Currency Markets, or more commonly known as Forex Markets, are the places where various currencies are traded. Currency Markets covers more than just currencies. Currency markets also include options, futures, commodities, and the list goes on.
The world’s leading Forex trading market is the Australian dollar and the latest announcement is that the Australian Dollar has been pushed higher by the US Dollar against the Canadian Dollar. This is a result of a major industrial event taking place in the United States that was based on commodities. This can potentially push the AUDUSD up in the future.
While this economic news may seem to be detrimental to the United Kingdom, it does not mean that the British Pound will be ruined. Although the Australian Dollar is currently worth more than the Pound it is important to remember that the Pound is still a major currency and it will continue to be valued by most nations throughout the world. The Pound will continue to be used and traded by all nations throughout the world.
Due to the recent move up in the AUDUSD there is no doubt that the currency markets have experienced a lot of activity in the past few days. This can be due to speculation that what is happening in the United States may happen in other countries, or even just because a major event occurred. No matter how it is perceived it does not change the fact that currency markets in general have experienced a large amount of activity over the past week.
One thing that must be understood is that each time-period has different indicators to follow. For example, in the period that begins the day after a major announcement such as the occurrence of a fire, the FTSE All-Share prices are likely to be much higher than the news from the United States has affected the American Stock Market. Since the Dollar is used globally, it is important to understand when a move up is due to speculation and when it is due to a true announcement.
In addition to this, there are also indications that market participants are trying to trade with cash. Even though many traders will use options to hedge their positions in the event of a sudden financial move they will be buying and selling options in case of a large, unexpected move in the currency markets. It is important to note that this trend will be felt throughout the financial markets. With this in mind, it is safe to say that the AUDUSD is most likely going to rise even more than it already has.
The future movement of the AUDUSD is important to watch because it may indicate whether a long or short position is going to be successful. Right now the currency markets seem to be moving in the direction of long positions as the AUDUSD moves up in value. A long position is simply a position in the currency markets, where a trader bets that the currency will go up in value over time. A short position is similar to a long position but a trader only bets that the currency will fall in value.
For many traders in the currency markets may not be able to support a large position in long positions because many investors will seek out to short the AUDUSD at first in the beginning of the market. This means that a trader may need to look for a shorting market to begin with. This can be done by looking at the major currency markets such as the USDJPY, EURUSD, GBPUSD, AUDUSD, and EURUSD.
Many of these currencies are trading in their early days and it is wise to ensure that the currencies are only being traded on exchanges that are reliable. By doing this it will reduce the chances of a fluctuation happening in one’s funds.
Another indicator of where the currency markets are heading is the decline in the EURUSD. At the start of the recession European currencies were offered in attractive spreads that would allow traders to enter into long positions. This trend has now been reversed with the Euro now offering very small spreads and the only way to enter into a long position is with a short.
At the time of writing the only method for entry into a long position is through a futures contract. This means that the currency market has entered a long-term bearish market.
This bears out the idea that the market will bounce back in a short period of time. We have to remember that even with a long position there is a risk involved.