by R. MAK. on September 9, 2009 · 0 comments
in Currency Trade, Forex Market, Forex News, Forex trading, News, Stock Trading, Trading, currency, investment, stock exchange
On Wednesday the U.S. dollar fell, as investors moved to riskier assets like stocks and higher-yielding currencies and now it has touched new low levels for 2009 against major currencies.
Hopes for economic recovery has been supported by the rally in European and U.S. stocks, and together with the fall in U.S. dollar borrowing costs, it has encouraged investors to look for higher returns around the world.
Concerns over the dollar’s long-term status has been renewed as the world’s reserve currency and options-related euro buying also contributed to the sell-off, and that has been started on Tuesday.
Boris Schlossberg, who is a director for currency research at GFT Forex in New York has said that the dollar trade is ultimately a risk trade. What it means is that, as risk appetite improves, the dollar gets hurt. Further he said that the lower move has been initiated once a key technical barrier on euro/dollar was lifted late on Friday. Large options contracts expired and this has let the traders to push the euro through $1.45 and $1.46 is the target now. The rise in stocks and commodities are making contribution to the move.
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Open interest are also referred to as open contracts or open commitments. The total number of derivative contracts are denoted by them, like futures and options, that are currently active on a specific underlying security. The flow of money into the futures market is measured by open interest. There must be a buyer of that contract for each seller of a futures contract. Thus a seller and a buyer are joined to create only one contract. Therefore, we need only to know the totals from one side or the other, buyers or sellers, not the sum of both in order to determine the total open interest for any given market.
The increase or decrease in the number of contracts for that day is represented by the change in open interest that is reported each day, and it is shown as a positive or negative number.
Example of Open Interest
For the IBM call option that hit 90 and expiring in January 2007, on February 10, 2006 the total open interest on was 10251.
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