What impact does a change in exchange rate affect trade?

There are so many currencies in this world that dealing with FX can be very tricky these days. With more and more sophisticated markets, it’s not that simple to hedge your position. Markets can be very volatile and you want to limit your exposure to that volatility. That impact can be complex to understand for different aspects of the trade such as shipment finance.

Let’s say you are a manufacturer of drugs and you have a contract with a hospital in Japan for 1 year. Japanese Yen will move in your favor or against you. During that timeframe, a lot of money can be a stake. If you have a $10m contract and Japanese Yen goes 10% against you, you might lose $1m. That’s a lot of money! And that can be even wose. We know how markets can be highly volatile and you are not a trader. Your job is to manufacture drugs not to trade USD versus JPY.

To answer this specific issue, you can consider FX hedging contracts or different types of contracts to cover your exposure. Just talk to a financial advisor to find out what would be the best solution for you!

Enjoy trading!

EURUSD: Remain Short as Bears Return

FX Technical Commentary

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Weekly Economic and Financial Commentary

Economic readjustment continues to dominate any upside momentum the economy may have, and this is especially true for housing. Existing home sales dropped 27.2 percent in July, which was well below expectations. The monthly decline was the largest on record. Payback from the tax credit is largely responsible for the

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The GBP/USD broke out of the triangle pattern yesterday. Instead of continuing the downtrend, as anticipated in the previous update, the market broke through on the upside. The rally broke above 61.8% and even 78.6% retracement level. This was the threshold for abandoning the bearish outlook, and the market broke

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The USDJPY may face increased volatility over the next twenty four hours as traders await Japan’s jobless rate and inflation reports, in addition to U.S. GDP and consumer confidence releases.