Analyst Articles – Forex News 24 |
- Most Volatile Currencies Next Week
- Relative Strength Index (RSI) Defined and Explained
- EURUSD May Fall on Industrial Production as Growth Outlook Dims
- Dow Hits a Record High, So Why Didn’t the S&P 500, Nasdaq or Russell 2000?
- Dollar Tumble Halted by CPI, Dow Ignores Fresh Trade War Threats Beyond US-China
- Dollar Tumble Halted by CPI, Dow Ignores Fresh Trade War Threats Beyond US-China
- Will Facebook Libra Cryptocurrency Undermine Financial System?
- USD/SGD May Reverse as Singapore Economy Contracts Most Since 2012
- Pound Sterling Set to Rise off Year to Date Lows
- S&P 500 Returns When the Fed Cuts Rates
| Most Volatile Currencies Next Week Posted: 12 Jul 2019 03:48 AM PDT Hits: 6 Currency VolatilityGBPUSD, NZDUSD Talking Points
Top 10 most volatile currency pairs and how to trade them 1W Implied Volatility Source: Thomson Reuters, DailyFX *Through calculating the 1-standard deviation estimated range, this suggests that there is a 68% statistical probability that these pairs will trade within this range. Risk of Market Complacency as FX Volatility Hovers Around 5yr LowsThe trend of declining volatility across FX markets has shown little signs of reversing, given that our G7 currency 1-month implied volatility index is hovering near the lowest level since 2014. One of the reasons we see behind the move has been due to the subdued nature of equity market volatility (full analysis). Elsewhere, the well-telegraphed communication that central bank easing will be on the way, particularly from the Federal Reserve and ECB has also contributed to putting a lid FX market volatility. However, given the deteriorating outlook regarding the global economy, with implied volatility nearing 2014 lows, there is a risk that the market could be somewhat complacent and thus there is a vulnerability to a spike in volatility.
Most Volatile Currencies Next Week
Source: Thomson Reuters, DailyFX NZD: The New Zealand Dollar is expected to be the most volatile currency over the course of next week with 1-week implied vols at 6.8. However, with that said, implied volatility in NZDUSD is only 0.9vols off the 2019 low. For Kiwi traders' eyes will be on the NZ inflation report (15th July) for the second quarter, where expectations are for a slight lift to 1.7% from 1.5%, alongside this, the RBNZ's preferred measure of inflation (sectoral factor) will also be released, as such, this will be key as to whether there is increased scope for further monetary easing from the central bank in the near term. As it stands, money markets have attached at 72% chance of a 25bps rate cut at the August. Elsewhere, focus will be on the latest Q2 growth figures from China, whereby the headline figure is seen dropping to 6.2%, which would mark the worst quarterly rate of growth for China in roughly 30yrs. Although, while this would be within the Chinese governments target range of 6-6.5% growth, this will continue to raise concerns over the health of the global economy, thus keeping gains in high beta currencies (AUD, NZD) contained. NZDUSD 1-week ATM break-evens imply a move of 56pips(meaning that option traders need to see a move of at least 56pips in either direction in order to realise gains). Risk reversals are neutral at -0.025, suggesting that the pair could remain rangebound, however, there is a risk that implied vols are under-pricing the risk of next weeks events given that realised volatility (fair value) has been notably higher at 9.04vols than implied volatility 6.8vols. GBP: A raft of tier 1 data from the UK is due to be released, in the form of employment, inflation and retail sales figures, althought, while GBP implied vols are higher than the majority of its G10 counterparts, 1-week tenors are only 0.5vols above the YTD low. GBPUSD 1-week ATM break-evens imply a move of 85pips. Given that UK data is largely on the sidelines wth Brexit the main focal for GBP. US data may play a more important role in influence GBPUSD amid the influence that it will have on Fed monetary policy going forward, thus eyes will be situated on the US retail sales report.
For a more in-depth analysis on FX, check out the Q3 FX Forecast — Written by Justin McQueen, Market Analyst To contact Justin, email him at Justin.mcqueen@ig.com Follow Justin on Twitter @JMcQueenFX http://platform.twitter.com/widgets.js Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| Relative Strength Index (RSI) Defined and Explained Posted: 12 Jul 2019 12:39 AM PDT Hits: 8 Relative Strength Index – Talking Points:
What is Relative Strength Index (RSI)?The Relative Strength Index (RSI) is a technical analysis tool that is used to measure the degree of recent price movement of an asset/market to determine overbought or oversold conditions. The RSI is referred to as a momentum oscillator which fluctuates between 0 and 100. Notice the 'mid-line' at 50 in the image below – traders will frequently use this as a cut-off. If the RSI is reading above 50, traders will consider the trend to be bullish. If RSI is below 50, traders will often consider the momentum to be bearish. Traders have also taken this a step further, with the idea that if RSI goes over 70 – the pair is not only bullish, but potentially overbought. Alternatively, traders often assume that if RSI is below 30 – the pair isn't just bearish, it may be oversold. How do you calculate Relative Strength Index?Relative Strength Index (RSI) is calculated by:
RSI was developed by engineer, mathematician, and trader J. Welles Wilder. Wilder was a stock and commodities trader at the time and he encountered a common problem regarding timing of trade entry and exit points. Wilder then developed a formula to overcome this challenge and allow traders to better time long and short entry/exit points. RSI will grade the price movement exhibited between candles for the last 'X' periods (with 'X' being the input used by the trader, commonly 14 with RSI). As price changes, RSI will register these changes in price – relative to previous price movements to show market 'strength.' What does the Relative Strength Index tell you?There are several ways to use the RSI in trading, which will be outlined in the examples below: The first two images below represent the most basic method of using the RSI by interpreting overbought and oversold junctures whereby potential trade entry points occur. 1. Overbought signal USD/ZAR – The USD/ZAR chart shows an overbought RSI signal above the '70' level indicating potential short entry opportunities.
2. Oversold signal GBP/USD – The GBP/USD chart shows an oversold RSI signal below the '30' level indicating potential long entry opportunities.
Divergence is another valuable way to use the RSI indicator. Divergence is a tool used to spot potential reversals by comparing the movement between indicator and market direction. The charts below illustrate positive (bullish reversal) and negative (bearish reversal) divergence signals. 3. Positive divergence USD/JPY – The USD/JPY chart exhibits falling prices along with rising RSI levels signalling a reversal in trend to the upside.
4. Negative divergence USD/JPY – The USD/JPY chart exhibits rising prices along with falling RSI levels signalling a reversal in trend to the downside.
Relative Strength Index: A SummaryRSI measures the relative strength of the market, making this oscillator an invaluable tool that can be employed in virtually any market. The multiple ways of utilising the RSI allows for traders to become flexible within their trading strategy. Every novice technical trader should definitely have the RSI incorporated into their repertoire. Become a Better Trader with Our Trading Tips 2019-07-12 07:28:00 Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| EURUSD May Fall on Industrial Production as Growth Outlook Dims Posted: 11 Jul 2019 11:48 PM PDT Hits: 6 EURUSD FORECAST, EUROZONE GROWTH– TALKING POINTS
See our free guide to learn how to use economic news in your trading strategy! EURUSD may fall if Eurozone industrial production data misses its estimates and falls in line with the broader trend of economic underperformance in the region. Month-on-month factory orders out of Germany, the largest Eurozone economy, contracted 2.2 percent in June, more than the -0.2 percent forecast. The ECB has recently alluded to its willingness to reintroduce rate cuts and QE if the economic circumstances warrant it. On July 10, the EU Commission – the executive arm of the European Union – lowered its forecasts for growth and inflation in light of growing downside risks and uncertainty over US trade policy toward Europe. Trade tensions between Brussels and Washington may continue to escalate as the latter presses the WTO to look into the former's subsidies to Airbus, a multi-billion Euro aeronautic company. Furthermore, escalating tensions between the US and EU over Iran may result in sanctions placed against Europe if it continues to undermine Washington's attempts to pressure Iran into cooling its nuclear ambitions. Less than two weeks ago, news broke that Tehran had allowed for uranium enrichment to go past the predetermined levels outlined in the 2015 nuclear accord. How will the EU balance pleasing the US and Iran? To learn more about how politics affects financial markets, follow me on Twitter @ZabelinDimitri. EURUSD TECHNICAL ANALYSISEURUSD is now hovering below familiar resistance at 1.1261 and the path of least resistance suggests capitulation and a resumption of the broader downtrend. Over the past few days the pair has retested the 18-month descending resistance channel, though the sudden bounce from it suggests traders are not yet ready to trade in that zone again. However, the longer-term outlook appears biased toward a weaker EURUSD. CHART OF THE DAY: EURUSD MAY NOT BE ABLE TO OVERCOME KEY RESISTANCE EURO TRADING RESOURCES— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter http://platform.twitter.com/widgets.js Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| Dow Hits a Record High, So Why Didn’t the S&P 500, Nasdaq or Russell 2000? Posted: 11 Jul 2019 09:54 PM PDT Hits: 12 Dow Talking Points:
See how retail traders are positioning in EURUSD, USDCHF, USDJPY and other Dollar-based majors using the DailyFX speculative positioning data on the sentiment page. The Dow Surpasses Another Mile-Marker at 27,000 for Another Record HighRisk trends were still favoring the bullish appetites that we had seen nurtured over the past month, but progress was more uneven through Thursday’s session than any other time this past week. Nevertheless, in this mix, the benchmark Dow Jones Industrial Average managed to earn a new record high taking out 27,000. This happens to be the most popular US index among the old hand and with investors outside the United States. As such, the charge reverberates in the speculative rans. If we were to take this benchmark ‘at its word’, it would seem that speculative appetite is firmly on the rise. Chart of Dow Jones Industrial Average (Daily) Noticeably, Less Impressive S&P 500 and Nasdaq MovesYet, when we start to compare the Dow’s performance to other benchmarks, a contrast in pace becomes very apparent. Looking outside the confines of US equities, we find global equities were spinning their tires on the day while emerging market, high yield and carry assets were similarly struggling. However, we don’t need to look so far afield to recognize that something was amiss with this past session’s isolated progress. The other US indices failed to find meaningful purchase of their own. The broad S&P 500 failed to set a new intraday high and instead closed Thursday with a doji and an ‘inside day’ (whereby the high and low of that session fit within the high and low of the previous day). That is the epitome of indecision. As for the tech-heavy Nasdaq 100, the past session was actually registering a loss for the day. How are we to register genuine enthusiasm against this backdrop? Chart of Nasdaq 100 (Daily)
Outperformance for the ‘Blue-Chip’ Index Doesn’t Bode Well for Speculative ContinuationGiven the leader status from the Dow, there will be a natural default by many global speculators to read an innate enthusiasm through this past session. That said, the deviations from other risk-dependent assets speak to underlying issues in value. The most concerning conflicts are found in the contrasting performance in other key US indices. The S&P 500’s position as a more heavily traded benchmark (through derivatives like the SPY, emini futures and CFDs), deserves critical evaluation. However, it is the Nasdaq’s lack of conformity to this past session’s Dow performance – must less its ability to lead – that is more worrisome. In the past three to four years of the record breaking bull run for US markets, tech sector performance has repeatedly drawn the greatest enthusiasm. While confidence inevitably shifts for running risk trends, these are not exactly reassuring times to take up another motivator for speculative reach. Chart of Nasdaq to Dow Ratio (Daily)
A Long Divergent Small Cap to Large Cap Divergence Matches Uneven Global Risk ShowingsBeyond a trip to the return potential in US equities, the concern to be derived from disparate indices’ performance hints at deeper troubles to the foundation of risk seeking. US shares have led the charge in sentiment for years as appetite has sought out momentum relative to income interests such as dividends or yields. Throughout the charge, momentum has inspired more participation for capital gains than any systemic appetite for slow returns. Yet, the recent shudder in the performance contrast between the likes of the Nasdaq and Dow isn’t the first time this issue has arisen. In fact, the small-cap Russell 2000 index has long diverged from the S&P 500’s performance. So what does this mean for equities, US markets and even global risk trends? We discuss that in today’s Quick Take video. Chart of Nasdaq-to-Dow Ratio (Daily)
If you want to download my Manic-Crisis calendar, you can find the updated file here. 2019-07-12 04:15:00 Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| Dollar Tumble Halted by CPI, Dow Ignores Fresh Trade War Threats Beyond US-China Posted: 11 Jul 2019 08:29 PM PDT Hits: 9 Dollar Talking Points:
What do the DailyFX Analysts expect from the Dollar, Euro, Equities, Oil and more through the 3Q 2019? Download forecasts for these assets and more with technical and fundamental insight from the DailyFX Trading Guides page. Powell’s Second Day of Testimony Didn’t Add Much Lift ThursdayAfter the boost in enthusiasm from investors Wednesday on the first day of testimony by Federal Reserve Chairman Jerome Powell, the hurdle to extend a speculative run through day two of the grilling was significantly lowered. That said, it seemed the market didn’t find enough material from his remarks to nudge the market to the modest next step. In general, the content of his insights offered little beyond what was already laid out the previous day. The US central bank seems to be confirming a shift in monetary policy course to eventual rate cuts, but Powell refuses to signal that he will move quickly to appease either President Trump or the speculative markets. If we are operating on rate expectations alone, the charged speculation of two-to-three 25 basis point cuts his year has been priced in since last month. Further, there was a modest curb to a simple coasting for speculative appetite fueled by monetary policy dreams: the US consumer price index (CPI) for June. The market’s favorite inflation indicator saw its headline reading fall in line with expectations below target, but the core figure unexpectedly recorded a 0.3 percent jump on the month. That is the biggest jump in a year-and-a-half and the second biggest since the current growth cycle began. Does this undermine the Fed’s plans to cut rates in the second half of this year? No. However, between this provocative inflation reading and the robust employment report last week, the argument for an aggressive three hikes is not nearly as convincing. The Dollar seems to have responded to the news with a strong intraday reversal that left a large ICE Dollar Index tail, but this is not the outlook I would expect to readily carry forward a counter-trend monetary policy view. Chart of Dollar and Expected Fed Cuts Through December from Fed Fund Futures (Daily) Another interesting observation with the lost traction in transitory speculative leverage – monetary policy encouraging risk taking – was the performance of US indices. Normally, I highlight the long-term performance divergence between US equities, global equities, emerging market assets, high yield fixed income, carry trade and other benchmarks for risk taking as an indication of uneven or unconvincing conviction. Yet, what happens when this disparity arises within the specific regional asset class? The Dow managed to rally above 27,000 this past session to a new record high, but the typically better performing S&P 500 and Nasdaq failed to extend their own climb. This is hardly polar performance, but the disparity in small cap (Russell 2000) versus the Dow speaks to that systemic issue. Chart of Russell 2000 to Dow Ratio (Weekly)
The Pound and Euro Seem Oblivious to Their Own Monetary Policy UpdatesWhile the attention was squarely on US monetary policy, the Fed wasn’t the only major group offering updates this past session. The Bank of England (BOE) issued its regular financial stability report. It comes as no surprise that the group would once again warn about the risks associated with a ‘no deal’ Brexit. Governor Carney warned that while the UK’s financial system would survive the shock, it would result in severe repercussions and the economic impact would be ‘virtually instantaneous’. Even if the worst case scenario weren’t realized, the economic tab continues to grow as the country’s relationship with the EU remains unclear. That is perhaps an unnecessary reminder that trading the Pound means a bearish bias that will be throttled for momentum while reversals will likely die out well before momentum takes. Chart of GBPJPY (Daily)
Another central bank making waves this past session was the European Central Bank (ECB). Minutes from the world’s second largest central bank most recent policy meeting made clear that the group had discussed routes for further policy easing beyond the QE program that was capped this past December and the targeted-LTRO which was introduced some months ago to supplement. This moves this central bank into a position that it is arguably competing with the Bank of Japan (BOJ) for the title of the most dovish major central bank – and possibly the most desperate.
Serious Risks Brew for Global Trade Wars Despite Market’s ConfidenceThe ECB may also be seeding the next stage of escalation in global trade wars. US President Donald Trump has repeated accusations these past few months that China and the EU were using monetary policy and manipulation to afford themselves economic benefit through currency devaluation and unorthodox means. Reports suggest the President has tasked aides with investigating means to devalue the Dollar since the Fed seems unwilling to relent to his demands. Against that backdrop, the IMF’s report on the European Union downgrading the region’s economic forecast alongside encouragement to further pursue stimulus to support expansion can easily stoke conspiracy theories in the White House. With the group’s current director, Christine Lagarde, due to head the ECB later this year; it can naturally be considered a warning that further Euro devaluation is ahead. We don’t really need further pressure to inspire currency wars. Another potential breaking point for the spread in the global trade war may be France’s decision to move forward with a 3 percent digital tax on major tech companies’ revenues earned in the country. Given the concentration of these types of firms under US ownership, it naturally finds its way to Trump’s desk. The White House is reportedly studying the tax to see if it is disproportionate and/or hurts the US in particular. Given recent history, they will likely find it as a particular burden to the US which the government will pursue. Meanwhile, the US-China pressures have been revived after the President tweeted that China was “letting us down” as they were not purchasing US agricultural goods ‘like they promised’. Appeal in Oil and Loonie – And No, Not for CorrelationFurther trouble between the US and China comes from reports that senior Trump administration officials agree that China defied the country’s sanctions on Iran by importing a million barrels of its oil. That said, there is no agreement on what kind of consequences will be applied in this case. Oil is itself a pressure laden economic theme. I am not a strong believer in the supply side drive in the commodity, but there is undeniably an overwhelming amount of pressure on that side of the equation. Reports that the UK Navy prevented an attempt by Iranian controlled boats to seize a British cargo ship suggests the political pressures are mounting. Chart of Crude Oil (Daily)
Another benchmark without a decisive fundamental theme to keep an eye on is the Canadian Dollar. Typically, we draw correlation between the Loonie and oil is a useful relationship to exploit. However, at the moment, the currency isn’t drawing on its natural production of crude and its shipment to the US as the US is now a net producer and the commodity is more range-prone than trend. Despite this fundamental break, the currency is still hosting an interesting technical bearing. The rally this past month is practically universal, but its momentum has flagged without a clear fundamental sponsor. While stretched in shear technical terms, committing to a distinct move would be best served by a catalyst. We discuss all of this and more in today’s Trading Video. Chart of USDCAD (Daily)
If you want to download my Manic-Crisis calendar, you can find the updated file here. 2019-07-12 02:00:00 Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| Dollar Tumble Halted by CPI, Dow Ignores Fresh Trade War Threats Beyond US-China Posted: 11 Jul 2019 07:50 PM PDT Hits: 1 Dollar Talking Points:
What do the DailyFX Analysts expect from the Dollar, Euro, Equities, Oil and more through the 3Q 2019? Download forecasts for these assets and more with technical and fundamental insight from the DailyFX Trading Guides page. Powell’s Second Day of Testimony Didn’t Add Much Lift ThursdayAfter the boost in enthusiasm from investors Wednesday on the first day of testimony by Federal Reserve Chairman Jerome Powell, the hurdle to extend a speculative run through day two of the grilling was significantly lowered. That said, it seemed the market didn’t find enough material from his remarks to nudge the market to the modest next step. In general, the content of his insights offered little beyond what was already laid out the previous day. The US central bank seems to be confirming a shift in monetary policy course to eventual rate cuts, but Powell refuses to signal that he will move quickly to appease either President Trump or the speculative markets. If we are operating on rate expectations alone, the charged speculation of two-to-three 25 basis point cuts his year has been priced in since last month. Further, there was a modest curb to a simple coasting for speculative appetite fueled by monetary policy dreams: the US consumer price index (CPI) for June. The market’s favorite inflation indicator saw its headline reading fall in line with expectations below target, but the core figure unexpectedly recorded a 0.3 percent jump on the month. That is the biggest jump in a year-and-a-half and the second biggest since the current growth cycle began. Does this undermine the Fed’s plans to cut rates in the second half of this year? No. However, between this provocative inflation reading and the robust employment report last week, the argument for an aggressive three hikes is not nearly as convincing. The Dollar seems to have responded to the news with a strong intraday reversal that left a large ICE Dollar Index tail, but this is not the outlook I would expect to readily carry forward a counter-trend monetary policy view. Chart of Dollar and Expected Fed Cuts Through December from Fed Fund Futures (Daily)
Another interesting observation with the lost traction in transitory speculative leverage – monetary policy encouraging risk taking – was the performance of US indices. Normally, I highlight the long-term performance divergence between US equities, global equities, emerging market assets, high yield fixed income, carry trade and other benchmarks for risk taking as an indication of uneven or unconvincing conviction. Yet, what happens when this disparity arises within the specific regional asset class? The Dow managed to rally above 27,000 this past session to a new record high, but the typically better performing S&P 500 and Nasdaq failed to extend their own climb. This is hardly polar performance, but the disparity in small cap (Russell 2000) versus the Dow speaks to that systemic issue. Chart of Russell 2000 to Dow Ratio (Weekly)
The Pound and Euro Seem Oblivious to Their Own Monetary Policy UpdatesWhile the attention was squarely on US monetary policy, the Fed wasn’t the only major group offering updates this past session. The Bank of England (BOE) issued its regular financial stability report. It comes as no surprise that the group would once again warn about the risks associated with a ‘no deal’ Brexit. Governor Carney warned that while the UK’s financial system would survive the shock, it would result in severe repercussions and the economic impact would be ‘virtually instantaneous’. Even if the worst case scenario weren’t realized, the economic tab continues to grow as the country’s relationship with the EU remains unclear. That is perhaps an unnecessary reminder that trading the Pound means a bearish bias that will be throttled for momentum while reversals will likely die out well before momentum takes. Chart of GBPJPY (Daily)
Another central bank making waves this past session was the European Central Bank (ECB). Minutes from the world’s second largest central bank most recent policy meeting made clear that the group had discussed routes for further policy easing beyond the QE program that was capped this past December and the targeted-LTRO which was introduced some months ago to supplement. This moves this central bank into a position that it is arguably competing with the Bank of Japan (BOJ) for the title of the most dovish major central bank – and possibly the most desperate.
Serious Risks Brew for Global Trade Wars Despite Market’s ConfidenceThe ECB may also be seeding the next stage of escalation in global trade wars. US President Donald Trump has repeated accusations these past few months that China and the EU were using monetary policy and manipulation to afford themselves economic benefit through currency devaluation and unorthodox means. Reports suggest the President has tasked aides with investigating means to devalue the Dollar since the Fed seems unwilling to relent to his demands. Against that backdrop, the IMF’s report on the European Union downgrading the region’s economic forecast alongside encouragement to further pursue stimulus to support expansion can easily stoke conspiracy theories in the White House. With the group’s current director, Christine Lagarde, due to head the ECB later this year; it can naturally be considered a warning that further Euro devaluation is ahead. We don’t really need further pressure to inspire currency wars. Another potential breaking point for the spread in the global trade war may be France’s decision to move forward with a 3 percent digital tax on major tech companies’ revenues earned in the country. Given the concentration of these types of firms under US ownership, it naturally finds its way to Trump’s desk. The White House is reportedly studying the tax to see if it is disproportionate and/or hurts the US in particular. Given recent history, they will likely find it as a particular burden to the US which the government will pursue. Meanwhile, the US-China pressures have been revived after the President tweeted that China was “letting us down” as they were not purchasing US agricultural goods ‘like they promised’. Appeal in Oil and Loonie – And No, Not for CorrelationFurther trouble between the US and China comes from reports that senior Trump administration officials agree that China defied the country’s sanctions on Iran by importing a million barrels of its oil. That said, there is no agreement on what kind of consequences will be applied in this case. Oil is itself a pressure laden economic theme. I am not a strong believer in the supply side drive in the commodity, but there is undeniably an overwhelming amount of pressure on that side of the equation. Reports that the UK Navy prevented an attempt by Iranian controlled boats to seize a British cargo ship suggests the political pressures are mounting. Chart of Crude Oil (Daily)
Another benchmark without a decisive fundamental theme to keep an eye on is the Canadian Dollar. Typically, we draw correlation between the Loonie and oil is a useful relationship to exploit. However, at the moment, the currency isn’t drawing on its natural production of crude and its shipment to the US as the US is now a net producer and the commodity is more range-prone than trend. Despite this fundamental break, the currency is still hosting an interesting technical bearing. The rally this past month is practically universal, but its momentum has flagged without a clear fundamental sponsor. While stretched in shear technical terms, committing to a distinct move would be best served by a catalyst. We discuss all of this and more in today’s Trading Video. Chart of USDCAD (Daily)
If you want to download my Manic-Crisis calendar, you can find the updated file here. 2019-07-12 02:00:00 Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| Will Facebook Libra Cryptocurrency Undermine Financial System? Posted: 11 Jul 2019 07:12 PM PDT Hits: 15 FACEBOOK LIBRA, CRYPTOCURRENCIES, BLOCKCHAIN – TALKING POINTS
See our free guide to learn how to use economic news in your trading strategy! Facebook is looking to introduce a low-volatility cryptocurrency known as Libra that can be used to facilitate peer-to-peer transactions all over the world by using blockchain technology. The tech giant is expected to launch the digital coin in June 2020 and is anticipating to encounter significant resistance and regulatory hurdles from policymakers all over the world in governments, central banks and financial institutions. HOW DOES LIBRA WORK?In order to use Libra, users will need to provide a government-issued ID and will have to convert their local currency into the digital coin. The cryptocurrency will be accessible through the Messenger app, WhatsApp and Calibra, a subsidiary of Facebook designed to store Libra and manage transactions. The digital wallet optimizes for cheap and fast peer-to-peer transactions and users do not need a Facebook account to sign up. A Possible User Interface Model Facebook also stated that information stored on the social media site and Calibra will not be shared and emphasized that financial data will not be used to target ads at users. Facebook will also have to apply many of the same measures banks undertake to protect their customer's deposits. This includes using software and/or staff that will be used to monitor activity and prevent fraudulent behavior. In addition to Calibra, an independent non-profit organization called the Libra Association was created to govern the currency. It is headquartered in Geneva, Switzerland – apropos, considering the country's reputation of maintaining neutrality in world affairs. It is composed of 28 founding members which include giants such as Mastercard and Uber as well as academic institutions and nonprofit organizations. Founding Members of the Libra Association
Each member has to pay a $10 million fee to join. Upon admittance, the membership grants each participant one vote which can be used to select new founding members, elect a managing director and appoint an executive team. Upon completion of the association's charter, the initial group of organizations will be officially classified as Founding Members, with the intention of having 100 representatives by the launch date. Chain of Command
"Members of the association [will also] run the validator nodes that operate the libra blockchain. Validator nodes are responsible for securing the network and validating transactions on the blockchain". The association will also be responsible for managing the Libra Reserve, participating in key decisions about the development of the Libra Blockchain and "the approach to social impact grant-making". "Blockchains are described as either permissioned or permissionless in relation to the ability to participate as a validator node. In a "permissioned blockchain," access is granted to run a validator node. In a "permissionless blockchain," anyone who meets the technical requirements can run a validator node. In that sense, Libra will start as a permissioned blockchain." HOW DOES THE LIBRA BLOCKCHAIN WORK?In lieu of using existing blockchains, Facebook elected to create its own on the condition that it will be secure, scalable and flexible enough to power "future innovations in the financial system". Facebook is now designing the open-source programming language known as Move that will be used for "implementing custom transaction logic and 'smart contracts' on the Libra Blockchain.". Here is an excerpt from the White Paper: "Move enables the secure implementation of the Libra ecosystem's governance policies, such as the management of the Libra currency and the network of validator nodes. Move will accelerate the evolution of the Libra Blockchain protocol and any financial innovations built on top of it." Learn more here about the technicalities underlying Libra Blockchain! HOW IS LIBRA DIFFERENT FROM OTHER CRYPTOCURRENCIES?Like other cryptocurrencies, Libra will be operated using a blockchain network to facilitate transactions where users' identity will remain anonymous and their financial activity will be recorded in a public ledger. The network is estimated to be able to handle 1,000 transactions per second, which is substantially higher than Bitcoin's seven per second, but also significantly lower than Visa's 24,000 per second. Therein lies the issue. The problem of scalability – meaning, how many transactions can a blockchain network process over a given time frame – continues to be an issue among crypto enthusiasts. If Libra becomes a worldwide digital currency, the Association will have to find a way to reconcile the high level of usage with the efficiency of processing transactions. Lags and delays could be a major deterrent to wide-spread adoption. Unlike other cryptocurrencies like Ethereum and Bitcoin, Libra will be backed by a reserve of stable and liquid assets as a way to tame volatility and offer the assurance of price predictably. The currency basket will include the Japanese Yen, US Dollar, the British Pound and the Euro. The idea is that an index of currencies will protect Libra users from violent price swings from one particular currency. The Libra Reserve will be responsible for managing the currency basket. It will use deposited funds from Libra users to invest in "bank deposits and short-term government securities in currencies from stable and reputable central banks". The interest garnered from these assets will then be used to fund operational expenses and pay dividends to early investors once the initial overhead is covered. Therefore, Libra's stability and return for investors relies on wide-spread adoption. If more users exchange their local currency for Libra, the fund grows and the volume of capital flowing into income-generating assets increases. The costs relative to the size of growing returns will become smaller, leaving a greater proportion of spare funds that can be used to pay dividends to the Libra Association for their contributions. Furthermore, if even just a fraction – say, one percent – of all of Facebook's 2.38 billion users sign up and use Libra, it would already have a user base of 23.8 million. For a point of reference, that's slightly over Taiwan's population of 23.7 million (recorded in 2019). Increased usage among users and businesses is expected to incentivize the latter to post ads on Facebook and increase the social network's revenue stream. HOW WILL OTHER CRYPTOCURRENCIES REACT TO LIBRA?In the short term, cryptocurrencies may rally on the expectation that an increased interest in digital tokens may cause the flood gates to open and lead to capital pouring into crypto FX markets. While this may cause an initial spike, it will likely then fizzle out as traders remember that the speculative nature of first-generation cryptocurrencies remain a key feature of their existence. Following the Great Recession, trust in banking institutions substantially eroded and led the disillusioned and emboldened skeptics to embrace and promote fiat alternatives like Bitcoin and other cryptocurrencies. The current fundamental outlook suggests a recession may be approaching, and if the severity of it sparks another backlash – politically or otherwise – interest in crypto assets may once again surge. ROADBLOCKS: REGULATIONS AND REPUTATIONSFacebook has acknowledged that it will have to overcome numerous regulatory obstacles not only in the US but all over the world. Officials from governments and financial institutions have expressed concern about the tech giant's already-expansive reach across the world and the prospect that its influence will be amplified by the implementation of a world-wide digital currency. Facebook is already encountering criticism from the People's Bank of China (PBoC), where a senior official expressed concern that Libra could severely disrupt monetary policy and destabilize exchange rates. One risk an official referenced was if countries with volatile currencies – particularly those in emerging markets –switch to Libra, it could spark a rapid depreciation in the local currency. On July 10 during Fed Chairman Jerome Powell's testimony in front of the House Financial Services Committee, he expressed concern about Libra, saying that its wide use may be a threat to financial stability. He had a meeting with Facebook about the tech giant's proposal, but that clearly did not quell Mr. Powell's concerns, as he alluded to a likely intervention from the Financial Stability Oversight Council. Barry Lynn, the Executive Director of an antitrust advocacy group called the Open Markets Institute said that "[Facebook has] fires all over the world with regulators. And its only going to get worse". He has a point. Facebook's reputation for maintaining privacy has been tarnished over the years and was only made worse during the Cambridge Analytica scandal that exposed the company's use of Facebook users' data without their consent. As such, Facebook will have to contend with both external and internal barriers. On the outside, the tech giant will have to undergo severe regulatory scrutiny from agencies all over the world. And on the inside, it will have to atone for the sins of its past and regain the trust of its users. Accomplishing such a task will be difficult as major technology companies continue to face backlash against their growing influence. Because the road ahead is so uncertain, and there is no telling how the regulatory landscape will shift over the coming months or years, some of Libra's features and the overall process of implementation may be radically altered or delayed. When Facebook Newsroom published the announcement of its new Libra cryptocurrency, it added the following disclaimer: "This announcement contains forward-looking statements regarding our future product and business plans and expectations. These forward-looking statements may differ materially from actual results due to a variety of factors and uncertainties, many of which are beyond our control. Please note that the date of this announcement is June 18, 2019 and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events." FX TRADING RESOURCES— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter http://platform.twitter.com/widgets.js Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| USD/SGD May Reverse as Singapore Economy Contracts Most Since 2012 Posted: 11 Jul 2019 06:32 PM PDT Hits: 10 Singapore Dollar, GDP Talking Points
Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in the DailyFX Webinars. We'd love to have you along. The SGD weakened after the latest GDP report showed that Singapore's economy unexpectedly contracted by the most since 2012. The first estimate of second quarter GDP pointed to a 3.4 percent decline versus +0.5% anticipated and from +3.8% in the first quarter. Meanwhile, year-on-year GDP clocked in at just +0.1 percent which was the slowest pace of expansion since 2009. Singapore Dollar Falls as GDP ContractsChart Created in TradingView The details of the report revealed that industrial components of growth contracted. Manufacturing and construction declined 6.0 and 7.6 percent respectively (QoQ). Combining these two segments of the economy adds up to roughly 25% of overall GDP according to the Department of Statistics Singapore. Furthermore, there was also a 1.5% contraction in services. According to estimates by Bloomberg, economists are anticipating growth of about 2.1% y/y in 2019. Today's dismal readings undermine the outlook and puts the Monetary Authority of Singapore (MAS) in a tight spot. Looking at the chart below, headline CPI in the city-state has been steadily creeping higher. While the MAS revised CPI (all items) estimates lower, softer economic activity could also dampen headline inflation. This places the focus on whether or not the monetary authority could continue its "gradual appreciation" of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER). A stronger currency works to dampen rising price pressures. Meanwhile, the impact of the US-China trade war is quite noticeable given the sectors most hurt in today's lackluster growth figures. It is unclear if the trade truce reached by the two nations may last.
USD/SGD Technical AnalysisBelow, USD/SGD finds itself oscillating between support at 1.3516 and resistance at the outer bound of 1.3624. This is while the dominant downtrend since late May struggles to remain intact. The falling trend line from then is currently being tested and clearing resistance opens the door to reversing USD/SGD's decline. Something to keep in mind of is SGD's close relationship to the US Dollar, and if the MAS steps in to stem significant weakness in the Singapore Dollar given their policy stance. For more updates on the Singapore Dollar, you can follow me on Twitter here at @ddubrovskyFX. USD/SGD Daily Chart
Chart Created in TradingView Singapore Dollar Trading Resources— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter http://platform.twitter.com/widgets.js Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| Pound Sterling Set to Rise off Year to Date Lows Posted: 11 Jul 2019 03:55 PM PDT Hits: 6 GBP OUTLOOK – BRITISH POUND COULD RALLY AS PM, BREXIT CLARITY EMERGES
Spot GBPUSD is down a little less than 1% after a rocky ride so far for 2019. The Pound Sterling recorded a proverbial "rip-and-dip" from the 1.26 handle to 1.34 before falling back again to 1.25 where spot GBPUSD trades currently. Price action in the British Pound has largely been driven by the latest Brexit developments with the odds of a no-deal departure largely dictating the currency's direction. BRITISH POUND INDEX (BXY) PRICE CHART: DAILY TIME FRAME (NOVEMBER 27, 2018 TO JULY 11, 2019)Similarly, this pattern is also mirrored in the broader British Pound Currency Index (BXY). The steep slide in the Sterling since March 2019 could be starting to show signs that the drop is losing momentum and GBP prices could turn higher as suggested by the relative strength index (RSI). A possible upside target could be a tag of the downtrend resistance line. If this level of technical resistance can be overcome, it likely opens up the door to test the 23.6% Fibonacci retracement level highlighted in the chart above. This upside potential is reflected by a healthy rebound off confluence where the British Pound previously bottomed back in December 2018 when spot GBPUSD sunk to its lowest level since June 2017 as currency traders reacted to news that the Brexit vote was canceled. While spot GBPUSD climbed during the first three months of 2019 on hopes that UK Parliament would back Prime Minister Theresa May's Brexit deal negotiated with the European Council, the ongoing impasse in the House of Commons sent the currency pair subsequently swooning. The move lower accelerated as the risk of leaving the EU without a Withdrawal Agreement grew larger after failing to pass a Brexit deal on three separate occasions. GBP/USD PRICE CHART: DAILY TIME FRAME (DECEMBER 09, 2018 TO JULY 11, 2019)
Bearish price action in spot GBPUSD was then exacerbated by reports that PM May would step down from her position which injected another layer of uncertainty into UK politics. Now, it seems that MP Boris Johnson is set to top the PM election which again increased the market's fear of no-deal Brexit and has weighed negatively on the British Pound. In the latest Financial Stability Report released by the Bank of England, the central bank stated that "significant volatility and asset price changes are to be expected in a disorderly Brexit." Although, with Boris Johnson appearing very likely to win the leadership contest, this scenario is largely priced in by markets already. That said, there are upside risks to GBPUSD such as contender Jeremy Hunt may garnering additional support in the polls as the voting deadline approaches, whereas Boris Johnson could soften his Brexit hardliner rhetoric which may also reverse some of the recent downside in the Sterling. BRITISH POUND 1-WEEK IMPLIED VOLATILITY PRICE CHART: DAILY TIME FRAME (SEPTEMBER 01, 2018 TO JULY 11, 2019)
Furthermore, falling 1-week GBP implied volatility measures also suggest the possibility that the British Pound has potential to rebound higher over the near-term. Also worth mentioning, UK economic data has remained relatively upbeat on balance. BOE Governor Carney has stated several times that interest rates appear low in the event that a Withdrawal Agreement is reached and that rate hikes could be warranted if no-deal Brexit is taken off the table. — Written by Rich Dvorak, Junior Analyst for DailyFX.com Connect with @RichDvorakFX on Twitter for real-time market insight http://platform.twitter.com/widgets.js Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
| S&P 500 Returns When the Fed Cuts Rates Posted: 11 Jul 2019 01:50 PM PDT Hits: 9 STOCK MARKET RETURNS WHEN THE FED CUTS RATES – SUMMARY POINTS
Over the last few months, financial markets have observed a sharp shift in monetary policy outlook from the Federal Reserve (Fed). The US central bank pivoted quickly from a hawkish stance indicated by Chair Powell and FOMC members this past December who previously hinted at 3 rate hikes for 2019 to the current stance of no rate hikes this year. Meanwhile, rate traders are now pricing in a rough 75 basis points of cuts to the Fed's policy interest rate by the end of 2019 which currently stands at 2.25-2.50 percent. WILL THE FED CUT RATES IN 2019?Several business cycle indicators – like the yield curve inversion – amid decelerating GDP growth suggests that the global economy is losing momentum quickly and suggest that the latest expansion may be on its last leg. Heightened market risks revolving tariffs and the lingering US-China trade war have also largely driven the stark change in interest rate expectations. A drastic deterioration in economic data and ballooning market uncertainty has backed the Fed into a corner with little choice but to juice the slowing economy with monetary stimulus. Additionally, this is being hinted at by tepid inflation and fading strength in the US labor market. Now, with the central bank aiming to preserve its dual mandate of stable prices and employment, it appears more likely than not that the Fed will cut rates this year. This is also in consideration of recent commentary from Chair Powell at the June Fed meeting where the head central banker hinted at the FOMC's willingness to act and ease monetary policy – if needed. HOW DO STOCKS PERFORM WHEN THE FED CUTS RATES?Historically speaking, stocks tend to benefit from lower interest rates set by the Federal Reserve. This was also pointed out by Goldman Sach's equity strategist, David Kostin, who stated that "if the Fed does cut rates, the S&P 500 usually rallies afterward," adding that "few precedents exist during the past 30 years where futures discounted an interest rate cut 30 days prior to a scheduled FOMC meeting but the Fed did not cut." This relationship can be observed in chart 1 below which depicts the monthly change in the S&P 500 Index and the effective federal funds rate (FFR). S&P 500 INDEX PRICE AND EFFECTIVE FEDERAL FUNDS RATE OVERLAY – CHART 1S&P 500 INDEX RETURNS DURING START OF FED RATE CUT CYCLES – CHART 2
For the Fed rate cut cycles beginning July 1995, September 1998, January 2001 and September 2007, the S&P 500 Index posted positive returns of 3.18 percent, 6.24 percent, 3.46 percent and 3.58 percent respectively and is detailed above in chart 2. Although, the S&P 500 Index slid a mere -0.79 percent during the month prior to the start of the Fed rate cut cycle beginning June 1989. STOCK MARKET PERFORMANCE WHEN THE FED BEGINS TO EASE MONETARY POLICY – CHART 3
While the small sample set limits the ability to make statistical inferences, the variance of S&P 500 Index returns rises dramatically in the 3-months, 6-months, 9-months and 12-months following the start of a Fed rate cut cycle. Looking out a year after the FOMC begins to ease monetary policy, the S&P 500 Index was higher by 12.59 percent, 13.86 percent and 26.13 percent from June 1989, July 1995 and September 1998 whereas the stock market dropped -17.26 percent and -23.61 percent from January 2001 and September 2007. HOW MIGHT STOCKS PERFORM IF THE FED CUTS RATES THIS YEAR?It is worth pointing out that the previous Fed rate cut cycles came in response to patch up deflating asset bubbles like the 2001 internet bubble and 2007 housing bubble. Central banks have increasingly tested the limits of easing monetary policy with new unconventional tools such as quantitative easing. As such, generally-strong equity returns in the month leading up to a Fed rate cut could be explained by the market's hope that the Fed can step in to bolster investor confidence by saving declining asset prices and a slowing economy with looser financial conditions. Also, a reduction in the Fed rate increases the equity term premium and thereby boosts the relative attractiveness of stocks to bonds and other asset classes. That being said, it is difficult to imagine that the already-diminishing impact of loosening monetary policy can overcome the daunting headwind posed by global trade friction, decelerating GDP and deteriorating equity earnings. If the macro-economy truly needs as much monetary stimulus as markets are currently pricing, investors could be in for a rude awakening when the longest business cycle in history officially comes to an end. — Written by Rich Dvorak, Junior Analyst for DailyFX.com Connect with @RichDvorakFX on Twitter for real-time market insight http://platform.twitter.com/widgets.js Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.  |
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