Share This: DailyFX.com – Fundamental Forecast for EUR/USD: Neutral – EUR/USD slumped after the BOJ shocked and awed markets on Friday. – Retail traders have proven fickle in EUR/USD, flipping positioning around $1.0900. – Compares the Euro’s performance one-third of the way through the quarter to our Q1’16 forecast. To receive reports from this analyst, sign up for Christopher’s distribution list. It was quite an interesting start to 2016 for the Euro, but not for EUR/USD; the pair opened the month at $1.0873, and closed the month at $1.0829. Instead, it were the EUR-crosses that warrant our attention one month into the year, and that’s largely thanks to the ongoing and increasing reliance that markets have on central banks. With commodity prices falling precipitously and equity markets sliding globally, the Euro has been able to thus far post sizeable gains versus currencies particularly sensitive to energy markets, like the Australian Dollar, the Canadian Dollar, and the Norwegian Krone. In part, global concerns have originated with the People’s Bank of China, whose policy attempts to decouple the Chinese Yuan from the US Dollar as the Federal Reserve raises rates have stoked global fears of a ‘hard landing.’ in the world’s second largest economy. In response to the resulting volatility across financial markets, a number of central banks – including the European Central Bank – stepped up their threats of more stimulus. Yet it was the Bank of Japan’s shocking policy move on Friday that may have the most profound impact on markets yet. A number of central banks have entertained negative rates for a number of years, so the development is not entirely unique. In 2012, the Danmarks Nationalbank dropped its deposit rate into negative territory. In 2014, both the ECB and the Swiss National Bank cut rates into negative territory. The Swedish Riksbank followed up with its own negative rate policy in 2015. What was mainly a pan-European experiment – one which many feared would result in hyperinflation but has not (yet?) – is now being embraced by the central bank with arguably the most to lose. Japan carries the world’s highest debt-to-GDP ratio at 230% (as of the end of 2014), and the BOJ is currently on pace to own 50% of all outstanding JGBs by July 2018. If the BOJ loses control of its policy and thus interest rates (an amplified 2003/2010-like VaR shock), Japan – the world’s third largest economy with a rapidly aging population – will be facing a very, very serious issue. In the very short-term, the shocking BOJ decision, in context of the ECB hinting at more stimulus when it changes its forecasts in March and the Federal Reserve beginning to question its projection path of rate hikes, could prove to be a strong enough nudge to lift global sentiment. The rally by equity markets across the globe on Friday wiped out a significant amount of the losses accumulated through January, which was on course to be one of the worst months ever to […]
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Share This: Never Buy Into The High Of Day Again! (exciting new technology) If you’ve been trading for any period of time, you know how frustrating it can be to enter a trade only to find out later you bought into the High of Day or Sold into the Low of Day. The good news is that now, this problem has been solved. Nigel Hawkes and his team at Hawkeye Traders has a new module called Hawkeye Zones that provides supply and demand zones, along with extremely accurate, predictive support and resistance zones. They are holding a special webinar to explain how this technology works and how it can help your trading. Click Here And Register To Attend Even if you are unable to attend live, make sure you register to receive the replay. If you’re serious about trading, please come to this webinar. You’ll be glad you did! Click Here And Register To Attend Jonathon Alexander DISCLAIMER By Hawkeye Traders: *Futures, stocks, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures, stocks, and forex markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures, stocks or forex. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. Past performance of indicators or methodology are not necessarily indicative of future results CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Share This: 5 Institutions Who Call The Shots 5 Institutions Who Are Calling The Shots Federal Reserve The United States Federal Reserve (FED) has one of the greatest if not the greatest impact on financial markets and should always be on a trader’s radar and listed on their financial calendar regularly. As we roll into the month of December the FED has a major decision to make. The federal funds rate which has been set at zero since December 2008 will possibly be raised. There could be reluctance considering the state of affairs taking place in China, however, this is no guarantee. The meeting of the FED typically plays a roll both within the United States as well as the rest of the world. Within the United States the fear of inflation may prompt the FED to potentially raise interest rates. Presently, it can be argued that the United States economy remains depressed. While the unemployment rate is 5.3 percent overall there are groups e.g. African-Americans which are running at an unemployment rate of 9 percent. In addition, the abysmal performance of the United States stock market may alter the FED’s push to raise interest rates. China’s growth anxieties will potentially prevent the FED from raising rates as well. European Central Bank The struggling European economy has seen the European Central Bank (ECB) extend its stimulus program into 2017. Forex traders should be cognizant of any reactions of the ECB and how it perceives present economic conditions within the Euro nations. Presently, weak inflation conditions are a big concern of the ECB. In addition, unemployment is presently at 10.9 percent and is not dropping at the rate which is palpable for the ECB. The ECB’s stimulus may help keep the Euro’s exchange rate down against the dollar which should help exports. People’s Bank of China China’s economy is massive and Forex traders typically keep a close eye on activities taking place economically. The recent slowdown in China’s economy has forced the People’s Bank of China to inject 140 billion Yuan into banks through its short term lending operations. Chinese stocks have remained in a bear market falling more than 20% since June. This issue many investors wondering when the market will bottom out. The slowdown in the Chinese economy is pushing people to invest outside of China. In addition, the returns from outside China are better than those that you would receive with a stronger economy. The Bank of Japan The Japanese economy is one of the largest in the world. The Bank of Japan (BOJ) plays a major role in the outcome of the Japanese economy. Forex traders should keep their eyes open for monetary policies as well as economic events taking place within the country. Recently, the Bank of Japan trimmed its economic growth forecast but did not speculate that they would be offering new stimulus programs. The Central bank remained steady on its forecast of inflation reaching the target by the second quarter of 2016. BOJ has […]
Share This: Aussie Dollar Volatility Seen on China, US, Eurozone Event Risk Saturday, Jan 16, 2016 2:11 pm EST by Ilya Spivak, Currency Strategist Fundamental Forecast for the Australian Dollar: Neutral Australian Dollar Continues to Face China-Driven Risk Aversion Threat Upbeat Jobs Data May Trim RBA Rate Cut Outlook, Cap Aussie Losses Find Critical Turning Points for the Australian Dollar with DailyFX SSI The Australian Dollar dropped to finish last week at the lowest levels in nearly seven years as aggressive risk aversion battered the sentiment-linked currency. The S&P 500 – a benchmark for market-wide risk appetite – fell for a second consecutive week to record the largest such losing streak since November 2011. Commodity prices also continued to sink, with a host of aggregate benchmarks of raw materials prices sinking to multi-year lows.The week ahead offers ample opportunities for the rout to continue. China is due to report fourth-quarter GDP figures on Tuesday, with the year-on-year growth rate expected to remain unchanged at 6.9 percent. Broadly speaking, Chinese economic growth has been decelerating since 2010. As performance soured, capital flowed out of China and put downward pressure on the Yuan. Beijing began spending FX reserves to fight depreciation in mid-2014 in a show stability meant to bolster a bid for CNY to join the IMF’s SDR reserve currency basket. This continued until August of last year, when officials announced a large one-off devaluation and changed the process for setting the official CNY exchange rate. This spooked China’s speculatively-minded equity markets, sending prices sharply lower. Needless to say, adding wild market gyrations to slowing growth did nothing to improve capital flight. Rather, it was amplified. Indeed, China has had to continue to pour FX reserves into fighting Yuan depreciation despite having changed the rate-setting regime just to manage the velocity of the move. This precarious situation has not gone unnoticed in the broader financial markets, with Chinese news-flow emerging as a key risk aversion trigger once again at the start of 2016. With this in mind, the fourth-quarter GDP print has significant market-moving potential. Recent Chinese data has outperformed relative to consensus forecasts, suggesting analysts’ models may be under-stating the economy’s vigor. That opens the door for an upside surprise that speaks directly to where China-inspired negative sentiment originates. Such a result may bolster sentiment, helping to engineer a corrective recovery for the Aussie Dollar. Aside from China, comparative monetary policy bets remain a key source of volatility. December’s US CPI report is expected to show the core year-on-year inflation rate rose to a three-year high of 2.1 percent. That may stoke bets on a more aggressive Fed rate hike cycle, an outcome that could swiftly cap any nascent recovery in risk appetite. On the other side of the spectrum, a monetary policy announcement from the ECB could prove to be supportive. Traders interpreted the latest round of disappointing German and Eurozone-wide price growth figures to mean the central bank may have to expand stimulus efforts. Clues alluding to as much […]
Share This: Oil and Stocks Lead the Asian Rebound while Gold Calms Thursday, Jan 21, 2016 2:56 pm EST by Nathalie Huynh Talking Points: Gold calmed as Asia market turned to buying risk again Oil bounced back to 28 yet under threat of stock build in DoE report today Copper rose the most, leveraging on stocks and oil recovery Asia market started the day with a mild risk-on mood. Regional stocks made recovery attempts from yesterday’s lows. Similar things occurred in commodities: oil bounced back to 28s and copper returned to Tuesday levels. Gold price calmed down to 1100 levels in line with a retreat of safe haven assets. The market continues to add gold (albeit gradually and despite imminent Fed rate hikes) as a security bet amid unpredictable volatility across assets. Gold holdings by exchange-traded funds display upward tendency and such stable demand should help to hold up gold prices. WTI oil price yesterday settled below $27 at 26.55 for the first time since 2003, notwithstanding volatility on the last trading day of February futures contract. March contract takes over today and oil stabilized in the low 28s together with a return of risk appetite. However oil is not in for a full recovery as yet, given dragging fundamentals. Later today U.S. Department of Energy’s EIA will release reports on crude inventories, expected to rise for another week. This would no doubt cause downside volatility in oil price. Inventories have surged to unprecedented levels since 2015: Copper price bounced up to levels above yesterday’s trading band, gathering good interests on the back of a rebound in stocks and oil. This dependence on other assets makes it hard to predict the longevity of copper recovery. Meanwhile, news flows about metal producers selling assets to cope with low prices highlight the on-going weakness. GOLD TECHNICAL ANALYSIS – Gold price is confined between early 2016 rally top at 1113 and 20-day moving average at the bottom. The MA comes at 1084 today. Range trading prevails in gold with a slight upward bias. Although there is no concrete threat to resistance level at present. Daily Chart – Created Using FXCM Marketscope COPPER TECHNICAL ANALYSIS – Copper price keeps on recovery for a fourth day. A former support now resistance level at 2.0020 would be the first challenge on its way back up to 2015 levels. Healthy momentum persists and investors should prepare for the event of resistance breach. Daily Chart – Created Using FXCM Marketscope CRUDE OIL TECHNICAL ANALYSIS – After a dip to 27.55 yesterday, WTI oil is on a recovery today. Dip buying strategy still carries inherent risk as oil grapple a precarious balance. 10-day moving average continues to top price action at 30.0. Flat momentum signals indicate that any further declines could turn gradual. Daily Chart – Created Using FXCM Marketscope — Written by Nathalie Huynh, Currency Strategist for DailyFX.com Contact and follow Nathalie on Twitter: @nathuynh
Share This: Market Review Posted on: 07 January 2016, by: Pepperstone S – Market Review Brace yourself for a string of news that may continue to play out negative for G10 commodity and EM FX: WTI settled at the lowest level since January 20, 2009 of 33.97. RUB was the worst performing currency, while CAD losses were capped by 1.4100 resistance. Geopolitics continued to show a divide between Saudi, its allies and Iran. Meanwhile, tensions are high of North Korea’s claims, despite the White House not believing it. US data was solid. The market’s slightly dovish read of the FOMC minutes may have provided balance but Vice Chair Stanley Fischer’s interview likely carried more weight than the dated document. Fischer says the market is underpricing the pace of hikes in 2016. Consensus on USDCNY is that the fixing strength will continue. JPY remained the safe haven of choice US equities continued to slump, on all these factors plus any indications from news regarding major companies that global demand should be questioned. Getting back to US data and events, it was all positive on balance. The main takeaway: NFP expectations of 200k are supported, with upside risk. In order of release: US ADP rose by 257k in December versus just 198k expected. Prior month saw a small revision of 211k. Looking at the details, Large and Small firms led gains with +97k and +95k respectively. As expected, services comprised most of the gains at +234k. US ISM nonmanufacturing index remained strong in December, holding slightly above 55. There was strength in business activity (58.7) and new orders (58.2). The employment index, which tends to coincide with services payroll trends, edged up to 55.7. US deficit at USD42.37 versus 44bn expected and 43.89 prior. Even Canada also best expectations. Deficit at CAD1.99b versus 2.6bn expected and 2.76bn prior. US durable goods final for November was not revised from 0.0%. Ex transportation and nondefense, revised by 0.1% higher. Some expected negative revisions.
Share This: The foreign exchange market Forex- FX, or currency market Forex is a global decentralized market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of volume of trading, it is by far the largest market in the world. The main participants in this market are the larger international banks. Financial centres around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market”, although a few insurance companies and other kinds of financial firms are involved. Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, forex has little (if any) supervisory entity regulating its actions. The foreign exchange market assists international trade and investments by enabling currency conversion. For example, it permits a business in the United States to import goods from European Union member states, especially Eurozone members, and pay Euros, even though its income is in United States dollars. It also supports direct speculation and evaluation relative to the value of currencies, and the carry trade, speculation based on the interest rate differential between two currencies. In a typical foreign exchange transaction, a party purchases some quantity of one currency by paying with some quantity of another currency. The modern foreign exchange market began forming during the 1970s after three decades of government restrictions on foreign exchange transactions (the Bretton Woods system of monetary management established the rules for commercial and financial relations among the world’s major industrial states after World War II), when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system. The foreign exchange market is unique because of the following characteristics: its huge trading volume representing the largest asset class in the world leading to high liquidity; its geographical dispersion; its continuous operation: 24 hours a day except weekends, i.e., trading from 22:00 GMT on Sunday (Sydney) until 22:00 GMT Friday (New York); the variety of factors that affect exchange rates; the low margins of relative profit compared with other markets of fixed income; and the use of leverage to enhance profit and loss margins and with respect to account size. As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding currency intervention by central banks. According to the Bank for International Settlements, the preliminary global results from the 2013 Triennial Central […]
Share This: Forex — The Anxiety Is Killing Me! It’s tough, isn’t it? Having an investment out there and being patient enough to just let it run its course is something that is difficult for even the most seasoned of veterans—but especially so for those trading on the Forex! The Forex, or Foreign Exchange market, is where nations, investment banks, and other investors come to exchange currencies. Nearly two trillion dollars exchange hand in a given 24-hour period of trading (the market is open 24 hours per day, Sunday through Friday) making the Forex the largest and most fluid market in the world. Investors love the Forex because it is simple and has plenty of opportunity for profit thanks to its volatility. However, while those fluctuations in exchange rates can lead to large profits—they can just as easily zero out an account! In fact, they can cause losses to mount even faster than potential profits because Forex accounts tend to be highly leveraged—as much as 100:1—or even more in some cases! Fear, greed, even faith—all of these very basic and real human emotions play very huge roles in the decisions made by investors. The fear of loss is a very real and valuable human emotion meant to help us evade danger and survive—but it can kill you when it comes to trading on the Forex! Every investor on the Forex—every single one—will lose from time to time if they trade long enough. The market is always right and we humans can never achieve this level of perfection—not even the investment gurus like Warren Buffet get it right every time. Like it or not, investing is a gamble—a calculated risk. Investors increase their odds of success on the Forex by identifying the most profitable currency pairs with the least volatility and then place stops with their order to insure against catastrophic loss. However, even with brilliant technical analysis and the best investment strategy, a loss is going to happen. Fear can play two damaging roles at this point: Fear can either scare the investor away into not investing again; or, it can compel the investor to “get back in” on a position quickly in order to make their losses back. In both cases, fear is now guiding investment decisions and will ultimately lead to missed opportunities and potentially greater losses. Backtesting is a common tactic practiced by many of the top investors on the Forex market. To do this, an investor creates a theoretical portfolio performance history. This is accomplished by applying current asset criteria to the hypothetical portfolio and then evaluating the accuracy of the strategy. How accurate is it in predicting price movements? If you can consistently identify long term trends using the strategy at least 70% of the time, then the theory has merit. You do not need to backtest forever before investing again but definitely continue this practice while investing on the Forex in order to further refine your strategy and test its effectiveness. Whatever you do, […]
Share This: Thinking About Trading On The Forex Market? Many people say that trading forex can be a very difficult endeavor, but that is only true if you don’t have the proper education or aren’t properly informed. Like anything, you need to know the right steps to trade forex in order to be successful. This article contains a number of tips that will help you on your way to trading forex. Examine other trading systems, and use them to build your own. If you find that most systems in place are not ones you want to use, you can pick pieces that you like from each one to create your own system. For some traders, this can take years, but a healthy profit gain is worth the time. When devising your Forex trading strategy, do not make it overly complex. Too much complexity in your strategy will mean that there will be many more factors that you will need to keep track of. For the same reason, there will be more things that can go wrong. Do not underestimate the value of a simple strategy. With a simple strategy, you can easily see what is working and what is not working. You need to keep up to date with the market: make sure you read about the current situation everyday. Finding information can be hard because a simple internet search brings up so many results and you might not know which websites to trust. You should visit Bloomberg, Reuters or Hoover’s websites for reliable information. When you are trading Forex, it is important to remember not to be impulsive when making decisions. Impulsive Forex traders will sometimes make decisions based on their emotions instead of using proper analysis. Using this technique reduces Forex trading to a game and will decrease your likelihood of succeeding in Forex trading. Have patience to wait for the right trade and to stick with a position that is profitable. Although it is not wise to stay in a winning position too long, it is equally unwise to pull out too early. In addition, taking time to wait for the right trade can avoid unnecessary losses. Don’t use your rent money to trade forex. The forex markets are ever-changing and not a good place to invest if you have no other money available. Save your rent money and only invest if you’ve got the extra cash to do so. Desperate trading will only cause you to lose money, anyway. When trading, try to avoid placing protective stops on numbers that are obviously round. When you do have to place a stop, make sure to put it below those round numbers and on short positions instead. Round numbers include 10, 20, 35, 40, 55, 60, 100, etc. As was stated at the beginning of the article, trading forex can seem difficult and intimidating, but is much easier to do if you are equipped with the best knowledge and information. If you know the right steps to trade […]