Forex Market Snapshot

IntroductionThe following facts and figures relate to the foreign exchange market. Much of the information is drawn from the preliminary results of the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2007 and released on September 25, 2007. 54 central banks and monetary authorities participated in the survey, collecting information from approximately 1280 market participants."The 2007 survey shows an unprecedented rise in activity in traditional foreign exchange markets compared to 2004. Average daily turnover rose to $3.2 trillion in April 2007, an increase of 71% at current exchange rates and 65% at constant exchange rates. Against the background of low levels of financial market volatility and risk aversion, market participants point to a significant expansion in the activity of investor groups including hedge funds, which was partly facilitated by substantial growth in the use of prime brokerage, and retail investors. A marked increase in the levels of technical trading – most notably algorithmic trading – is also likely to have boosted turnover in the spot market." - BISStructure* Decentralised, over-the-counter market, also known as the 'interbank' market* Main participants: Central Banks, commercial and investment banks, hedge funds, corporations & private speculators* The free-floating currency system began in the early 1970's and was officially ratified in 1978* Online trading began in the mid to late 1990'sMajor Markets* The US & UK markets account for just over 50% of turnover* Major markets: London, New York, Tokyo* Trading activity is heaviest when major markets overlap5* Nearly two-thirds of NY activity occurs in the morning hours while European markets are open6* The Foreign Exchange Market in the United States - NY Federal Reserve* The Foreign Exchange Market in the United States - NY Federal ReserveAverage Daily Turnover by Geographic LocationSource: BIS Triennial Survey 2007Technical AnalysisCommonly used technical indicators:* Moving averages* RSI* Fibonacci retracements* Stochastics* MACD* Momentum* Bollinger bands* Pivot point* Elliott WaveCurrencies* The US dollar is involved in over 80% of all foreign exchange transactions, equivalent to over US$2.7 trillion per dayCurrency Codes* USD = US Dollar* EUR = Euro* JPY = Japanese Yen* GBP = British Pound* CHF = Swiss Franc* CAD = Canadian Dollar* AUD = Australian Dollar* NZD = New Zealand DollarAverage Daily Turnover by CurrencyN.B. Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%.Source: BIS Triennial Survey 2007Currency Pairs* Majors: EUR/USD, USD/JPY, GBP/USD, USD/CHF* Dollar bloc: USD/CAD, AUD/USD, NZD/USD* Major crosses: EUR/JPY, EUR/GBP, EUR/CHFAverage Daily Turnover by Currency Pair