchange market involve financial institutions, foreign exchange defies physical space and time.

Similar to any financial product, foreign exchange trading involves a price at which Sellers and Buyers are willing and can trade. Foreign exchange prices could either be a bid price or an asking price.

The Bid Price, according to Forex Basics at FX Solutions Online, is the price at which the dealer is willing to buy and traders can sell currency. On the other hand, FS Solutions Online notes, the Ask Price or Asking Price, is the price at which the dealer will sell and traders can buy currency. The difference between the Bid and Ask Price is called the Spread or the cost of the transaction on the part of the trader.

The Basics Of Trading

Foreign exchange prices are normally derived on quotes up to the currencies four decimal places or 0.0001, known as the pip. There are exceptions in quoting the pip and to determine this requires knowing the currency pairs.

There are major currencies often traded in the foreign exchange market. These are the US Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD), and Australian Dollar (AUD).

These currencies are often traded in pairs, which is more often done with the Dollar and Euro and at time with the British Pound. A sample currency pair would be the Euro and the US Dollar, traded as the Euro, or known under the forex symbol EURO/USD. To wit, here are the major currency pairs: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, EUR/GBP, EUR/JPY, EUR/CHF, and GBP/JPY.

With knowledge on the major currency pairs, trading would be a little less confusing for the beginner. One would also know that the pip when quoting for USD/JPY is equal to 0.01 only. This would result to a higher conversion and trading price compared to a pip using 0.0001.

Source: Forex Basics, fxsol.com and Forex Trading, fxsol.com

French Eco Affects Euro

France’s weak economic growth has affected the Euro to dissent slightly from its current post in the foreign exchange market. Data released by HSBC analysts showed that France’s poor export performance and slump in consumer spending resulted in the economy’s almost-stagnant growth. The decrease in industrial and manufacturing production in France this May were also factors to the slow economic turn.

As soon as news of these data on France reached the business scene, the Euro went down to almost US$1.26. The data also revealed that France first quarter GDP grew by only 0.2% compared to the last quarter of 2004 despite predictions that 0.5% growth could be attributed to the GDP.

Household borrowing or consumer credit was also pale and was reported at its lowest since 1999 to rise by only 0.4 billion for the month. Increase in oil revenues’ tax collection to be implemented by the French government in the following months is anticipated to be another burden for consumers and businesses alike.

Source: Forex – Euro Eases Slightly As France Posts Weak Economic Growth, Forbes.com