How high will the NZD go?

[rotsevni]

We tend to focus on the NZD/USD cross and blame a lot on the declining USD, but this week the NZD hit a new high on the TWI as well. It is also near record highs against the Euro (within 10% of 1997 record) AUD (within 3% of its peak last October) and the highest it's been against the GBP and Yen in over 5 years.

I know the banks regularly have opinions, but of the readers here it would be interesting to know how many are long and how many short on the NZD?
Is election hype going to make it worse (from an exporters viewpoint)?
Is it hurting or helping tourism and immigration?

I looked for threads with NZ and NZD and dollar in the title but only found USD commentary

[zyreon]

The moment I have a strong idea about the direction of the NZDUSD I will act. I am a cautious distance from action at present.

Infact, if they weren't so expensive, I would've purchased a straddle on the NZDUSD

a part of me feels it should go down, another points out the direction of the trend. For now the triangle appears to be broken to the upside, if you want to short; don't hold your breath... maybe consider buying put options due to their limited risk [limited as opposed to 50 or even at some places 200 to 1 leverage on an outright short position].

*watching and waiting*

[rotsevni]

Thanks. I hope I don't get slammed for starting another NZD/USD thread though. I was trying to focus here on the broader issue of the NZD strength generally, regardless of what the USD is doing

[peat]

yes on the forum where I hang out when forex trading (not that I actually trade the NZD or AUD myself), there is a very respected trader who has been recommending shorting the NZD and AUD for some time now. It has become a bit of an issue on the forum because a number of people have blindly followed his advice and been badly burned.
They would appear to be ready to fall and the number of net longs on the AUD is reaching extraordinary highs, but the move hasnt happend yet. Personally I would not go against the existing trend and wait for the downside breakout to actually start.
Suggestion of options is a good one.

[arco]

rotsevni

I am currently long from 7056.
Present price as of this moment 7266.

Take into consideration the action may be about to print
a triple top, and oscillators are in divergence.

Meanwhile I will stay long until I get a signal and then
reverse position. (SAR)

A

[kittydashwood]

The answer will be in the rates will Cullen raise rates before Greenspan.
Answer.... Probably. Inflation in America takes so long to be noticed it's out of control by the time it's picked up. In NZ inflation sticks out like dogs$#@!

I keep waiting for Brother Coy to post the NZ .80 thread.

[zyreon]

21 Feb 2005 17:24 GMT


Forex - Major currencies stay little changed ahead of busy week for data
LONDON (AFX) - Major currencies continued to trade within very tight ranges as investors stayed on the sidelines ahead of a heavy week for data and with US markets closed for the Presidents' Day holiday today.

Market focus this week will centre on the release on Wednesday of US inflation data and the minutes from the Federal Open Market Committee meeting earlier this month.

Though the dollar remains weak, analysts believe the currency will rebound towards the end of the week, particularly if the inflation figures reflect last week's huge surge in US producer prices.

"If the higher PPI translates into a higher CPI, markets will conclude that the Fed will increase the pace of interest rates hikes," BNP Paribas analysts said.

In the FOMC's minutes, released on Wednesday evening, market players will also be looking for discussion about the possibility of dropping the word "measured" to describe the pace of rate hikes.

Aside from the inflation data and FOMC minutes, fourth-quarter GDP on Friday is expected to see a substantial upward revision, while US Treasury yields are set to continue rising, all providing a potential boost for the dollar.

"The time may be approaching for a reversal (for the euro/dollar rate), particularly later in the week when US data is likely to favour the dollar," CALYON currency analyst Daragh Maher said.

In the euro zone meanwhile, the key Ifo business climate indicator for Germany is also due for release on Wednesday.

Though the Ifo index is expected to show improvement, it is unlikely to provide the euro with sustained support, however, as US data takes centre stage soon afterwards, BNP Paribas said.

The equivalent business climate indicator for France is also due out on Friday.

Elsewhere, the Australian dollar remained firm, hovering just below the 0.79 usd mark.

The Australian unit has outperformed since Reserve Bank of Australia governor Ian Macfarlane said on Friday that at this stage in the economic cycle it is likely interest rates will go up.

[arco]

Notes
Long upper wicks showing some resistance
at these levels. Possible bearish Gartley forming.
Long 7059 = +213 pips at close.

[zyreon]

could be some nice bearish action tonight when US CPI comes out...

[arco]

zyreon

Yes, it will be most interesting.

7324 is a dynamic number on NZD, and IMO it may
be prudent to sell some contracts towards/around this figure.

Balance on trailing stop, or hedge.

Arco

[Gryffyn]

Currency: Cullen talks kiwi down ahead of rate call

09.03.05 5.24pm


The New Zealand dollar today backed off last night's fresh post-float high ahead of tomorrow's interest rate call after Finance Minister Michael Cullen expressed concern about its strength.

The kiwi closed at US73.79c compared with US73.67c at 5pm yesterday, having traded in a US73.58c to US74.02c range today. The kiwi hit a fresh 22-1/2 year high of US74.04c during last night's offshore session on prospects of a Reserve Bank rate hike tomorrow and a weaker US dollar.

It had been trading around US74c today until Finance Minister Michael Cullen, now in Melbourne, said the kiwi's strength was "a very real concern".

"Let's see whether that's temporary or not, whether it's a blip in advance of a Reserve Bank announcement, which you sometimes see," Dr Cullen told Reuters.

W hile there was little the government could do to influence the kiwi, the Reserve Bank had some limited resources it could use where it saw a risk to systemic stability.

ANZ Investment Bank chief forex dealer Murray Hindley said the kiwi "lost a little bit of ground" after Dr Cullen's comments.

But he didn't see the kiwi trading in a big range tonight, before tomorrow's Reserve Bank Monetary Policy Statement.

"It depends how the offshore market digests those Cullen comments. "

The market is divided on whether the Reserve Bank will raise interest rates or leave them unchanged. The kiwi could hit US75c if the bank hikes by 25 basis points to 6.75 percent, and issues a hawkish accompanying statement.

Elsewhere, the greenback was buying 104.69 yen (104.98), and the euro was buying $US1.3340 ($US1.3228). The greenback's short term progress is now likely to depend on trade data on Friday.

The Australian dollar was trading at US79.74c (US79.38c).

On the crosses, the kiwi was buying A92.58c (A92.87c), 0.5533 euro (0.5569), 38.28 British pence (38.46), 77.24 yen (77.35), and 0.8581 Swiss francs (0.8647).

The Trade-Weighted Index was at 70.93 (71.12), and the monetary conditions index was at plus 1077 (1088).

On the money markets, 90-day bank bill yields were static at 6.92 percent, July 2009 bonds were unchanged at 6.25 percent, and April 2015s were at 6.13 percent (6.11).

- NZPA

[zyreon]

being the mover and shaker that he is

haha
gimmie a break

[Capitalist]

It's going to go to 76. There is NOTHING to drive it down. F.E.T.E.

[zyreon]

why not 80?

;)

[Cooper]

From my very limited understanding of the macro factors, 80 is looking likely. More US$ weakness than NZ$ strength, IMHO.

[srotherh]

Interesting opinion from someone.
Any thoughts on this??

JOHANNESBURG (Mineweb.com) –

There is increasing, and ongoing, expert analysis holding that commodity-linked currencies have run far ahead of underlying fundamentals. In hard-hitting comments on the subject, analysts at Investica, an independent UK-based currency specialist, confirm what a number of exporters in commodity currency countries have been saying for ages: enough is enough.
Investica say that “strong interest” in high-yield investments and developments such as the rise in commodity currencies against the dollar are signs of a possible speculative bubble in the near future.
The world’s three leading “commodity currencies” seen as the Australian dollar, Canadian dollar, and rand, have been outperforming most other currencies against the greenback, for much of the past three years. Substantial percentages of the three countries’ exports comprise commodities, minerals and metals, which are traded primarily in dollars.
In line with the sentiment expressed by Investica, a recent report from BCA Research held that the Australian dollar was “overdue for a significant correction.” It has benefited, said the analysts, from higher commodity prices during the past several years. However, “the upside for commodity prices should be limited in the near term” as the Federal Reserve, the US central bank, continues to normalise interest rates.
Investica’s reference to “high yield investments” refers to the tendency for interest rates in commodity currency countries to stand at premiums to those in the US. This encourages “carry trades,” where US dollars are converted and invested in domestic overnight cash deposits, known as “hot money” portfolio trades. The phenomenon was highlighted in the past week, when Australia raised interest rates, unexpectedly by most accounts.
As to underlying drivers of currency values, Investica says that investors appear to be overlooking Australia’s substantial current-account deficit, while highlighting the US current-account deficit.
The US trade deficit (the major component of the current-account deficit) ballooned by 24% during 2004, on the previous year, to a record $618-bn. The US trade deficit is universally named as the key driver behind the dollar protracted bear market, now of 36 months’ duration. By contrast, why is it that rising current-account deficits in commodity currency countries appear to be of little, if any, concern?
While South African officials have brushed aside concerns over the country’s trade deficit in recent speeches and presentation, independent voices have reacted more sharply. In a recent note to clients, Citadel Investment Services notes that domestic imports have shot up, thanks to the strong rand, which for three years has run a bull market inverse to the dollar’s bear market.
Cheaper South African imports have fuelled a consumer-spending boom, but, as Citadel notes, “our international trade balance has swung from a sizeable surplus to a gaping deficit.” If the pace at which this trade balance has deteriorated were to continue, South Africa would be in a similar position to that of the US “in a matter of six to nine months,” according to Citadel.
Investica says the value of commodity-linked currencies have appreciated far higher “than that justified by their fundamentals.” An increasing number of active market participants say that hedge funds are almost certainly over-playing the role of willing speculators in commodity and metal markets, and also in commodity currency markets.
During the past week, the Reuters-CRB dollar-based index of 17 commodities hit its highest level in 24 years. One key feature was seen in benchmark New York sweet, crude oil trading as high as $55,65 a barrel on Wednesday. The price level was just two pennies short of the all-time record attained on October 25, 2004.
During the past week, the dollar hit two-month lows against the rand and Canadian dollar, and a one-year low against the Australian dollar. The greenback also traded to a lifetime low again

[arco]

FWIW

I'm short NZD and AUD.

AUD.USD + 65 pips
AUD.NZD + 285 pips
AUD.JPY + 17 pips

NZD.USD + 73 pips

Tight stops in place in case the US
comes up with some nasty news later.

[Cooper]

Hi Srotherh... I'm no expert but they mention the trade deficits in the "commodity countries" as being similar to that of the US, but the (IMHO) main driver for a USD reduction is actually the Fiscal deficit of the US govt... this US fiscal deficit isn't being repeated in the stated countries to my knowledge.

I would argue that when compared to the US fiscal deficit, the US trade deficit doesn't really matter.

[Xerof]

Cooper,

you're right - the US has twin deficits. In fact with G-doubleya as well, one could argue they have three deficits

Xerof

[Xerof]

Dr Bollard's sanguine view of the strength of the NZD today will disappoint those waiting for an early turn (or intervention). Seems the correlation with commodities, (despite New Zealand not being particularly well aligned to the basket, esp hard commodities), might serve as an early indicator of 'trouble at t' mill' if we see a rapid decline in the CRB index.

In the meantime, still looking for final exhaustive rally to 76/77 area before multimonth decline. Am however very wary of the market positioning from carry trades, and could turn at any moment if risk aversion comes into play.

Xerof

[srotherh]

Hi Cooper


quote:Hi Srotherh... I'm no expert but they mention the trade deficits in the "commodity countries" as being similar to that of the US, but the (IMHO) main driver for a USD reduction is actually the Fiscal deficit of the US govt... this US fiscal deficit isn't being repeated in the stated countries to my knowledge.

I would argue that when compared to the US fiscal deficit, the US trade deficit doesn't really matter.

You have a point but any rising deficit must come into reckoning.

Xerof
Your post seems logical and I would tend to agree but geez
with if Greenspan comes out with this – “Very Hard to Forecast Dollar Movements.”
March 15th, Reuters
Does anyone have a hope???
Again the market will decided which way, when and by how much.

[zyreon]

I have a theory on the NZD... by no means is it profound:

NZ economy is generally at a stage where a slow down is expected; within the next 2 years the economy should start to taper off. Some suggest it will come to a "hard landing".

One theory of currency forecasting is that the economy of the country is important in the value of the country's currency --> i.e. if the economy is going to get better then a capital gain could be made by going long that currency.

IF ceteris paribus the NZ economy gets bad, then the NZD should depreciate.

So if one wanted to capitalise on this expected decline in the NZD, one could short the NZD vs another rate. But when you introduce another rate you include an entire country. So the next logical question based on economic performance is what country over the next few years will expereince economic status quo - or will experience economic growth at an increasing rate?

OF course the lazy way would be to simply short the NZD vs a basket of currencies, e.g. CHF,JPY,USD,AUD,GBP,EUR.

IF that was the chosen path of action then the hypothesis would be that over the next few years the NZ economy will experience downard pressure, and perhaps that economic growth will slow to such an extent that the ever vital OCR be reduced in accordance with lower inflationary pressure. The interest rate inclusion in the last paragraph adds potential to a decline.

Down with NZD?

any comments or criticism?

[Xerof]

Strotherh,

Technicals do give a good guide, and I think these days with so many people following TA, they become rather self-fulfilling. This is helpful in determining short term directional moves. I like to add a dose of fundamentals, a pinch of commonsense and a healthy amount of contrarianism into the mix. Most of us know that more often than not extreme bullishness is a good time to sell, simply becoz there is no-one left to buy it.

I think Kiwi is close to that situation, but not there yet. Exporters seem reluctant to buy at these levels, and so we will probably see a capitulation from that sector in due course which will create the exhaustive rally. This, IMHO, should then be sold.

Re Greenspans comment - he can't say anything else really

Does anybody have a hope? - this is the wonderful challenge of FX - no day is the same - exogenous shocks can and do totally destroy what looked like the perfect position, TA works perfectly for a few weeks then goes horribly wrong etc etc. I think you can make very good money out of leveraged trading, providing you have a system, are disciplined, and have a good cash/risk management regime in place. I've been involved directly in the FX markets in various roles, both price maker and taker, for over 25 years, and have now taken the opportunity to trade on a proprietary basis full time.

6 weeks into it (after spending many months sorting out models, risk profiles, etc etc, using demo accounts), I have returned 106% on available capital, having never risked more than 2% of the total in any one trade. Early days of course but not too bad so far....

My slogan 'trade with an empty mind' tries to get the message across - keep emotion out of your trades, you don't own the trade, it won't be enhanced by nurturing, its simply there to pass on to the next participant either at a small and calculated loss, or at a rather larger but calculated profit. No fear, no greed, no emotion - "empty mind" - use your mind before entering the trade - not during, not after.

Xerof

[srotherh]

Xerof
I agree with all you say however I do not believe I have the experience or Steel balls to trade the forex markets but they do have in part ,an impact in the timing and decision to invest in stocks in other currencies, hence my interest.
Appreciate your slogan and should apply to any markets.
Good luck and look forward to learning from all posters on this thread.

[Xerof]

The other thread "how low can the USD go" poses the same question but from the other side of the pairing. Check that thread for my opinion


Xerof

[Xerof]

Yes, doubled the account balance - started with $x, now have a little over 2 times $x (has been higher but having a lousy week so far this week, which has put me flat for past 3 weeks)

Available capital means the amount I can put up as margin, not the amount I risk on each trade.
I risk up to a maximum of 2% of available capital per trade, i.e. the S/L is set at a level where 2% max is potentially lost. T/P varies from 3% to 6%.

I have 3 to 5 trades open at any one time, not necessarily all directionally similar, so total at risk might be as high as 10% of available capital. If they all turn to custard in a series, thats 10% of available capital down the gurgler....has happened once so far.

Leverage at Saxobank is 100 to 1, i.e margin call is 1%, but need enough to cover 2% margins over weekends for open positions. But leverage is not the real issue - the real issue is limiting your losses within strict guidelines, i.e if you geared at 400 to 1, you'd still operate the same way, only you wouldn't have to put up as much margin. Again this is yet another myth of the platform traders - for some reason 400 to 1 is better than 100 to 1 - I don't think so....

Not possible to express as pips as I trade G4 plus NZD and AUD, and each deal varies in size, so pips do not accurately reflect returns. As I said, the size of the deal is determined by how wide the stop loss is - if its real tight, then the size of the trade will be larger than if the S/L is very wide. Fixed fractional is the terminology I think.

But generally 100 to 200 pip T/Ps are typical vs 30 to 45 pip S/L (sometimes 80 to 100, but then the position is a lot smaller, and expected return v risk is also a lot higher - these sort of trades will be longer term positions in trending markets - which, BTW, I wish we could see a bit more of, instead of this chopping around in ranges)

I have lots of small losses (currently 65% of number of trades taken), but the 35% of winning trades more than compensate, and currently leave me with a touch over double my start balance[8D][8D] Note this is now after 3 months, see earlier comment re cr*p markets[xx(][xx(]

To be fair, I should point out that a lot of the deals I count as S/L trades are simply part and parcel of lifting one side of a hedged pair, with the view that the other side will run further into profit. To get to a hedged pair with a locked in spread of 100 or so pips is the hard part;);)

Xerof

[peat]

quote:Originally posted by Xerof

lifting one side of a hedged pair, with the view that the other side will run further into profit. To get to a hedged pair with a locked in spread of 100 or so pips is the hard part;);)

Xerof


interesting to read about your methods Xerof, I appreciate your sharing.
I dont understand the part I have quoted tho. Would you explain a little more please.

FWIW I've had a cr*p last two weeks as well... Lost all the profits I made this year.... which of course is a pain, but I see my first year or so of this as letting blood anyway...

[Xerof]

Quite simple Peat, no rocket science here,

say you buy USD/JPY, it goes 100 pips higher,:):) then to protect your 100 pips, you do another deal where you sell USD/JPY i.e. don't close the original deal out. You then put S/L's each side of each deal, so that if it rallies another 100 pips, you get stopped out of the short after say 30 pips, but still have the long, or vice verca if it drops 100 pips, you stop out of the long after 30 pips and still have the short. In either case you should then get 170 pips instead of the original 100, providing it goes the 100 pips. :D:D Doesn't always work of course, but in my experience, it adds quite a lot of value.

Of course, you don't need to stop this process after one circiut, you could keep replicating it forever I guess - depends on your view of the market - is it ranging or trending.

As always, the hard bit is getting the first trade correct....

You do need to be using a platform which allows equal and opposite deals to remain open with linked OCO orders for each deal - some will net them off on value date.

A tip for you - if the platform you use won't allow 'hedges' as described, you could put the hedge on in another currency pair, i.e if you went long EUR/USD, you could then hedge it with long USD/CHF. Then your platform won't offset each deal. You do have a slight additional risk to movement in EUR/CHF, but at least there should be strong correlation with directional USD movements for each side.

This practice is called 'hedging'and is common practice amongst 'hedge funds' - get the connection?[8D][8D]

This is why so often you hear stories of hedge funds selling heaps, then later (hours, days or weeks) buying it all back - they are simply lifting the 'hedge'. You'll then see them offering again when their models give a sell signal - either further up again [:p][:p] (or lower, if its turned to custard for them:(:()



Hope this helps

regards

Xerof

[peat]

thx for the explanation
I am stil pretty much limiting myself to one open trade at a time...due to risk management and limited capital. Easy does it for me....

[peat]

tho of course i do understand that in that situation the 2nd open position is not actually increasing your risk. i just need to get my head around how having two opposing positions can benefit you. I will do some examples on paper....cheers.

[peat]

re the topic....
while i actually agree theres a lot of falsity about the Kiwis position , i think its always dangerous shorting the major trend. And you look at the daily for the NZD and tell me with a straight face that the trend isnt up.
Disclaimer
I dont play the kiwi and am relatively new to forex itself.

[Xerof]

I'm sure he won't mind me quoting him, but TRL www.trl.co.nz, to whom I subscribe, had this to say after NZD had topped out at .7450 area


quote: ** NEW ZEALAND DOLLAR/US DOLLAR - MEDIUM TERM VIEW **

MARCH 24th,.7180 - Kiwi's Trend has Reversed.Resistance at .7250 - .7300 now contains,for sell-off toward .6550,enroute .6100 over coming months.

The current uptrend on the daily chart is viewed as part of the correction of the five wave move down from 7450 to 7015. This is expected to end shortly (I'm having trouble picking the top as you will gather from NZD.USD thread comments!!)

From a technical perspective Kiwi is currently in a downtrend, targeting 61 cents. I say this with a straight face :D:D

regards

Xerof

[arco]

Peat
If you look at the monthly chart from 1987-2005 you will see what looks like a possible Triple Top.

A triple top is considered to be a variation of the head and shoulders top. Often the only thing that differentiates a triple top from a head and shoulders top is the fact that the three peaks that make up the triple top are more or less at the same level.

According to experts including Murphy, making a distinction between these two patterns is largely academic because they both imply the same thing. That is.......

They are both "reversal" patterns of an upward trend in an instrument. The triple top marks an uptrend in the process of becoming a downtrend.

Have you started to scale in some shorts yet Xerof?

arco

[Xerof]

Arco, refer to NZD.USD thread, my post of last evening.

Also, that diamond formation on GBP that I alerted you to on TT proving robust at this stage!! I tried for a 1.9235 entry but too ambitious:(:(

regards

Xerof

[arco]

Xerof

GBP - I got in yesterday at 9165 .....+ 81 currently.

arco

[Xerof]

Good man you:D:D

[slam]

Hi arco/xerof
I have been watching the forex for a while now and want to know if you can point me in the right direction for any discussion boards or info sites that I can check out.
By the way, really enjoy your posts on here, very informative with no nonsense. appreciated;)
Thanks in advance
Cheers
Slam

[Xerof]

Hi Slam

You'll find Arco's postings excellent IMO, right here on sharetrader.

I have yet to prove my worth as far as offering trading opportunities goes, but like to add my piece on the ins and outs of the FX markets generally.

Other sites I find useful are :
http://www.tacticaltrader.com in particular the GBP, EUR and JPY threads, (Arco, and GWDann posts in particular) but there's heaps more on this site to keep you busy

www.saxobank.com is good for commentary and trading ideas. Check out the daily commentary also posted to this site by Deutsche Bank - posted each day around 8 pm our time, but varies. I find they give a very good bigger picture perspective on the majors.

www.trade2win.com has a huge array of topics, but look for Stormygolds, and gmgfx.com postings - they are both very good for trading suggestions IMO

www.fxstreet.com has a large array of contributors, but is not a forum. You'll have to make your judgement on who you focus on here - some are genuine market views, but a lot are advertising their wares

www.trl.co.nz offers TA twice daily on 6 currency pairs. It is not free, but if you are willing to invest a bit to make good returns, I can definitely recommend him. I subscribed to his service in my previous professional role for around 8 years , and still do now as a home-alone proprietary trader.

Hope this helps

Xerof

[slam]

Thanks Xerof
That will keep me busy.
Running a demo account atm so a good time to do some testing.
Cheers
Slam

[peat]

theres a good active forum on forex at http://www.global-view.com/

[Xerof]

Slam,

another site I can point you to is www.fx-review.com which is someones attempt to give an overview of a lot of the sites which peddle their wares to both newbies and exp traders. Its obviously set up by a person who has english as a second language, but IMO is an honest attempt to assist.

Have a look

regards

Xerof

[slam]

Cheers again Xerof, some good info
Have done allot of research over the long weekend.
Demo account looking ok after the first week. (ignoring all the stupid button pushing in the first few days )
ATM running short on USD/JPY and NZD/USD
Let you know how I get on
Regards
Slam

[arco]

Thanks for the compliment Xerof.

Slam

As Xerof mentioned, MT, TT will offer some good
technical comments. Monitor and choose your
favourite poster.

FYI

This is a fairly new FX forum...
http://www.fxtradercenter.com/forums.html

Another FX forum here...
http://www.forexnews.com/

and you could also try...

http://www.trade2win.com

There are also many vendors that offer free
info and trials. Check on the web.

Have fun

arco

[Xerof]

Yes Slam, dead easy on the demo - wait till you try and push the button with your own 'readies' at risk!!

But good on you - you're taking the right approach to it - PLENTY of research and system testing - there is no rush to get in until you're well prepared - the FX market will still be around...

Xerof

[slam]

Thanks arco, will check them out.
Yes, day book notes beginning to fill up nicely.

Cheers you guys, hopefully have something worth while to add to the thread(s) soon

Slam

[Dazza]

could someone explain to me what a pip in numeric means?

NZD/USD = say 7200

so 1 pip up = 7201???

100 pip movement up = 1 cent movement up?!

[zyreon]

yep

[arco]

Dazza

How to Calculate Pip Values from http://www.forex-training.com/pip.htm

A "pip" is the smallest increment in any currency pair. In EURUSD, a movement from .8941 to .8942 is one pip, so a pip is .0001. In USDJPY, a movement from 130.45 to 130.46 is one pip, so a pip is .01. How much in dollars is this movement worth, for example, per 10,000 Euros in EURUSD? How much is one pip worth per 10,000 Dollars in USDJPY? We will refer to the size, in this case 10,000 units of the base currency, as the "Notional Amount". The formula for calculating a pip value is therefore:

(one pip, with proper decimal placement/currency exchange rate) x (Notional Amount)

Using USDJPY as an example, this yields:

(.01/130.46) x USD10,000 = $0.77

or 77 cents per pip

Using EURUSD as an example, we have:

(.0001/.8942) x EUR10,000 = EUR 1.1183

But we want the pip value in USD, so we then must multiply EUR1.1183 x (EURUSD exchange rate):

EUR 1.1183 x .8942 = $1.00

This is in fact a phenomenon you will see with any currency in which the currency is quoted first (such as EURUSD, GBPUSP, or AUDUSD): the pip value is always $1.00 per 10,000 currency units. This is why pip (or "tick") values in currency futures, where the currency is quoted first, are always fixed.

Approximate pip values for the major currencies are as follows, per 10,000 units of the base currency:

USD/JPY: 1 pip = $.77; In other words a change from 130.45 to 130.46 is worth about $.77 per $10,000.

EUR/USD: 1 pip = $1.00; .8941 to .8942 is worth $1.00 per 10,000 Euros.

GBP/USD: 1 pip = $1.00; 1.4765 to 1.4766 is worth $1.00 per 10,000 Pounds.

USD/CHF: 1 pip = $.59; 1.6855 to 1.6866 is worth $.59 per $10,000.