Tradable Currencies on the Foreign Exchange

Foreign Exchange Currencies

There are a lot of people who look at trading on the foreign exchange.  When you do this you should consider the currencies that you can trade on the foreign exchange.  There are some currencies that are more commonly traded than others.  Two of these currencies are the British Pound and the Japanese Yen.

The British Pound and the Foreign Exchange Market

The Bank of England can be viewed as the British brother to the American Federal Reserve System.  The governing body is headed by the bank’s governor.  This governing body consists of nine members.  This includes four participants from external sources who are appointed by the Chancellor of Exchequer.  The board is made up of a chief economist, committee chief economist, two deputy governors and a director of market operations, along with the external parties.

The Monetary Policy Committee meets on a monthly basis to decide on monetary policy and interest rates, with an overall view to stabilising total prices in its economy.  The MPC has a benchmark inflation rate which has been set at 2%.  In the event this benchmark is threatened, the onus is on the governor to notify the Exchequer via official correspondence.  The issuance of this letter often brings attention to the foreign exchange Melbourne market as it affects the monetary policy and possibly the current exchange rate.

The British pound is considered to be more volatile than the Euro.  It does, however, tend to trade more widely during the trading day.  The swings on this currency can be as wide as 100 to 150 pips, with a narrowing to about 20 pips.  The pound can be given a very volatile nature when it is traded with certain cross currencies, such as the Japanese yen and the Swiss franc.  The most volatility for this currency will be experience during the US and London sessions.  There is normally a small amount of movement during the Asian session.

The Japanese Yen and the Foreign Exchange Market

The Japanese yen is regarded as a carry trade component.  It offers a low interest rate and is normally used with currencies that offer higher yields, such as the Australian dollar, British pound and the New Zealand dollar.  Foreign exchange traders generally use technical analysis over the long-term when trading with this currency as it is extremely erratic.  The average ranges on a daily basis are between 30 and 40 pips.  Extremes can go up to 150 pips.  To make it more exciting to trade in this currency, you should focus on the crossover period between the US and London.  This is usually between 11:00 and 16:00 GMT.

The Bank of Japan acts as the central bank to this country and was established in 1882.  The bank governs the country’s monetary policy, along with the issuing of currency.  It also governs its economic analysis, data analysis and money market operations.  Its main board is called the Monetary Policy Board and members aim is to stabilise the country economically.  It meets with the reigning party on a regular basis, but does maintain a semblance of independency from the government.  There are seven policy members and two deputy governors who meet about 12 to 14 times annually.

 

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