Category: Money Exchange Software

Forex Trading Moves Closer To Computer Platform

Amid recent controversy regarding illegal activities within international currency markets by licensed traders, a growing number of investment banking executives are calling for a full transition to electronic, computer-based trading platforms that do not rely upon the soon-to-be “obsolete” human “voice spot” trading.

The advantages of a fully integrated electronic trading platform are obvious. By the very nature of the code manifested to create the trading algorithms and platforms, compliance is simply a non-issue. There exist no opportunities for malicious or deviant behavior when all trading is undertaken within a carefully monitored and regulated software infrastructure.

Although electronic trading methods were virtually unheard of at the dawn of the new millennium, roughly 74% of all currency trading now occurs through software platforms. That being said, investors should not completely forget voice trading just yet. In the spot market, where currencies change hands directly and traders themselves assume the risks previously held by market-makers, roughly 35% of all trades still occur via voice trading.

As an increased volume trading switches into the electronic currency trading marketplace, it is expected that the larger players in the industry will continue to grow and quickly develop overwhelming dominance. Currently, the most prominent electronic trading platforms for currency exchange are Deutsche, Citi, Barclays and UBS.

One of the largest criticisms of electronic trading is the decreased profit margins that results from such exchanges. Unlike voice trading, which allowed for decreased transparency and the opportunity to quickly shift massive quantities of wealth, electronic trading typically requires these large actions to be broken into significantly smaller quantities, resulting in increased financial loss and, therefore, decreased profit.

While some believe that electronic trading helps reduce in-office manpower levels, this couldn’t be farther from the truth. In fact, electronic trading platforms commonly require up to a 33% increase in personnel, as software algorithms and infrastructure must constantly be maintained. Additionally, many state that this “neutral” interface remains a vehicle for wrongdoing. Claims have been made that these electronic platforms can be engineered to adjust pricing levels depending upon mouse movements and behaviors of consumers, leveraging their uncertainty or desires against them.

Bitcoin Hits $13 Billion Value

Although the push for increased international regulation of Bitcoin continues to gain momentum, the threat of oversight and scrutiny has done little to assuage to the fascination with this anonymous online currency whose value has now reached a monumental $13 billion. Although Bitcoin remains one of the most popular “virtual currencies” in existence today, there are well over 90 of these monetary systems currently in operation, many of which have gained some measure of credibility with retailers and merchants around the world.

 

The call for enhanced scrutiny of virtual currencies is largely due to the stigma that they have gained due to their popularity in criminal circles. The anonymity that Bitcoin affords users has become a valuable tool for those wishing to engage in illicit activities and avoid a larger paper trail.

Although several Bitcoin operators and exchanges did suspend their operations following the initial onset of the “big brother” bureaucratic mechanisms, the majority of these organisations are now operating at full capacity yet again. Regulation, in itself, is not necessarily a bad thing, some prominent Bitcoin heavyweights have argued. By allowing for an internationally mandated “rules of order,” Bitcoin users can also gain increased confidence in the currency due to the fact that the threat of catastrophic seizure or infrastructure collapse is much less likely. Regulation may also help protect virtual currency users from malicious scams and fraudulent offers that, up until this point, have been relatively invincible due to previous policies.

As virtual currencies continue to gain prominence in the contemporary economic landscape, it is inevitable that dramatic policy changes will continue to occur. Where this ultimately ends, however, remains to be seen. As many virtual currency users will attest to, the appeal of these products is not only in their monetary worth. On an idealistic level, Bitcoin represents an opportunity for “sovereignty” in a world that many believe is already too over-regulated. The community itself is largely responsible for Bitcoin’s success. Were enhanced policy-making to confine the level of operations enjoyed by current Bitcoin users, the currency may see it’s overall popularity and, thus, worth, decline.

Global Concerns Eased Surrounding AUD/USD

It’s common knowledge that the volatile dynamics of international politics and conflicts have serious repercussions on the FX markets. In recent months, the upsurge in geopolitical tension between Russia and the Ukraine, as well as US military intervention in Iraq against the ISIS militant group, have resulted in a series of substantial price swings of the US dollar, the EU Dollar and the GBP. The EU Dollar recently retreated to a nine-month low, due largely to its inability to withstand investor scrutiny in light of Russia’s aggressive moves. As could be expected, the GBP shed value in tandem with the EU Dollar.

Optimism, however, isn’t far off. Although the US Dollar declined in value following the initiation of airstrikes in Iraq, prices have not been significantly affected. A recent, temporary ceasefire between Hamas and Israel has also helped provide a small level of comfort and reassurance for those assessing their positions in the US Dollar.

That being said, tensions have yet to fully abate in Easter Europe, where the Russian military remains poised to launch a series of devastating strikes against Ukraine. The sanctions levied against Russia have served as a moderately effective deterrent against Putin’s militaristic endeavours, although no formal withdrawal has occurred as of yet. Although Russian governmental representatives have declared that the military exercises they had undertaken near the border with Ukraine were now over, investors remain somewhat cautious.

The Australian Dollar recently dropped to two-month lows against the US Dollar. This decline is largely due to statements by the Reserve Bank of Australia declaring its intentions to cut growth and inflation forecasts while, simultaneously, keeping interest rates stationary.

As is becoming increasingly common, however, even the most informed of predictions can change substantially when global dynamics are as volatile as they currently are. Although the recent Ebola outbreak has yet to produce any substantial head-waves in the FX markets, any indications that the deadly virus had established its presence in Europe may also exacerbate existing volatility. Yet again, only time will tell if such issues will transform into pressing concerns requiring immediate attention.

It is likely that the vast majority of international investors will remain intently focused on current events until these substantial global conflicts reach some level of long-term resolution.

“To say FX Volatility is Low is an Understatement”

to put the current “tranquil” state of the FX markets in context, it’s necessary to look back in history…way back. The stability of the US Dollar against the Japanese Yen that is being observed in FX exchanges today has not been seen since 1977. Using a variety of proxy modelling techniques, it could also be stated that the Euro Dollar has not been this tame since 1979.

Although many would view these observations as simply part of a larger pattern occurring in the international economy, the actual data points to something else entirely. According to George Saravelos, a currencies analyst at Deutsche Bank, “The decline in currency volatility is unusual compared to other asset classes.”

So, what could be the cause of this unique situation? Analysts agree that current economic conditions would not promote this level of stability. In fact, both the S&P 500 and 10-year US Bonds are experiencing over a 1% increase in volatility when compared to levels witnessed in the early 1990’s. Following the “taper tantrum” that occurred last summer, as well as a variety of unexpected policy surprises coming from the ECB, it seemed reasonable to assume that volatility would shake up for the FX markets for a reasonable amount of time.

One possible explanation for the placid nature of the currency markets could be a shrinking gap between buy and sell prices due to increasing competition and ever more powerful FX trading technology. This year alone, the buy and sell spread for FX exchanges at large was reduced by 20%. As automation and complex algorithms take over the marketplace, some say, it is inevitable that stability will slowly embed itself within the infrastructure of the FX markets.

Another possible theory points to the growing shift towards electronic trading platforms as opposed to traditional inter-bank voice trading. This shift is not just relegated to the FX markets. Following recent changes outlined by Dodd-Frank, many of the asset classes within the US fixed income market are also being transformed and revolutionized by electronic trading systems.

FX traders shouldn’t be overly worried that the glory days of foreign exchange are over. That being said, some experts are saying that the highs experienced earlier this year may not return for quite a while. According to Saravelos, this unheard of stability, “is also a warning shot on the impact that technology and regulation can have on other asset classes as competition and the market mature.”

Gold Enjoys Reprieve Around $1240

Although gold prices have fluctuated significantly over the past week, a small margin of confidence has been restored following the stability that this precious metal seems to exhibiting. Falling sharply from a well-established $1275, gold reached a four-month low near $1240, a move which, for many, was as disappointing as it was financially painful. That being said, it seems that this particular price point may signal the full extent of the ‘damage’, as further losses have not been seen. Given the relative stable nature of the precious metals marketplace, significant fluctuations in gold price are bound to quickly draw attention.

That being said, this new pricing base is markedly lower than the recent high of $1315. Although many believed that market volatility around gold was largely reducing, the fast drop to $1240 has caused some to rethink their original predictions and quickly adopt new tactics in this particular niche of the precious metals marketplace.

The price of gold is, essentially, determined by a variety of factors. The health of national currencies is one of the most significantly influential forces when assessing the overall strength of a commodity. With this in mind, it becomes much easier to understand the relationships between the price of gold and the economic health of the world’s prominent economies during the 2008 financial crisis: as markets plummeted, the price of gold soared. Gold is, due to this ‘sovereignty’ often thought of as a “safe haven” during periods of economic turmoil.

With a number of important policy decisions soon to be announced, including the ECB’s potential disclosure of new policy options and the U.S. non-farm payrolls data, gold traders are waiting with somewhat bated breath to see what exactly may happen to the price of gold in the coming weeks. Were the ECB to announce new, looser regulations, many believe that the price of gold would inevitably rise. That being said, the loss of value in the Euro may also serve as a prominent factor in assessing the value of gold in the coming weeks. Volatility, it seems, may be returning to the precious metals marketplace after all.

GBP EUR USD AUD Foreign Exchange Rate Forecasts & Predictions June 2014

The world of foreign exchange (forex) trading is arguably one of the most complex and nuanced financial marketplaces on the planet. Featuring an array of finely tuned pricing mechanisms and intricate arrangements, the process by which currencies lose or gain value relative to one another has become a trillion dollar industry.

Market analysts have released their exchange rate predictions for the month of June, and their assertions seem to coincide directly with recent announcements in key nations around the world.

The British Pound Sterling has made further gains, expanding its competitive edge on international currencies due in large part to recent announcements that manufacturing data has demonstrated healthy growth. Although the Bank of England’s recent statements on monetary policy are causing some to worry that the price rally being experienced by the Pound Sterling is only temporary, analysts are recommended a neutral to positive outlook on this particular currency.

Similar successes cannot be claimed by the Euro Dollar, which has suffered slightly due to recent revelations that the ECB might continue to reduce interest rates, further driving down the value of this already beleaguered currency. Combined with disappointing manufacturing news, the Euro is believed to currently be in a period of decline. Analysts have adopted a negative outlook on this particular currency.

The US Dollar’s positive manufacturing reports will most likely keep this currency within previously established ranges compared to the Pound Sterling. That being said, the recent Michigan sentiment index is largely negative, potentially undercutting any positive outlook nurtured by the overall manufacturing report. Analysts currently believe that the US Dollar sits at a neutral to positive outlook.

The Australian Dollar has been impaired slightly by recent reports illustrating weak domestic building numbers. Because of this, it is unlikely that the Reserve Bank of Australia will move to strengthen the national currency using an interest rate hike. According to analysts, the Australian dollar currently sits at a neutral to negative outlook.

Overall, the assertion could be made that the “threat” of volatility in the forex marketplace will be greatly enhanced or reduced by policies currently being decided upon in Europe and Australia. That being said, many of the world’s major currencies stand to benefit from any sign of weakness in these aforementioned economies.

Forex – Pound Sterling Near 1-Year Lows

Forex traders may be in for a somewhat bumpy ride in upcoming months, as the Pound Sterling has fallen to a near one-year low following news that the UK’s economic growth may be slowing. Recent government reports have shown that the UK’s service sector is expanding at the slowest rate seen in the last 17 months.

Although such news may initially appear to be somewhat grim, business optimism has not fallen as much as may be expected. In fact, the vast majority of firms in London’s financial sector continued hiring staff. These disappointing figures are also serving as a strong prediction that the Bank of England will, at least for the time being, keep interest rates at their current levels in an effort to promote economic stability. From the perspective of GDP, the UK experienced .7% growth in the third quarter of this year, while a .5% expansion is considered the likely outcome of fourth quarter activity.

The rise in the value of the US dollar is not only the byproduct of economic weakness in Europe. The now exclusively Republican-controlled House and Senate are considered to be a huge show of support for the US dollar. Government gridlock has, historically, contributed to currency weakness. Fortunately, the United States no longer has to suffer through the degree of turmoil that had embroiled their government over the last two years.

Investors are currently awaiting the outcome of a European Central Bank meeting that is occurring on the heels of a surprise stimulus move by the Japanese government. Many industry analysts are now predicting that the ECB will engage in a similar strategy, injecting much-needed funds into the Euro zone.

Related data points regarding the economic health of the Eurozone continue to be somewhat disappointing. Retail sales have dropped 1.3% on the monthly charts, which exceeded predictions for a .8% overall decline. Whether or not these factors will strongly influence the value of Pound Sterling remains to be seen. If the ECB were to intercede, it is likely that currency value fluctuations would follow suit. It will be interesting to observe exactly how these scenarios play out in the final month of 2014, and what expectations are established for the opening months of 2015.

Forex Trading for Beginners: Advice from the Experts

The world of foreign exchange holds a special appeal for many novice traders, due in large part to the fact that these markets function in a manner that is entirely unique within the finance industry at large. With less regulation than the traditional securities exchanges, near round-the-clock trading and the ability to acquire (and lose) large sums of money quickly due to leveraging, it should come as no surprise that foreign exchange attracts countless “newbies” on a daily base, many of whom are looking for a quick and effective way to make substantial profits in this dynamic marketplace.

Unfortunately, the world of foreign exchange trading is not an easy nut to crack. In fact, the Forex markets are widely considered to be some of the most sophisticated and, yes, confusing within the financial markets as a whole. There’s no reason to avoid jumping into these markets, however, as a slow, patient introduction to the in’s and outs of these markets may allow traders to adopt a more responsible approach to forex trading which helps to ensure that they won’t break the bank on their first outings.

Experts agree that one of the best tools for novice traders are the Forex simulators that can be found on virtually every major trading platform in existence today. Using these simulators, individuals can test out their specific trading strategies without having to place real money on the line. While these simulators can’t account for trading strategies fueled by fear, greed, superstition and any one of countless other human emotions, they do allow for smart practice and critical observations of how these markets function.

Experts agree that one of the best tools for novice traders are the Forex simulators that can be found on virtually every major trading platform in existence today. Using these simulators, individuals can test out their specific trading strategies without having to place real money on the line. While these simulators can’t account for trading strategies fueled by fear, greed, superstition and any one of countless other human emotions, they do allow for smart practice and critical observations of how these markets function.

Due to the fact that these markets do behave in a rather volatile fashion, expert traders commonly advice novices to adhere closely to what is commonly coined the “golden trading rules”, which include discipline, patience and money management. As stated previously, the Forex markets often involve substantial leverage, which can prove to be disastrous for those who aren’t completely sure of what they are doing. There are countless stories of individuals who have gotten overly eager in their early days of trading and lost tremendous sums of money due to faulty trading strategies and an overly zealous approach to leverage.

More than anything, the most important tool for any novice trader who is serious about finding their way into the forex markets is extensive practice. The only way to understand the nuances of these markets is to observe how they react to varying international situations.

Pound will hold up against Dollar – Unless Scotland votes ‘yes’

Over the course of the past few months, it’s been readily apparent that volatility in the FX markets has become practically non-existent. Although brief swings have been seen due to tensions between Russian and Ukraine, as well as the United States and the Islamic militants in Iraq, prices have remained largely stable. Although some traders are predicting devastating fluctuations due to tensions within the UK regarding the possibility of an independent Scotland, others believe that the Pound will stay on solid ground. That is, of course, unless the UK is broken up by a majority “yes” in the upcoming vote.

The value of the Pound is largely created by the collaboration of the various political entities within the United Kingdom, including England, Scotland and Northern Ireland. If any one of these entities were to leave the UK, it seems likely that, at least over the short-term, the value of the Pound would take a hit. When asked to discuss this particular issue, Kit Juckes, a currency strategist with Societe Generale, said that, “The more divided the UK is, the weaker the pound will be…”Sterling’s correction to date has far more to do with the UK rate rethink than anything else, and there is very little political risk premium in the pricing – yet”

Other possible catalysts of price fluctuation could occur in the early months of 2015, when the Bank of England is planning on raising interest rates, the first move of its kind by any nation in recent years. That being said, it is expected that the Federal Reserve of the United States will follow up with a similar move shortly thereafter. The Federal Reserve has indicated that their strategy remains to implement a very slow, gradual increase of rates in order to ensure that the US economy, which is now developing on a much firmer footing, does not get sidetracked.

Regardless of what potential outcomes may occur, it seems likely that the rather lengthy slumber the FX markets have been in may come to an end shortly, which, for many traders, is welcome news.

Learn how to Save Money and Time on International Currency Transfers

Although international travel is, obviously, one of the most enjoyable and exciting adventures available for many us, current logistical hassles can transform what should otherwise be a carefree and thrilling experience into an annoying and cumbersome series of trials and blunders. International currency transfer remains one of the most important and yet annoying and time-intensive elements of traveling abroad. It’s not uncommon for travelers who have little experience with international money transfer to lose a large part of their initial travel fund on transfer fees and poor exchange rates.

It’s often tempting to approach one of the major high street banks when you first begin pursuing international money exchange services. That being said, these institutions often do not offer customers the best possible exchange rates. A variety of independent money exchange services are available for travelers across the United Kingdom that provide competitive exchange and allow you to spend more of your money on your vacation as opposed to exchange fees.

Due to the fact that foreign currency exchange rates often change on a second-to-second basis, it’s highly important that individuals who may be new to international exchange seek expert advice from those who make foreign exchange their primary business. Fortunately, a growing number of independent services do offer consultation services in addition to standard exchange services. Instead of wasting time and money at the major high street banks, we highly recommend that you explore the numerous advantages offered by independent services in business in virtually every major city in the UK.

For those whose interests fall more in line with long-term international adventures, including buying property in a foreign country, independent currency exchange / transfer services can also be particularly helpful. These businesses can help you establish a regular payment plan which ensures that you won’t miss any important milestones in your payment schedule.

As you can see, there are numerous reasons why an independent exchange service may be helpful for those interested in pursuing cost-effective, budget-friendly money transfers. While the fine details of any transfer or exchange-related endeavour will, obviously, have to be settled between the independent exchange service and the individual seeking to transfer money, it is likely that these issues will not present any long-term difficulties which would impede future plans. Ultimately, using an independent exchange service allows you to invest more of your money into your long-term goals and, simultaneously, prepare for a more exciting future! There’s never been a better time to explore international money transfers and exchange rate services. Contact your nearest independent exchange service today, and learn more about the wide variety of services that may currently be available for you, your friends or your family. Good luck!

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