Press review - page 112

[Sergey Golubev]

News from MetaQuotes :

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MetaQuotes Software Corp. to Participate in ABTEC

At the Arabian Banking Technology Exhibition & Conference (ABTEC), our company will showcase the MetaTrader 5 trading platform and present the latest developments for brokers and traders. The event will be held on April 8-9, 2014 in the Bahrain International Exhibition & Convention Centre (BIECC).

ABTEC (http://www.abteclive.com) is a very important exhibition for technical experts of different financial institutions, with representatives of leading banks, exchanges and financial groups of the Middle East and North Africa region being among the participants. We hope that they will be very interested to understand how MetaTrader 5 can facilitate the start up and the management of a brokerage business and intend to provide a complete demonstration of the platform using real trading scenarios.

Arabian Banking Technology Exhibition & Conference (ABTEC)
Bahrain International Exhibition & Convention Centre (BIECC)
April 8-9, 2014

[Sergey Golubev]

The Forex Guide to Fundamentals: Central Banks (based on dailyfx article)

• Central Banks are found in most major economies around the globe
• A tightening of monetary policy can increase currency rates
• A loosening of policy can cause excess supply and a devaluation of a currency

Fundamental traders keep a watchful eye on Central Banks and the policy decisions they make. These intuitions, through changes in monetary policy, not only can affect an underlying economy but by de facto currency rates as well. Today we will continue our look at market fundamentals by examining Central Banks and how their policy decisions can affect Forex prices.

Central Banks

Central Banks are institutions used by nations around the globe to assist in managing their country or region with the commercial banking industry, interest rates, and currency prices. Examples of active central banks include the Federal Reserve of the United States, European Central Bank (ECB), Bank of England (BOE), Bank of Canada, and the Reserve Bank of Australia (RBA). The sphere of influence of a central bank may range from a single country such as the Reserve Bank of Australia or, represent policy created for a region or group of countries such as the ECB. Because of this, the actions of Central Banks have the ability to move markets and should be on every fundamental trader’s radar.

Central Banking Rates

Monetary Policy

Normally, a Central Bank will use the monetary tools at their disposal to meet their designated goals. Monetary policy describes the actions taken by a central bank to control the money supply inside of its designated region. Depending on the state of the economy, the fed may select to either take an expansionary or contractionary policy, with the supply of money being influenced by two specific methods.

During times of crisis or economic slowdown, central banks will normally look to expand their monetary policy. They can do this by expanding asset purchases which increases the monetary base and by also decreasing interest rates. The theory behind monetary expansionary is to make money available to banks and businesses in an attempt to increase growth and development. As a byproduct of an expansionary policy, fundamental indicators such as GDP are expected to grow and unemployment decline.

As the economy heats up, the Fed will consider taking on contractionary measures. At this point, the monetary base may begin to be restricted and interest rates can begin to increase. These actions make excess investment capital scares, and place a higher premium on lending. With less capital circulating, the economy is expected to contract and slow down. During a time of contraction, GDP is expected to decline and unemployment to contrarily increase.

Conversely, when central banks loosen monetary policy, this can cause a depreciation of their currency. Lower interest rates can cause lending to increase at lower prices. As well expanding central bank balance sheets can create an excess supply of a currency. With a new larger supply of a currency and with demand being low this can cause prices to drop.

Policy Decisions

Policy decisions and economic releases from Central Banks will occur sporadically throughout the month. The best way to track upcoming news is through the use of a good economic calendar. As these decisions are made, it is also important to track the movements of the market!

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video August 2013

newdigital, 2013.08.26 08:40

82. How Central Banks Move the Forex Market

A lesson on how the central banks of the world participate in the foreign exchange market and move the forex market up and down for their economic benefit.

[Sergey Golubev]

Forex Weekly Outlook Mar. 24-28

The US dollar had a successful week, rising against most currencies thanks to a hawkish move from the Federal Reserve. German Ifo Business Climate, Inflation data in the UK, US consumer sentiment and housing data as well as jobless claims are the highlight events . Here is an outlook on the main market-movers this week.

1. German Ifo Business Climate: Tuesday, 9:00. German business sentiment edged up in February to 111.3 from 110.6 in January. The release was better than the 110.7 predicted by analysts. The rise suggests that economic recovery is continuing to improve despite some weak figures in exports and industrial output. The survey shows retailers are more satisfied with current economic conditions and consumer spending is rising. A small decline to 110.9 is predicted this time.
2. UK inflation data: Tuesday, 9:30. Inflation in the UK fell in January to 1.9% from 2.0% in the previous month due to lower tobacco prices. The rate declined below the Bank of England's 2% target for the first time in more than four years. In the first half of 2013 inflation nearly reached 3.0% but descended in the second half of the year. Prime minister David Cameron commented that this fall in inflation is further evidence that UK’s economic plan is working. Low inflation enables future planning without surprises. Another decline to 1.7% is anticipated now.
3. US CB Consumer Confidence: Tuesday, 14:00. Americans were more pessimistic about the US economy in February according to the Conference Board survey. Consumer confidence declined to 78.1 from 79.4 in January, contrary to predictions for 80.2 points. The Expectations Index, fell to 75.7 points in February from 80.8 January's 80.8. Responders were concerned over the short-term outlook for business conditions, jobs, and earnings. Meanwhile, current conditions assessment has improved. Consumer confidence is expected to improve to 78.7.
4. US New Home Sales: Tuesday, 14:00. New U.S. home acquisitions edged up to a 468,000 annualized pace in January, exceeding forecasts of a 406,000 reading. This five year high release was preceded by 427,000 in December, indicating the housing sector remains strong despite recent falls, even in the midst of unusually cold weather. If the job market continues to improve, the housing sector would return to solid growth. Home sales are expected to reach 447K this time.
5. US Durable Goods Orders: Wednesday, 12:30. Orders for long-lasting U.S. goods excluding transportation unexpectedly climbed 1.1% in January following a 1.9% plunge in December, suggesting factory activity may yet improve despite recent falls. However, durable goods fell 1.0% in January after posting a 4.3% fall in the previous month. Nevertheless, the harsh weather conditions had a big role in the recent industrial decline. The manufacturing sector is expected to do better in the coming months. A small rise of 0.3% is anticipated this time.
6. US Unemployment Claims: Thursday, 12:30. US jobless claims rose less than expected last week, increasing 5,000 to 320,000 Analysts expected claims to reach 327,000. The four-week moving average declined by 3,500 to 327,000. Continuing claims increased to 2,889,000, compared to a downwardly revised 2,848,000 recorded a week earlier. The better than expected release suggests the weak Non-farm payrolls release was a onetime event affected by the cold weather. Jobless claims are expected to reach 326,000.
7. US Pending Home Sales: Thursday, 14:00. Contracts to buy existing U.S. homes edged up 0.1% in January after a 5.8 drop caused by unusual winter storms, harsh weather and limited inventory. This small scale rise was less than the 2.9 climb anticipated by analysts. Nevertheless, conditions are expected to improve in the coming months despite tight credit conditions. A further rose of 0.2% is expected now.

[Sergey Golubev]

GBPUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Pound: Bullish

• British Pound Holds Steady Following BOE Minutes
• British Pound Breakdown Seen Through GBP/AUD and GBP/USD

[Sergey Golubev]

GOLD Fundamentals (based on dailyfx article)

Fundamental Forecast for Gold: Bearish

• Key Reversals on USDOLLAR, Gold Post FOMC- March Range at Risk

• Gold Finds Reaction Area; End of Week Bounce?

[Sergey Golubev]

USDJPY Fundamentals (based on dailyfx article)

Fundamental Forecast for Japanese Yen: Neutral

• Yen crosses are looking increasingly expensive with risk trends (Nikkei) struggling and the BoJ backing away from QE upgrades

• USDJPY expected volatility has collapsed to levels not seen since November 15, 2012 – a contrarian reading

[Sergey Golubev]

Turkish FX Market Unmoved by Twitter Ban (based on forexmagnates article)

Industry estimates suggest that there are over 10 million users of twitter in Turkey, the country has an internet savvy population with over 40% using Facebook. However, the county’s investor community has been slow to adopt the new generation of communication channels for news and sharing of trade ideas. “Turkish traders are slightly old-fashioned when you compare them to those in western countries,” explained Saffet Ulker, a spokesperson for Integral Menkul, one of Turkey’s largest currency derivatives broker.

Brokers in Turkey saw little or no impact in trading activity, “It was business as normal,” explained one Istanbul-based FX broker.

To the advantage of traders in Turkey, twitter is not as prominent or widely used, otherwise things could get tough for the trading community. One Istanbul trader commented to Forex Magnates about the use of social media: “twitter is common in Turkey, but it’s used to check the latest political news, for trading I commonly use news sites to stay on top of what data is due and the effects of it.”

[Sergey Golubev]

India’s forex reserves jump by $1.83 billion (based on thehindu article)

India’s foreign exchange (forex) reserves rose by $1.83 billion to $297.28 billion for the week ended March 14, Reserve Bank of India (RBI) data showed.

This is the third consecutive week of increase in the country’s forex reserves as overseas investors poured in money in local bonds and stock markets.

According to the RBI’s weekly statistical supplement, foreign currency assets, the biggest component of the forex reserves, jumped by $1.84 billion to $269.81 billion.

Foreign currency assets, expressed in US dollar terms, include the effect of appreciation or depreciation of non-US currencies held in reserve such as the pound sterling, euro and yen.

The value of special drawing rights (SDRs) fell by $2.6 million to $4.47 billion during the week under review. India’s reserve position with the International Monetary Fund (IMF) declined by $1.1 million to $2.01 billion.

The value of gold reserves remained unchanged at $20.97 billion.

[Sergey Golubev]

EURUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Euro: Neutral

• The Euro has had a rocky few days after ECB President Draghi warned on Euro strength.
  
• The midweek EURUSD triangle was resolved after the FOMC rate decision.

[Sergey Golubev]

AUDUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Australian Dollar: Neutral

• Australian Continues to Look at External Factors for Directional Guidance

• US Economic Data, Fed-Speak Calendar at the Forefront for Price Action