Currency forecast 2009, the year of the Greenback

The US dollar took a stiff beating since the Federal Reserve, in mid December, slashed policy rates to essentially zero. The reverberation from the historic rate cut brought the US dollar/euro rate back to the levels of September and left the greenback at a 13-year low against the yen.

After a strong run in the latter half of 2008, the dollar seemed ripe for consolidation. Still, the longer-term outlook for the dollar is strong, as witnessed by its upsurge against a basket of currencies in January.

The US economy has been struggling with severe economic headwinds for a longer period of time than most others, and thus could be the first to emerge from recession.Supporting that view is an aggressive monetary policy and what is expected to be a vigorous fiscal stimulus plan.

Measured against the US, the Euro Zone policy response has been tepid, and, if not made more aggressive, could prolong the recession, putting pressure on the euro, especially in relation to the dollar. We do anticipate, however, that the euro probably will continue to appreciate against other European currencies.

Weak pound-Sterling is likely to remain weak well into 2009, reflecting the UK's severe recession, ballooning fiscal deficit and falling policy rates. A weak pound will help underpin exports and offer useful support in the face of shrinking domestic demand.

Of course, there is a potential boost to inflation from a weaker pound, but in our view, that should be offset by the squeeze on margins from the recession and collapse in commodity prices. Yen in unique position We expect the Japanese yen to retain its unique position in the currency market in 2009.

It will likely continue to appreciate against the US dollar through the year, as uncertainty persists surrounding the global economic outlook and volatile financial markets.However, economic spillover from a strong yen will likely be capped by Japan's Ministry of Finance. The government will probably intervene in the currency market if the yen appreciates against the US dollar in a way that takes a significant toll on the economy and financial markets.

Asian weakness-Asian currencies ex Japan generally weakened in the final weeks of 2008 on reduced risk appetite, slowing growth and deteriorating current accounts. The Korean won, the Indonesian rupiah and the Indian rupee led the decline due to their external financing risks.

Even the Chinese yuan, having appreciated rapidly against the dollar earlier in 2008, has stagnated of late. Once global financial risks subside, we believe the yuan will likely resume a path of around 5% annual appreciation against the greenback.

Downward dollar shifts-The Australian dollar will likely trade with a downward bias in the near term, as global commodity prices continue to decline, policy rates are cut and risk appetite remains impaired. Further into 2009, however, we expect the Aussie dollar to recover some of its lost ground, especially if China can avoid the worst of the global downturn and the Australian financial system remains in better shape than many of its peers.

The Canadian dollar has retreated sharply with the slide in commodity prices. US dollar strength, spillover from ongoing global financial market imbalances, monetary policy easing and downbeat Canadian data reports have also weighed heavily on the loonie. There is nothing in the outlook that will change that anytime soon.

Tokyo stock exchange

In the 1870's, a securities system was introduced in Japan and public bond negotiation began. This resulted in the request for a public trading institution; and, the "Stock Exchange Ordinance" was enacted in May 1878. Based on this ordinance, the "Tokyo Stock Exchange Co., Ltd." was established on May 15, 1878; and trading began on June 1st.

GLOBAL MARKETS-US dollar gains, world stocks slip

The U.S. dollar rallied to new high for the past month against the euro on Tuesday after news of the biggest contraction in the U.S. trade deficit in 12 years, and ahead of an expected interest rate cut by the European Central Bank later this week.

The U.S. trade deficit contracted 28.7 percent in November, the biggest fall in 12 years, narrowing to $40.4 billion.U.S. stocks ended mixed, but the Dow Jones Industrial Average closed lower for a fifth consecutive day.Energy-related shares provided some support to stocks though after oil prices rebounded on Saudi Arabia's decision to cut crude output.

European stocks fell for a fifth straight session also on intensifying concerns about the global economic slump that is expected to lead the ECB to cut its benchmark interest rate half a percentage point to 2.0 percent at Thursday's meeting.

"The euro should spend the day trying to resist the negative sentiment being placed upon it, however the current trend suggests this will be a difficult task," said Sacha Tihanyi, currency strategist at Scotia Bank in Toronto, in a research note.

ECB President Jean-Claude Trichet said on Tuesday the euro zone economy faces pressing challenges and cannot afford to let down its guard, adding "a lot of work remains to be done" to address the financial crisis.Hopes that the U.S. Congress would speedily approve the release of the remaining $350 billion financial rescue fund to stabilize credit markets helped underpin U.S. stocks.

"Obama is in a much better position to work with Congress than the previous administration," said Gail Dudack, chief investment strategist at Dudack Research Group in New York. "The market wants to see some very pragmatic action, and Obama is trying to do that."

FED ASSURANCES-The reiteration by U.S. Federal Reserve Chairman Ben Bernanke that the government would consider buying non-performing assets did little to help stocks.The Dow Jones industrial average fell 25.41 points, or 0.30 percent, to 8,448.56. The Standard & Poor's 500 Index lost 1.53 points, or 0.18 percent, to 871.79.

The Nasdaq Composite Index dropped 7.67 points, or 0.50 percent, to1,546.46.Aluminum producer Alcoa kicked off the U.S. fourth-quarter earnings season on a sour note on Monday after reporting a big loss, and its shares fell more than 5.0 percent.

"There's little-to-no good news forthcoming," said Marc Pado, a U.S. market strategist with Cantor Fitzgerald & Co in San Francisco.Shares of Chevron Corp rose 1.4 percent to $71.82 while Exxon Mobil Corp gained 1.8 percent to $77.92, helped by higher crude oil prices.

European shares were led down by losses in banks. The FTSEurofirst 300 index of top European shares fell 1.51 percent to 840.36, all but wiping out the gains achieved since the end of 2008. The index fell 45 percent last year.

Japan's Nikkei average fell 4.8 percent 8,413.91, its lowest close in a month after a strong yen hurt exporters at a time when firms are worried about earnings.Global risk appetite deteriorated this week after Standard & Poor's warned about the ratings on several countries including the United States, Spain, Greece and New Zealand.

In foreign exchange trading, the U.S. dollar firmed against a basket of major trading-partner currencies, with the U.S. Dollar Index up 1.18 percent at 84.2 from a previous session close of 83.214, buoyed by the U.S. trade data and the expected ECB rate cut.

The dollar rebounded from a one-month low against the yen, rising 0.11 percent to 89.23. The euro fell 1.31 percent at $1.32, extending a one-month decline. Sterling fell 2.19 percent to $1.4502, a one-week low.The benchmark 10-year U.S.

Treasury note was down 8/32 in price, with the yield at 2.28 percent.Intra euro zone government bond yield spreads widened to the most since the launch of the euro a decade ago as investors piled into German Bunds, the safest and most liquid of regional government debt.

Ten-year Portuguese, French, Belgian, Greek, Spanish and Dutch bonds were all yielding their biggest premiums over benchmark Bunds since 1999, according to Reuters charts.Crude oil prices rose over 2.0 percent after Saudi Arabia confirmed it planned to produce less than its OPEC target while Qatar said OPEC would cut output again in March. Profit taking cut into the gains and it settled with a 0.51 percent gain to $37.78.

Spot gold prices rose 0.20 percent to $820.95 an ounce. (Additional reporting by Ellis Mnyandu, Pedro Nicolaci da Costa, Wanfeng Zhou, Leah Schnurr and Deepa Seetharaman in New York and Mike Peacock and Emelia Sithole-Matarise in London;

Yen up, dollar rises vs euro as risk appetite suffers

The yen rose against the dollar and euro on Friday as more signs of weakness in the U.S. economy heightened fears that the ongoing credit crisis had pushed the global economy to the brink of recession.

Though governments worldwide have started pouring cash into troubled banks, helping reduce the cost of interbank borrowing, investors remain worried about high cost to the economy from a credit crisis that has persisted for more than a year now.

And with signs of trouble now emerging in economies in Eastern Europe and Asia, investors have reversed risky trades financed with low-yielding yen, helping lift the Japanese currency at the expense of its higher-yielding rivals.

The dollar, which benefits from risk aversion because dollar-based investors repatriate funds, gained on the euro. “The focus is shifting from the credit crisis to a looming global recession,” said Omer Esiner, senior currency analyst at Ruesch International in Washington. “I’d characterize recent U.S. data as dismal, but no matter how bad things get here, the global picture looks just as bad,” and that will support
the dollar and the yen, he said.

Early morning, the dollar was down 0.6 percent at 100.95 yen, while the euro was down 0.9 percent at 135.69 yen , edging closer to a three-year low around 132. European stocks pared earlier gains while U.S. stocks pointed toward a lower opening on Wall Street.

The euro also fell 0.4 percent to $1.3435, while sterling was flat at $1.7317. “We’re still in an incredibly unstable market which will persist for a long time. Although we’ve had all these policy initiatives, it won’t necessarily stop the extreme moves we’ve seen across markets,” said Bilal Hafeez, foreign exchange strategist at Deutsche Bank in London. “Given that context, I expect to see the yen strengthen across the board.”

U.S. economic data has discouraged traders this week, with reports on retail sales and industrial output showing sharp declines. On Friday, a Commerce Department report showed U.S. housing starts continued to fall in September, and markets awaited a fresh reading on consumer sentiment due at 10 a.m. (1400 GMT).

The dollar, however, has held its ground against most higher-yielding currencies, thanks to safe-haven flows. Esiner said much of that is also driven by concern about the economy beyond U.S. borders.

With the Federal Reserve having slashed interest rates to 1.5 percent, he said there is little room for further cuts. That’s not so in the eurozone, Britain and beyond, where rates are much higher. “That means they have a lot further to fall, so in a global recession scenario, the euro, sterling, Aussie and kiwi have a lot more room to the downside,” he said.

The Australian dollar, with rates of 6 percent, was down 2 percent against its U.S. counterpart at $0.6788 while the New Zealand dollar fell 1.3 percent to $0.6116.

Further unnerving investors on Friday was news that Ukraine and Hungary had turned to the International Monetary Fund and other foreign lenders to help bolster their financial systems. That soured sentiment on emerging markets in general and sent investors back into yen, considered low-risk because Japan’s key interest rate remains at just 0.5 percent.

Pound rallies despite bleak High St news

The pound ended its seven-day slump against the euro today and rose against the dollar, to above $1.40, despite horrific news from the High Street.Sterling was up 1.03 cents against the European single currency, to €1.0752, making one euro worth 93.0p. It was also up 1.4 cents to $1.414 against the greenback, having fallen to $1.35 on Friday - its weakest since September 1985.

The rally came despite the bleakest forecast from the High Street in 25 years after nearly two-thirds of retailers saw business decline on a year ago in the New Year sales.It raised fears the recession could be deeper and longer than expected. Howard Archer of Global Insight said he now expected to UK economy to contract by 3.1% in 2009, the steepest decline since the aftermath of the Second World War, compared with his earlier forecast of 2.9%.

But currency traders were betting the pound has been oversold in recent weeks and analysts at BNP Paribas argued that sterling's next stop could be $1.46. This followed assurances yesterday from Barclays that it did not need a Government bailout, which would have put the UK's fragile finances under even greater strain. Barclays shares jumped 73% yesterday and were up another 5%, or 4.3p, to 93p today.

'The fact that sterling is benefiting from the banking news suggests it may not be the lost cause many seem to assume it is right now,' said Steve Barrow, head of G10 currency research at Standard Bank. BNP analysts added that the downturn in the UK is unlikely to be as bad as that in the eurozone.

Euro, Pound Weaken on Speculation European Rates Will Decline

The euro and the pound fell against the dollar on speculation the European and U.K. central banks will lower interest rates to combat a recession and bank losses.

The 16-nation euro also traded near a seven-year low versus the yen before data that may show business sentiment in Germany slumped. Sterling approached a 23-year low versus the U.S. currency after U.K. home prices had the biggest annual decline since at least 2001.

“The European Central Bank will have to cut rates further than the market expects,” said Paul Robinson, a currency strategist in London at Barclays Capital. “Far too much bad news is priced in the pound.”The euro fell to $1.2945 as of 9:47 a.m.

In London from $1.2975 in New York on Jan. 23, when it slid to $1.2765, the lowest level in more than six weeks. The euro was at 115.23 yen from 115.12 yen and 113.75 earlier. The euro touched 112.15 yen on Jan. 21, the weakest since March 2002. The dollar bought 89.07 yen from 88.75 yen.

The pound dropped to $1.3737 from $1.3804. Sterling reached $1.3503 on Jan. 23, the lowest level since September 1985. The U.K. currency declined to 94.19 pence per euro from 94.02. It also fell to 122.18 yen from 122.42 yen after reaching a record low of 118.85 yen on Jan. 23. The pound may rebound to $1.41 and 92 pence versus the euro in a month, Robinson said.

U.K. Rates-U.K. policy member David Blanchflower said interest rates should be at zero to 0.25 percent to aid the economy, the Sunday Times reported yesterday. The central bank will cut its 1.5 percent main rate by a half-percentage point on Feb. 5, a Credit Suisse Group AG index of derivatives showed. The government’s plan for a second bank bailout in three months has stoked concern the financial crisis is deepening.

“Those that agree with Blanchflower should be bearish on the euro-pound, as we are,” Ashley Davies, a currency strategist in Singapore at UBS AG, the second-largest foreign- exchange trader, wrote in a research note today. “We continue to target euro-pound lower from current levels.”

Sideways trade seen for peso

There is no reason or any major factor that will affect the peso’s further movements. I think it will range between P47 to P47.50 per dollar this week," a trader said. Last Friday, the peso opened at P47.42 per dollar, hit an intraday high of P47.43 and a low of P47.30 before closing at P47.40.

Continuing risk aversion due to Wall Street’s volatility, a stronger dollar over other major foreign currencies and a weaker demand for the peso pushed the local currency to lose three cen-tavos last Friday from Thursday.

Investors also had a wait-and-see attitude on Friday as to what kind of action the Bangko Sentral ng Pilipinas would take amidst the economic slowdown.A trader said he believes the Monetary Board’s meeting on Thursday to review rates will impact the peso later in the week."The peso should weaken in case the BSP cuts rates," a trader said. The market expects the central bank to cut rates by 25 to 50 basis points on the back of declining inflation.

BNR puts a halt on leus downfall. Exchange rates slide to 4.29 lei/euro

The national currency had an opposite evolution compared to emerging currencies in the region with a sharp increase around noon. The move was likely determined by an indirect intervention of the central bank in the currency market,” said Ioan Birle, senior dealer at Banca Transilvania, NewsIn informs.

After a depreciation to 4.34 lei/ euro in the early trades, evolution attuned to the European markets, the national currency started to gain ground gradually, and before BNR’s announcement of the benchmark exchange rate, the euro fell sharply from 4.33 lei to 4.29 lei. Later on, the local currency remained near to this threshold, and at 16:40, the banks were buying euro at 4.2844 lei and sell it at 4.2956 lei.

In the region, Hungarian forint plummeted to record lows of over 291 units versus euro, while the Polish zloty lost ground, and exceeded 4.46 units against euro, the lowest rate since September 2004. The benchmark rate announced by BNR on Friday indicates a 0.5% appreciation of the leu, up to 4.2910 lei/euro, compared to Thursday’s record of 4.3127 lei/euro.

What's really wrong with Sterling?

How bad is this fall in the pound? In a word: hideous.Measured against a basket of other currencies – the best way in this globalised era to test a currency's strength – the pound has fallen in the past year by around a quarter.

This is more than any previous devaluation in the past century – greater even than in 1931, when, under Ramsay MacDonald, the UK was forced to abandon the gold standard and saw the pound plummet by more than 24 per cent against the dollar.

Greater than after Black Wednesday and the abandonment of the Exchange Rate Mechanism; worse than in 1967, when Harold Wilson was forced to make an extraordinary televised statement to the nation claiming that the "pound in your pocket" would not be worth any less after his devaluation.

US, China headed for possible currency clash

The deepening world economic crisis and a possible spat over currency levels hung in the air as the United States and China sat down Thursday to discuss the future of their economic relations.U.S. officials say Treasury Secretary Henry Paulson will press Beijing to let its yuan rise against the dollar to ease trade tensions at the two day Strategic Economic Dialogue.

American companies contend that China keeps the yuan undervalued, giving its exporters an unfair advantage and adding to its swollen trade surplus.But with China's exporters suffering, the yuan plunged Monday in government-controlled trading a possible message to Washington to go easy on the issue.

Dollar Falls on Concern Middle East Conflict May Cut Oil Supply

The dollar dropped the most in more than a week against the euro on concern Israeli attacks on Hamas in the Gaza Strip will fan Middle East tensions and disrupt oil supplies to the U.S., the world’s biggest energy consumer.

The greenback also slid versus the yen before U.S. housing and manufacturing reports this week that may show the world’s largest economy is slipping further into recession.

The British pound fell to near a record low against the euro after a survey of U.K. estate agents and surveyors forecast home prices will slide in 2009, extending this year’s declines.

“The tensions in the Middle East appear to be causing buying of the euro,’ said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “When there’s geopolitical risk in that region, the dollar tends to be sold.”

Forex Brokers comissions

Most forex brokers do not charge commissions. GFT Forex Brokers, like other forex brokers, are compensated by revenues from their activities as currency dealers, including proceeds from buying, selling, converting and holding currencies, interest on deposited funds, and rollover fees.

Many may wonder how brokers work without commissions. The forex dealer is like a middleman. Let's consider the case of a bread middleman. He buys bread at a “wholesale” price and he sells it at a “retail” price. So if one is a baker, he can ask the middleman how much he would buy his bread for. Let's say the middleman quotes $1, so he's willing to pay $1 per loaf.

On the other side of the equation, let's say you just finished his last slice of bread, and you needs a new loaf. So you call up the local middleman, and ask him how much he's willing to sell you (a customer) a loaf of bread for. And he quotes the baker $1.25. That sounds reasonable, so you tell him to drop one off for you.

In this example, the bread middleman didn't charge you a commission to either the baker or you, the customer. Instead he bought at one price and sold at another. He will let you buy from him at $1.25, and let you sell to him at $1. So every time the baker has bread to sell, he checks the middleman's sell price. And when you want to buy a loaf of bread, you check the buy price.
In trading, this is known as the “bid” and “ask”. The bid is the price you can sell at, and the ask is the price you can buy at.

Considering forex broker commissions, the forex dealer will let the trader buy from him at 1.1971 and will let the trader sell to him at 1.1967. The difference 0.0004 is known as the spread. And this spread is where the forex “middleman” makes his money.

If the trader were to buy at 1.1971, then the instant the trader buys, he is “down” 0.0004, because if the trader wanted out of the trade, the best price he could sell it for is 1.1967. So as the forex dealer takes varying trades from people, each buying or selling, he can make money from this price gap. Each minimum increment, 0.0001 is referred to as a “pip”. So the spread in this example is 4 pips. In terms of dollars, for a forex contract of $100,000, this transaction would cost you $40 ($100,000 x 0.0004) or 4 pips. So the trader will find that some companies will advertise a spread of 3 pips on some currencies, usually ranging up to five on others. In forex trading, the tighter the spread is, the better.

Best hours for forex trading

Forex is a highly dynamic market with lots of price oscillations in a single minute, this characteristic of the Forex market allows traders to enter the market many times a day and pull some profit from these number of trades. If you want to find an appreciable number of profitable trades you need to enter the forex market at the best period of time, i.e., when the activity, the volume of transactions, is the highest.The main timing characteristics of the Forex market are the following:* Forex is 24 hour market – It starts from Sunday 5pm EST through Friday 4pm EST. Rollover at 5pm EST * Forex Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America * The US & UK account for more than 50% of the market transactions * Forex Major markets: London, New York, Tokyo * Nearly two-thirds of NY activity occurs in the morning hours while European markets are open.* Forex Trading activity is heaviest when major markets overlap.From this timing facts, it is quite visible that at any given time, somebody somewhere in the world is buying and selling currencies. As one market closes, another market opens. Business hours overlap, and the exchange continues as day becomes night and night becomes day. The great liquidity of Forex, combined with a market that's traded 5.5 days a week around the world, offers you an exceptional independence and choices to trade Forex when you want to and not when the market wants you to do it. Trades always develop with relatively the same frequency, regardless of time. As long as the Forex market is open, there is about the same probability that you will find a trade, whenever your look for it.During each trading day, the total Forex “volume” is determined by the number of markets that are open and the times each of these markets overlap one another. Forex market volume of transactions remains high during the whole day, but peaks highest when the Asian market(including Australia & New Zealand), the European market and the U.S. market are open simultaneously. And these are the trading hours you must target in order to find the highest possible amount of profitable trades.This is the breakdown of OPEN Market Times for your reference:* New York Market trade times: 8am-4pm EST* London Market trade times: 2am-12Noon EST* Great Britain Market trade times: 3am-11am EST* Tokyo Market trade times: 8pm-4am EST* Australia Market trade times: 7pm-3am ESTIf you pay attention to the last schedule you will notice that there are two times when two of the major markets overlap during trading hours; between 2am and 4am EST (Asian/European) and between 8am to 12pm EST(European/N. American).So here you have it, if you want to find a great number of profitable trades, focus on the hours when the markets tend to make their biggest moves, i.e., during these big markets overlaps, which therefore, are usually the Best Times to Trade.

Guidelines for average trader

Look for a reputable broker
Ability to trade effectively depends on consistent spreads and ample liquidity
Anyone can establish a position
Ability to close out a position at a fair market price is more important
Live to trade another day
Apply prudent money management skills
Avoid using excessive leverage that puts your investment capital at risk
Always trade with a stop!
Dont trade emotionally, stick to your plan and maintain discipline
Establish a trading plan before initiating a trade
Set reasonable risk/reward parameters
Dont override your stops for emotional reasons
Dont react to price action means dont buy just because it looks cheap or sell because it looks too high, Have supporting evidence to back up your trade
Dont punt
Don't punt ( Punting is trading for trading sake without a view)
Dont leave stops at obvious levels such as big figures (e.g. eur/usd 1.20, usd/jpy 110)
i.e. JUBBS stops = stops at obvious levels and thus are more likely triggered
Dont add to a losing position in unless it is part of a strategy to scale into a position
In other words, dont double up in the hope of recouping losses unless it is part of a broader trading strategy
Trading with and against the trend
When trading with a trend, consider the use of trailing stops.
When trading against the trend, be disciplined taking profits and dont hold out for the last pip
Treat trading as a continuum
Dont base success on one trade
Avoid emotional highs or lows on individual trades
Consistency should be an objective
Forex trading is multi-currency
Watch crosses as they are key influences on spot trading
Crosses are one currency vs. another, such as eur/jpy (euro vs. jpy) or eur/gbp (eur vs. gbp)
Crosses can be used as clues for direction for spot currencies even if you are not trading them
Be cognizant of what news is coming out each day so you dont get blindsided
Be cognizant of what news is coming out each day so you dont get blindsided
Beware of trading just ahead of an economic number and be wary of volatility following key releases
Beware of illiquid markets
Beware of illiquid markets
Adjust strategies during holiday or pre-holiday periods to take into account thin liquidity
Beware of central bank intervention in illiquid markets
Jay Meisler, a partner in Global-View.com, says one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. "Those who treat forex trading as if they were in a casino will see the same long-term results as when they go to Las Vegas," he says, adding: "If you treat forex trading like a business, including proper money management, you have a better chance of success." Newsweek International, March 15, 2004Treat this business as a marathon and not a sprint so you avoid burnout and maintain stamina for the long haul.

Australian Dollar Pummeled by Falling Stocks and Commodities

The Australian dollar has broken to new lows today as global stock markets and commodity prices plummet.The Aussie is considered a commodity-based, higher risk currency and today's developments did nothing but scare traders away.

"Renewed risk aversion and weaker equity and commodity prices weighed on the AUD," said Patricia Gacis, strategist with ANZ Bank.Sydney's ASX is now trading down by over 2% on the day after Wall Street closed in the red. Meanwhile, nymex crude oil fell by over 8% down to $37.31 per barrel.

Since the Wall Street open, the currency has lost over 1 cent against the U.S. dollar to trade at 67 cents U.S. The fall comes after a New Year rally which saw the currency climb as high as 72 cents U.S. on Jan. 7.

Foreign exchange market

The foreign exchange (currency or forex or FX) market exists wherever one is traded for another. It is by far the largest financial market in the world, and includes trading between large banks,and institutions. The average daily trade in the global forex markets currently around 1.9 trillionRetail traders (individuals) are a small fraction of this market and may only participate indirectly through or banks.

Unlike a stock market, where all participants have access to the same prices, the forex market is divided into levels of access.
At the top is the inter-bank market, which is made up of the largest investment banking firms.
Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle.
As you descend the levels of access, the difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips only for major currencies like the euro).
This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread.
The levels of access that make up the forex market are determined by the size of the “line” (the amount of money with which they are trading).