Forex Funds

Modern day spread betting companies like Trade Fair offer thousands of markets to their traders. There are very few financial markets that aren’t open to spread betters. One of the most popular ‘alternative’ markets is foreign exchange, or Forex, and in the coming months it could provide some of the greatest opportunities for profit.
The reason for this is that there are a lot of activities around at the moment that will directly impact upon the price of a given currency. The general election in the UK, for example, has great potential to devalue sterling and the Greek economic crisis seemed to be derailing the euro, although that has now been rectified somewhat.
The biggest and most influential currency of all, the dollar, is equally susceptible to price movements. The US economy is recovering slowly, but it’s by no means a certain process and the fate of the dollar is largely out of the hands of the Federal Reserve.
The reason for this strikes at the heart of the discord between the US and China in recent years. US officials have been accusing the Chinese government of artificially devaluing their currency in order to the keep the price of the exports low, and though the Chinese government denies this, there is some basis of fact.
China has been swapping its own currency for US dollars on a massive scale. This means that the market is relatively awash with the remininbi, meaning that the price is low, but also that China has built up astonishing reserves of US dollars, almost £2,600 billion in the last two or three decades. Many east Asian countries have followed suit meaning that the total US reserves held in the Far East alone total £5,000 billion.
If China, or any of the other countries, decides to dump some of these dollars, the value of the dollar will plummet, but this will only cheapen US exports and devalue the rest of the reserves that China holds. However, Chinese officials may well feel that there’s no point keeping the reserves if they can’t do anything with them. Additionally, if economic pressures within the US result in inflation and a devaluing of the dollar, China may well exacerbate the problem by dumping some of its dollars in order to make a quick profit.
As a result Forex traders pay extremely close attention to every development between the US and China, both countries have each other in a difficult situation that will need untangling in the not too distant future. That untangling is the perfect opportunity for a spread better to make a profit, so keep your eyes peeled.