This article looks at the US dollar and the Euro as the top forex live trading currencies.
The forex live market is normally thought of as the domain of the large banks, however if you are an investor with a portfolio that has become stagnant, you can benefit greatly from this market. This trading market offers many opportunities when the other financial markets are declining. This is what makes it the perfect ground for both traders and investors alike to add some profit to their pockets.
The two top currencies in this market are the US dollar and the Euro.
United States Dollar
The US dollar is the most traded currency and can be seen as the one currency that trades against all the others, particularly the majors. The currency, as with all other currencies, gains support from certain economic fundamentals. This includes the gross domestic product, employment reports and manufacturing reports. The announcements and decisions made by the Federal Reserve Bank often have a massive impact on the US dollar’s value.
The US central bank is the Federal Reserve. The bank is fronted by a chairperson who is assisted by a board of governors. A division of the bank named the Federal Open Market Committee holds control over the country’s monetary policy, open market operations and interest rates. The committee is controlled by five of the 12 presidents of the Federal Reserve, along with seven other seat members of the Federal Reserve Board. One of the permanent members of the committee is the Federal Reserve Bank of New York. The Reserve’s voting number remains at 12, but an opportunity is provided to non-members to voice their opinions and views on the economic situation the country currently faces. This is undertaken at the six-weekly meetings that are convened by the committee.
Euro: Important Forex Live Currency
The Eurozone comprises of 17 member countries. The central bank in the area is called the European Central Bank which is located in Frankfurt, Germany. The executive council of the bank comprises of a president and five members. The board of members carries the responsibility for the monetary policy for the entire zone. The council representatives are chosen from the zone’s largest economies – Germany, Italy, Spain and France. It convenes approximately ten times during the calendar year.
The printing of money is done at the Central Bank’s discretion. If the zone experiences failures of systems or banks, the central bank policy makers are able to intervene. The main task of the ECB is to maintain stable prices, with general economic policies taking a definite second spot. This prompts policymakers to focus on inflation rates when decisions are taken regarding interest rates. This is very different to the US Federal Reserve that focuses on unemployment levels and maintaining an interest rate that remains stable.
The European Central Bank may have a complex structure, but the currency it controls is not as complex. In contrast to the British pound and the Australian dollar, the Euro is much slower moving when directly compared with the US dollar. If it is used as the base currency, the average pip movement on a daily basis is around 30 to 40. During volatile periods, this may increase to 60.
If your intention is to trade the USD with the Euro, you need to remain vigilant during the European and US trading sessions, particularly during the overlap times.