Saturday, 31 December 2016

The euro rose, the dollar was down in the last trading session of 2016

The euro jumped to a maximum of three weeks on weak trading on Friday, but is preparing to drop on expectations that the policy of the United States President-elect Donald Trump would fuel inflation and accelerate the increase in Fed rates.
By by the end of the last day of trading in 2016, the dollar index slowed by 0.3 percent to 102.380, below the peak of this year of 103.65, reached on December 20 - the maximum value since January 2003. However, at year-end it added 3.8 percent.
The euro rose by 0.4 percent to $1.0518 after a brief recovery to $1.0700 - the highest value since December 8. During the year the euro fell against the dollar by 3 percent.

Friday, 30 December 2016

Forex preparation (3)

Develop your discipline.

Fill a record of your transactions in a journal, it's the most useful habit, that you can build. The documentation of transactions will allow you to review your rules, to find mistakes and can even serve as a source of ideas. It will also help you avoid the same mistakes in future transactions.
Be detail-oriented! Pay attention to details. As John Wooden avoided injuries as directing his players how to shod socks in a special way, so dismissing small details can seriously affect your trades.

Thursday, 29 December 2016

Forex preparation (2)

"If you fail to prepare, then you are prepared to fail" - John Wooden said. For those who do not know who he is, here's a brief summary:
John Wooden is considered by many to be the greatest coach of all time. He has won 10 national championships in men's basketball. Wooden is not only famous for his victories, but rather for his approach to basketball and life in general. He was always prepared and paying attention to the smallest details, no matter how insignificant they looked.
An example is how he taught his players to be shod socks properly. That's right, even wanted them to put thrm in a specific way. The reason? He did not wanted any creases, which can cause blistering and potentially injure his players.
Wooden felt that a man should give all of himself into anything, and this part is always the first thing, that is under his control. Wooden so always came prepared.
Surely these principles can apply in forex trading. What habits must we develop to be prepared?

Forex preparation (1)

In forex trading there is only one thing over which we have control and that is ourselves. The markets move in different ways. Sometimes we win from trading, sometimes we lose, but when we draw the line, what remains is under our control.
Of course, when we are in chase for good ideas, we devote our time in analysis and research, but there will always be unexpected market events that happen out of nowhere. Here is where preparation and proper implementation of the deal becomes crucial to reduce potential losses from unexpected events.
The preparation includes optimal risk-profit ratio, placing of good stops, determining the size of the position based on the risk and stop and strong stick to our trading plan. These are aspects that are under our control, and if we want to be the best, we have to do everything, that depends on us to do this.

Look for part 2.

Wednesday, 28 December 2016

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Saturday, 24 December 2016

The British economy grew in the third quarter

In the third quarter the UK economy slowed its growth much more restrained than expected, despite the initial shock caused by the vote of the British people to leave the EU at the end of June. These are the final data of the official British statistics ONS.
Gross domestic product in the UK expanded during the period from July to September by 0.6% compared to the second quarter, when it was recorded growth by 0.7%, while the previous assessment of ONS was for growth by 0.5% in the third quarter.
On an annual basis UK GDP grew by 2.2%, but with previous estimate of an increase by 2.3 percent after growth by 2.1% recorded in the previous quarter.
British statistics noted that the economy has been supported largely by consumer spending which offset the weak performance of exports, analysts say. British exports fell by 2.6% after falling by 1.0% in the second quarter, while imports grew in the third quarter by 1.4% after rising by 1.3% in the three months by the end of June. Meanwhile, business investment growth slowed from 1.0% to 0.4%, agricultural production declined by 0.7% and industrial production - by 0.8%. The services sector grew by 1.0% q/q with previous estimate for an increase by 0.8%, while construction shrank by 0.8%, not by 1.1%, as were previous estimates of ONS.

The US economy grew in the third quarter with a stronger pace compared to the previous assessment

The US economy grew in the third quarter with a stronger pace compared to the previous assessment, thanks to a better increase in consumer spending and business investment during the period from July to September.
Gross Domestic Product of the US, which is the most common measure of the production of goods and services, increased in the third quarter by 3.5% yoy in the previous estimate of growth by 3.2 percent. This is the most solid expansion of the US economy for two years after its anemic performance in the first half, as the average forecasts of financial markets were for more modest upward revision for growth by 3.3%.
The solid economic growth in the third quarter is due to stronger growth in consumer spending and better business investment in construction and intellectual property.
The costs of US consumers who are the main driver of economic expansion, increased in the third quarter by 3.0% instead of 2.8%, according to previous evaluation, but after their strong growth by 4.3% in the second quarter. Let me recall that the domestic consumption forms more than two-thirds of the growth of the leading economy in the world.
Business investment in non-residential construction rose by 1.4%, which is far above the previous estimate for their anemic increase by 0.1%, while investments in infrastructure grew by 12% and intellectual property - by 3.2%. Investment in residential construction, however, narrowed in the third quarter by 4.1%.
One of the main generators of economic growth in the third quarter is the increased exports by 10.0% after an increase by only 1.4% in the previous quarter, this represents the most robust growth in exports in nearly three years. At the same time, imports rose by 2.2% after an anemic increase by 0.2 percent in the three months, ending in June.

Friday, 23 December 2016

ECB expects a sharp rise in inflation

Inflation in the euro area will exceed 1% at the end of the year, reaching levels not seen since the end of 2013, while growth in the global economy will increase speed. It was said the European Central Bank's latest economic bulletin, released today.
In the medium term prospects for global business activity remain in favor of strengthening of economic growth, though at a pace that is below its pre-crisis levels. Overall growth in developed economies will be a little better and it seems that the economies of emerging markets will start to get away from the bottom, says ECB.
However, the global outlook remains overshadowed by the unfavorable impact of lower commodity prices on countries exporting goods. The rebalancing of the Chinese economy and uncertainty about future US policy after the inauguration of the new US president Donald Trump also will have their influence. It was underlined by the central bank, as today's economic bulletin is largely in line with bank's statement after the last annual meeting on 8 December.
The ECB reiterated that they stand ready to use all available financial instruments within itheir mandate and that if necessary they can make new changes both in size and in duration of the program for "quantitative easing".

The Canadian economy shrank in October

Canada's economy shrank surprisingly at the beginning of the last quarter of the year due to strong weakness in the industrial sector and reduced yields of oil and natural gas, according to the official Canadian statistics.
Gross domestic product fell in October by 0.3% to 1.68 million canadian dollars in expectation of stagnation of the Canadian economy compared to September, when it rose by 0.4 percent.
This represents the first reduction of the Canadian economy after four consecutive months of growth and today's data will likely reinforce expectations for its delay at the end of the year after a good rebound in the third quarter, analysts say.
Surprisingly deterioration was due to the greatest degree of decline by 2% in industrial production - the most solidly decrease from December 2013. Extraction of oil and natural gas fell by 2.5%, retreating positions after four months of growth.
Weak construction also weighs on the economic performance of Canada in October it deteriorated by 0.5%, marking the fifth decline in the past six months, the analyst added.

Thursday, 22 December 2016

Bitcoin has risen above $850, the highest value since 2014

On Thursday, the digital currency Bitcoin has reached its highest level since January 2014, continuing its recent rally.
On the New York Stock Exchange itBit Bitcoin broke through $875, before returning to $870, rised more than 4% today and exceeded almost twice its level from the beginning of 2016.
This month the digital currency soared almost 18% on the back of growth in demand in India and China, as investors try to protect themselves against the devaluation of the local currency and the lack of funds.
US and Europe are also responsible for a significant part of the volume of trading, as traders seek refuge from the problems of the world economy.
Bitcoin is a decentralized electronic payment system, which is not regulated by any government or central bank. Bitcoins can be used to pay for goods and services from their host vendors.

Friday, 16 December 2016

US bulls with new rally

The US dollar continued its bullish run after the Fed raised interest rates. The greenback reached its strongest level in 14 years. For the last three months the dollar index rose by 3%, and for the last 4 months - by nearly 10%.
USD/JPY passed the barrier of 118 and now investors expect next target of 120, so as parity of EUR/USD. Janet Yellen gave a forecast for the new three raises of interest rates next year. This to some extent would lead to major problems for central banks around the world, including higher costs for debt service, higher inflation and falling of exchange rate. Emerging markets were hardest hit by capital outflows in search of higher yields and higher costs for servicing of dollar-denominated debt. In combination with the weak euro, yen and other major currencies this may have negative effects on the world and lead to slower growth, which will eventually overtake also the US economy.
Currently the strong dollar poses a major risk for the US economy, especially in terms of raising interest rates in the country. If the administration of Trump did not come quickly with a major fiscal stimulus package, the euphoria will fade and this will be the beginning of fluctuation for the US economy.

Thursday, 15 December 2016

Investors accepted the Fed optimism with caution, the US stock markets closed lower

Waiting for more significant increase of rates by the Federal Reserve System (FED) spooked investors, despite the optimistic forecasts for the US economy.
Immediately after the news about the increasing rates the major US stock indexes briefly switched to growth, but then resumed their decline and fell by 0.5-0.8%.
Dow Jones Industrial Average index on the session on December 15 fell by 118.68 points (0.60%) - up to 19,792.53 points. Standard & Poor's 500 was down by 18.44 points (0.81%) - up to 2,253.28 points. Nasdaq Composite lost 27.16 points (0.50%) and amounted to 5436.67 points.
Shares of financial companies fell by 0.6% on the news from the FED.
Oil and gas companies index fell by 2.1% following the decline in WTI oil prices by 3.7%, to $51.04 per barrel.
Stock price of Hertz Global Holdings Inc. dropped by 8.3%. CEO of the company John Teygen resigns from 2 January, he will be replaced by Kathryn Marinello.
Share price of analyst firm Neustar Inc. It jumped by 21% in trading in New York after the announcement of its purchase of a group of investors led by Golden Gate Capital for $2.9 billion.

Dollar at 14 years peak after the Fed's decision to raise the rate

The dollar reached 14 years peak to a basket of major currency rivals on Thursday after the US Federal Reserve has increased the number of expected rate increases in 2017, reviving lasted for a month rally and hitting the currencies of emerging markets.
The US Federal Reserve raised its key interest rate by a quarter point and indicated to accelerate the increase in the cost of borrowed funds in 2017 after promises of President-elect Donald Trump to spur economic growth with tax cuts, increased spending and deregulation.
The range of federal funds rate has been raised to 0,50-0,75 percent as expected by financial markets, however, the signals that the Fed could raise rates three times in 2017, instead of two, as expected in September, seems to have caught them by surprise.
By 5.53 GMT the dollar index to continued rally and rose by 0.57 percent to 102.32. It touched the mark of 102.620, the highest since January 2003. Euro fell by 0.3 percent to $ 1.0503 after falling to a minimum of 21 months to $ 1.0468.
Dollar on Thursday struck a 10-month high against the Japanese yen, reaching 117.860 yen, rising by 0.3 percent to 117.50.

Wednesday, 14 December 2016

Optimism on the stock markets in Europe and the US the day before Fed's decision

European markets led by Italian shares ended with raise and overseas indexes are on their way to new highs in anticipation of the Fed's decision on interest rates in the US.
European shares rose to 11-month high on Tuesday as a major factor for this was the Italian shares and more accurate - UniCredit, which present a plan for restructuring and reform. European Stoxx 600 index added 1.06 percent and reached 357.50, making it the best price from January this year. This occurs after the beginning of the week the index lost 0.5%.
Italian banking sector added 5.83%, while shares of UniCredit achieved a growth of 15.92 percent, after it became clear that the bank would cut 6500 employees by 2019 and that they will start selling stocks and bonds. This was welcomed by the markets in anticipation of stabilizing the bank. The market capitalization of the bank is worth 15 billion euros.
In the UK, FTSE 100 climbed by 1.13% to 6968, which is the highest level for six weeks. The main reason for growth also was the banking sector, which managed to prevail over the loss of the energy sector.
Overseas investors are about to find out whether Dow Jones will overcome the psychological level of 20 000. On Tuesday the index added new 114 points and climbed to 19,911 after reaching a peak for the day of 19 953. SP500 added 15 points to 2272, as 9 of the 11 sectors finished at plus. The tech Nasdaq added 59 points to 5471.

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Thursday, 8 December 2016

Euro close to the peak of 3 weeks in anticipation of results of the ECB meeting

The euro strengthened and traded at a three weeks peak against the dollar on Thursday in anticipation of the outcome of the ECB meeting, as the US currency slowed down against the background of a rollback of government bonds yields.
The focus of investors this week remains the euro after Italian Prime Minister Matteo Renzi announced his decision to retire after the failure of the referendum on constitutional reform.
Initially falling due to the news about the results of the referendum, the euro showed a strong rally on Monday and since then has been held near the maximum of three weeks against the dollar, as investors await the ECB decisions.
The European Central Bank will announce the extension of the quantitative easing program by six months on Thursday, while leaving the volume of buying up assets of EUR 80 billion, according to a majority of economists polled by Reuters.
In the morning the euro rose by 0.18 percent against the dollar to $1.0770, close to reached on Monday level of $1.0797, a peak from November 15.

Wednesday, 7 December 2016

At Commerzbank talk about conditions for euro back to 1.10 dollars

In light of yesterday's movement of the euro, EUR/USD can attempt to test 1.0816, warn from Commerzbank. According to analysts, the pair showed interesting price movements yesterday, as on the market there was a slight breakthrough of lowest since November 2015 level - 1.0523, which clearly showed an unwillingness of the pair to break the level of March 2015 - 1.0457, which break could open the way for parity.
The level at 1.0700/02 was broken and now it should act as support. Break up opens the way to 1.0816. Then there are resistances at 1.0821 and 1.0851, analysts say.
Their bearish forecast remains valid as long as the trading is below these levels. A breakout will lead to the initiation of recovery to 1.0910 and 1.1000.

UOB forecast range for USD/JPY

According to currency strategists at UOB Group the forecast for USD/JPY remains bullish and suggests a period of consolidation before further growth. They say that the fluctuations of the US dollar yesterday made a mixed outlook. Further, it is expected fluctuations to be in the range of 112.84/114.77.
The bank already have closed their long positions in the pair and have a neutral opinion about it today, they do not expect any change in the opinion of analysts. The pair is currently moving around in its early stage of the consolidation phase, as it will probably go to a very wide range of 111.50/115.00, analysts say.

Tuesday, 6 December 2016

The Australian dollar fell because of the GDP data

The Australian dollar fell on Wednesday during the Asian trading session, as Australian GDP shrank in the third quarter.
AUD/USD was trading at 0.7431, down by 0.40%, and the USD/JPY rose by 0.12% to 114.16.
The US Dollar Index, showing the strength of the dollar against the six major currencies, was up by 0.01% to 101.52.
In Australia the day is rich in fresh indicators. Thus, the index of activity in the construction sector from AIG rose from 45.9 in November to 46.6, and in the third quarter GDP fell qoq by 0.5% and grew year on year basis, while it was expected to grow by 0.3% and 2.5% respectively.
Reduction of GDP, the highest since 2008, is one of the biggest deviations from the forecasts of the Reserve Bank of Australia's history. RBA, according to the calculations of economists expect GDP growth somewhere at 0.5%. Although officials expect that GDP will retrace in the fourth quarter, the lowest rate will attract the attention of traders to the report on the state of the labor market and definitely will soften the current neutral position of the central bank.

Canadian dollar falls from highs due to lower oil prices

The Canadian dollar fell against its US counterpart on Tuesday, as oil rally ended as a result of profit taking by investors, as the market focused on the meeting of the Bank of Canada this week.
Pair USD/CAD rose by 0.30% to 1.3310. On Monday, the pair reached 1.3235, the lowest level since 21 October.
Oil prices fell on Tuesday to 16-month highs after data showed that the OPEC oil production reached in November another record high.
OPEC last week managed to sign an agreement on the limitation of production, which can reduce the excess of reserves of the world, which was followed by a sharp jump in oil prices, the main part of Canada's exports.
The increase in production before the coming into force in January an agreement to reduce production caused concern that the global excess of reserves can continue in 2017.

Friday, 2 December 2016

The attractiveness of the British currency may rise

The dollar took a break again, going to the correction mode after Wednesday's rally. European currencies are trying to recover due to the increased interest in risk appetite following Wednesday's decision of OPEC to reduce production volumes, which triggered a 10% rally of oil prices.
Especially actively adjusted pair GBP/USD, which had reached a 3-week highs near 1.2660. After the breakdown of the upward movement of 1.26 quotes accelerated, and now the pound is trying to strengthen its position on the psychological level. The key growth driver for the British currency were the optimistic statements of the Minister of Brexit, which tried to weaken the market fears of a "hard Brexit". Players were particularly pleased with the comment that Britain can maintain access to the European single market after leaving EU. This is directly beneficial for the sterling as the British currency will return the attractiveness, shattered after the June referendum.
If we compare the EUR and the GBP, the position of pound look at this stage is much more stable. Status of the British economy, in spite of the "divorce" with the EU, so far eliminates the need for additional stimulus, and the negotiations themselves on an output from the block may last for quite a long period. The ECB, from the other hand, may be forced to extend the program of buying assets, especially in light of the increased political risk in the region.
However, the potential for further strengthening of GBP/USD looks limited due to the fundamental strength of the dollar. Today the US will publish key employment report, which is expected to increase jobs in the area of ​​170-180 (in my opinion higher than 200) thousand. If expectations are met, players will resume buying USD in anticipation of Fed rate increase at the next meeting.

Thursday, 1 December 2016

New jobs in the private sector in the US rose in November

A research by the company Automatic Data Processing Inc. (ADP) reported an increase of 216 000 jobs created by private businesses in the US in November with average forecasts of financial markets for an increase of about 165 000. At the same time it was announced some downward revision of data for October, according to which private sector of the US economy were revealed 119,000 jobs during a previous assessment of the ADP of 147 000.
Yesterday's stronger than expected data suggest a pretty good rate of improvement in the labor market, even though the US economy is getting closer to achieving the so-called "Full employment", analysts say.
The ADP report is unlikely to lead to a substantial revision of forecasts of financial markets for upcoming on Friday an official report on employment in November, they added.
According to ADP small US companies with employees between 1 and 49 already for the fifth consecutive month are not a major generator of employment in November, as they had opened 37,000 jobs, medium-sized companies, employing between 50 and 499 people, were hired extra 89 000 workers, while large companies, employing more than 500 people have launched 90,000 new jobs.
The service sector added in the eleventh month of this year 228,000 jobs, in the manufacturing sector were cut 10 000 jobs, only within the industrial enterprises were laid off 10,000 workers, while in construction the number of jobs had increased by 2000, shows the latest survey of ADP.
Let me recall, that ADP surveys pretty much show what to expect from NFP on Friday. If their results are close to the real data, we can expect serious rise in dollar after this week's NFP.

European stock indexes rose on Wednesday after oil

European stocks finished the session in the growth on Wednesday. Driver of growth was the rise of shares of energy companies, caused by OPEC agreement for limitation of the production.
The composite index of the largest companies in the region Stoxx Europe 600 rose during trading by 0,3%, to 341.99 points.
The index of 50 largest enterprises of the euro zone Euro Stoxx 50 added 0.43%. The British FTSE 100 stock indicator rose by 0.17%, the French CAC 40 - by 0.59%, the German DAX - by 0.19%.
Prices of Brent crude for delivery in February soared on Wednesday by nearly 9%, to $51.55 for a barrel on news that OPEC agreed to reduce the collective production to 32.5 million barrels a day, starting from January next year.
Countries outside of OPEC will cut output at 600 000 b/d, and 300 000 b/d of them will fall to Russia.
Shares of Total SA (PA:TOTF) rose in price by 2,4%, BP Plc (LON:BP) - by 3,8%, Royal Dutch Shell - by 4%. The capitalization of the smaller European oil and gas company Tullow Oil (LON:TLW) and Saipem SpA increased by 13% and 10%, respectively.
However, the prospect of rising fuel prices led to a decline in prices for securities airline EasyJet Plc and Air France-KLM by more than 2%.
The contract value for most metals is reduced on Wednesday, due to which the capitalization of Anglo American Plc (LON:AAL) and Rio Tinto Group (LON:RIO) has decreased by 1.6% and 2.5%, respectively, at auction in London.
The market value of the German industrial gases producer Linde AG (DE:LING) increased by 1% on the news that its US rival Praxair Inc (NYSE:PX) resumed merger talks that could lead to the creation of a giant with $60 billion market capitalization.
Quotes of pharmaceutical companies Novo Nordink increased by 3.4% thanks to the good results of the clinical trials of its production of insulin.
Meanwhile, the price of securities of Royal Bank of Scotland fell by 1.4%. The bank failed the British Central Bank stress tests.