Trading currency crosses opens a whole new side of the currency markets, as different crosses possess different qualities that can suit any style of trading. Some crosses move fast and are extremely volatile with daily ranges that may exceed over 100 pips. While other crosses move relatively slow and exhibit low volatility, which is more suited for novice traders.
Another added dimension to trading crosses is the ability to collect substantial amounts of interest (i.e. GBP/JPY, NZD/JPY and other high yielding crosses) as the positive carry created by the interest rate differentials can add to a trader's bottom line P/L. Discover the world beyond the majors where traders can expand their trading horizons.
All About the Crosses: [EUR/JPY] [EUR/CHF] [GBP/CHF] [GBP/JPY] [AUD/JPY]
All About the Crosses: GBP/JPY
Long the most popular carry trade in the market, high volatility in the GBP/JPY makes it an excellent medium-term range trade as well! Highly sensitive to interest rate outlook changes and change in the economy of the UK and Japan, the GBP/JPY can make powerful, sweeping moves.
Overall, the pair tends to trade in a range, especially when the UK interest rate outlook is neutral. Movements within these ranges are substantial. The RSI indicator and real support/resistance levels (available in the Market News & Charts section ) are two excellent ways for traders to identify entry and exit points at the tops and bottoms of these ranges.
With an average daily range of 172 pips, GBP/JPY offers plenty of opportunitties for traders of all time frames, whether in the short, medium or long-term!
Another added dimension to trading crosses is the ability to collect substantial amounts of interest (i.e. GBP/JPY, NZD/JPY and other high yielding crosses) as the positive carry created by the interest rate differentials can add to a trader's bottom line P/L. Discover the world beyond the majors where traders can expand their trading horizons.
All About the Crosses: [EUR/JPY] [EUR/CHF] [GBP/CHF] [GBP/JPY] [AUD/JPY]
All About the Crosses: GBP/JPY
Long the most popular carry trade in the market, high volatility in the GBP/JPY makes it an excellent medium-term range trade as well! Highly sensitive to interest rate outlook changes and change in the economy of the UK and Japan, the GBP/JPY can make powerful, sweeping moves.
Overall, the pair tends to trade in a range, especially when the UK interest rate outlook is neutral. Movements within these ranges are substantial. The RSI indicator and real support/resistance levels (available in the Market News & Charts section ) are two excellent ways for traders to identify entry and exit points at the tops and bottoms of these ranges.
With an average daily range of 172 pips, GBP/JPY offers plenty of opportunitties for traders of all time frames, whether in the short, medium or long-term!
GBP/JPY tends to be quiet during Japan's lunch hour: 10 PM to 11 PM EST.Analyst Says: Personally my favorite pair, it trades wonderfully on technical indicators and makes dramatic (almost epic) moves! If you catch a move upward late in the game, the interest will ensure that you make up for it quickly.
- Average daily range: 172 pips
- Extended ranges; breakouts can be explosive
- Good for: medium and long-term range trades; long term carry trades
HOT Buttons: What moves GBP/JPY?
Shifts in UK interest rate outlook Since this pair is saturated with carry trades, it is hypersensitive to any potential change in interest rates.
Bank of Japan intervention Hints that the BoJ will defend their currency from getting too strong will impact the price.
UK and Japanese economic data Changes in the strength of these economies relative to each other will have an effect on the price of their currency.
Fundamentals to Watch
BoE Meeting Policy statements from the Bank of England. Changes in interest rates will affect this pair since it is a carry trading pair.
UK Unemployment Amid fears of a "jobless recovery," the market has become very sensitive to this indicator, which measures new jobs created in the UK.
UK Retail Sales Measure of the level of consumer interest in the UK. Consumer spending is one way to measure robustness and growth in the economy.
UK Inflation Inflation is closely watched since it can affect Bank of England interest rate policy.
UK Housing Prices The UK interest rate outlook is closely tied to how the housing market is doing; if growth is too little or too great it can affect monetary policy.
Japanese Inflation A measure of inflation in Japan. Closely monitored because when too high or too low, it can prompt a change in the interest rate outlook of a country.
Japanese Consumer Spending A measure of how much Japanese consumers are spending. The Japanese economy is driven primarily by its export sector, but consumer spending is an important gauge of economic activity and prosperity.
BoJ Monetary Policy Meeting When Japanese bank officials meet to determine monetary policy. Has direct implications for currency traders since they often hint at whether or not they intend to intervene to protect the Yen from becoming too expensive—hence making their exports more expensive.
Japanese Trade Balance Japanese imports vs. exports – the Japanese economy is highly dependent on exports; a drastic change in this number can have implications on the value of the Yen.
Japanese Industrial Production A measure of activity in the Japanese manufacturing sector. This acts as a gauge for the level of production and growth in the economy.
Tankan Survey A quarterly business survey assessing Japanese business conditions. The headline number shows the difference between the proportion of optimistic businesses and the proportion of pessimistic businesses. A large positive number means that optimism pervades.
Shifts in UK interest rate outlook Since this pair is saturated with carry trades, it is hypersensitive to any potential change in interest rates.
Bank of Japan intervention Hints that the BoJ will defend their currency from getting too strong will impact the price.
UK and Japanese economic data Changes in the strength of these economies relative to each other will have an effect on the price of their currency.
Fundamentals to Watch
BoE Meeting Policy statements from the Bank of England. Changes in interest rates will affect this pair since it is a carry trading pair.
UK Unemployment Amid fears of a "jobless recovery," the market has become very sensitive to this indicator, which measures new jobs created in the UK.
UK Retail Sales Measure of the level of consumer interest in the UK. Consumer spending is one way to measure robustness and growth in the economy.
UK Inflation Inflation is closely watched since it can affect Bank of England interest rate policy.
UK Housing Prices The UK interest rate outlook is closely tied to how the housing market is doing; if growth is too little or too great it can affect monetary policy.
Japanese Inflation A measure of inflation in Japan. Closely monitored because when too high or too low, it can prompt a change in the interest rate outlook of a country.
Japanese Consumer Spending A measure of how much Japanese consumers are spending. The Japanese economy is driven primarily by its export sector, but consumer spending is an important gauge of economic activity and prosperity.
BoJ Monetary Policy Meeting When Japanese bank officials meet to determine monetary policy. Has direct implications for currency traders since they often hint at whether or not they intend to intervene to protect the Yen from becoming too expensive—hence making their exports more expensive.
Japanese Trade Balance Japanese imports vs. exports – the Japanese economy is highly dependent on exports; a drastic change in this number can have implications on the value of the Yen.
Japanese Industrial Production A measure of activity in the Japanese manufacturing sector. This acts as a gauge for the level of production and growth in the economy.
Tankan Survey A quarterly business survey assessing Japanese business conditions. The headline number shows the difference between the proportion of optimistic businesses and the proportion of pessimistic businesses. A large positive number means that optimism pervades.
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