LONDON, June 18, 2012 /PRNewswire/ --
On Friday, June 15, the pound fell against the US dollar following the Bank of England's announcement of an emergency liquidity package the day before. But how will you profit from this fall?
In the guide below, we show you how you can profit from the depreciating sterling through a spot forex trading account from City Index.
BoE Announces Emergency Liquidity Package
On Thursday evening last week (14 June), Governor Mervyn King suggested more quantative easing (QE) could be on its way as the Bank of England announced an emergency liquidity package to support the British banking system.
In his keynote speech, King said that the BoE would also be providing cheap long-term funding to encourage lending to businesses and consumers.
Pound Depreciates against Dollar
Whilst many investors in the marketplace said the measures planned by King would support the UK economy; further suggestions of monetary easing prompted investors to sell-off sterling in early London trade on Friday (15 June).
How to Trade Forex
With a City Index forex trading account you can take a position on the future price movement of 37 currency pairs within the foreign exchange market.
As a global currency market - trading 24-hours a day from Sunday evening to Friday night - forex offers traders multiple opportunities to potentially profit from fast-moving major, minor and exotic currency pairs.
Unlike in traditional equity markets, trading forex with City Index allows you to profit from market movements - regardless of whether they are rising or falling.
With this in mind, using the example above whereby the pound depreciates against the US dollar - traders have the potential to 'go short' and sell the pound with the aim of potentially profiting from every pip that it depreciates further.
In addition, as a leveraged product - forex trading requires only a small percentage of the underlying market's total value as an initial deposit.
This enables traders to control a relatively large exposure for only a small amount, gain greater access to the global currency markets and possibly magnify gains.
It is important to remember, however, that as a leverage product, you also run the risk of losing more than your initial deposit. A forex risk management strategy should be used in order to limit potential losses.
Start Trading Forex
To start trading forex across a range of trading platforms - including mobile - you can apply for a forex trading account with City Index through their website: http:http://www.cityindex.co.uk
Read More Forex Trading Tips
If you found this article helpful, you may want to read more just like this. You can access a range of free forex trading tips, guides and articles through the City Index website also.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.
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FOREX-Euro retreats from 1-month high vs dollar - Reuters
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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FOREX-Euro falls, Spanish woes overshadow Greek poll - Reuters
* Euro turns negative vs dollar, retreats from 1-mth high
* Spanish bond yields rise above 7 pct
* Rally on pro-bailout win proves short-lived
By Nia Williams
LONDON, June 18 (Reuters) - The euro fell from a one-month high against the dollar on Monday with the election win for pro-bailout parties in Greece overshadowed by Spanish bond yields surging back above the 7 percent level which traders view as unsustainable.
While the election result allayed immediate fears of Greece being forced out of the euro zone, uncertainty persisted as the winning centre-right New Democracy party tried to form a government with other parties backing the international bailout.
Many investors said the new government could not hope to deliver on further austerity measures with the economy already into a fifth year of deep recession.
Market players were also concerned about the euro zone's ability to take effective steps to protect Spain and Italy from the debt crisis.
"The euro is already off the day's highs, displaying that while we have a decent result in the Greek election, everybody knows it's going to be a long, rocky road and we are nowhere near the end of Greece's problems," said Jane Foley, senior FX strategist at Rabobank.
"Even if we carry on getting a better outcome with respect to Greece we have still got Spain and problems there."
The euro fell 0.15 percent on the day to $1.2619 on reported selling by Asian investors and after breaking below reported stop-loss orders around $1.2660-70. It had earlier hit a peak of $1.2748 in Asian trade.
Ten-year Spanish government bond yields, hit by persistent concern about the country's fiscal and banking problems, rose above the 7 percent level deemed unsustainable in the long run and at which other peripheral countries have asked for a bailout.
Despite the problems facing the euro zone, some strategists saw potential for the euro to rise given a build-up of huge short positions in the common currency, taken on concerns that a win for anti-bailout parties could lead to Greece rejecting austerity measures and leaving the euro.
Positioning data showed speculators' massive net short positions of 195,187 contracts last week, even after having trimmed them from the previous week's record high of 214,148 contracts.
"The election results should keep hopes alive that Greece will stay in the euro," said Taisuke Tanaka, chief FX strategist at Deutsche Securities.
"There are massive short positions on the euro. Market players now need to consider whether the euro has more downside or upside, ahead of euro zone policy makers' meetings in coming days."
European finance ministers meet on Friday and a European Union summit is scheduled for the end of this month.
QE RISK SUPPORTS EURO
Although the Greek election result was expected to provide only limited support to the euro, many said the common currency could benefit versus the dollar on speculation the U.S. Federal Reserve may opt for more easing to boost growth.
Many market players expect the Fed could extend its long-term bond-buying through Operation Twist by a few months from the current deadline of June, after a series of disappointing data.
Additional easing from the Federal Reserve could also support other perceived riskier currencies against the safe- haven greenback.
The dollar index was up 0.1 percent at 81.731 after hitting a one-month low of 81.188. The Australian dollar was close to flat at US$1.0073, paring gains from a one-month high of US$1.0135.
"There's a chance the Fed could adopt more of an easing bias at its policy meeting on Wednesday and that should cap the dollar for now," said Peter Dragicevich, an FX economist at Commonwealth Bank of Australia.
The safe-haven yen fell against the euro to 99.87 yen and against the dollar to 79.04 as a result of the initial risk-positive reaction to the Greek vote.
There was little movement in the Swiss franc against the euro, which traded at 1.2010 francs, just above the 1.20 franc floor enforced by the the Swiss National Bank. Many market players have been increasingly wary of a test of the floor as concerns about the euro zone debt crisis intensified. (Additional reporting Hideyuki Sano; editing by Stephen Nisbet)
Nigeria: Concern Mounts Over Forex Reserves Accretion - AllAfrica.com
The steady growth recorded by Nigeria's forex reserves since this year may discontinue as a result of the sharp drop in the price of crude oil.
THISDAY checks Sunday showed that the forex reserves -derived mainly from the proceeds of crude oil production, fell by $218 million in the last nine days, from $37.768 billion as at June 6 to $37.550 billion last Thursday.
The reserves which stood at $32,985 billion at the beginning of the year, improved remarkably to $35.608 billion at the end of the first quarter.
On the other hand, crude oil price settled at $83.99 per barrel on Friday, after touching an eight-month low near of $81.
This was attributed to concern over Spain's bank bailout, the euro debt scenario, among other external factors. The current value of the oil price reflected a drop by 35 per cent, compared with its peak value of $127 per barrel in mid-March.
At the current rate of decline, financial market experts predicted that forex inflow into the country would fall from the $4.31 billion it was in January to $3.34 billion next month, while they also forecast the external reserves would diminish to $22 billion- covering less than three months of imports.
The development has also impacted negatively on the naira as it has depreciated significantly against the United States dollar, especially at the interbank and parallel markets.
For instance, at the interbank market, the naira has so far fallen by N4.68 to N163.68 to a dollar on Friday, as against the N159 to a dollar it was on May 15. Similarly, at the parallel market, the local currency dropped by a total of N4.20 to close at N164.20/$1 on Friday, compared with the N160/$1 to a dollar it was a month earlier.
Managing Director of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, said the recent decline in oil prices was partly triggered by market sentiments of a further deepening crisis in the euro-zone, in conjunction with weak economic growth recorded in advanced economies in the first quarter of the year.
"The question however is how vulnerable are Nigeria's external reserves, should oil prices drop further, for example, to a low of $80 per barrel? The Federal Government's budget is benchmarked to oil price at $72 per barrel, while Bonny Light crude is trading at $98 per barrel.
This is a variance of $26 per barrel. At the current rate of decline, we expect forex inflows to fall from $4.31 billion in January to $3.34 billion in July.
"If oil prices were to drop to $80 per barrel (which is 50 per cent likelihood based on current trends), there is a 95 per cent likelihood that forex inflows will decline to approximately $3.03 billion."
"In this situation Nigeria's external reserves would be expected to follow suit and drop to a value as low as $22 billion, covering less than three months of imports. Resultantly, the CBN may be forced to allow the naira to depreciate sharply to N165/$1, to compensate for the substantial loss in oil revenue."
International Financial Advisory and Investment firm - Renaissance Capital (RenCap) also warned that the drop in oil price may pose some risk to the Nigerian economy if the trend continues, even as it expressed concern over the ability of the federal government to meet its revenue projections if the trend continues.
Vice President, Sub-Saharan Africa Economist, RenCap, Yvonne Mhango, said: "This evidently has implications for Nigeria given that it is an important oil exporter. Our estimates suggest that the risk to Nigeria's economy becomes significant if the average oil price for 2012 drops below $75 per barrel."
Similarly, FSDH Securities Limited, in its latest report, stated that "the recent sharp drop in the international price of oil has severe negative implications for the country's external reserves position in the short-to-medium term. The recent shortfall in crude oil production, coupled with the declining price of crude oil could put further pressure on the exchange rate in the face of growing demand, particularly from oil importers."
As a result of all these, the Coordinating Minister of the Economy/Minister of Finance, Dr. Ngozi Okonjo-Iweala, last Wednesday, advised members of the Federal Executive Council (FEC) to be proactive in decision making, so as to forestall effects of possible economic recession based on happenings in the global economy. She had warned them to shun wastefulness in the management of the nation's resources.
FOREX-Euro falls as Spain worry overshadows Greek vote - Reuters UK
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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Forex Flash: EUR/USD scope for a near-term bounce but seen at 1.20 in 12M – Wells Fargo - NASDAQ
FXstreet.com (Córdoba) - Despite the pro-austerity parties fared best at the weekend's election in Greece, "some other key steps remain to be taken in the coming weeks" with the Troika returning to Greece to review the country's eligibility for continued international aid, says Wells Fargo analyst team. "Separately, the details of financial assistance for Spain to help recapitalize that country's banking sector should be finalized by late this month".
"At this time, based on the election outcome and likely near-term events, we see no need to adjust our foreign exchange forecasts", says Wells Fargo. "There is still scope for a near-term euro bounce, although we see the euro slipping back to $1.20 in the next twelve months". Commodity and emerging currencies like the CAD and the MXN "could enjoy more lasting gains", they added.
Tough luck, Generation X: Only half of wealthy Baby Boomers to leave money for their kids...and ONE THIRD would rather give it to charity - Daily Mail
- Baby Boomers defined as people between the ages of 47 and 66
- Generation X refers to people born between early 1960s and early 1980s
- 55 per cent of Baby Boomers believe it's important to leave money to offspring
- Most Baby Boomers believe each generation should earn its own wealth
- Three-quarters of people younger than 46 favor leaving money to kids
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When members of the Baby Boomers generation die in the next 50 years, they will leave trillions of dollars in wealth behind, but their children should not hold their breath for a large inheritance.
According to the U.S. Trust Insights on Wealth and Worth annual study released on Monday, only 55 per cent of Baby Boomers - those between the ages of 47 to 66 - think it is important to leave money for their offspring.
U.S. Trust commissioned an independent, national survey of 642 high net worth adults, who were not clients, with at least $3million in investable assets.
Givers: A study found that 31 per cent of wealthy Baby Boomers would prefer to leave their money to charity
One of three Baby Boomers surveyed – about 31 per cent - don’t think it is important to leave a financial inheritance and said they would rather leave money to charity than to their children.
By contrast, three-quarters of wealthy people under age 46 said it's a priority to leave inheritance for their children.
The top reason for not wanting to leave money for their kids is the belief shared by some Baby Boomers that each subsequent generation should work to earn its own wealth.
Following closely behind is the thought that it is more important to invest in children’s success while they are growing up.
‘Our survey points to a shift in generational behavior and outlook, most likely shaped by personal experience and societal responses to economic realities,’ said Keith Banks, president of U.S. Trust.
Banks added that well-off parents are concerned that the next generation is not prepared to inherit wealth, which is not surprising considering the fact that most of the Baby Boomers surveyed don't talk to their kids about money: just 37 per cent said they've fully disclosed their net worth to their children.
Kept in the dark: Just 37 per cent of Baby Boomers said they've fully disclosed their net worth to their kids
Those over age 67 said they weren't having this discussion because they were raised to avoid money talk, while younger respondents said they didn't want to inhibit their kids' work ethic.
Unlike the majority of people from her generation, 63-year-old Kathleen Taylor, of Chimacum, Washington, taught her two grown children since they were young to be responsible for their own money.
That is why she plans to leave most of her money to her children and some money to charitable causes, ABC News reported.
One way Taylor and her husband taught their children about responsible spending was providing the value of college tuition, room and board to each of them and putting them in charge of paying the bills.
‘People thought we were crazy,’ she told ABC.
The Taylors plan to start a college fund once their children start having their own kids. And they intend to add to it on their grandchildren’s birthdays as long as Taylor and her husband are alive.
Mrs Taylor said she hopes her own children will do the same for their great-grandchildren.
The U.S. Trust study also has found that 42 per cent of Baby Boomers and 54 per cent of those under age 46 are paying medical costs for their parents or other relatives.
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