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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

What is Forex and How Does It Work?

Eden

Oct 25, 2021 13:27

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Photo: Internet


What is forex trading?


Forex, or foreign exchange, can be explained as a network of buyers and sellers, who transfer currency between each other at an agreed price. It is how individuals, companies, and central banks convert one currency into another – if you have ever traveled abroad, it is likely you have made a forex transaction.


While a lot of foreign exchange is done for practical purposes, the vast majority of currency conversion is undertaken to earn a profit. The amount of currency converted every day can make price movements of some currencies extremely volatile. This volatility can make forex so attractive to traders: bringing about a greater chance of high profits while also increasing the risk.


The foreign exchange market is the world's largest financial market in terms of trading volume, with a daily trading volume of US$5 trillion. Therefore, transactions in the foreign exchange market are very active and highly liquid. Due to its strong liquidity, currency exchange rates often react very quickly to market news, political situations, and key economic events. The volatility of the foreign exchange market largely reflects the region's political and economic events where the currency is located.


How does foreign exchange trading work?


A forex position is always quoted in currency pairs, GBP/USD (also known as cable). To profit, you need to look at the fluctuations in the two currencies' exchange rates. The first currency is called the base currency. Forex traders speculate on whether it will improve or decline against the quote currency.


When you open a trading position, you speculate on the direction in which the market moves. You either begin a buying (long) or selling (short) position, depending on what direction you think the value of the currency will go. Price movements in the forex market are affected by the strengthening and weakening of the currencies' value.


For example, GBP is the base currency, and USD is the quote currency. If GBP/USD is trading at 1.35361, then one pound is worth 1.35361 dollars.


If the pound rises against the dollar, then a single pound will be worth more dollars, and the pair's price will increase. If it drops, the pair's price will decrease. So if you think that the base currency in a pair is likely to strengthen against the quote currency, you can buy the pair (going long). If you believe it will weaken, you can sell the pair (going short).


Forex trading does not take place on exchanges but directly between two parties, in an over-the-counter (OTC) market. The forex market is run by a global network of banks, spread across four major forex trading centers in different time zones: London, New York, Sydney, and Tokyo. Because there is no central location, you can trade forex 24 hours a day.


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Photo: Internet


There are three different types of forex market:


Spot forex market: the physical exchange of a currency pair, which occurs at the exact point the trade is settled – i.e., 'on the spot' – or within a short period.


Forward forex market: a contract is agreed to buy or sell a set amount of a currency at a specified price, to be settled at a set date in the future or within a range of future dates.


Future forex market: a contract is agreed to buy or sell a set amount of a given currency at a fixed price and date in the future. Unlike forwards, a futures contract is legally binding.


Most traders speculating on forex prices will not plan to take delivery of the currency itself; instead, they make exchange rate predictions to take advantage of price movements in the market.


Like most other financial markets, supply and demand primarily control the price movements in the forex markets. Banks and other big investors want to pour in capital into economies with strong potentials.


If good news about a particular country reaches the markets, investors would be encouraged to put more money, increasing the demand for the country's currency.


If there is no corresponding increase in the currency's supply, the higher demand will trigger the price to rise. Likewise, bad news can discourage investors from putting money. This will, in turn, cause the price of the currency to drop. It can be said that a country's currency reflects the economic condition of the country it represents.

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