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US Federal Reserve | FOMC
Federal Reserve News and Events...
Latest US interest rate announcements (Fed Funds Rate), speeches and
press releases.
http://www.federalreserve.gov/newsevents/default.htm
Federal Open Market Committee
Includes explanations of the Fed Funds Rate, Open Market Operations,
the Discount Rate, Reserve Requirements, Structure of the FOMC, and a
list of all Members.
http://www.federalreserve.gov/monetarypolicy/fomc.htm
FOMC Rate Decision Calander and Minutes
Meeting calendars, statements, and minutes (2005-2011)
http://www.federalreserve.gov/monetarypolicy/fomc.htm
Monthly Report on Credit and Liquidity
Programs
and the Balance Sheet
The Federal Reserve prepares this monthly report as part of its
efforts to enhance transparency about the range of programs and tools
that have been implemented in response to the financial crisis and to
ensure appropriate accountability to the Congress and the public
http://www.federalreserve.gov/monetarypolicy/clbsreports.htm
The Discount Rate
Why is the Discount Rate Here? Because by raising the Discount Rate, the Federal Reserve is quietly pushing the effective rate up into the target rate, which if/when such finally occurs, will signal the next phase of liquidity retraction (Reverse Repos, or a Rate Increase) on the horizon.
http://www.federalreserve.gov/monetarypolicy/discountrate.htm
The weekly effective rate can be found at the below Federal Reserve Link
federalreserve.gov/weekly-effective-rate
Bank of Japan | BOJ
Bank of Japan Home Page
The traders at ForexMetaTraderROBOT.com firmly believe the Bank of
Japan does an extremely good job of delivering economic information,
while clearly explaining policy and monetary related concepts within
its reports. Unlike the Federal Reserve and European Central
Bank, the authors of the BOJ economic / monetary policy reports
actually deliver their message in a clear, understandable format,
which not only allows individual traders to learn about international
economic and monetary policy, but also enables the reader to see the
CLEAR and DISTINCT logic of why the BOJ is taking whatever action it
is.
http://www.boj.or.jp/en/
Bank of Japan Monetary Policy
Please notice the very FIRST link under the BOJ's Monetary Policy page is: Outline of Monetary Policy... Nowhere on the Federal Reserve's Website will readers find ONE (as in "1") easy to find, easy to understand, thoughtfully outlined and written (and up to date) document detailing the Federal Reserve's Monetary Policy. Even the FOMC's "Monthly Credit and Liquidity Programs and the Balance Sheet" is nothing but economic data "shock and awe" monkeytalk, when compared to the clear, helpful reports from the BOJ.
Bank of Japan Monetary Policy Home Page
http://www.boj.or.jp/en/theme/seisaku/index.htm
Bank of Japan Outline of Monetary Policy
http://www.boj.or.jp/en/type/exp/seisaku/expseisaku.htmEuropean Central Bank | ECB
European Central Bank Home Page
Notice "Economic research" on the Main Left Hand Navigation comes AFTER "Job
opportunities" and "for suppliers".
http://www.ecb.int/home/html/index.en.html
European Central Bank Monetary Policy
Really... A dead link... Seriously...
http://www.ecb.int/ecb/tasks/monpol/html/index.en.html
Whoops... Guess someone forgot to update the previous link... Anyway, here's the live page...
http://www.ecb.int/mopo/html/index.en.html
Past 2010 Monetary Policy Decisions
http://www.ecb.int/press/govcdec/mopo/2010/html/index.en.html
ECB Interest Rate Decision Schedule for 2010 thru March 2012
http://www.ecb.int/events/calendar/mgcgc/html/index.en.htmlWhat is Forex?
Forex is an acronym for Foreign Exchange. Forex is often referred to as the largest market in the world due to its enormous size, liquidity, and large fluctuations.
How Large is the Forex Market?
Nearly $1.2 trillion dollars is traded every single day within global Forex markets. When you think about it if Foreign Exchange represents all currency that moves across borders everywhere in the world, it is no wonder it is the largest market in the world.
Is the US Dollar Index Traded in Forex?
Not literally. The US Dollar Index is a compilation (called a "basket") of six major foreign currencies, due to the dismantling of the Bretton Woods System in the 1970's. The six currencies are:
● Euro (EUR), 57.6% weight
● Japanese yen (JPY), 13.6% weight
● Pound sterling (GBP), 11.9% weight
● Canadian dollar (CAD), 9.1% weight
● Swedish krona (SEK), 4.2% weight and
● Swiss franc (CHF) 3.6% weight.
Though most resources state the US Dollar Index's birth as 1973, in
reality, while it is factual to say the index itself began trading in
1973, the true dismantling of "fixed exchange rates" on an International
basis came from an International Monetary Fund (IMF) meeting in Kingston,
Jamaica, in 1976. The Jamaica Conference (made up IMF power-members)
specifically made five significant decisions, which were to be (and
really, still are) supported internationally...
1. On an international basis, floating exchange rates were made
legal.
2. Gold was "delinked" (reduced, in-terms of the larger role) from
the dollar.
3. The IMF agreed to increase funding for less-developed nations.
4. IMF "quotas" were increased noticeably; OPEC nations were
significant major beneficiaries.
5. Every country was suddenly responsible for the determination of
the "par value" of its own currency.
Regarding the US Dollar Index, the basket can be traded as a futures contract, but does not trade as an individual currency. Currencies (as the retail Forex participant trades them) are always paired, meaning the US Dollar (USD) is always paired with another currency, like the Euro (EUR), for example. The pair would look like: EUR|USD, meaning the Euro|US Dollar.
In addition to the US Dollar Index and Forex, in 1998, the Federal Reserve created the Trade Weighted US Dollar Index, given the introduction of the Euro, which eliminated five of ten currencies, the then Federal Reserve Staff used to make up the US Dollar Index. The Federal Reserve also stated a second reason for the new index as, "Second, developments in international trade since the late 1970s called for a broadening of the scope of the staff’s dollar indexes and a closer alignment of the currency weights with U.S. trade patterns."
Like virtually every document published from the Federal Reserve, the initial explanation left much to be desired... Upon further investigation into the 2005 document though, the explanation was printed, even though slightly buried.
On Page 2, Paragraph 2, inquisitive readers will find, "The staff chose
geometric rather than simple arithmetic averaging for its exchange rate
indexes because under geometric averaging, proportionately equal
appreciation and depreciation of a currency has the same numerical effect
(though of opposite sign) on the index. In an arithmetically averaged
exchange rate index, such changes result in an upward bias
in the index for the dollar. The upward bias is less of a problem if
major components move in the same direction, but this condition is often
not met by bilateral exchange rates."
In the end, the invention of the Euro was the perfect excuse to diversify the US Dollar's exposure to foreign currencies, while also altering the "averaging function", so as help keep the greenback from ascending too high... In the International economic environment, a devalued currency is positive for Exports and Trade Balance.
Indexes of the Foreign Exchange Value of the Dollar. Loretan, Mico. Winder, 2005 Bulletin.
What Makes Up Forex Symbols?
Forex pairs have two components to their symbols. For example the USD is the US dollar and the EUR is short for the Euro. The most commonly traded Forex pair is the EUR/USD. If you were to purchase this pair you would be long the Euro and at the same time Short the US Dollar. If you did the opposite and shorted this pair you would end up short the Euro and long the US Dollar.
How Is Forex Traded, Meaning... Are Currencies Traded Like Stocks in Equity Markets?
The pairs are two currencies matched or paired together. The Forex pairs are standardized or "fungible measurements" of currencies making it possible to buy and sell. The fungible quality of Forex pairs makes it possible for your trades to be passed on to the Interbank Market so the brokerage firm does not have to take on the risk or other side of the customer trades.
What is a "Lot"?
Currency pairs trade in standardized lots. A standardized lot is generally $100,000, and a mini lot is $10,000. These lots are assigned a pip value which is the smallest increment the currency pair can trade in. For example a mini lot of $10,000 USD is made up of 10,000 pips, each pip represents $1.
What is a Pip?
A "PIP" is an acronym for "Percentage in Point" and is 0.0001, or four decimal places deep. In more traditional terms, a PIP is 1/100th of 1-percent.
Most all Forex pairs (with the exception of the JPY pairs) trade in "PIPS" which are really equivalent to 1/100th of a cent. If, for example, the USD|CAD were to move upward 100-pips meaning a change from 0.0001 to 0.0101, the US Dollar would have theoretically increased on penny against the Loony.
In the case of the EUR|USD, every 1-PIP (0.0001) move in a full-lot position of $100,000, or $1,000, leveraged 100-1, would theoretically gain/lose $10.
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