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Forex Commentary: 19/06/2020 - Stocks drift, dollar strength holds firm amid growth, second wave of corona virus worries

Risk appetite is looking increasingly on borrowed time as stocks turned sideways. Having lost momentum after last week's sell-off global shares on Friday could only manage a tepid rebound from Thursday's dip amid ongoing worries about the surge in new virus cases in the United States. The number of new daily corona virus cases reached record levels in ten US states this week, putting into jeopardy the reopening of the economy. Fresh doubts about the economic recovery were also raised from stubbornly high weekly jobless claims out of US. Thursday, there wasbetter news elsewhere however as China said the outbreak in Beijing has been contained. The mixed news flow kept Friday's gains and equity markets in check with S&P 500 emini futures indicating a 0.5% rise at the open on Friday on balance despite the latest setbacks in the medical and economic data. The prevalent mood is still one of optimism as investors remain hopeful that a vaccine will be found before the end of the year enabling economies to fully recover from the pandemic. However, even if those expectations were to materialize there are plenty of other risks that markets have been ignoring lately; the main one being the recent souring of sino-us relations Trump's tweet that a complete decoupling from China is a policy option for the US could be one factor buying the safe-haven gold. On Friday the precious metal was last trading up 0.5 percent, though it remains flat on the week. Read the full article

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EURUSD soars after ECB's surprise move

The resurgent euro which has been rallying,on the back of recovery hopes for the eurozone economy got another shot in the arm on Thursday after the European Central Bank delivered a bigger than expected stimulus. The ECB boosted its pandemic emergency purchase program by a bigger than expected 600 billion euros and while the ECB sharply lowered its economic projections. ECB President Lagarde pointed to some signs that the downturn is bottoming out. Her comments underscored the central theme,that's been driving risk assets higher,over the past month and that is a recovery whatever shape or form will come in the second half of 2020. Investors are growing confidence that "the worst is over" propelled the euro to 3-month high versus the dollar, coming within sight of the one dollar fourteen level on Friday. The increasing optimism wasn't confined to the euro, as all majors as well as emerging market currencies advanced against the mighty,US dollar. The Australian dollar was testing the psychologically-important,0.70 level even as sino-us tensions lingered in the background. Sterling was also able to enjoy some positive momentum despite brexit concerns as it surged past the one dollar 26 level to reach a near three-month peak. Negotiators from Britain and the EU have,been unable to resolve differences on key issues after a week of talks with the end of June deadline for extending. The UK's transition period is fast approaching an EU summit in two weeks time; may be the last hope for a breakthrough in contrast the dollar sagged with its index against a basket of currencies on track for a 7th straight session of losses. The non-farm payrolls report for May due out of the,u.s. later today is unlikely to be able to provide much support even if America's jobless rate doesn't jump to almost 20 percent as is being anticipated after a brief wobble. This week on doubts about whether OPEC and its allies will be able to reach a deal on extending their output cuts oil prices are on the up again,the OPEC plus group of countries were due to hold a meeting on Thursday but it has now been postponed to June 6th, an extension of at least one month is,looking increasingly certain and that,should support oils rally for a while longer. Disclaimer: The contents of the article are for educational purposes only. All opinions, ideas or forecasts, implied or expressed, are strictly for educational and information purposes only and should not be used as a basis of strategy or recommendation to trade, invest or take positions in the markets. We are not liable for any damage or losses, and also any loss of potential profits without limitation, which may derive indirectly or directly by using or relying on the information used on this website and its sublinks. Please do your own due diligence before making any investment decisions. Read the full article

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Margin and Leverage in Forex Trading

Let's say,that you want to trade a mini lot,remember that was 0.1 and it was worth,$1 per pip that is 10,000 units of,currency that seems odd but when you trade a mini lot you're controlling,10,000 units of currency but let's say that you only have $1,000 in your trading account how can you control a,10,000 unit position and I say units,because your account may be denominated in pounds or euros or yen or whatever. How can you trade 10,000 units of currency with only a $1,000 account? It's through the wonders of,margin and leverage and in this longer lesson which you may want to return to,later we're going to discuss a topic and really simple easy to understand terms,that most people never get but it's really important your margin is essentially a down payment on a trade. Example, when you buy a house you don't have to put down the full value of the house otherwise you're buying the entire house for cash. You offer a down payment equal to a,percentage of the total purchase price, sometimes that's 10% sometimes,that's 20% well in the world of trading,you may only have to put up 2% but generally speaking in the world of currency trading you only have to put a small percentage of the total value of the position in order to take the trade,and that's called leverage. Leverage is,just like it sounds,it's adding power to whatever existing capital you have leverage is. In other words, the beautiful thing that your FX,dealer will offer you to put a small down payment up and then,multiply that down payment by a certain number in order to control a larger position. In other words, your dealer will let you control a large position with a small initial investment all. Let's say that you have a ten thousand dollar trading account, and you want to put up $1,000 as your down payment now we're going to use the word margin.You're gonna put up,$1,000 as your down payment or your margin and let's say that your FX dealer,offers you one hundred to one leverage,meaning they're willing to let you put up only one percent of the total value of your position. How big of a position,can you control with a $1,000 down payment or margin if they offer you one hundred to one. I know a lot of you might have thought it was ten thousand but if one thousand is one percent of your total position size if you're FX dealer is offering,you one hundred to one leverage they're,willing to increase your down payment one hundred times so it's a 100 thousand unit position. Let's do another example and we'll talk about it if your dealer offers you one hundred to one leverage you live in,Europe or the UK or Australia and they,let's say you want to trade, let's say that we want to trade 10 standard Lots each standard lot is,100,000 units of currency that means we're going to do a position of 1 million units of currency that makes sense. So far,now if each standard lot is $10 a pip,what's your value per pip if you trade,10 of them yep it's $100 for every pip,the market moves. Largest trade size I ever took was 80 standard Lots $800 a,pip it was a big big trading account but,I was still pretty freaked out so let's say you want to control it, let's say you,want to trade,10 standard Lots that's a million units of currency and your broker offers you,one hundred to one leverage what you need to do is you need to divide 1 million by 100 now that now that's just,to simplify the whole process that's,gonna mean that you have to put up $10,000 as your down payment or as your margin 10,000 times 100. The margin was the down payment and that's not money available,to you anymore your FX dealer keeps that,down payment sets it aside and actually,marks it at the bottom of your trading platform as the down payment that's no longer available to you now it also has a number which called free margin or usable margin is another word that,people use for that term so we'll call it usable or free margin usable or free margin is the amount of money that you can use for new trades. Number one so that's the first,thing it is you can use your free margin,for new traits just like a real-estate, investor might have a hundred thousand,dollars to work with and they might have ten thousand dollars out as a down payment on one property and that means they have how much leftover for,more down payments on more properties,$90,000 okay so you could take new,trades with your free or usable margin,but that's not the only thing that,you're free or usable margin is used for. Margin call is the most important,number that you can focus on and the,easiest way to keep this margin level,percent high and you want a high number,the easiest way to do that is and now we,come full circle on our conversation,about trade size is keep your trade size,small trade micros and mini trade sizes,don't trade standard Lots with a small,trade size you'll never use very much,margin you'll never need very much,leverage your free margin or usable,margin will always stay high and you'll,never get a margin call the last point I,want to make is most traders blow up,their trading account within 90 days 90,of traders lose 90% of their money,within 90 days it's probably not exactly,that number but that's pretty close,that's because they have big trade sizes,in small trading accounts if you have,small trade sizes in every account you,will last past that 90-day mark if you,can last beyond the 90-day mark as a,brand-new trader and you have the,original account that you started with,the chances that you are going to,succeed go way up not gonna throw around,promising statements or anything like,that I'm not gonna make any promises but,the longer you can survive with small,trade sizes the better you can do and,the more likely it is that you're going,to figure out what trading system you,like while your trade sizes are small,and then as you do better and learn more,you can increase your trade sizes as your confidence and your account grow. 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Demo account in Forex Trading is important

Welcome back readers, let's talk about demo versus live trading. When you set up your first trading account,and we're talking about trade sizes and,we're talking about pip values and, the big question on most people's minds when we get to this stage,is should we trade with a demo account versus a live account? A demo account is a fake money account and it's absolutely free from your broker and it allows you to get set up and learn your trading platform and it looks exactly like a regular trading account. The quotes are the same and the trade execution is largely the same and you can put a robot on a demo trading account you can take trades in a demonstration trading account you could do all the same things that you would ordinarily do in a regular live trading account. It's just a demonstration account and your broker will direct you to how to download a demo trading account usually when you logged in to your favorite FX dealer or FX,broker or dealers website, they'll give you links to download a demo account and they'll give you the option of how much money you want to put in your demo trading account. So a demo trading account is a simulated trading experience and it's really good,because it teaches you how to get familiar with your trading software and shows you how fast the market can move. You can learn how to press the buttons and take orders and all that other kind,of good stuff that we're going to teach you. In demo account, there is no emotion,whatsoever no consequences. If you make a mistake and you can make all kinds of wonderful mistakes. Some people say that demo accounts are worthless because you're not feeling the same emotions, you would feel with a live trading account,however,it's never a good idea to trade live if you haven't ever done any trading before. So it's better to practice on a demo account. It's a great place to practice and get set up and get started. Now a live trading account is everything that it sounds like. It's a live money account with real money inside and real consequences. When you trade live I think if you demo trade for 30 days or so it's a great idea and then you can move on to your first live trading account and I would recommend that your first live trading account have at least $1,000 inside. So you can trade one micro lot for 10 cents a point or pip and not feel really any strong emotion about that but you can work up your courage with your trading now. Most people are gonna ignore everything,I just said and they're gonna go open up a live trading account and they don't want to miss any opportunities they're gonna trade with the largest trade size they possibly can and they're gonna blow up their trading account and most people are gonna do that because of margin and,leverage. Remember forex trading carries significant risk of loss. Terms and conditions will apply. I'll see you in the next one. Read the full article

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Stocks await Trump’s Hong Kong decision; dollar skids on Fed remarks

Morning, this is the daily market commentary. Thanks for reading. Markets are bracing themselves for US president Trump's press conference expected later today for his decision on what actions to take against China and Hong Kong. The Chinese Parliament yesterday passed the controversial national security bill,which is seen as eroding Hong Kong's autonomy from China. US Secretary of State, Mike Pompeo has already warned, that the legislation would endanger Hong Kong's special status with America and speculation is running rife about trump's options on punishing China. The cautious mood led most Asian indices to close a negative territory on the last trading day of May and US and European stock futures were also in the red. Moreover the limited sell-off suggests investors are not anticipating Trump to announce anything too harsh and the most likely outcome is sanctions on Chinese officials and businesses doubts about how punitive Trump's actions will be sparked only a muted reaction among safe havens with the Japanese yen being the main beneficiary of safety flows. The yen was up almost 0.5 percent versus the,US dollar which slid to two and a half month flows against a basket of currencies on Friday. The dollar weakness was broad-based as it came under pressure from fresh speculation that the Federal Reserve's next crisis move will be to implement yield curve control. Treasury yields were lower across the curve on Friday weighing on the greenback and accentuating the euros advances the single currency is on track for a fourth straight day of gains, following the announcement this week that a 750 billion euro virus recovery fund has helped turnaround sentiment for the eurozone economy. Fed chairman Jerome Powell who is due to participate in a panel discussion at 1500 GMT could drop further hints. Policymakers actively considering yield curve control possibly pressuring the dollar even more another danger will be,the personal income and spending numbers,out of the US which are expected to show a record monthly drop in consumption in April. However, the data may not matter a great deal if Trump surprises with a much more stringent response on China as markets,appear to be under pricing the risk of a major flare-up in us-china tensions this,was today's daily market comment thanks,for joining us.

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Weekly Forex Outlook - Week of 25th May 2020

Now it's looking to be a fairly quiet week however there are a few things coming up that markets will be looking at. Let's start with a developing us-china feud and it appears though that the Australian dollar has brushed off these renewed tensions. Australia will be reporting quarterly figures on construction, that's on Wednesday and capital expenditure on Thursday. We've seen some rising,tensions between the US and China and,that has impacted risk sentiment slightly in recent date who's had a slight risk off tone though given the gains we've had in recent weeks it's only very small losses we've seen any equities markets in particular and as you said, the Australian dollar in fact continued to make fresh highs next week there could be some risks from quarterly data on construction and capital expenditure which will give us indication as to what expect in the GDP numbers coming up in the following week. Overall investors are fairly optimistic about the outlook for the Australian economy at least a relative to other advanced economies because Australia hasn't been impacted as much by the virus and its economy have started to reopen and given that it trades heavily with China and China has also started to reopen too. So things are not looking as gloomy with Australia as with some other economies so overall, even if you might see some knee-jerk reaction in the Australian dollar we'll probably continue to see the Aussie maintaining its uptrend now. It appears that the worst has passed for now at least; regarding oil after the severe slump and that demand and prices oil seems to be on the rebound. But contrary to what one would expect the Canadian dollar has been unable to gain now with Canadian quarterly GDP numbers coming up will loonie will come under further pressure this week? Well that's right so,the loonies rebound from its lows have been not particularly inspiring,especially when compared to the Australian dollars impressed rally and even though we are now seeing that oil glut easing somewhat over the past week or so,the loonie hasn't has been unable to break about the key resistance barrier,against the US dollar and could potentially come under pressure next week from the GDP numbers so the loonie,will be vulnerable to a big miss in the GDP for the first quarter and that's because although we are seeing oil prices recover the outlook overall for the energy sector which is the main driver for the Canadian economy, is not looking too great at the moment, turning to the Eurozone, the euro had a rather good week one would say with the,announcement of a 500 billion euro recovery fund and upbeat PMI we're expecting a lot of data out of the eurozone this coming week. We did just have the flash PMI numbers for May for the euro area,and they were slightly better than expected we are seeing a bit of a recovery in early May and the the main data next week which will be the German Ifo business survey and economic sentiment indicator. For the Eurozone now,those will probably stay within trend as,we saw in the flash PMI and point to abit of a recovery in the early parts of May and I should further help the Euro,overall though in order for the Euro to,make much more substantial gains,we will need to see further evidence of,economic recovery in the Eurozone. Finally let's look at u.s. consumption which is a significant part of the US economy,investors are bracing themselves for weak numbers. Question is how weak they are going to be and what will tell us about the economic contraction we're likely to see. So the main data from the US will be the personal consumption personal income we already saw for the previous month's. The big falls in these figures and for April we are likely to see another big fall,especially personal consumption that's expected to have plunged by record 9.7%,month or month in April we're also going to have the second estimate of GDP for the first quarter as well as durable Goods,although goods orders expected to decline again in double-digit numbers,but despite all the gloomy numbers we're expecting, the dollar could possibly gain on the back of it because if that risk tone deepens in the coming week and the US data provides a bit of a reality check for the markets, though the dollar could actually benefit on the back of that because of course it has been acting as a safe haven throughout this virus crisis on the other hand better than expected numbers might actually help the dollar pull back a little bit. Read the full article

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What is Swaps in forex trading?

Hey everybody welcomes we're adding a little lesson in between other lessons so bear with us. Trading or FX trading swap is the interest paid at the time of rollover, every day the currency market sort of rolls over at about 5 p.m. I was being really careful this time night to draw, slowly yeah maybe it was because I zoomed in and if I gotta wait till that thing disappears at about 5:00 p.m.,eastern US time your FX dealer will roll your trades over you will not probably see anything different about them but you've carried trade from one day into the next. Sometimes this is also referred to as the carry trade or you've carried trade from one day into the next. Alright so what is this, inside of your platform when you take a trade and will view the terminal window, inside of Metatrader? Here one of the items that you're going to see in your terminal window on the right side inside, the terminal window part of your open trade is swap. Swap is the interest that you either earn or the interest that you pay for holding on to trade overnight. Generally you will not earn or pay anything if you do not hold that trade through 5:00 p.m. eastern US time or whatever time your broker uses but some dealers will charge or pay interest on a minute-by-minute basis. Check with your Forex dealer to find more information. About that why do they do that well; in the big world of trading every Central Bank around the world has an interest rate and you could see this on the nightly news especially the business news central banks set base,interest rates so a central bank in,Australia might have a 6% interest rate,a central bank in Japan the Bank of,Japan might have a 0.25 interest rate. Nate no this is obvious but which number,is higher the six is higher so this is,Australia this is Japan so if you're,playing along at home let me ask a,question Alaska to Nate and you can take,a moment to answer if you buy the,Australian dollar / Japanese yen and you,hold it overnight will you earn interest,or pay it you're going to earn it,because the Australian interest rate is,higher now the reason this is a this,exists is a mystery to most everyone and,it's been forgotten but in the old days,you are holding on to something,overnight in your bank account and you'd,get paid interest on your holdings just,like you would and on an annualized,basis you'd get paid a little bit of,interest to holding on to a high,interest pair against a low interest,pair if you're holding a high interest,pair against a high interest pair you,might even get charged a little bit of,interest if you sell the Australian,dollar Japanese yen you're short the,Australian dollar and you're buying,Japanese yen in that case you're going,to pay interest if you hold that trade,overnight for simple calculations on,swaps you can go to FX swap well it's,not doing anything you can type into Google. I'll just write it down here for,you,you can type in FX,swap and I have two types I have to,write slowly so it doesn't move the,monitor FX swap calculator and a series,of websites will come up and you can say,oh I'm buying the u.s. dollar Japanese, yen or I'm selling the British Pound US, dollar and you can type in your trade, size Siri thought I was talking to you, here that Siri was just answering, nothing that I asked her that's pretty, funny if you google that you can find, calculators that will show you the overnight rate that you get paid or, charged generally this is a small amount, of money and does not mean a lot or, factor into your trading unless you're, holding on to something for a very very, long time. We'll see you in the next one. Read the full article