What is Forex or foreign exchange: it is the largest financial market in the world, with a volume of over 1.5 trillion dollars, currency. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency against another. What about predictions: forecasting market trends and future using existing data and facts. Analysts rely on technical and fundamental statistics to predict the direction of the economy, stock markets and individual securities.
Why should we worry about oil prices, if you're not buying oil? If you're trading currencies, there is a good reason. Many of the most important currency trading pairs rise and fall of oil prices on the price of a barrel. The price of oil has been a leading indicator of the global economy for decades, and experts predict that the change is not any time soon. Contact the price of oil and the economy in many countries is based on some simple facts:
Countries that provide healthy economic benefit of the wise crude oil prices higher. Countries that depend on imports for its energy needs to benefit from oil prices and lose when oil prices rise. When a country's economy is strong, its currency is also strong in the forex market. When a country's economy has a downturn, its currency loses value in the exchange rate.
The experts are in the oil market is divided on how oil prices are heading and how far. A little over a year, most experts agreed that $ 40 a barrel was the upper limit of a barrel of crude oil. Initially, the oil had already broken that point, and was sold for $ 42.50 per barrel. The vagaries of the weather, international politics and the real capacity to meet demand has fueled one of the year prices more volatile in recent times. At one point the price of crude broke $ 70 a barrel, up 65% on the beginning of the year. And while prices dropped for a short period at the end of the year, they were still 45% higher than at the beginning of the year. Since the beginning of the year, prices began to rise again, and the majority of traders believe that we will not see a turnaround in the near future. The Conservatives are predicting a price of 80 dollars a barrel. The most aggressive is to call $ 100.
Fluctuations in oil prices last year - 2005 - is a good example of what can happen when factors affect the price and supply of oil. Remember the basic courses of study for the economy, oil prices affect consumer spending. This is true as long as major industrialized countries, oil is a petroleum-based. The price of all goods produced depends on the price of a barrel of oil prices. If the price of oil, so do not be supply and demand, prices of most consumer goods. In addition, the cost to individual consumers to pay more because they get fuel in their cars and heat their homes. The end result is a swing down the economy, until you reach a place of gathering, which begins to rise again.
What does this mean for the foreign exchange market?
The exchange rate is often based on the health of the economy of a country. If the economy is robust and growing, the rate of their currency be reflected in the higher value. If the economy is not stable, the exchange rate of their currency against most other currencies also stumbles. Knowing that the following sense. The currency of the country which produce and export oil will increase in value. The currency of countries that import most of their oil and depend for their exports will decline in relative terms. The most profitable trades will involve a country that exports oil vs. a country that depends on these three elements oil.Based, experts are now their eyes fixed on the coupling CADJPY most profitable industries, and here's why.
Canada has been climbing the list of oil producers in the world for years and is currently the largest exporter of oil in the ninth worldwide. Since 2000, Canada was the largest supplier of oil to the United States, which has yet paid much attention to the Chinese market. It is expected that by 2010 the demand for imports from China for oil will double, and match the U.S. in 2030. Currently, Canada is well positioned to be the largest oil exporter to China. This puts the dollar in an excellent position with a view to negotiation.
Japan, meanwhile, imports 99% of its oil. Their dependence on oil imports makes their economy especially sensitive to fluctuations in oil prices. If oil prices continue to rise, the price of Japanese exports have to increase, thus weakening their position in the global market. Over the years, there was a strong correlation with the increase in oil prices and declines in the value of the yen.
If the economy and the story must be heard, the oil price can not continue to increase indefinitely. Finally, consumers bite the bullet and start cutting their demand for oil and gas. When this happens, oil prices will stabilize or begin to fall to $ 40 a gallon that experts predicted would never be affected. As you can see many factors have an important influence on the currency of the game. Please let the experts speculate unless you trade Forex as a hobby and not a lot of money.
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