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Factoring in the Fed - Where to now for the Dollar?

By : Mike Wright
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Wall Street leapt higher last week after the Federal Reserve calmed investors' fears about a sinking economy, implying that risks to the financial markets from the summer's credit crises have eased, says BetOnMarkets.com's Michael Wright.

Stocks initially zigzagged after the Fed lowered interest rates on Wednesday, because some investors balked at the notion that the Fed might not lower rates again at its December meeting. However, investors eventually appeared relieved after interpreting the Fed's comments to mean that the central bank is now able to return to more 'regular' worries such as price inflation.

Wall Street was pleased by the fact that investors, businesses and consumers alike will be getting cheaper access to cash, because of the widely anticipated quarter-point rate cut. The Fed funds rate now stands at 4.50 percent. Last month, the Fed surprised the market with a larger-than-expected half-point cut in the funds rate.

After months of agonising over a weak credit market, investors appeared to take some comfort from the fact that the Fed found room to offer a less accommodative statement than some had expected. In comments following its two-day meeting, central bank policymakers said recent spikes in energy and commodity prices, are among the forces that could be adding to inflationary pressures, and that with its latest move "the upside risks to inflation roughly balance the downside risks to growth."

While a more accommodating statement would have left the door open for yet another rate cut, traders worried about what would happen to the US dollar if there was another cut. Some analysts have gone on record to point out that the recent surge in the oil prices have been partially attributed to the weaker US dollar.

The focus remains on the once mighty US dollar, which now trades just shy of 2.08 against the British Pound, and near an all time high of 1.45 for every Euro. The Bank of England's chief economist was rather hawkish in his latest comments, dashing many people's hopes of a rate cut here in the UK. This coupled with the US cuts, has pushed the USD/ GBP exchange rate ever closer to 2.10.

The Fed's latest statement has been labelled as "subtle as a sledge hammer" by some economists, for the bold way it indicated that this was the last cut for a while. This coupled with indications from the Bank of England that they won't move on rates this side of Christmas, could present an opportunity.

We're still a long way off the dizzy heights of the 70s and 80s when you could get around $2.64 to the pound at its peak, so there is certainly room for higher levels. The Fed may be done cutting for now, but this doesn't mean that the dollar will rebound. Given the hawkish comments from the MPC it is possible that the Dollar could keep sliding against the pound or at least may not strengthen considerably in the short term.

With the above information, the average trader can use BetOnMarkets.com to take full advantage of this situation. A no touch trade compensates a trader for correctly predicting that the market won't touch a certain point in the future, within a set period of time.

A no touch trade on the GBP/USD with a 20-day term, and a trigger set at $0.06 cents lower than today's level, pays around 11%. This means that the exchange rate could rise, stay where it is, or drop as much as another $0.055 cents, and you could still win.

- THE END -

Contact Details:

Email: editor@my.regentmarkets.com Tel: +44 1624 678 883 Url: Betonmarkets.com & Betonmarkets.co.uk

Address: Regent Markets (IOM) Limited 3rd Floor, 1-5 Church Street Douglas, Isle of Man IM1 2AG

Betonmarkets.com is the leading fixed-odds financial betting website. The website has processed over 10 million bets since inception in 2000, and generates annual turnover in excess of US$ 100 million. Betonmarkets offers a wide range of fixed-odds financial bets on forex rates, stock indices, and international stocks.

Betonmarkets is operated by the Regent Mark-ets Group of companies. Regent Markets is affiliated to the Regent Pacific Group, a Hong Kong-listed investment group. Regent Markets has offices in three countries, and holds bookmakers licenses in the Isle of Man, the UK, and Malta.

Fixed-odds financial betting offers particular advantages over other forms of financial betting and investments, such as limited risk, potentially high payouts, and unique market opportunities. Particularly popular is Betonmarket's Range Bet, which offers the opportunity to profit from a period of quiet market action.

Betonmarkets also offers the following bet types: the Bull/Bear bet, the One Touch bet, the No Touch bet, the Range and Expiry Range bets, the Double One Touch and Double No-Touch bets, and a variety of intraday bets. Contracts are available on foreign exchange rates, major stock indices, and stocks.

Fixed-odds bets are also known as binary options, binary bets, contingent claims, spot options, box options, clickoptions, and offer market participants a unique tool to profit from market movements.

BetOnMarkets Bet Types:

One Touch Bet: You would buy a one-touch bet if you believe the market will touch a given point at least once before the bet expires. In other words, a one-touch pays out, if at any time prior to expiration, the market touches or trades through the specified barrier. Example: [Pays 100 if the FTSE touches X between today and date T]

No Touch Bet: A no-touch bet is the opposite of the one-touch bet. You would buy a no-touch bet if you think the market will never reach a certain level within a specified range of time. Example: [Pays 100 if the FTSE does not touch X between today and date T]

Bull Bet: You would buy a bull bet if you believe the underlying security/index/currency pair will be higher than a certain level (also referred to as the barrier level) on the maturity date. Example: [Pays 100 if the FTSE closes higher than X on date T]

Bear Bet: You would buy a bear bet if you believe the underlying security/index/currency pair will be lower than a certain level (also referred to as the barrier level) on the maturity date. Example: [Pays 100 if the FTSE closes lower than X on date T]

Expiry Range Bet: You believe that the market will be between two distinct levels (high and low) on the expiry date. Example: [Pays 100 if the FTSE closes between X and Y on date T]

Barrier Range Bet: You believe that the market will never touch two pre-determined barrier levels (high and low) before or on the date the bet expires. In other words, when you buy a barrier range you will win only if the market never touches the two barrier levels you have chosen. Example: [Pays 100 if the FTSE never touches X and Y between today and date T]

Double Touch Bet: You believe that the market will touch two pre-determined barrier levels (high and low) before or on the date the bet expires. In other words, when you buy a barrier range you will win only if the market touches both of the two barrier levels you have chosen. Example: [Pays 100 if the FTSE touches both X and Y between today and date T]

Up or Down Bet: You win if the market touches either of two pre-determined barriers before or on the date the bet expires. Example: [Pays 100 if the FTSE touches either X or Y between today and date T]

Double Up Bet: A Double Up bet pays two times the premium if the market rises above a given level between the time of purchase and the close of trading. It expires at the close of business on the day of purchase of the bet. Example: [Pays 100 if the FTSE closes above X between now and the close of trading today]

Double Down Bet: A Double Down Bet pays two times the premium if the market drops below a given level between the time of purchase and the close of trading. It expires at the close of business on the day of purchase of the bet. Example: [Pays 100 if the FTSE closes below X between now and the close of trading today]

Intraday Double Up Bet: Buy this bet to play a market rise between two given hourly market times today. You will have the possibility to set the starting hour of the bet and the ending hour of the bet, and you will win double your stake if the market follows your prediction. Example: [Pays 100 if the FTSE rises between the starting time hour and the expiry hour]

Intraday Double Down Bet: Buy this bet to play a market drop between two given hourly market times today. You will have the possibility to set the starting hour of the bet and the ending hour of the bet, and you will win double your stake if the market follows your prediction. Example: [Pays 100 if the FTSE declines between the starting time hour and the expiry hour]

Run Bets: These fun bets are over in the space of less than a minute; so you can make money in seconds. Here, you have to guess the last decimal digit of say, the USD/JPY (predict 3rd decimal place) after 5 ticks.

About the author:
Name: Mike WrightAddress: Regent Markets (IOM) Limited 3rd Floor, 1-5 Church Street, Douglas, Isle of Man IM1 2AG, British Isles.Phone: +44 1624 678 883Email: editor@my.regentmarkets.comURL: http://www.betonmarkets.com & http://www.betonmarkets.co.uk


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