Forex market looks like a ‘festival’ but it could be an epic roller coaster
Forex futures are showing signs of a ‘pump and dump’ market, but the market has a lot of volatility ahead.
The main factors that are driving the market are low oil prices and a drop in the US dollar.
The recent decline in oil prices has left the price of Brent crude at about $80 per barrel, which is below its peak in July 2016.
However, the dollar is also weakening against the US currency, and this is contributing to a drop of over 25 percent in the dollar’s value against the euro, according to Bloomberg News.
This has left Forex traders scrambling to trade against a currency that is now trading at less than $1.25 per euro.
The US dollar is now hovering around $1,220, which means Forex trades have been significantly affected.
In the meantime, the US has managed to maintain a healthy rally in the markets after President Donald Trump called for the US to withdraw from the Trans-Pacific Partnership (TPP).
The US has lost $1 trillion in trade during the Trump administration, but it’s still the world’s largest economy and the president still wants to sign the trade agreement.
For forex traders, the low oil price has seen the price surge, but there’s also the possibility that oil prices will bounce back and the market will return to its normal levels.
Forex traders have had to make do with cheaper options in the past, and the low price of oil has also led to higher risk-free rates.
However, the lower interest rates could help to offset some of the losses forex markets have seen, according the Forex Insider newsletter.
Forex brokers are now seeing a lot more forex trading activity as the price drop is taking its toll.
While the stock market is still going strong, traders are finding themselves in a position of having to trade at a premium.
“The current market conditions are a little too favorable for some forex brokers to be able to continue trading on a high volume and to maintain their profitability,” said Daniel Schmid, head of FX & Options trading at Cantor Fitzgerald.
A lot of traders have also decided to sell the Foreyx stock market index.
ForeyX has seen a 50 percent fall in its value since June 1.
However the ETF has seen its market value fall by more than a third in the same period.
Some analysts are also seeing the low interest rate environment affecting forex futures trading.
With the low level of forex rates, traders can no longer rely on the low-cost options and can instead focus on selling their forex holdings, according CNBC.