Forex Crunch Forex in Banks – Essential for Bringing Forex to the Masses

Forex in Banks – Essential for Bringing Forex to the Masses

Posted: 01 Jul 2010 01:53 AM PDT

Having the ability to trade currencies using regular banks will be a big step forward in bringing forex trading to the masses. This is the second article in a series of articles about forex coming to the mainstream.

Previous article: Forex Education – The First Step to Make Forex More Mainstream.

Most people make investments using their banks. It’s much easier trading stocks from the same account where you deposit the paycheck. Opening a separate account, making a deposit and starting to trade requires people to be active. And most people aren’t. And what options do banks offer?Regular banks have a big role in forex trading – but not for the retail trader – only for interbank liquidity. Most serious brokers rely on bigger institutions for liquidity. Market makers don’t do it for small clients (they bet against them in many cases), but are forced to work with banks for big positions.

Retail trading is almost impossible

Some banks around the world enable holding foreign currency in your account. This is usually limited to the very major currencies, and is subject to very high commissions. And forex trading? Most banks that I know of don’t enable this option. In rare cases, forex trading will be limited to certain hours and will feature extreme spreads.

Automated trading? Special study tools? Advanced charts? Forget about it. Banks might offer nice tools for trading stocks. These tools are way behind the basic tools that every forex broker offers today.

Currently banks aren’t keen on supporting forex trading. They contribute to the risky image that forex trading has. Without their support, forex will never reach the masses.

There are already a few banks that have a section for forex. They are outnumbered by the banks that don’t. After the outbreak of the financial crisis in the autumn of 2008, the volume of retail forex trading rose. With this rise, banks became more aware of this alternative to stocks, that were plunging at that time.

I believe that more and more banks will carefully start offering forex trading to their clients. They’ll want to compete with forex brokers and attract more mainstream audience. They might have harsh limits on leverage and might not allow all their clients to trade at first. Banks are slow to move and they’ll be extra careful, especially with new regulation.

They won’t need to offer better tools or spreads to traders. They will be looking for different clients – clients that aren’t constantly searching for a better broker – clients that only want another option within their home bank.

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Forex Daily Outlook – July 1 2010

Posted: 30 Jun 2010 02:00 PM PDT

Another busy day is ahead with American Unemployment Claims, American ISM Manufacturing PMI and American Pending Home Sales. Many other events will be reviewed today. Here's an outlook for the market-moving events that are awaiting us.

In the US, American Unemployment Claims: This weekly figure is still causing trouble for the dollar. Jobless claims refuse to drop below 430K, and even rise. A significant drop is necessary in order to see a big leap in the NFP. This is the last job-related figure before the NFP. A small drop from 457K to 456K is expected now. The Challenger Job Cuts report is commonly used by investors as an indicator to determine the strength of the labor market expecting -65.0% as in the previous month.

More in the US, American ISM Manufacturing PMI: Purchasing managers in the manufacturing sector have been positive in the past 10 months, sending the score above 50 – meaning economic expansion. Last month saw a small, yet expected drop from 60.4 to 59.7 points. Another drop is to 58.9 is expected now. ISM Manufacturing Prices a component of PMI serves as an inflation gauge is expected to reach 72.2- 5.3 lower than in the previous month.

Later in the US, American Pending Home Sales: The number of closed contracts for homes leaped in the past three months at very strong rates – 8.2%, 5.3% and 6%. This time, a drop of -4.5% will probably be seen, cooling down the markets.

Finally in the US, Construction Spending predicted to drop -0.6% following 2.7% rise in May. Total Vehicle Sales expected to decrease by 200,000 reaching 11.4M and Natural Gas Storage is likely to remain around 81B.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, final manufacturing PMI was revised down by 0.1 pt from the advance estimate to 55.8 in May, remaining the lowest since February (54.2), as output and new orders growth "slowed sharply" on the month; activity growth slowed in May across Germany, France, Italy and Spain. Another drop to 55.6 is expected.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Halifax HPI reached -0.4% in May, weaker than the 0.35 expected and -0.1% prior reading a similar figure is expected now.

More in Great Britain, UK Manufacturing PMI coming out it is expected to read 57.6. Last month it read 58.0.

The Manufacturing PMI – which is calculated from data on new orders, production, employment, supplier performance and stocks of purchases – has now remained above the no-change mark of 50.0 for eight consecutive months.

Later in Great Britain, BOE Credit Conditions Survey released quarterly includes detailed data on secured and unsecured lending to households, small businesses, non-financial corporations, and non-bank financial firms correlated with spending and confidence – rising debt levels are a sign that lenders feel comfortable issuing loans, and that consumers and businesses are confident in their financial position and eager to spend money.

Read more about the Pound in the GBP/USD forecast.

In Switzerland, In May Swiss SVME PMI came in at 66.4, stronger than the 64.3 expected. A slight drop to 65.9 is expected now.

In Australia, Building Approvals indicator is very volatile, and tends to have a strong impact on the Aussie. A drop of almost 15% was reported in approvals last month, but this was merely a correction for a 17% rise beforehand. 0.0% is expected now.

More in Australia, Retail Sales a major consumer-related indicator rose by 0.6% last month, showing confidence for a second month in a row, despite the rate hikes. A smaller rise of 0.3% is expected this time.

Finally in Australia, Commodity Prices: Australia's commodity-oriented economy enjoyed a recovery in commodity prices in June. This will be reflected in this indicator that is expected to show a year-over-year growth rate of over 50%, boosting the Aussie.

For more on the Aussie, read the AUD/USD forecast.

In New Zealand, The ANZ Commodity Price index fell to 2.5 points in May from 4.9 points in April and is expected to remain 2.5%.
ANZ Commodity Price released by the ANZ National Bank is considered as an early indicator of export price changes. The price changes influence GDP and exchange rates. An increase in prices may indicate strength of the NZD, while a decrease in prices may indicate weakness of the NZD. A high reading is seen as bullish for the NZD, whereas a low reading is seen as bearish.

In Japan, Monetary Base measuring Change in the total quantity of domestic currency in circulation and current account deposits held at the BOJ expected a 3.8% rise continuing the 3.7% rise in May.

That’s it for today. Happy forex trading!

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