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EURO :the currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).

European Central Bank (ECB) : the Central Bank for the new European Monetary Union.

Eurozone Labor Cost Index : Measures the annualized rate of inflation in the compensation and benefits paid to civilian workers and is seen as a primary driver of overall inflation.


F Factory Orders : The dollar level of new orders for both durable and nondurable goods. This report is more in depth than the durable goods report which is released earlier in the month.

Federal Reserve (Fed) : The Central Bank for the United States.

Foreign Exchange :(Forex, FX) - the simultaneous buying of one currency and selling of another

Forward : The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

French Central Government Balance : The difference between the central government's monthly income and spending.

Fundamental Analysis : Analysis of economic and political information with the objective of determining future movements in a financial market.

Futures Contract : An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts - ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

FX: Foreign Exchange.


G (G7) :The seven leading industrial countries, being US, Germany, Japan, France, UK, Canada, Italy.

Going Short : The purchase of a stock, commodity, or currency for investment or speculation.

Gold Contract : The standard unit of trading gold is one contract which is equal to 10 troy ounces.

Gross Domestic Product : Total value of a country's output, income or expenditure produced within the country's physical borders.

Gross National Product : Gross domestic product plus income earned from investment or work abroad.

Good 'Til Cancelled Order (GTC) : An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.


H Hedge : A position or combination of positions that reduces the risk of your primary position.

I Industrial Production : Measures the total value of output produced by manufacturers, mines and utilities. This data tends to react quickly to the expansions and contractions of the business cycle and can act as a leading indicator of employment and personal income.

Inflation :An economic condition whereby prices for consumer goods rise, eroding purchasing power.

Initial Margin : The initial deposit of collateral required to enter into a position as a guarantee on future performance.

Interbank Rates : The Foreign Exchange rates at which large international banks quote other large international banks.

Intervention : Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.

ISM Manufacturing Index : An index that assesses the state of US manufacturing sector by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

ISM Non-Manufacturing : An index that survey service sector firms for their outlook, representing the other 80% of the U.S. economy not covered by ISM MANUFACTURING REPORT. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.


J Japanese Economy Watchers Survey : Measures the mood of businesses that directly service consumers such waiters, drivers, and beauticians. Readings above 50 generally signal improvements in sentiment.

Japanese Machine Tool Orders : Measures the total value of new orders placed with machine tool manufactures. Machine tool orders are a measure of the demand for machines that make machines, a leading indicator of future industrial production. Strong data generally signals that manufacturing is improving and that the economy is in an expansion phase.


K Kiwi : Slang for the New Zealand dollar.

L Leading Indicators : Statistics that are considered to predict future economic activity.

Leverage : Also called margin. The ratio of the amount used in a transaction to the required security deposit.

LIBOR : The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from another bank.

Limit order : An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50)

Liquidation : The closing of an existing position through the execution of an offsetting transaction.

Long position : A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.

Lot : A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.


M Manufacturing Production : Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measure the 13 sub sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production.

Margin : The required equity that an investor must deposit to collateralize a position.

Margin Call : A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.

Market Maker : A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.

Market Risk : Exposure to changes in market prices.


N Net Position : The amount of currency bought or sold which have not yet been offset by opposite transactions.

O Offer (ask) :The rate at which a dealer is willing to sell a currency. See Ask (offer) price

(One Cancels the Other Order (OCO : A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.

Open position :An active trade with corresponding unrealized P&L, which has not been offset by an equal and opposite deal.

Overnight Position : A trade that remains open until the next business day.


P Personal Income : Measures an individuals' total annual gross earnings from wages, business enterprises and various investments. Personal income is the key to personal spending, which accounts for 2/3 of GDP in the major economies.

Pips : The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.

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