The Australian dollar managed to gain versus

lower-yielding currencies before a report to be released this week in the country is likely to show an advance in inflation in the last year’s last quarter, helping speculations that a series of interest rates in the country will restart.

The Aussie rebounded after losing versus most of lower-yielding currencies last week as risk aversion remained predominant in majority of trading hours. Investors in the South Pacific region are waiting an inflation report to be released on Jan 27th expecting positive numbers as forecasts suggest an advance for the country’s prices in the last quarter of 2009, which would provide grounds for a new series of interest rate hikes by Australian policy makers.

AUD/USD traded at 0.9053 as of 00:09 GMT from a previous rate 0.9034 when markets opened Sunday evening.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

After a week of losses versus most of the main traded currencies in

foreign-exchange markets, the Brazilian real advanced today fueled by a positive performance in commodities and equities markets.

The Brazilian real gained today versus the yen and the U.S. dollar as demand for commodities and optimism regarding the nation’s economy allowed the South American currency to revert a negative trend that lasted five consecutive days. A great sum of capital inflows to Brazilian stocks also influenced on the good performance of the real this Monday.

USD/BRL traded at 1.7661 as of 19:54 GMT from an opening rate of 1.7715.

If you want to comment on the Brazilian real’s recent action or have any questions regarding this currency, please, feel free to reply below.

The Brazilian real posted the fourth straight day of decline versus the U.S. dollar as speculations suggest that the Treasury is likely to start a debt selling plan to buy dollars, declining attractiveness for the real in currency markets.

The real touched the weakest level in 2010 today as speculations suggest that overseas investors are leaving the country, and such capital outflows declined appeal for the emerging market South American currency. A Treasury plan that may be used to buy dollars also affected the real’s outlook, in another day of losses versus most of the main traded currencies this week.

USD/BRL traded at 1.7658 as of 20:03 GMT from an opening rate of 1.7405.

If you want to comment on the Brazilian real’s recent action or have any questions regarding this currency, please, feel free to reply below.

The Canadian dollar had its rally towards parity with its U.S. counterpart halted after a monthly trade deficit was posted today, raising doubts that the nation’s economy is not going as good as some analysts like to believe.

The loonie had a disappointing surprise today as Canada posted a trade deficit of more than $300 million while forecasts suggested a surplus of $500 million, surprising traders and affecting the outlook of one of the best performing currencies so far in the beginning of 2010. The Canadian dollar had profited so far this month from high risk aversion and an increasing demand for the nation’s commodities, which influenced the Canadian economic expectations, impacted today showing traders that Canada’s resilience is not as high as previously imagined.

Doubts regarding the overconfident Canadian economic outlook helped other currencies to pare losses versus the loonie, specially its U.S. counterpart, which jumped from the lowest rate almost 3 months versus Canada’s currency. Monthly reports can be deceiving thought, as seasonal adjustments may hide the actual economic scenario of a country, which is the case of Canada, is still above the average.

USD/CAD traded at 1.0362 as of 16:39 GMT from a previous rate of 1.0334. CAD/JPY tumbled to 87.59 from 89.09.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Risk aversion declined significantly today after China set a new reserves requirements for banks in the country, allowing the yen to outperform all of the 16 main traded currencies in

foreign-exchange markets, as pessimism surged.

Equities markets in Asia and globally declined today, raising demand for the yen, as China set a minimum of 16 percent of reserves that large banking corporations in the country must have, in order to avoid a credit bubble as the one that caused the global slump in late 2008. The yen is considered the safest refuge in currency markets for turbulent times and benefited from today’s negative scenario, as China’s policy decreased demand for high-yielding assets, which were trading high since the beginning of the year. The Australian dollar posted the sharpest losses versus the Japanese currency as loan approvals in the real estate sector declined.

China’s strict regulations declined optimism that were fueling demand for higher-yielding since the last week, according to analysts. The yen had declined significantly after several sessions losing versus most currencies, as today’s shift in markets sentiment was a good opportunity for it to level up.

AUD/JPY fell to 84.23 as of 15:45 GMT from a previous rate of 85.53 in the intraday comparison. CAD/JPY followed the same trend at 87.72 from 89.08.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Understanding forex quotes can be quite challenging and it may take some time while you can master the implications of these quotes.

A forex quote is always measured in respect of two currencies, where one currency is being sold and the other is being purchased. Also, there are two prices namely, the bid price and the ask price, one is the selling rate and the other is the buying rate.

Let us take a live example of a Forex Quote. If the forex quote of US dollar and Japan Yen. Now if the quote is USD/ JPY 106.52/56. There are two currencies involved here, base currency and the quote currency. The base currency is always equal to 1.  The number of the quote currency reflects how many quote currencies can be bought with 1 unit of base currency. In our example, it would tell us how many Japanese Yen can be bought for 1 USD.

106.52/56 actually means 106.52 and 106.56.

The bid price tells us the price at which the base currency will be bought. The ask price reflects the selling price of the currency.

So, 106.52/56 USD/ JPY actually means that 1 US dollar can get you 106.52 Japanese Yen. Alternatively, if you want to buy US dollars, you pay 106.56 Japanese Yen to get 1 USD.

The price differential between the ask rate and the bid rate is called ‘spread’. Each unit of 0.01 is called ‘pip’. If we take the example of 106.52/106.56 USD/ JPY, then the pip is equal to 4.

The most commonly traded currencies are US dollars, UK Pounds, Japanese Yen, Swiss Franc, Euros and Australian Dollars.

At times, the pip can be as low as 1 pip. For other less traded currencies, the pip may be more. However, small pip does not reflect less profit. If the volume of your trading is enormous, one pip can also translate into huge profit or losses.

Most dealers deal in 100000 or more USDs and the trading would take place several times in a day and hence even a small unassuming pip can mean huge amounts.

The greeback pulled back from its sharp sell-off on Thursday, as weak US economic data spurred a return to risk aversion.

• In early trading, the dollar continued to lose ground following the better-than-expected US growth data, however the GBP/USD rally was capped at 1.6600, and the UK currency pulled down steadily, eventually closing down 0.6% ay 1.6448.
• US markets went through losses on Friday, with financials and materials leading the path, as risk aversion returned after Thursday’s optimism, strengthening support for the greenback.
• On the macroeconomic front, data revealed that US consumer spending declined 0.5% in September, the largest decline since December 2008, further buoying the dollar rally.
• Positive manufacturing data from the Midwest in the afternoon failed to dent dollar buying in the markets and traders acknowledged that part of this may have been due to month-end flows into the US currency related to foreign portfolios.
• The US currency has continued to climb in trading this morning, currently half a percent up, as investors remain cautious ahead of big events this week, including interest rate decisions in the UK, eurozone and US.

Better-than-expected GDP figures in the US caused risk appetite to surge across the board enabling the kiwi to post gains of over a cent against the pound.

• The solid GDP figure in the US renewed optimism about recovery in the global economy, prompting investors to buy higher-yielding currencies.
• The kiwi, which has suffered recently on a rise in risk aversion, was able to reverse losses as the positive data encouraged investors to buy up riskier assets.
• However, in trading this morning, the pound is recouping losses, pushing the price back near 2.27 as market participants return their thoughts to the RBNZ’s rate statement on Wednesday where they indicated that interest rates would not be raised for some time.

The aussie dollar reversed recent losses yesterday after positive US GDP data encouraged investors to buy-back into perceived riskier currencies.

• The aussie pulled back nearly two cents, or 1.0%, bringing the sterling/aussie pair back down to trade around 1.80 as the data spurred demand for risk.
• Investors have been cashing profits in the Australian currency recently as global equities took a downturn, but yesterday’s figure saw traders revive long positions in the aussie.
• Analysts noted that the figures were a near-perfect combination for riskier assets: strong enough to encourage those with an optimistic outlook on the financial markets, but not too strong to generate expectations of accelerated monetary tightening from the Federal Reserve.
• In trading this morning, the pound has halted its fall and is currently trading up around 0.2% with price hovering above 1.8100.

The dollar snapped four days of gains against the euro as the US economy returned to growth in the three months through September, officially exiting recession.

• The US government’s advance estimate showed gross domestic product grew at an annualised rate of 3.5% in the third quarter, the first rise since the second quarter of 2008, which beat expectations for a reading of 3.3%.
• The data reduced the safe-haven appeal of the greenback, encouraging investors to sell their dollar holdings in favour of growth-linked currencies, enabling the euro to climb over a cent on the day.
• Analysts did note however, that concern may still linger over whether the US economy will be able to sustain this level of growth as the government begins to unwind its stimulus packages.
• In addition, trading yesterday saw the European Commission’s economic sentiment indicator post a bigger-than-expected October rise. The index for the eurozone rose to 86.2 from 82.8 in September, beating expectations and lending support to the single currency‘s rally.

The single currency slipped further away from recent 14-month highs against the dollar yesterday, losing nearly a cent to close down at 1.4707.

• The US dollar rose, stretching a rally against the euro to a fourth day, supported by weak U.S. economic data that weighed on equity markets and led investors to seek safety in the greenback and cut exposure to assets perceived as risky.
• Initially though, the euro pared early losses after data showed core US durable goods orders were better-than-expected in September.
• The report revealed that the core figure, which excludes transport equipment, rose by 0.9%, higher than forecasts of a 0.6% rise, strengthening risk appetite in the market.
• However, in the afternoon the euro extended losses after further data showed that US home sales unexpectedly fell, declining 3.6% last month to an annual rate of 402,000, disappointing market forecasts that expected a 2.6% rise.
• Analysts noted that the soft housing sales figure offset positive durable goods orders, given that the latter data is generally volatile and sometimes does not represent the whole economic story.
• In trading today, investors will be eagerly awaiting US 3rd quarter GDP data, released at 12:30.

The dollar rose against the single currency for a third consecutive day in its longest advance since August, as a report showed US consumer confidence fell this month.

• The euro struggled in trading yesterday after data showed that public sector lending in the eurozone declined by 0.3% in September compared to this period last year.
• The figure raises concern that there are still few signs that the ECB’s unlimited provision of liquidity to banks is prompting any pick up in eurozone broad money lending, which could put pressure on the single currency.
• The euro then continued to slide, after data revealed that US consumer confidence unexpectedly fell in October as fears about future job prospects increasingly preyed upon the American public.
• The index fell to 47.7 from 53.4 in September, disappointing market expectations of a rise and spurring a return to perceived safety of the greenback.
• In addition, traders noted that as the single currency breached a key technical level at $1.4850, stop-losses were triggered, which pushed the single-currency to a two-week low of $1.4773.

Sterling closed up against the dollar yesterday, but slipped back nearly a cent from its intra-day high after a survey showed that consumer confidence in the US disappointed market expectations.

• In early trading, the markets continued to take the pound higher with analysts noting that long term investors and Asian reserve managers were attracted by sterling’s one-week low.
• This trend was maintained as the UK CBI retail sales index advanced to a balance of +8 in October from a balance of +3 in September, the largest advance since June 2007, beating forecasts.
• There was also support for the UK currency as the oil giant BP reported third-quarter profits of $4.98bn (£3bn), which experts said “obliterated” market predictions.
• However, the dollar trimmed its losses in the afternoon after a survey revealed that US consumer confidence dropped in October. The index produced a figure of 47.7, substantially less than the 53.7 forecast, which cautioned traders against risky investments.
• The weak report bodes ill for the US economy indicating restrained consumer spending, and suggests that the recovery is not as entrenched as initially thought.

Sterling pushed back over 1.10 in trading yesterday as data revealed a pick-up in UK realised sales dulling concerns over the health of the British economy.

• The pound continued to recover last week’s losses as the UK CBI realised sales index revealed a significant monthly increase in sales volumes, beating market forecasts.
• Conversely data also showed that lending to the eurozone’s private sector declined in September compared with the same period a year earlier, highlighting notable constraints on financing to companies and households that could damage the region’s economic recovery.
• Private-sector lending decreased 0.3% in September, after rising by an annual rate of 0.1% in August, data from the ECB revealed.
• In addition, traders noted good demand for sterling from longer term investors and Asian reserve managers who were keen to sell the dollar following the US currency‘s sharp gains in the previous session.
• However, the pound remains range bound, slipping back marginally this morning, as investors remain cautious after MPC member Adam Posen in his speech on Monday evening reminded market players that UK officials may maintain stimulus programs in order to cement the recovery.

Having traded strongly against the dollar in the early session, the euro surrendered gains in the afternoon session, pulling the price down sharply to close a $1.4873.

• Initially, the greenback hit a fresh 14-month low versus the euro after the Beijing-based Financial News revived concern over the status of the dollar, stating that China should raise the amount of yen and euros held in its foreign-exchange reserves.
• However, the dollar pared its losses after the author of the report said that it was purely a “personal view”.
• In addition, the issue of diversification has been a topic for quite a while and the impact of the news was short-lived. Analysts noted that investors were particularly short on the dollar already and were cautious about over-selling.
• In the afternoon, the Chicago Fed announced that its Midwest Manufacturing Index rose 1.0% in September offering more evidence that the US economy is digging itself out of the economic slowdown and lending support to the greenback.
• The single currency lost further value with the US stock markets opening in the red, which in turn pulled European equities negative, discouraging euro investment.

Having given up ground to the UK currency in early trading, the kiwi rallied steadily through the afternoon, to close marginally up at 2.1833.

• The pound found support yesterday after the BoE’s policy minutes revealed no direct discussion over further loosening the current monetary policy.
• In the wake of the news, sterling posted an intra-day high of 2.2074 as investors grew more confident in the outlook for the UK economy.
• However, the New Zealand dollar capped its losses as Alan Bollard, governor of the Reserve Bank of New Zealand, in a speech appeared surprisingly reserved over the recent appreciation of the kiwi dollar.
• Mr Bollard said that kiwi strength was “not necessarily an obstacle to raising the cash rate,” encouraging investment in the higher-yield currency.
• In trading this morning, the New Zealand dollar has weakened, enabling the pound to advance back towards 2.20, as Chinese data failed to do more than meet market forecasts, giving traders a reason to cash profits.

Sterling climbed over a cent and a half against the kiwi in trading yesterday as the market briefly turned bearish on higher-yielding currencies.

• The pound reversed losses incurred on Monday, but closed the day some way from its intra-day high of 2.2000 as investors held back from taking significant positions ahead of the UK MPC minutes released today.
• The kiwi dollar, which has broadly risen as the global economy shows increasing signs of recovery, fell back as demand for “riskier” assets stumbled following some weak economic data from the US economy.
• The US Producer Price Index revealed an unexpected monthly drop of 0.6%, with forecasts predicting a rise of 0.1%. Housing starts also disappointed market expectations, resurfacing concerns over the pace of US economic recovery.
• In response, global equities also halted their recent rally, which spurred a pull back from higher-yielding currencies, allowing the pound to gain.
• In trading this morning, the pound is broadly rising, sustained by the minutes from the latest UK MPC minutes, which revealed that a unanimous decision to keep QE on hold.

The single currency slipped back from a fresh 14-month high against the dollar following further comments from the ECB that expressed apprehension over the euro’s strength.

• In early trading, options buying once again prevented the euro from pushing through the psychologically important $1.50 level, posting a high of $1.4993.
• The single currency was supported after further positive corporate earnings weighed on haven demand for the dollar, emboldening investors to sell the low-yielding US unit to fund the purchase of riskier, higher-yielding assets elsewhere.
• However the euro fell back as the ECB repeated their support for the US Treasury’s self-professed strong-dollar policy, and expressed concerns over recent “volatile” trends in the market and the strength of the single currency
• In the afternoon Wall street slipped as tame US inflation data offset strong quarterly earnings from Apple, denting investor appetite to sell the low-yield dollar.
• The economic data, which showed that the US PPI unexpectedly dropped by 0.6% last month, disappointed market expectations and helped the greenback recover earlier losses, though analysts said that it would remain under pressure as long as stocks continued to show an upward trend.

Sterling dipped slightly against the single currency, relinquishing gains in the afternoon as US equities slipped back, closing the day down just 0.1% at 1.0958.

• In early trading, investors picked up on comments from the ECB President who added to remarks from other eurozone officials expressing worries about the strength of the single currency.
• In response the markets took the euro slightly lower, enabling the pound to reach up over 1.10, near Monday’s 3-week high.
• In addition, the pound gained slight support after the UK public spending deficit in September fell short of market expectations, buoying investor sentiment.
• However, the euro trimmed its losses in the afternoon as global equities turned negative and investors cautioned over taking long positions ahead of a speech by Bank of England Governor Mervyn King in the evening.
• In trading today, the pound has broadly strenghtned as the MPC minutes from their latest meeting sounded a relatively positive tone. Currently the UK currency is trading one percent up on the single currency, approaching €1.11.

Having traded in the red during the morning session, the pound rebounded back over $1.64, climbing for the fifth consecutive day and reaching a near one-month high of $1.6422.

• The pound initially fell against the dollar, relinquishing last week’s gains after the Sunday Times said Bank of England policy maker Adam Posen may support an extension of the central bank’s asset-purchase programme.
• Posen added that he was “not worried about overshooting inflation right now,” which many analysts have said will become an issue as the economy begins to grow.
• Last week, following the words of Mr Fisher, the market moved to discount a scenario where it was more likely that asset purchases would be paused. However, these comments suggest that the question of QE is still a finely balanced decision.
• Sterling was able to reverse its losses in the afternoon, however, after the US markets opened strongly, with Dow Jones edging over 10,000, supporting risk appetite in the market.
• The dollar has advanced in trading this morning with markets awaiting Producer Price Index data from the US, released today at 13:30BST.