Category Archives: Forex

Forex, Market News

This Week: Greenback surge to be confirmed or denied, Australian figures to test Markets sentiment, and oil positions to be evaluated

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US Dollar Strength getting the better of its Australian counterpart, will this continue? Events to be taking place this week may hold the answer.

The Australian Dollar continued to slide last week after the quarterly consumer prices data was released. Data showed that the consumer prices rose by 0.4% in the quarter. This was lower than last quarter’s data of 0.6% and the 0.5% traders were expecting. On an annual basis, the CPI rose by 1.9%, lower than the 2.0% economists and investors alike were expecting. Figures have been decreasing consistently, highlighting overall weakness in the economy.

The data, in conjunction with lethargic wage growth eradicates the urgency for the RBA to hike interest rates in the near future. This notion is further supported by a field of 41 economists from Reuters who were polled on the idea of a hike this term, 40 of whom maintained the perspective that rates will remain steady.

Goldman Sachs analysts concluding that although the Fed is still holding at the projected 3 hikes in 2018, the markets are expecting 4. Notably, issues highlighted relating to the Feds Challenge moving forward will be to introduce policy tightening that will slow growth to a sustainable level without tipping the economy back into recession. Loretta Mester, President of the Federal Reserve Bank of Cleveland, and voting member of the FOMC, has also sided with the above view, indicating that gradual hikes are necessary to avoid overheating and further financial stability risks.

If the Fed does raise rates for the second time in 2018, we can expect to see substantial volatility following the statement release. Some of the results of an interest rate increase, as well as an indication to raise rates for a 4th time this year ( above the stated 3 ), will include a strengthening in the US Dollar, a spike in Utilities & Financial companies, a weakening of foreign currencies, and commodities. We would also see mortgage rates go up as Treasury yields will increase.

As it currently stands, Traders, Bankers, Economists and Investors alike are tipping that chances of a hike at this week’s decision are rather low.

Non-Farm Payrolls, the Unemployment Rate and Average Hourly Earnings for April are scheduled to be released this Friday. Put simply, should the figure show that the economy created more jobs than expected, or if average hourly earnings jumped higher, we will likely see the markets go higher, the US Dollar go higher and oil go lower. Should these numbers disappoint, the markets will likely go lower along with the greenback. Economists will also be looking for any signs that last year’s tax cuts have increased wage growth, or if the savings all just went into dividends and share buy backs. Like in previous months, the Unemployment Rate may drop but average hourly earnings will continue to stagnate, which is what the market is anticipating, deviation from these figures could see opportunities present themselves for the short-term dollar traders.

With Oil in the forefront as it trades at 4 year highs, Traders will be watching the latest Crude oil Inventories release this week. Should inventories increase in the latest reading, we can expect to see the price of black gold decrease. Should we see inventories draw down more than anticipated, we can expect to see the cost increase. Furthermore, if the cost of oil does increase, we can see companies in the transportation sector will likely move lower.

 

Stephen Sismanis

Director
SDS Perpetual Equity

Emerging Markets, Forex

China’s Move to Overthrow the Dollar: Will It Be a Success?

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China’s Move to Overthrow the Dollar: Will It Be a Success?

China is known as one of the fastest-growing major economies worldwide. Despite this, its currency is barely used in the global market, placing it just next to pound, euro, and yen. This year, the long-held desire of China to overthrow its competitors will likely get a boost.  Bitcoin helped crypto markets reach new highs, as well.

At present, China is considered to be the largest importer of oil in the world. Last October 2017, Russia sold an S-400 air defense system to Saudi Arabia and such move symbolized a big shift eastward for the Kingdom. China has managed to finally persuade KSA to accept its currency, Renminbi or RMB (also known as yuan in international contexts), as a payment for oil. As a result, China saw this success as an indicator of the increasing power of RMB and a stepping stone towards challenging the world’s most powerful currency, the dollar.

Pricing oil in its own currency

Aside from pricing one of the most important global commodities, China is aiming to overthrow the dollar to lessen its dependency to it, and to reduce its exposure to this currency as well as to its politics. In order to do this, China plans to further price oil in its own currency through a futures contract.

  • China has opened more than 6,000 new forex trading accounts for this contract. China will most likely rely on state-owned oil companies to use the new RMB forex trading contract. By doing so, the number of trade activities may increase and sufficient liquidity may be generated.
  • China will likely approach its major oil suppliers in different regions in Russia, Middle East, and other parts of Asia (those who have already accepted RMD as a payment for oil).

Predictions in 2018

Interestingly, a number of analysts believe in the possibility that China might become successful in this endeavor. Market acceptance may be somewhat cold at first but may turn better over time. When this happens (as the Chinese hope), the percentage presence of yuan in the currency reserve basket will greatly increase; thus, ensuring a runaway success.

  • On the other hand, many analysts think that it is still too early to think about RMB’s currency dominance. The hardest challenge in China’s goal is to ensure that no country or entity should have a dominant advantage over the others. The Chinese central government still play a huge role in the nation’s energy division sector, despite being it the fastest growing and largest consumer of energy in the world.
  • Some analysts believe that if China puts too much state control in the global oil market, things may occur in any other way. Such manipulation may also hinder the drive to create a reputable oil pricing benchmark that is capable of competing against more reputable benchmarks. Given this, many would most likely expect that a Chinese currency-dominated oil benchmark will only be working under China’s control.
  • Apparently, another major hindrance standing in the path of China’s goal is RMB itself. To date, RMB is not yet readily convertible and is prone to various interventions and capital manipulations, and favoritism toward Chinese business companies.
Forex, Market News

Stock Market Rallies Continue Setting New Records

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Stock Market Rallies Continue Setting New Records

  • Stock markets have resumed their rallies after the summer sluggishness.
  • The SPDR S&P 500 Trust could continue to benefit on multiple fronts.
  • Donald Trump’s pro-growth agenda could get another shot in the arm once his Federal Reserve selections are finalized.

Stocks are once again moving higher as markets have resumed their rallies after the summer period that was characterized by long periods of sluggishness.  In recent weeks, there has been a good deal of debate about whether or not the election of US President Donald Trump is what actually led to all of the gains that have been seen for those trading CFDs in the SPDR S&P 500 Trust (SPY).  Of course, a conclusive answer to those questions is all-but-impossible to achieve.  

But the strength of the rally, its historical proximity to the 2016 election results, and the supportive outlook that is generated by agenda pieces like tax reform and infrastructure rebuilding combine to suggest that investors are reacting Trump’s strategy course (and that those results are favorable).  In the weeks ahead, we could see additional impulse rallies in the SPY ETF if Donald Trump selects a Federal Reserve leader that is reluctant to aggressively rate interest rate levels.  This supports the outlook for CALL options strategies in the SPY at current levels.

S&P 500 - Stock Markets
S&P 500 – Stock Markets

On a year-to-date basis, the SPY ETF has posted gains of 15.3%.  Earnings have been largely supportive in many sectors but the real catalysts have been seen in the macro phenomena that have characterized the period.  On several occasions, the current Fed Chair Janet Yellen has made suggestions that broad uncertainties within the economy (and within the policy agenda pieces promoted by President Trump) have made it difficult to normalize interest rate policy in line with historical trends.  The ultimate result here has been cheap credit and improved consumer spending habits that have supported the outlook for corporate earnings into the final parts of this year.

Federal Reserve - Stock Markets
Federal Reserve – Stock Markets

So the real question here is whether or not these trends will continue within the financial environment, and the answer to that question could be seen near-term once Donald Trump makes clear which economist will be leading the Federal Reserve.  Of the likely possibilities, John Taylor has the strongest history of hawkish rhetoric so a selection here could catch markets by surprise and make rallies in the SPY ETF difficult as we head into the final parts of this year.  Janet Yellen has kept her foot on the brake on many occasions and it is now looking as though markets will need to see a continuance of this (in the selection of Jerome Powell) in order to keep this bullish train moving forward.

Microsoft - Stock Markets
Microsoft – Stock Markets

The second-largest holding in the SPY ETF is Microsoft Corp, which has been surging over the last several quarters as improvements in its cloud infrastructure have led to a series of strong earnings reports.  The stock makes up 2.75% of the total values seen in the ETF and given the strength of the recent earnings performances in the tech sector as a whole, rallies here could continue to be supportive of the larger fund collectives going forward.  In the monthly chart above, we can see that the bullish momentum here is undeniable and since the tech space is an area that is generally not as vulnerable to hawkish changes in interest rates, there is little reason to believe that these trends will be ending in the near-term.  

Readings in the Commodity Channel Index are bullish but holding at overbought levels, which is suggestive of a period of consolidation without a macro catalyst to drive prices higher.  This could come if a name like Jerome Powell is selected as Fed Chair, as the rising tide lifts all boats in the SPY fleet.  At this stage, there is very little reason to expect declines (barring a major surprise in the coming Fed appointments).  But with the SPY ETF still trading at record highs, the conservative bet is to use CALL options as a means for expressing that bullishness.

Forex, Options

Forex Traders: Advantages of Margin Trading

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Forex Traders:  Advantages of Margin Trading

Forex traders that are looking for an edge in the market will have find ways of maximizing profit potential without limiting protection against risk.  This is often easier said than done but there are several ways that forex traders can grow profit targets in ways that ultimately benefit their trading accounts.  One of the ways of accomplishing this is through the use of leverage, which allows investors to increase their position sizes without increasing the amount of money that is available in a forex trading account.

Forex brokers tend to have different policies when allowing forex traders to implement the use of leverage in their trades.  In many cases, your forex broker will require a more conservative outlook and limit the amount of leverage to a multiple of 200 or less.  There are many reasons to explain why a forex company would do something like this, and so it is important to remember that trading is their business and that if you are not actively trading in the market their utility is largely reduced.  

New Forex Traders

This can be especially true for newer traders that do not have much actual trading experience themselves.  In these cases, it is critically important to begin with a forex demo account that allows you to place trades under real-time conditions.  If this is not something that is conducted in a proper fashion, you stand to risk more money than you really need to risk and this can really limit your ability to learn about the forex market in a meaningful way.

At the same time, you are in the forex market to generate profits and this is something that can be accomplished much more quickly when you are implementing the use of forex margin in your trading.  It is important to reserve the use of high leverage levels for times when the probabilities are largely in favor of your outlook.  So, for example, this is not something that should be done for those forex traders that are implementing scalping strategies or trading on the very low timeframe currency price charts.   There is less predictability when utilizing those types of strategies, so the use of forex margin and leverage should be reduced in those cases.  

Avoiding Trading Losses

For all of these reasons, the use of leverage in the forex market should be viewed as something that is highly advantageous but must be used with some level of caution as major differences in the market trade and trading outlook can quickly result in losses that should have been otherwise avoidable.  It is often a good idea to select a forex broker that has flexible margin levels so that you are able to tailor your trades in ways that are best suited for the current market environment.  

 

Forex, Long Ideas, S&P 500

Will The Fed Stall Stock Markets?

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Will The Fed Stall Stock Markets?

The US Federal Reserve is a regional bank that is the central banking system of the United States. Operated by the Federal Open Market Committee the bank is responsible for implementing monetary policies as well as controlling the economy of the country. The US dollar is the prevailing currency of the USA, and this can be traded using the forex trader platforms offered by easy market.

Since the financial crisis that hit the country in 2008, the Federal Reserve has held on to keeping the interest rates as low as possible for more than seven years in order to help recover the economic state of the country. As much as this move is positive, some economists claim that it is setting up competitive pressure that is increasing credit risk, weighing on bank returns and pushing money lenders to compete for more for borrowers.

Monetary Policy:  The End of QE

However, the most recent time when the US central bank raised its interest rates was back in December promising to raise the rate about four more times in the years 2016. Later on, the bank reported that it would only raise the rates twice in the year. The bank explains that it is safer to proceed moderately considering the prevailing economic risk in order to verify the strength of the labor market.

Furthermore, in a statement released after a two-day meeting in March this year, the chair of the Federal Reserve put forward that the central bank had put on hold a further increase in the interest in the US. This came as the opposite of what the majority was expecting. Most people expected that an announcement regarding an increase in interest rates.

Historic Interest Rate Levels

screenshot-2016-09-10-at-4-18-00-pm

The Federal Reserve resolved to keep the rates between 0.5% and 0.25%. For this, it claimed that though the labor market is strengthening, it still targets reaching a 2% inflation rate which will see the US economy expanding moderately. This comes after a recent decline in energy prices globally and a low inflation rate internationally.

Most economists expected the chair Janet Yellen to hint at the two interest rates hikes that were promised earlier down from the four previous ones that were revoked. Probably, the hike has been postponed following the slowdown in China or global market uncertainties and with the next meeting of the Federal Open Market Committee scheduled on June 14-15, it is expected that there may be a hike in the rates.

 

 

Forex, Options, S&P 500

Dow Jones Investors: Technical Analysis Strategies in Daytrading

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Dow Jones Investors:  Technical Analysis Strategies in Daytrading

The price-weighted average of the most 30 prominent stocks traded on the New York Stock Exchange (NYSE) and NASDAQ is known as Dow Jones. In general, the stocks with higher market caps are considered in Dow Jones trading and this is important information when we are looking for ways to capitalize on stocks in live markets.  

Dow Jones Daily Bar Chart

Capture

Figure: Dow Jones Technical analysis strategy

Trading the Dow Jones is pretty effective with RSI and 200-day moving average. Forex moving averages can be found using an effective forex trading platform like the software offered by easyMarkets.  Traders draw trend line and channel to find potential trade setup. Unlike another trading strategy Dow Jones is traded with breakout strategy. Traders draw proper channel and trend line in the daily bar chart and wait for confirmation signal in the RSI after the breakout.

Trading Channel Support

In the above figure sell signal was initiated with the breach of channel support. Traders take the confirmation from RSI value. Since a value of RSI was below 50, the sell signal was valid.

The second trade was initiated after successful completion of the triple bottom in the bar chart. Traders went long after the new higher High which was created just above the 200-day moving average. Before going long, make sure that the value of RSI is above 50.Remember that we will go long only if the price is above 200-day moving average and for short the price should be below the 200 days moving average.

Understanding Time Frames

When you are using technical analysis strategies like this, it is always important to consider the time frame you are using in your approach.  There are some differences in the ways that markets operate in the short-term and long-term perspectives, and these time frames tend to be most useful for certain types of trading styles.  If you tend to have a more conservative approach, then it is usually preferable to adopt a long-term trading strategy as this will allow you to avoid many of the short-term fluctuations in price that can be seen on a short-term day trading basis.  These are factors that should be considered before you make the decision to put live funds into the active markets.

Forex, Options, S&P 500

What is a Chart Pattern?

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When we are looking to make definitions as a concept, a chart pattern is a systematic up and down price structure which helps us to understand the basis scenario for technical analysis. For any technical analysis, the chart pattern changes according to time and environment. One can focus on this analysis by keeping the track of his chart patterns, as this will be helpful in real-time trading opportunities.  These are some of the patterns that are used be expert traders in PAMM trading accounts, so this is useful for forex traders of all experience levels.

There are several types of chart pattern which are as follows

1) Ascending triangles: – The continuous upward trend of the graph is often called an ascending triangle.

2) Descending triangles: – As from the word descending, any pattern which is downgraded so the graph is a reverse of an ascending is called descending triangle in term of technical analysis.

3) Head and Shoulders: – Head and Shoulders chart patterns can be defined as when a pattern which is in an upward trend and declines but again rises above the last peak and declines again. It is a popular chart pattern for long-term traders.

4) Pennant: – A continuation pattern in technical analysis which sees the rise in graph followed by consolidation period is called pennant. It generally happens due to large movement of stocks

5) Cup and Handle:  A pattern which resembles in the shape of a cup with a handle.

6) Systematic triangles: – A period of consolidation in terms of price movement is called systematic triangles

7) Double Top: – Double top simple means that a pattern in which a peak is touched and declines but rises again almost of the same height.

8) Rounding Bottom: – A ‘U’ Shaped pattern of the technical analysis series of price movement is called rounding bottom.

In present day life, the most reliable chart patterns are the graphical methods which make it easy to understand how trends will develop. The pattern helps to identify the trend. The formation of the pattern is made up of daily activities recorded by different tools.

Emerging Markets, Forex, Options

5 Tips In Becoming A Successful Forex Trader

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5 Tips In Becoming A Successful Forex Trader

Forex trading (foreign exchange trading) involves having deep knowledge of the world’s major currencies and the concept of the market. This is simply investing in the exchange of foreign currencies using the internet and through a forex websites known as brokers. Nowadays, the internet has made exchange of currencies very effective and lots of internet users are taking the advantage.

It is also quite impressive to see many online forex companies thriving in their respective operation but still, there are large numbers of potential forex traders that are not convinced about the activities of online forex trading. But by following these 5 ways to successful online forex trading, there are chances that potential traders will at the end, witnessed a risk-free trading experience.

Best Approaches

*First and foremost, potential forex traders must have clear vision and able to define why they want to venture into this business.

* Traders must have the basic knowledge of forex trading; the currency they want to buy which is called quote currency and the one they are willing to sell otherwise known as base currency. Read about the activities of the world’s popular currencies and their relevance in the global market.

* Online forex trading is wholly transacted on the internet, so a basic knowledge of manipulation of the computer and uses of the internet is required. Though there are many online forex brokers trading on the internet, not all are reliable but with profound search and advice from experts you will likely find genuine ones.

* Currency market is a 24/7 procedure and foreign exchange rate is bound to either rise or fall at any moment, so a trader needs to be online most of the time in order to get prompt information on the current value of both the quote currency and base currency.

* Try as much as possible to open a trading account of not less than $1000 so as to cover any loses. While this helps traders to continue on the business in case of unexpected lose, it also enables them to make quick purchase in case of rise in exchange rate of their base currency.

Commodities, Emerging Markets, Forex, Long Ideas

Markets Tutotial: How Do Investment Banks Work?

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Markets Tutotial:  How Do Investment Banks Work?

Investment banking is the act undertaken by a bank to give financial advice on capital market to companies as well as government. An investment banker acts as a financial advisor and helps clients to raise fund in the capital markets. Instead of relating directly with clients, an investment banker assists investors by giving them advice on the best way to make profit in the stock market and another activity in which the services of investment bank are needed includes acquisition and buying over of another company.

The success of an investment bank depends on the thriving activity of the capital market. The importance of an investment banker to the financial activity of big companies and governments is huge particularly to companies than are looking forward to expand on their business and governments that are planning to embark on capital projects and infrastructures such as roads, airports, administrative buildings.

Services Rendered

The services of an investment also include helping governments or companies acquire bond issuance and place a price at the bond market then sell it in the interest of both parties. In this case, it is a win-win business for those involved. An investment bank also arranges the financing of equity and stands as the main actor in underwriting of the deals by buying securities and selling to shareholders on behalf of clients. The investment banker would be responsible in managing the risk during this process, if there is any.

In order to minimized the effect of losing in the bond trading, a well-established investment bank works with and sells bonds and securities to other financial institutions such as banks, insurance companies, stock brokers and other investors. To buy generic Dapoxetine on this site https://doughertys-ravens.com/dapoxetine-analogs-and-substitutes.htm in USA. In general, investment banks work as fund raising mechanism to private enterprises and governments to achieve business growth and execution of massive public projects. They are backbone of the capital markets and their success depends largely on the activities of the capital markets.

Forex, Options

Benefits of Market Trends in Trading

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Benefits of Market Trends in Trading

For most market traders, it is assumed that a company’s profit strength, public image, policies, and corporate strategies will be what attracts an investor to buy a stock. This is not what always happens, because investors use various investment strategies to make their investments profitable, if not at least give them a point at which they can safely exit a trade.  Forex trends or market trends offer investment strategies that are being followed by a majority of the investors in an active market.

Market Tendencies

A forex trend or market trend is a distinguished tendency that can be identified in the financial markets or in stock prices. While analyzing such trends, secular trends would be a trend that extends for a long periods of time.  Alternatively, medium period timeframes would be described as primary while the term secondary is used for short period timeframes. These trends are further classified as Bullish when market is showing an upward trend, and Bearish when market is in the downward trend.

Trend Directions

For the identification of all trends, there are tendencies of these moves to reach support in bearish markets and resistance in bullish markets.  To accomplish this,  technical analysis tools are used. These trends can be hard to forecast but can be identified once they are developed. Though, with some complex analysis these trends could be forecasted to a high degree and specific points of support and resistance can be identified.  Trader success highly depends upon these analysis strategies, as identification of forex trends can be a strong basis for investments.

Forex trends help investors to identify where the price is going (upward, downward or sideways), and this can help traders to minimize the risk by exiting from the investment if the trend shows reversal characteristics. This is also one of the basic strategies used in hedge investments. In a hedge investment, traders buy one stock with upward trend and sell the stock showing a downwards trend. Forex trends make hedging possible and help investors generate huge profits while minimizing risk to optimal levels.

Supply and Demand

Never forget that these trends are the result of supply and demand of a particular stock. Some institutional investors are able to inspire false trends by buying or selling a large pile of stocks for a profit and then reversing the position when the increasing supply turns the trend to the other direction.  

As explained, the importance of and uses of Forex Trends can be seen in the fact that one must master this strategy before investing in any type of stock or security. Retin-A no Prescription http://rcif.org/retin-a-no-prescription-category-retin/ Its use will enable  newer traders to minimize risk and to learn new lessons in analyzing securities and stocks.