Month: July 2011

By Cedric Welsch

The huge market which allows buying, selling, exchange, and speculating in different countries of the world is the foreign exchange market. The participants in this exchange include retail forex brokers, forex investors, central banks, hedge funds central banks, commercial companies, investment management firms, and banks. It is the largest financial market in the world. Forex news generates from these large and liquid markets. They are not a single exchange but a world-wide network of computers. These computers handle all of the functions and requests of participants from all over the world. One component of this very large market is forex futures.

Forex trading news covers the activities taking place in this sector which operates in the same basic manner as traditional counter part. The basis is the purchasing of a contract to buy or sell a certain volume of an asset at a specific price on a previously specified date. The difference in these types of futures is that forex market is traded through several different exchanges instead of a centralized exchange. All of these currency futures quotes are against the U. S. dollar. This is different than the spot forex market.

There are two ways to participate in this branch of the investment strategies. They are Hedging and Speculating. Hedgers use these derivatives to reduce or totally avoid risks by protecting themselves against various price movements. Speculators are looking to earn a profit so they invite the risk. One reason to use the hedge strategy is to neutralize effect of changes in currency values on sales revenue. Hedging requires the use of forwards and futures. Forwards offers the trader more flexibility in tailoring investments to their needs. With futures a set contract size must be used.

The income from a forward is not due until a contract expires. The cash backing a future is calculated daily and buyer along with seller must settle daily. Futures allows the investor in the foreign exchange to re-evaluate their position as frequently as necessary to achieve their goals. Speculating offers a greater opportunity for profit. The trading in the futures market advantages offer advantages of lower spreads, transaction costs, and more leverage. The disadvantages are requires more capital per purchase, being limited to the exchanges hours of operation, possible National Futures Associations fees. On the foreign exchange there are advantages and disadvantages in hedging and speculating. The chosen method depends on an investors financial goals.

About the Author

It can be inconsiderably confusing at times listening to various currency news trading all at once. There can be a huge magnitude of forex broker review sources you can read, but pick the reputable one.

By Ali Snider

Foreign exchange or Forex is a complicated and challenging business especially if you have a very little background on how it really works. You can almost say that Forex or FX trading is only for people with background on financial, economic or business courses. But just like any other type of goal, there is always a way through proper awareness and willingness to learn. With patience and hard work, you can master the best techniques to prosper in this kind of business and you don’t need to acquire degrees on courses related to business or the Forex market.

Foreign exchange or Forex trading is a type of business which is based on the currency market. It is usually abbreviated as FX or FX trading. Forex trading involves the exchange or trading of one type of currency for another. You can encounter a lot of terms and names which refer to the same business such as currency exchange, Forex trading, FX trading etc. Usually, the parties involved in a Forex trading depend on the type of currency and the country. The participants usually include governments, banks, large corporations, currency speculators and other financial establishments.

The currency market or the Forex market can be described as a huge network of global companies and individuals involved in the business of selling and buying different types of currency or money. Forex trading is based on a spot market where participants can trade at the current market rate as dictated by the laws of supply and demand. This means that you are trading money for money at the current market price. But there are also other options especially in the United States where you can trade a contract price for delivery in the future. Forex is becoming more and more popular as people are more aware on how it works and how it is being driven by multinational corporations, travelers, and government actions. As a result, Foreign exchange has become one of the fastest growing markets nowadays.

If you’re planning to engage into such form of business, you have to be aware of the basic factors related to a country’s economy and how movements of other countries’ economies can affect currency rates. You may need to understand some basic financial concepts and principles to learn how Forex trading or FX trading works. There are a lot of factors that can affect currency exchange rate in a certain economy. Forex usually depends on the stability of a certain country and factors that include political developments, economic policies, movements made by banks or other financial institutions and the reaction of the currency market to unavoidable circumstances brought by calamities, social problems, economic issues etc. An FX trader should know when to trade and predict the next behavior of the currency market. It is also important to always consider fundamental factors of Forex trading and not always rely on technical observations from analysts.

Overall, a Forex trader must be very observant and aware of the behavior of the economy and the currency market to know when to make a move and benefit from his investments.

About the Author

Ali Snider is the author of this article on Forex.
Find more information on Currency Trading here.

The State Bank of Vietnam reduced its open market operations (OMO) interest rate by 100 basis points to 14.00% from 15.00% previously, according to reports by Bloomberg and Reuters.  Aside from the OMO rate adjustment, the Bank held its main monetary policy rate, the Base rate, unchanged at 9.00%.  The Bank also held the Discount interest rate unchanged at 13.00%, and the Refinancing rate at 14.00%. 

By Forex Mansion

Managing your account along with your strategy and your risk parameters are the key components to becoming a successful day trader. The balance of power between your personal rules and if or how they make mathematical sense for your strategy is key. Above all else, once you have ironed out your rules your account will eventually hit ZERO if you violate them. This does not mean that you cannot change a rule to improve your strategy. It does not mean that you cannot change your entire strategy altogether. What it does mean is that you must be disciplined and stick to every rule that you have currently given yourself based on your strategy and style. Let us analyze this further. If for example you earn $1000 on an average positive trading day you cannot lose $10,000 on an average losing day to make it a mathematically viable strategy, even if you have an ratio of 90% up days to only 10% down days. It simply does not work. Along those same lines you also cannot earn an average of $1000 daily versus a $500 average on losing day if you are only making money 30% of your trading days.

So what does work? You must play with the numbers. An example of a realistic package for a winning strategy is for someone to be averaging 65% to 75% wining trading days and to have your average positive day at the very least be enough to equal your average losing day. So for example if there are 20 days in the average trading month and you average 70% up days to down days you will have 14 up days and 6 down days. If you are making or losing $1000 per day then you will have a total of $14,000 for the monthly up days versus a $6000 total for your down days given you a monthly net result of +$8000.

In addition it is key that your day trading discipline is coupled with the proper implementation of your RISK PARAMETERS. The risk parameters that you set up for yourself must keep in mind the amount you need to risk daily in order for your strategy to work versus the % you are willing to risk daily from your actual account. If for example you put $50,000 into a trading account and your trading house wants to give you 100 to 1 in leverage, DO NOT put a smile on your face and take it. The reason is that if for example you want to keep your maximum daily risk to your account to a manageable 4% ($2000) of the actual cash in your account, it will be extremely difficult to control if you are actually trading with $5,000,000 of open positions.

Almost everyone who stays in the trading business long enough figures out how to make money. Believe it or not this does not make for a successful trader. A successful trader is someone who has LEARNED HOW TO LOSE MONEY. This successful trader has learned to take a loss and move on. He or she has learned how to take a loss on a specific trade or a specific day or even a specific week while keeping things in perspective and looking at the bigger picture. The successful trader is looking at the bigger picture on how to rack up positive MONTHS while building up their account equity.
For additional information about day trading and forex trading, check out http://www.tradersnarrative.com. You can go to this site for a list of prop firms around the globe and ask or answer any type of trading questions that you may have. Remember discipline and consistency are your keys to trading success!

About the Author

This article discusses tips on day trading by helping you better understand managing risk. Daytrading.org is your comprehensive guide to learning how to make money day trading at home.

By Elliott Wave International

You can find low-risk, high-probability trading opportunities by trading with the trend. The trick is to find the end of market corrections, so you can position yourself for the next move in the direction of the trend.

This excerpt from Jeffrey Kennedy’s free 47-page eBook How to Spot Trading Opportunities explains where to find bullish and bearish trade setups in your charts and how to zero-in on these opportunities. If this lesson interests you, the full 47-page eBook is free through July 6.

On the left-hand side of the illustration below, there are two bullish trade setups. As traders, we want to wait for the wave (2) correction to be complete so we can catch the move up in wave (3) – this is the trade. What we are trying to do in this bullish trade setup is anticipate the potential for profits on the buy-side as prices move up in wave (3). Another bullish trade setup is at the end of wave (4).

As traders, we are looking to buy the pullback and position ourselves within the direction of the larger up-trend. Remember, three-wave moves are corrections, which means that they are countertrend structures. On the other hand, five-wave moves define the larger trend. As traders, we want to determine what the trend is and trade in the direction of the trend. Our buying opportunity to rejoin the trend is whenever the trend pauses and forms a correction.

Now, let’s look at the right-hand side of the illustration where we see two bearish setups. When a five-wave move is complete, it is retraced in three waves as a correction. The end of the five-wave move presents the first trading opportunity that we can take advantage of the short side (or the sell side) as the wave (A) down begins.

Notice the second bearish trade setup gives us another shorting opportunity as wave (B) tops.

So, within the classic wave pattern of five waves up and three waves down, we have four high-probability trading opportunities in which we are either positioning ourselves in the direction of the trend or identifying termination points of a trend. I want to share with you some tricks I have picked up over the years about how to analyze corrective waves and their termination points. The single most important thing I’ve learned from analyzing corrections is that corrective or countertrend price action is usually contained by parallel lines.

As shown above, draw the parallel lines by beginning at the origin of wave A and going to the extreme of wave B. You draw a parallel of that line off the extreme of wave A. So basically you have a small, slightly angled downward price channel. This will show you the containment region for wave C. It also shows you an area toward the bottom of the lower trend line where you can expect a reversal in price.

Here is another example. Again, you draw the parallel lines off the origin of wave A, the extreme of wave A and the extreme of wave B.

Toward the upper end of the upper trend line, you will usually see a reversal in price.

This example shows how countertrend price action is contained by parallel lines in the British pound, 60-minute, all sessions. Why is it important to know parallel lines contain the corrective or countertrend price action? Number one, it will increase your confidence that you are indeed labeling a countertrend move properly. Number two, it identifies areas where you will likely see prices reverse. For example, we see this reversal up near the top.

This brief trading lesson is just a small example of the opportunities you can find once you learn to identify key market patterns. Learn more in your free 47-page eBook, How to Spot Trading Opportunities. This valuable eBook is regularly $79, but you can get it free through July 6. Download your free copy of How to Spot Trading Opportunities now.

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators bet in favor of the US dollar and decreased their short positions against the American currency as of June 28th. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $12.44 billion against the other major currencies as of June 28th, according to a report published by Reuters. The data is a decrease from the total short position of $17.05 billion registered on June 21st, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

This week’s notable changes were British pound sterling positions declining lower on the short side to the lowest position since July 2010 while Canadian dollar positions fell to their lowest level since August 2010.

EuroFX: Currency speculators increased their net long positions for the euro against the U.S. dollar after two straight weeks of declines. Euro futures positions rose to a total of 32,987 long contracts as of June 28th following a total of 29,771 long positions on June 21st.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions continued to decline lower on the short side as of June 28th and fell for a second straight week. Pound contracts decreased to a total of 18,349 net short positions as of June 28th following a total of 11,360 short contracts on June 21st.

JPY: The Japanese yen net contracts declined after rising for three consecutive weeks to a total of 13,623 net long contracts reported on June 28th. This follows a total of 32,594 net long contracts on June 21st which marked the highest yen level since March.

CHF: Swiss franc long positions decreased for a fourth straight week as of June 28th. Franc positions fell to a total of 9,948 net long contracts following a net of 11,813 long contracts on June 21st.

CAD: The Canadian dollar positions decreased last week and fell to the lowest level since August of 2010. CAD positions declined to a total of 1,863 short contracts on June 28th following a total of 2,204 long contracts on June 21st.

AUD: The Australian dollar long positions fell on June 28th for the second consecutive week. AUD contracts decreased to a total net amount of 46,897 long contracts as of June 28th. AUD positions had totaled 54,571 net long contracts on June 21st.

NZD: New Zealand dollar futures positions dipped lower last week for a second straight week. NZD contracts declined to a total of 18,364 long positions as of June 28th from a total of 18,849 long contracts on June 21st.

MXN: Mexican peso net long contracts rebounded slightly after declining for four straight weeks to the lowest level since September 2010. MXN contracts rose to 46,077 net long contracts as of June 28th from a total of 41,423 long contracts as of June 21st.

COT Data Summary as of June 28, 2011
Large Speculators Net Positions vs. the US Dollar

EUR: +32987
GBP: -18349
JPY: +13623
CHF: +9948
CAD: -1863
AUD: +46897
NZD: +18364
MXN: +46077

By Forex Mansion

The AUD/USD trade is a unique and dynamic one in the world of forex. The AUD/USD currency pair is one of the most traded on the market. In order to corner every angle of this trade it is important to analyze the AUD/USD chart on the micro level and also to stay aware of the macroeconomic variables that affect these two currencies.

The tools for analyzing the AUD/USD chart are the rate of change indicator, the directional movement indicator, the parabolic SAR indicator, moving average indicators, the stochastic oscillator, and the relative strength index:
• The rate of change indicator evaluates the value differential of a currency over two different time intervals. This can be helpful when one is comparing the Australian dollar and the US dollar to other currencies over a given time period in which a certain event occurred that affected the market (and you wish to compare how they reacted).
• The directional movement indicator produces a calculation called the average directional movement index (ADX). The ADX is a measure of strength and trending. An ADX of 20 or higher is good indicator that the currency is trending high (upward).
• The parabolic SAR indicator is a calculated prediction for changes in the chart. The calculation is designed to determine when the curve (parabola) of the currency chart will reverse its direction (“Stop and Reverse”).
• Moving average indicators also help measure trending. The moving average is meant to aid by calculating the average value of the currency amongst all the volatility in order to understand if it is trending upward or downward. This calculation tends to lag; therefore, it is recommended to use multiple moving average indicators and to cross-reference them with other indicators.
• The stochastic oscillator helps determine market trends as well. Taking into account peak values and closing values, the stochastic oscillator looks at fourteen denominations of time (hours, days, or weeks…) with the assumption that trending markets close in compliment with the trend. The calculation results in a number between 0 and 100. A score of 80 and above can mean the currency is reaching the end of an upward trend, and a score of 20 or below can mean that a currency is reaching the end of a downward trend.
• The relative strength index (RSI) is an indicator of momentum that is used to determine of a currency has been overbought or oversold (and is therefore riding momentum). A currency that is riding momentum is sure to change direction shortly. The RSI produces a score between 0 and 100. A score of 70 and above generally indicates overbuying, and a score of 30 and below generally signals that the currency is undervalued and is a good buy.

Other Factors that Affect Trading AUD/USD Pairs

Chart analysis only words while simultaneously taking into account the factors that can affect the AUD/USD trade on a macroeconomic level. Some of the key macroeconomic factors that affect the currency trade are gross domestic product (GDP), interest rate, budget deficit, consumer price index (CPI), balance of trade, commodities, and other related currency pairs.
• GDP is the sum total of all goods and services produced by a country. The GDP directly reflects the fiscal status of that country, and therefore is a great positively correlative indicator of the value of the currency.
• The interest rate, as set by the central bank, will greatly affect currency values. When trading AUD/USD one must compare the interest rate set by the Reserve Bank of Australia against the interest rate set by the US Federal Reserve. High interest rates generate an attractive environment for investors and cause currency values to rise.
• The budget deficit is a double edged sword. On the one hand, public debt being owned by foreign governments is bad for the economy and bad for currency value. However, on the other hand, central banks will respond to deficits by raising interest rates (which causes currency to appreciate in value).
• The CPI is a calculation of how much average households are spending on everyday goods and services. The higher CPI is, the higher inflation is, and the higher inflation is, the lower the comparative value of the currency is.
• Balance of trade is the balance between imports and exports. If the exports exceed the imports (a trade surplus) the currency will be strong. If the imports exceed the exports (a trade deficit), it is a sign of a weak economy.
• Commodities generally have a negative correlation to the value of currency. Specifically, gold is known to have a negative correlation to the value of the US dollar. Since Australia exports gold, this commodity has an especially strong impact on the AUD/USD trade. (There is a strong positive correlation between the value of gold and the AUD/USD). Additionally, rising oil prices can have a negative impact on the USD.
• The other related currency pairs that most impact the AUD/USD are USD/CAD, USD/CHF and USD/JPY. The AUD USD has a negative correlation with aforementioned currency pairs.

Properly analyzing the AUD/USD charts while staying on top of all the latest news with regard to the macroeconomic indicators that affect this foreign exchange currency pair is a sure fire way to make the bucks in this cross-pacific trade.

About the Author

For more forex updates, check http://www.forexmansion.com .

By ForexYard

Last week’s improvement in risk sentiment was noticeable with the passage of the Greek austerity measures along with encouraging Chicago PMI and Manufacturing ISM data from the US. However, global manufacturing data was weaker in the UK, Europe, and China. Over the weekend China released disappointing non-manufacturing PMI which fell from 61.9 to 57.0, underlining the slow patch the global economy is experiencing.

Economic News

USD – Improving US Economic Data Points

On the backdrop of better than expected US data releases towards the end of last week (Chicago PMI and ISM) the dollar resumed its role as the FX market’s whipping boy with the dollar index falling to its lowest level since early June. The “risk-on” environment was sparked by encouraging US data releases and expectations of a positive outcome in Greece helped fuel the USD losses. The string of data releases will be tested this week with the headline risk this Friday’s Non-Farm Payrolls report.

Also creating background noise will be political brinkmanship as the Obama administration attempts to hash out a deal with Republican leaders over the US debt ceiling and current budget deficit. Obama’s self-imposed July 22nd deadline to raise the debt limit before the actual August 2nd deadline is quickly approaching. Bond yields have already begun to rise with the 10-year Treasury note rising to 3.20%, though this may also be a result of the conclusion of QE2 which ended last week.

The technical picture for the dollar versus the euro is also looking bleak. The weekly candlestick closed with an engulfing candlestick pattern which hints at further gains for the euro. On the daily chart the EUR/USD is slowly moving above the triangle consolidation pattern which has held the pair since late May. With rising momentum the 1.4700 resistance looks like the next target.

EUR – Headline Risk Declines with Greek Aid Approval

Euro zone finance ministers agreed to provide the 5th and final tranche of aid to Greece following last week’s approval of new austerity measures by the Greek parliament. FX markets largely expected this move in order to stave off a default but Greece still requires approval from the IMF before the funds will be released. An additional bailout plan for Greece will not be finalized until September. Interestingly enough, despite the new bailout package being crafted for Greece, in comments to German newspaper Der Spiegel, German Finance Minister Wolfgang Schaeuble said Germany was shaping plans to deal with a potential Greek default.

This week the ECB is expected to raise the refinancing rate 25 bps to 1.50% as Trichet expressed last week the ECB will maintain “strong vigilance” when it comes to fighting inflation. Traders should also be eyeing Tuesday’s euro zone services PMIs which could show a bit of weakness in the euro zone economy from the month of June.

As the euro continues to bounce higher the Swiss franc has been the most hurt versus the euro with the EUR/CHF coming off of its all-time low by a whopping 4%. More gains could be in store for the pair should the “risk-on” environment continue combined with a quiet front in the European debt crisis.

GBP – Slowing UK Data Headlines Sterling Risks

Last week’s drop off in UK manufacturing PMI highlights the slowdown in UK growth as the index declined to 51.3 from 52 as the survey struggles to maintain a reading above the 50 level which indicates economic expansion. Q1 UK GDP climbed a tepid 0.5% and economists may be revising their Q2 forecasts’ lower. Today’s construction PMI is expected to show a stable reading with consensus expectations of 53.6 from last month’s reading of 54.0. On Thursday the BOE is expected to hold interest rates steady given the split between those MPC members voting for an interest rate increase, no change in monetary policy, and those lobbying for increased quantitative easing measures. Currently the market has priced in the first BOE tightening to come in November but given the dire UK economic data the risks are skewed for a later start. This same risk applies to sterling given the ECB’s tightening schedule and even the ultra-dovish Fed has indicated QE3 is not in the cards.

Gold – Gold Prices Back Below $1,500

Spot gold prices dropped to their lowest level in six weeks after closing Friday below the $1,500 mark. Demand for gold has fallen as increased optimism is apparent following a positive outcome in Greece and rising equity markets.

The declines in gold prices began to intensify following the approval of the Greek austerity measures by Greece’s parliament and the passing of vote for asset sales and additional budget cuts. Improved US data points helped fuel stronger equity markets last week. This also contributed to the “risk-on” environment which does not favor gains for gold. US stocks surged last week with the Dow Jones Industrials Average climbing 5.4%, the index’s best week percentage wise since July 2009. Investors should take the gains with a grain of salt; volumes were down last week from their average by almost 12.5% which may hints at a lack of follow-through in the equity markets. This would be a positive for spot gold prices. $1,514 and $1,557 would be the next targets to the upside though a break of the $1,4662 support would reduce the bullish sentiment in spot gold.

Technical News

EUR/USD

A bullish engulfing pattern on the weekly chart does not bode well for further gains in the pair. Combined with rising weekly and daily stochastics, a case can be made for additional gains in the EUR/USD. The first resistance level the pair should face is 1.4700 off of the June high and a move above here and the pair would encounter selling pressure at the May high of 1.4940. To the downside the upper line of the triangle consolidation pattern at 1.4515 may prove to be supportive with additional support at 1.4440 and the lower leg of the triangle which comes in at 1.4125.

GBP/USD

The monthly chart shows potential declines for sterling. Falling stochastics point to additional losses in the pair. Traders could be looking for the GBP/USD to decline to 1.5650, a level that offers long term support. Both the 20-month moving average comes in near this area but more importantly this is where the falling trend line from the 2007/2008 highs comes in and sterling could see a technical bounce in this area. This level has further significance as it coincides with the October 2010 lows on the daily. To the upside resistance is found at 1.6150, the top of the current consolidation pattern as well as the previous trend line from the May 2010 low at 1.6280.

USD/JPY

A triangle consolidation pattern has formed on the daily chart with the legs froming from the May high and the June low. Judging from the long term trend the USD/JPY would be expected to break lower where support comes in at 80.25. A break here would likely test 79.70 and 79.55. However, a move higher may also be in the cards and a break above the initial 81.10 resistance would target 81.75.

USD/CHF

After forming a base near the 0.8300, the pair has risen to test its falling trend line from the February high which comes in at 0.8535, not far from the resistance level at 0.8550. Further resistance awaits the pair as the 50-day moving average. A breach here and the pair could unravel to the mid-May low at 0.8750.

The Wild Card

EUR/CHF

The pair has made a sharp 4% move higher from its all-time low but is now encountering some significant technical levels. The pair has retraced 38% from its April to June move at 1.2350. Additional resistance from the December and March lows at 1.2400 is also apparent. Forex traders may want to wait for confirmation the upside movement has finished before initiating any shorts again.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Just as quickly as EU officials thought they were out in the clear of the Greek debt crisis, the rating agencies pull them back in. Early in the morning S&P announced that the French led Greek debt rollover plan in its current form would be considered a credit event, sending EU officials back to the drawing board.

In a release earlier this morning S&P announced it would view both French banking proposals as a “selective default.” The view by S&P is discouraging as it is the first of the three major rating agencies to comment on the proposed rollover plan. S&P cited both proposals would return a reduced value to the holders of Greek debt than previously expected under the original debt agreement. Under ECB guidelines the European Central Bank will not accept Greek debt as collateral in exchange for ECB liquidity after a default. While the decision by S&P is certainly a negative for the euro, the 17-nation currency was off its early highs versus the dollar but has been able to maintain its position above the 1.4500 level, perhaps due to expectations of an interest rate hike by the ECB this week. Initial resistance is found at the top of the consolidation pattern at 1.4520 and a solid close above here would likely target 1.4700. To the downside 1.4440 from the June 22nd high is the initial support.

Cable was stronger after construction PMI survey was in-line with consensus forecasts, falling to 53.6 from 54.0. Sterling was initially supported as were gilts, but the rally faded as the European trading session extended into the afternoon hours. Recent UK economic data releases have been in the doldrums and therefore sterling got a lift from the data. Talk of an additional round of quantitative easing at the next BOE meeting may keep sterling on its back foot in the near-term. Market positioning has also fallen out of favor with sterling as Friday’s CFTC Commitment of Traders report shows speculators are now net short sterling for the first time since mid-January, a possible signal of a shift in the long term trend of the GBP/USD.

The majors will likely be range bound for the remainder of the day, typical of trading conditions with tight liquidity as US markets will be closed in observance of Independence Day. Happy 4th of July.

Read more forex trading news on our forex blog.