Forex Focus | APR 2006
Forex Focus by Darrell Jobman
Stocks & Commodities V. 24:4 (14-18): Forex Focus by Darrell Jobman Access to foreign exchange trading has opened up exciting trading options for the retail trader. You can now trade alongside corporations and institutions in a highly liquid market that is global, traded around the clock, and highly leveraged. Before jumping into this market, however, we must understand the factors that affect the forex market. With that in mind, STOCKS & COMMODITIES has introduced Forex Focus to better prepare the retail trader to participate in the currency market. Where Will The US Dollar Find Support? Monetary trends in the first quarter of 2006 may have the answer. Monetary policy will remain very important for currency trends during the next few months, even if the markets give greater attention to the growing US trade deficit. The exact timing of a peak in US interest rates is difficult to forecast, but there is a strong possibility that rates will peak in the first quarter of 2006. Thereafter, short-term US rates should not change very much for the remainder of 2006. The European Central Bank (ECB) is likely to increase interest rates steadily during the year with a rate around 3.0% realistic by the end of 2006. The Bank of Japan is set to abandon its ultra-expansionary monetary policy during the first half of 2006, potentially in April, although interest rates will stay low. Nominal yields will continue to favor the US dollar, but the gap relative to the euro and yen is unlikely to widen significantly further. In fact, spreads are likely to narrow from late in the second quarter, and with markets looking forward, the US dollar will find it more difficult to attract capital inflows. A benign series of events is possible, with the dollar settling into a trading range as interest rate differentials stabilize or narrow slowly. Of course, there is also still the risk of sharper dollar falls if the markets start to price in a quick US interest rate cut.
by Darrell Jobman
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.