USD Currency Trading
Introduction
On the onset of the currency trading on 29th Oct in various capital markets, there were variations in profitability indices. A myriad of factors such as the political climate, the perception about the future performance of the currency, the economic performance of those markets and volatility of the currency caused the variation in demand in factors on the international market. Assuming that supply of the currency was constant, then the demand side downplayed the impact on the USD.
Q1
In this international trade, there was a higher interest earned depending on the profit realized. The currency that had the greatest impact on the market was the sale of GBP/JPY to USD on Nov 8th. The USD close sale of a 1000,000 units at a price of 126.97^3 had no impact. It is also evident that the market floated with the currency, implying that its demand was highest when traded with Japanese yen.
The second sell of ticket that came closer in profit realization was the sale of GBP/JPY on Nov 8th, realizing a profit of USD 1170.0615, with a sale of a 1000,000 units each. The Japanese market could have hit in the international market because of its faster pace of industrialisation and development in the world.
Research indicates that by 2050, Japanese would have overtaken other economic super powers. This translates into a positive outlook on its market share and capitalization. However, there was a general trend in of currency trade in the buy market section, with all currency earning no profit. The Japanese and Canadian dollar had not realized profits in the ordering section.
Q2
On the contrary, the currency trade that almost had the least impact on the USD was during the close of sale of the GBP/JPY. On this date, 150, 000 units were sold at the highest price of 127.77^2.
However, there was the greatest loss of USD 1.602.7325. This could have been caused by the over subscription of the order. In the mind of investors and currency traders, the currency initially appeared viable. However, it dropped in sale price after a discovery that it will fetch little profit due to dropping demand.
The other currency that had the least impact was the sale of GBP/AUD. There was a sale resulting into a loss of USD 1,580.9216 on Nov 8th. A closer examination of the trading indicates that price had no influence on the profit as both the higher and lower priced currency resulted into either a loss or profit. This implies that other factors both internal and external had affected the profitability of the currency. Factors such as the firm’s performance, the location and the internal management had a profound effect on the currency trading in the market.
The stop loss tickets resulted into a loss irrespective of whether the price it attracted. On Oct 30th and Oct 31st, the EURO was the most traded, which implies that there was a less demand in trading of the USD. The relationship between the Euro and the USD was undesirable perhaps because the variation in the political ideologies and policies.
Finally, factors that could have affected the currency trading in the international market are balance of trade and investment both in the US and foreign markets. The politics in both us and its major trading partners and the economic performance also has a profound effect on the performance of the currency. Besides, entitlement programs such as social security, economic policies and theories interact to affect the general performance of the trading in the currency market.
In addition, interest rates on capital invested, American consumers housing, economic and industrial indicators like growth in sub-sectors such as manufacturing could have been responsible for the such trading in the global market. Finally, the capital markets, general economy, weather conditions and inflation have a great effect in the affecting demand and supply of USD currency in the world market.
