special report on forex market 23-december

8/13/2019 Special Report On Forex Market 23-December

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INTRODUCTION

HISTORY OF FOREX MARKET

MARKET SIZE AND LIQUIDITY

MARKET PARTICIPANTS

DETERMINANTS OF EXCHANGE RATES

FINANCIAL INSTRUMENTS

TECHNICAL VIEW

CONCLUSION


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Theforeign exchange market(Forex,FX, orcurrency market) is a globaldecentralized market for the trading ofcurrencies. The main participants in thismarket are the larger international banks.

The foreign exchange market works through financial institutions, and it operateson several levels. Behind the scenes banks turn to a smaller number of financial

firms known as dealers, who are actively involved in large quantities of foreign

exchange trading.

The foreign exchange market is unique because of the following characteristics:

Its huge trading volume representing the largest asset class in the worldleading to high liquidity;

Its geographical dispersion; Its continuous operation: 24 hours a day except weekends, i.e., trading from

20:15 GMT on Sunday until 22:00 GMT Friday;

The variety of factors that affect exchange rates; The low margins of relative profit compared with other markets of fixed

income; and

The use of leverage to enhance profit and loss margins and with respect toaccount size.

As such, it has been referred to as the market closest to the ideal of perfect

competition, notwithstanding currency intervention by central banks.


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Currency trading and exchange first occurred in ancient times. Money-changingeople, people helping others to change money and also taking a commission orharging a fee were living in the times of the Talmudic writings (Biblical times).

These people (sometimes called "kollybists") used city-stalls, at feast times theemples Court of the Gentiles instead. Money-changers were also in more recent

ncient times silver-smiths and, or, gold-smiths.During the fourth century the Byzantium government kept a monopoly on thexchange of currency.

Currency and exchange was also a crucial element of trade in the ancient world sohat people could buy and sell items like food, pottery and raw materials. If a

Greek coin held more gold than an Egyptian coin due to its size or content, then amerchant could trade fewer Greek gold coins for more Egyptian ones, or for morematerial goods. This is why the vast majority of world currencies are derivatives

f a universally recognized standard like silver and gold.

880 is considered by one source to be the beginning of modern foreign exchange,ignificant for the fact of the beginning of the gold standard during the year

rom 1899 to 1913, holdings of countries' foreign exchange increased at an annualate of 10.8%, while holdings of gold increased at an annual rate of 6.3% between903 and 1913.

n fact 1973 marks the point to which nation-state, banking trade and controlledoreign exchange ended and complete floating, relatively free conditions of a

market characteristic of the situation in contemporary times began (according tone source), although another states the first time a currency pair were given as anption for U.S.A. traders to purchase was during 1982, with additional currencies

vailable by the next year.


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The foreign exchange market is the most liquid financial market inthe world. Traders include large banks, central banks, institutional

investors, currency speculators, corporations, governments,

other financial institutions, and retail investors.

In April 2010, trading in the United Kingdom accounted for 36.7% ofthe total, making it by far the most important centre for foreign

exchange trading. Trading in the United States accounted for 17.9%

and Japan accounted for 6.2%.

In April 2013, for the first time, Singapore surpassed Japan inaverage daily foreign-exchange trading volume with $383 billion per

day. So the rank became: the United Kingdom (41%), the United

States (19%), Singapore (5.7%), Japan (5.6%) and Hong Kong (4.1%).

Foreign exchange trading increased by 20% between April 2007 andApril 2010 and has more than doubled since 2004.


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Commercial Companies:An important part of this market comes from the financial activities of companiesseeking foreign exchange to pay for goods or services.

Central Banks:National central banks try to control the money supply, inflation, and/or interestrates and often have official or unofficial target rates for their currencies.

Foreign Exchange Fixing;Foreign exchange fixing is the daily monetary exchange rate fixed by the nationalbank of each country. The idea is that central banks use the fixing time and exchange

rate to evaluate behavior of their currency.

Hedge Funds as Speculators:About 70% to 90% of the foreign exchange transactions are speculative. They weresolely speculating on the movement of that particular currency. Hedge funds havegained a reputation for aggressive currency speculation since 1996.

Investment Management Firms:Investment management firms (who typically manage large accounts on behalf ofcustomers such as pension funds and endowments) use the foreign exchange market

to facilitate transactions in foreign securities.

Retail Foreign Exchange Traders:Individual Retail speculative traders constitute a growing segment of this marketwith the advent of retail foreign exchange platforms, both in size and importance.

Currently, they participate indirectly through brokers or banks.

Non-Bank Foreign Exchange Companies:Non-bank foreign exchange companies offer currency exchange and international

payments to private individuals and companies.

Money Transfer/Remittance Companies and Bureaux Dechange:

Money transfer companies/remittance companies perform high-volume low-valuetransfers generally by economic migrants back to their home country.


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Economic Factors:These include:

Economic policy, disseminated by government agencies and centralbanks

Government budget deficits or surpluses Balance of trade levels and trends Inflation levels and trends Economic growth and health Productivity of an economy Political Conditions:

Internal, regional, and international political conditions and events

can have a profound effect on currency markets.

Market Psychology:Market psychology and trader perceptions influence the foreign

exchange market in a variety of ways:

Flights to quality, Long-term trends, "Buy the rumor, sell the fact",

Economic numbers, Technical trading considerations


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Spot:

A spot transaction is a two-day delivery transaction (except in the case of

trades between the US Dollar, Canadian Dollar, Turkish Lira, Euro and

Russian Ruble, which settle the next business day), as opposed to

the futures contracts, which are usually three months. This trade

represents a direct exchange between two currencies, has the shortest

time frame, involves cash rather than a contract; and interest is not

included in the agreed-upon transaction.

Forward:

One way to deal with the foreign exchange risk is to engage in a forwardtransaction. In this transaction, money does not actually change hands

until some agreed upon future date.

A buyer and seller agree on an exchange rate for any date in the future,

and the transaction occurs on that date, regardless of what the market

rates are then. The duration of the trade can be one day, a few days,

months or years. Usually the date is decided by both parties. Then the

forward contract is negotiated and agreed upon by both parties.


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Swap:

The most common type of forward transaction is the foreign exchange

swap. In a swap, two parties exchange currencies for a certain length of

time and agree to reverse the transaction at a later date.

Future:

Futures are standardized forward contracts and are usually traded on an

exchange created for this purpose. The average contract length is roughly

3 months. Futures contracts are usually inclusive of any interest amounts.

Currency futures contracts are contracts specifying a standard volume of a

particular currency to be exchanged on a specific settlement date

Option:

A foreign exchange option (commonly shortened to just FX option) is a

derivative where the owner has the right but not the obligation to

exchange money denominated in one currency into another currency at a

pre-agreed exchange rate on a specified date. The options market is the

deepest, largest and most liquid market for options of any kind in the

world.


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GBP/USD

COMMENDATION:

BP/USD trading around 1.6330-1.6360 levels, it may show some upward movement towards 1.6500-1.66

vels, so traders may take long position for the targets of 1.6480/1.6600.

OUTLOOK:

TREND : -CONSOLIDATE

RESISTANCE : - 1.6400, 1.6490

SUPPORT : - 1.6270, 1.6200

STRATEGY : - BUY ON DIPS


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EUR/USD

ECOMMENDATION:

OUTLOOK:


RESISTANCE : - 1.3700, 1.3810

SUPPORT : - 1.3540, 1.3390



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USD/JPY

RECOMMENDATION:

0 weeks rally in USD/JPY. It may shows more upward movement towards the level of 108, so trader ca

ake long position in it around 105 for the target of 106.50/110.50.

OUTLOOK:

TREND : -BULLISH

RESISTANCE : - 108.00, 110.50

SUPPORT : - 104.00, 102.00



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USD/INR

ECOMMENDATION:

SD/INR trading sideways around the level of 61.00-64.00. Trader can take short position around 62.00

e target of 60.00/57.00.

OUTLOOK:


RESISTANCE : - 64.05, 65.50

SUPPORT : - 60.50, 58.60

STRATEGY : - SELL ON HIGH


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This report is based on our prime research. We use different

informative websites for necessary information. The foreign

exchange market (Forex, FX, or currency market) is a global

decentralized market for the trading of currencies. The main

participants in this market are the larger international banks.

The foreign exchange market works through financial

institutions, and it operates on several levels. Most foreign

exchange dealers are banks, so this behind-the-scenes market

is sometimes called the interbank market, although a few

insurance companies and other kinds of financial firms are

involved.

EUR/USD has shown some downward movement this week

but now rally support euro to gain against us dollar.

Upward movement towards 1.6500-1.6600 levels in GBP/USD.

USD/INR trading sideways to bearish.

50 weeks rally in USD/JPY.


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About TheEquicom

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this Report. Information has been obtained by The Equicom Financial Research Pvt.

Ltd. From sources which it considers reliable. However the Equicom Financial Research

Pvt. Ltd. does not guarantee the accuracy, adequacy or completeness of any information

and is not responsible for any errors or omissions or for the results obtained from the

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special report on forex market 23-december

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