Coronavirus and The Markets: Where The Connection Is

You saw such headlines as “coronavirus is pushing gold and Japanese yen up” or “Asian stocks are down due to the spread of the virus”. Have you thought why global markets react to the non-economic event? Have you found the answers? If you haven’t, read the article to get clues on the correlation between the epidemic and the financial markets; and the forecast for the upcoming market moves.

What the coronavirus is

Coronavirus is a wide range of viruses that cause such illnesses as the common cold. The virus usually applies to animals. However, there are cases when it spreads from animals to people. That is what happened in China. The virus appeared in Chinese city Wuhan on January 31, 2019. Since that time, it has expanded around the world including such countries as Thailand, Japan, the Republic of Korea, and the US. It is a deadly virus that has already taken the lives of 25 people, 830 are infected.

Due to the expansion, the virus has been influencing markets more and more.

Why the virus affects markets

It may sound strange that the medical virus has an impact on the financial world. Traders know that natural disasters and epidemics always affect the market. However, usually, it’s the market of the suffering country. This time, the coronavirus has affected not only China but the whole market sentiment. Let’s figure out why this has happened.

Last year, market sentiment was shaken by the risk of the global recession. Chinese economic data was one of the barometers of the global economic slowdown due to US-China trade tensions and the financial power of Beijing. The virus led to the shutdown of three Chinese cities. As a result, analysts think it may affect the Chinese economy in general.

Economists see another risk in the expansion of the virus. It is mostly noticed in Asian countries. However, one case was already registered in the US. If the epidemic spreads around the world, the risks for the world markets will increase even more.

The third point we should consider is the fragility of market sentiment due to the Brexit and geopolitical instability, thanks to Mr. Trump, US-Sino trade war is not among risks for now. As a result, any negative event is considered as a risk factor.

Market outlook

The virus may have a short-term effect if the vaccine is invented soon and the escalation of the virus decreases. In the case of the virus expansion around the globe, more markets will be affected.

Stock market

The stock market is a great indicator of risk sentiment. The virus negatively influenced the Asian stocks and stocks of companies that heavily rely on Chinese tourists. As a result, world travel-based companies suffered a lot.

Source: FactSet

On January 23, Shanghai’s stock market fell by almost 2.8% because China’s government closed off all public transportation in Wuhan. Two other cities were also blocked.

Source: Investing

Investors worry that the country’s Lunar New Year holiday that starts on Saturday will increase the spread as Chinese citizens will travel domestically and abroad. The Chinese market will be closed during the week. However, US stocks can stay under pressure.

Chinese yuan

It seems the Chinese yuan was not affected by the virus that much. The USD/CNH pair had been suffering until January 20, 2020. That means the Chinese yuan was strong enough. The recovery of the pair could be caused by the correction factor that happens every time the pair rises/falls for a long period. As a result, we can see that the impact of the virus on the Chinese currency is not that strong now. If the epidemic increases, the CNH may suffer. Then the pair will target 6.97, 7.0110, and 7.0335. If the effect is limited, the yuan has chances to appreciate, pulling the pair to 6.90, 6.86, and 6.8280.

USDCNHDaily.png

Safe-haven assets

Some analysts talk about the strong positive effect of the coronavirus on the refuge assets. However, we can doubt the strong effect.

Nowadays, gold is a major safe-haven asset that reacts to global risks. If we follow the direction of the XAU since December 31, 2019, we will see that the XAU/USD pair is not that strong during the past weeks.

US-Iran geopolitical crisis was the biggest driver of the pair at the beginning of the year. As a result, the pair reached a high of 1,611. After the crisis passed, the pair rebounded and has been trading within a narrow range of 1,545-1,611. All its ups and down mostly related to the strength of the USD.

XAUUSDDaily (1).png

As for the US dollar. The greenback has been recovering since the beginning of the year. And this happened not because of the risks of the virus. The USD is a weak safe-haven asset that means the negative market sentiment could not push the American currency up that much. The US-China war melting and US-Iran tensions were more important factors for the USD.

UsDollarDaily.png

As for the Japanese yen, if you read our article “Gold and Japanese yen: who is not a safe-haven asset anymore?”, you know that the JPY is unlikely can be considered as a refuge. If we take a look at the chart of the USD/JPY, we will see a decline of the pair.

Some consider the fall as the strength of the Japanese yen caused by the negative market sentiment, however, we should remember that previously the pair reached highs of May 2019 and the correction was expected. The pair rebounded from 110.20 and fell to 109.31. If the decline continues, the pair will target 108.86, 108.47. In the case of the upward movement, previous supports will become resistances. And additional resistance levels can be placed at 109.62, 110.20.

USDJPYDaily (2).png

Talking about the safe-havens, we can say that the market mood will be their driver. Nevertheless, the effect will be short-term and may only arise in the times of the negative news.

Trading tips

We don’t underestimate the impact of the virus on market sentiment. However, it may be not that strong as some analysts claim. The spread of the virus will negatively affect the global market outlook. Until then, we may expect a negative impact on the Asian markets. To catch the market mood, follow the news with FBS.


Note for investors

All the information above is signaling the change in the way we determine the strength of the domestic currency. If before the rate cut signaled the weakness of the currency, it’s more likely that in 2020, investors will look at other easing measures. In this case, the economic calendar is not the major way to predict the currency moves. Check the news with FBS to get the recent updates on the monetary policy.  

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Coronavirus Remains Investors’ Top Concern For The Week Ahead

  • Global equities decline as coronavirus continues to spread
  • US earnings season in full swing with 145 S&P 500 companies announcing results
  • The Fed and BoE will conduct their first policy meetings of 2020

The spike in the Volatility Index (VIX) on Friday is starting to reflect fears about the spread of the deadly coronavirus. It has already killed 80 people in China, infected more than 2,700 globally and is showing no signs of retreating. The latter issue is leading investors to sell risk assets and flee to safe havens.

Whether the market reaction to the coronavirus will be short-lived or extended further remains a guessing game for now. The bottom line is how much global economic output will be wiped out, and so far, no one knows the answer.

Many investors prefer to increase their cash allocation and overweight safe havens, such as Treasuries, Gold and the Japanese Yen, until we have a clear assessment on the degree of economic impact. However, if the mortality rate continues to rise with no cure to the virus, investors will move to panic mode, so expect to see further downside in risk assets. That’s why investors are advised to keep a close eye on the VIX index.

While the coronavirus is set to grab all the headlines, this week is shaping up to be a busy one on many fronts. Earnings season gets into full swing with 145 S&P 500 companies reporting results, central banks in the UK and US decide on monetary policy, President Trump’s impeachment trial enters its second week and key economic data are due to be released.

Earnings

Tech giants will be under the spotlight with Apple, Microsoft and Amazon among the names to be reporting results on Wednesday and Thursday. Those big tech firms contributed to a large chunk of the S&P 500 rally in 2019 with Apple rising 86%, Microsoft 55% and Amazon 23% last year. For these companies to sustain their upside momentum, we need to see not just earnings surprise to the upside, but upcoming quarters projections as well.

Exxon Mobil, Chevron, Facebook, Tesla, Pfizer, General Electric, Boeing, Caterpillar, and United Technologies are among the big firms reporting this week.

Central Banks Meetings

The Federal Reserve and Bank of England will be holding their first meetings of 2020. The Fed is widely expected to remain on hold when delivering its statement on Wednesday. We also anticipate very little changes to their economic projections. With a robust labour market and moderate inflation, we don’t expect to see any amendments to monetary policy in the near term. Market participants still need to know how long the Fed will remain on the sidelines, but the only answer they’re likely to receive is “we are data-dependent.”

However, the BoE’s rate decision is likely to be much more interesting with markets split 50/50 on whether we’ll see a rate cut on Thursday. MPC members have been talking up the case for lower rates so far this year, but the positive PMI releases last week will likely lead to more of a wait-and-see approach. Whatever the outcome from the meeting, expect to see volatility in the Pound.


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Lukman’s Week Ahead: Market themes to watch out for – Webinar Jan 27

An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders. Enjoy an expert look at:

• The key themes driving the financial markets

• Technical and fundamental trading ideas on the MT4 platform

• How to use the latest FXTM trading signals

• Using fundamental analysis to increase your profit potential

• What to monitor over the coming week

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Lukman Otunuga has been a Research Analyst at FXTM since 2015. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis. His in-depth analysis on global currency and commodity markets is often cited by leading international media, including the Associated Press (AP), BBC, CNBC, CNN, Marketwatch, NASDAQ, and The Telegraph. He has also appeared on Africa’s biggest television network, NTA 2. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance.

Asian Markets Mixed as Investors Contemplate Coronavirus Threat

While these are still early days, the reported cases have evoked fears of a repeat of the 2003 SARS virus outbreak. Amid hopes that the authorities in affected countries are better equipped this time around following other epidemics over the years, the losses in risk assets should prove transitory as long as investors’ fears can be reined in.

This outbreak is sure to test the risk appetites of investors who have already overcome the flare-up in the US-Iran conflict earlier this year. However, should the World Health Organization label this outbreak as an international public health emergency, that could catalyse further losses in riskier assets while boosting demand for safe havens. If the authorities around the world show signs of failing to contain the coronavirus for an extended length of time, that could prompt a sustained risk-off period in the markets.

Dollar traders keep watchful eye over Trump impeachment trial, virus outbreak

While the Dollar index (DXY) has recovered from the oversold conditions seen at the onset of 2020, it still appears dampened below its 200-day moving average for the time being, as its downward trend since October is showing signs of levelling out.

The Dollar and US equities have offered scant reaction to the impeachment proceedings against US President Donald Trump thus far. But should the trial in the Senate unveil any material information that threatens policy continuity, then financial markets may react negatively to the added uncertainty. Given the Greenback’s status as a safe haven asset, the Dollar could however find near-term support if the fallout from the coronavirus outbreak is reflected in the hard data and threatens the stability of major economies.

$1600 within reach for Bullion if virus concerns escalate

Gold has quickly given up its recent gains following initial reports of the coronavirus outbreak, with Bullion moderating back below the $1560 psychological level. The case for Gold breaching and staying above $1600 will become stronger if there are more widespread cases of the coronavirus, coupled with lingering concerns over geopolitical risks. However, once such fears subside and investors can refocus on the global economic recovery, Gold is then expected moderate over the course of the year.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Gold and Japanese Yen: Which One is not a Safe-Haven Asset Anymore?

However, since recently, the USD with the weak American economic data and the easing monetary policy has been losing its status. What about the JPY and XAU? The situation is unclear. Let’s get a grasp on it.

Japanese yen

The new year started with the US-Iran tensions. Let us remind what happened. The US airstrike at the direction of Donald Trump killed a top Iranian commander Qassem Soleimani. Iran retaliated striking multiple US bases located in Iran and Iraq.

The conflict started on January 3 and the escalation continued until January 8. After, the tensions calmed. What could we expect? According to the sense of the safe-haven asset, the Japanese yen was expected to strengthen. However, the rise was limited. Let’s take a look at the chart.

USDJPYDaily (1).png

As you can see, the USD/JPY pair kept falling until January 3. On January 6, the rebound happened. Since then, the pair has been moving up. The Iranian retaliation on January 8 was reflected with the long lower shadow. Nonetheless, the USD/JPY continued rising.

The weakness of the JPY could be caused by the New Year holidays that lasted for the Asian markets until January 6. However, the Japanese investors who returned to work didn’t support the currency.

What are the reasons then?

Analysts name several reasons for the JPY weakness. The first one is the willingness of the domestic asset managers to buy higher-yielding foreign assets. The second reason may be hidden in the trade deficit of Japan. The third point we should consider is the overseas capital flows of Japanese companies.

One more reason we can mention is the carry trade strategy. The idea of the carry trade is to borrow the low-interest currency and invest in the higher-interest currency. Since the last year, the major central banks have been easing their monetary policy. The basis of the loose policy is the lower interest rates. That means the advantage of the Japanese yen as a low-interest currency has been vanishing. This year, the central banks are anticipated to hold the rates unchanged. However, this factor unlikely supports the JPY. Some analysts believe the euro with its extremely low rates can be more attractive for carry-trade traders.

Technical setup

JPMorgan currency strategist noticed that in 2019 the pair had been trading in its tightest range since 1980 at 7.6%. It signals upcoming levels to be narrow.

Let’s consider middle-term levels. On the daily chart of USD/JPY, the pair has been trading at high of May 2019. The resistance at 110.16 is the psychological level marked at the weekly chart. If bulls can push it above, additional resistances are placed at 110.63, 110.98, and 111.45. At the same time, both the RSI indicator and Stochastic Oscillator are in the overbought area. It means the rebound may happen soon. Look at the supports at the range of 109.55-109.30, 108.47, 107.97.

USDJPYDaily1.png

What does all this mean? It seems the Japanese yen has lost its position of the safe-haven asset. It is more likely the only recovery of the carry trade factor will be able to support the Japanese yen. However, the easing monetary policy of the central banks is among the major negative factors that may affect the carry trade.

Gold

The reaction of gold on the US-Iran escalation was more visible than the one the yen experienced. On January 8, XAU/USD reached the highs of April 2013. Later the pair moved down and it was expected. Firstly, the pair reached significant highs. Each maximum and minimum are always followed by a correction. And such a correction happened. Secondly, the market sentiment improved due to the remission of the US-Iran conflict and the upcoming first phase of the US-China agreement.

What about the future? TD Securities argues the strength of the gold despite the current consolidation. As for the analysts at MKS PAMP Group, they believe in the strength of the XAU/USD with the average price of $1,636 with the high at $1,780 an ounce. The support is anticipated to lie at $1,520. Analysts predict the pressure from geopolitics and politics. The US presidential election may be an additional risk-off factor.

As a result, we can confirm the asset is the safe-haven asset that will strengthen at any time the market sentiment turns negative.

The risks for gold power also exist. Rumors of the global economic recession have passed, the central banks are anticipated to keep the rates on hold at least for a while, US-China trade war tensions improved, as a result, the gold’s rise may be limited. But we should not forget about the unexpected factors such as political and geopolitical tensions. Thus, traders should follow the news to be up to date.

Technical setup

As we mentioned above, XAU/USD reached highs of April 2013 on January 8. After that, the pair tuned down with the following correction. Currently, the pair has been trading in a channel of 1,545-1,562. A break above 1,562 will lead the pair to the next resistance at 1,575. The previous maximum of 1,611 is high. It means the pair may form new highs. Nevertheless, the RSI indicator and Stochastic Oscillator are in the overbought area. That may cause a prolonged correction. The next support is at 1,520.

XAUUSDDaily.png

To conclude, we can say that the gold is still the safe-haven asset that is supposed to rise in times of uncertainties and decline when the risk sentiment is on. As for the Japanese yen, the currency is not the refuge for investors anymore. The carry trade strategy is the basis of the future position of the JPY. If it is still the low-interest currency using for borrowing, it will have an opportunity to appreciate against the USD. Until then, the strength of the yen is limited.


Note for investors

All the information above is signaling the change in the way we determine the strength of the domestic currency. If before the rate cut signaled the weakness of the currency, it’s more likely that in 2020, investors will look at other easing measures. In this case, the economic calendar is not the major way to predict the currency moves. Check the news with FBS to get the recent updates on the monetary policy.  

Market Caution Returns Ahead of Davos Summit

  • Asian shares slip on China coronavirus concerns
  • Annual World Economic Forum in Davos in focus
  • Macron and Trump call truce in digital tax dispute
  • Gold gains as safe-haven interest rises

This unfavourable development could not come at a more critical time with many people expected to travel within China before the Lunar new year. The outbreak certainly presents an economic risk to China and its close neighbours, especially if tourism, air travel and other industries are affected.

Caution from Asia should hit European markets ahead of the World Economic Forum (WEF) in Davos, Switzerland. Business leaders, financial heavyweights and politicians from across the globe will discuss key issues revolving around climate change and sustainable business. There could be some movement across stock markets if global trade developments and geopolitical risks are discussed during the summit.

Euro steady after Trump-Macron truce

In other news, the Euro held steady against the Dollar after France announced an agreement with the United States on a truce in their digital tax dispute.

With the accord lasting until the end of 2020, this is a welcome development for the Eurozone as tensions ease between both sides. In regards to the technical picture, the EURUSD is trading around 1.1095 as of writing. A breakout above 1.1100 may open the doors towards 1.1170. Alternatively, a move back below 1.1080 could trigger a decline towards 1.1040.

Commodity spotlight – Gold

Gold is set to remain the prime destination for safe haven buyers this week as developments in China and caution ahead of the Davos summit dent risk sentiment. The precious metal is trading around $1566 as of writing and could challenge $1580 if risk aversion intensifies. A solid breakout above here will most likely open the doors back towards $1600.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

HotForex Celebrates 10 Years of Trading Excellence

Port Louis, Mauritius, January 2020 – HotForex, the award-winning forex and commodities broker on CFDs, was founded in 2010 and in just ten years has become a worldwide broker of choice to millions as a result of its commitment to providing the best possible trading experience.

HotForex CEO George Koumantaris said: “We are committed to being a global market leader known for our customer service, and always keep our loyal clients at the heart of everything we do. To show our appreciation of their support, we constantly work to ensure that our products and services reflect the very best that the industry has to offer, and look forward to doing so for another ten years and more!”

With 35+ of the most prestigious industry awards and 2,000,000 live accounts, the HotForex success story is sure to continue, as the broker finds new ways to further enhance everything that they do.

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With its origins dating back to 2010, HotForex is the brand name of HF Markets Group which encompasses global and regulated entities which are operating as multi-asset brokers offering both retail and institutional trading services to clients from around the world. HotForex is continuously establishing its position as a market leader, a fact affirmed by:

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Is Netflix’s Crown Under Threat From Rival Streaming Giants?

As the streaming wars kick into higher gear in 2020, Netflix’s latest earning should offer a taster of how the giant is faring against competitors like Disney+, Apple and Amazon. Investors seem optimistic over the company’s prospects despite the growing competition, and this positivity continues to be reflected in Netflix stocks. Shares have already jumped almost 5% since the start of the year and appreciated 20% since the launch of Disney+ in November 2019. However, it remains uncertain whether the profits in Q4 will mirror the encouraging gains witnessed in stocks over the past few months.

The fourth-quarter results will be interesting, because it will offer some insight into how the company’s subscriber’s number have been impacted by the launch of rivals Disney + and Apple TV +. Netflix expects revenues to grow 30% to $5.4 billion while earnings are projected to surge over 65% to reach $0.52 per share. If Netflix can attract more subscribers to its existing legion of 160 million across the globe, this may push stock prices higher and the streaming giant will maintain its status as market leader.

At the end of the day, everyone wants the crown but there could be only one King. Will 2020 see Netflix dethroned as new champions emerge from the fierce competition?

Netflix is trading around $339 as of writing. News that a number of classic studio Ghibli films will finally be available on Netflix from February onwards should boost buying sentiment towards the stock. A technical close and daily close above $345 could open the doors towards $360 and possibly $370 in the medium-term. Should earnings disappoint, Netflix stock could sink back towards the $320 level.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

BDSwiss Supports Australian Bushfire Relief Cause

Dubbing the last day of January as its official charity day, BDSwiss Group has committed to donate 100% of the trading commissions earned on Jan 31st to the NSW Rural Fire Services, to support the volunteer firefighters and the victims of the ongoing bushfire crisis in Australia. The NSW RFS is the world’s largest volunteer firefighting service; however, it’s been widely reported to be underfunded by the Australian government. BDSwiss contribution aims to support the efforts of the NFW and make an impact from the other side of the world.

Australia is currently experiencing its worst-ever bushfire season and sadly counts 25 casualties, 14.5 million acres of scorched land and over 400 million animal lives lost. According to BBC, wildfires in Australia have caused massive devastation across the subcontinent destroying over 6 million hectares of land comprising forests, bush, and parks. Thousands of Australians have been forced out of their homes to find shelter as the area already burned is more than triple the size of the land destroyed by the 2018 California Fires and six times the size of the 2019 fires in the Amazon Rainforest.

Joining in the efforts to help raise funds for the volunteer firefighters and victims of the ongoing Australian bushfire crisis, BDSwiss’ contribution aims to specifically support immediate rescue and relief efforts as the unprecedented bushfires sweep through Australia, as well as long-term recovery and rebuilding of the bushfire-affected communities.

About BDSwiss Group: BDSwiss Group is a leading financial group, offering Forex and CFD investment services to more than a million clients worldwide. BDSwiss as a brand was established back in 2012 and has since then been providing top-class products, a wide range of platforms, competitive pricing and fast execution on more than 250 underlying CFD instruments. BDSwiss complies with a strict regulatory framework and operates its services on a global scale under different entities. With 200+ personnel, BDSwiss Group’s holding company is located in Zug, Switzerland and maintains its operating offices in Berlin, Germany and Limassol, Cyprus.

Asian Equities Edge Higher as US and European Stocks Hit New Records

  • Central Banks expected to keep policies unchanged this week
  • Oil prices rally on supply disruption from Libya

Three weeks into the new year and equity bulls remain well in control. Wall Street continued to post new all-time highs with the S&P 500 up more than 3% year-to-date. Meanwhile, in Europe, the Stoxx 600 managed to break above recent resistance to close at a new record high on Friday.

Several factors have played a role in this bull run, including the US-China trade deal, better than expected economic data from the US and China and most importantly, the addition of short-term liquidity to the financial system by the Federal Reserve.

While it makes sense to be worried about high valuations in equity markets, as long as monetary policies remain loose, bond yields stay relatively low and economic data remains solid, we can still see further gains in global equities.

One ingredient that has been missing in the bull run is corporate earnings. The S&P 500 is expected to report its fourth consecutive quarter of year-on-year earnings declines, but many observers hope that Q4 will mark the end of the US earnings recession. Equity analysts are anticipating 4.3% earnings growth for Q1 2020 and for this to improve significantly in the quarters ahead, to reach 15% in Q4 2020. Given that markets are forward-looking, the recent weakness in corporate profits has been ignored.

After the large US investment banks delivered an upbeat start to the earnings season last week, 44 companies will announce their results this week. The list includes IBM, Netflix, Baker Hughes, Johnson & Johnson, Texas Instruments, Intel and Procter & Gamble.

Central banks meetings

Currency traders will be more interested in central bank meetings this week as The European Central Bank, Bank of Japan and Bank of Canada all hold their first monetary policy meetings of the year.

The ECB rendez-vous will likely be the most interesting one as new President, Christine Lagarde, launches only the central bank’s second strategic review in the euro’s two decade history. However, we do not expect to see any changes to interest rates or asset purchase program.

The BoJ and BoC are also expected to keep policy unchanged, given that the recent easing in trade tensions and improvement in economic data will buy them some time, before deciding on whether further rate cuts are required. That said, the tone of the statements may still have an impact on their currencies.

Oil jumps on supply disruption

Oil was the only asset class that saw significant moves early Monday. Brent was more than 1.2% higher at the time of writing, after two production bases in Libya were shut down. Although markets seem to be well supplied, such events remind investors that geopolitical risk remains an important factor in oil pricing. It is estimated that 800,000 barrels of crude supplies have been halted and if they don’t return fast, we may see a further rally in the days ahead.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

FC Barcelona and FBS Sign New Global Partnership Agreement

FC Barcelona and FBS have reached a new global partnership agreement, whereby the broker specializing in Forex trading is to become the soccer club’s Official Trading Partner for the next four years, through 30 June 2024. This partnership will be a boost to Barça’s global commercial strategy, as part of the consolidation of its international expansion to ensure it continues to be a benchmark club both on and off the field.

The agreement was made official at an event held at the Camp Nou stadium attended by Mr. Josep Pont, Board of Directors Member responsible for Commercial Area, and Mr. Juliano Belletti, former player and Barça ambassador, in representation of FC Barcelona, and by CMO Mr. Ali Heder, on behalf of FBS. At the event, FBS representative was presented with the new FC Barcelona 19/20 home shirt.

As a result of this agreement, FC Barcelona and FBS plan to undertake different joint programs to offer unique online and offline experiences to their followers around the world. These include the creation of branded content to take both parties closer to their audiences and to generate greater engagement with Barça fans, as well as the presence of the FBS name on the LED at the Camp Nou stadium on game days, among other assets.

This new partnership is part of FC Barcelona global expansion strategy, based on sourcing the best possible agreements in each partnership category, in order to keep the Barça project growing and to stay at the top, not only on the field, but also in the fields of marketing and sports sponsorship.

FBS is an international broker that offers financial products for currency, precious metals, CFD, and stock trading. The company ran onto the field back in 2009 and stand out with authentic services adapted for different demands. The focus is to transform a traditional approach to investment, making it easy to start and stay for anyone. The company features a low barrier to entry, top-ranking apps, and a wide social trading network.

Statement by Josep Pont, Board of Directors member responsible for the Commercial Area of FC Barcelona

“We are pleased to announce this new partnership with FBS, a leading brand in its sector. It is an agreement that will help us to continue growing and advancing with such a unique project as FC Barcelona and to consolidate our expansion strategy on a global level, to continue setting standards not only for our style of play, which is so recognised around the world, but also in the fields of partnerships and sports marketing.”

Statement by Ali Heder, Chief Marketing Officer of FBS

“Partnership with FC Barcelona is an exciting new chapter in FBS history. Our mutual goals meet at the point of ambition: just as Barcelona strives for being the #1 name in football, FBS aims to win the global leadership and become synonymous with success in online investing.

We reckon this partnership will help both sides to push the limits even further and get in the spotlight at the new playgrounds. For the time being, FBS is cooking up some great promo ideas and social responsibility projects – as experts in investing, we know that meaningful deeds implemented with passion and supported by strong allies pay the best interest.”

About FBS

FBS is a broker with an international outlook that serves clients in Asia, Latin America, Europe, and the MENA. It took 10 years in the field and 14 million clients across the globe to build an ecosystem to match diverse investing interests, such as currencies, CFDs, stocks, metals, and social trading.

FBS supports traders with different goals, geographies, and biographies. With a unique combination of services, the broker allows people with different backgrounds to invest in various assets and operates as clients’ “hands” in the global market. FBS is social. It offers round-the-clock customer support in 19 languages and stays in touch with the community through charity campaigns and promos. International licenses and the latest instruments of money and data protection ensure safe trading under any circumstances. In a nutshell, if the Forex market was a football field, FBS would give you 3 pairs of feet and Godzilla in goal.

FXTM Invest, Applied – Webinar Jan 22

This insightful presentation provides an overview of our innovative copy trading programme, FXTM Invest. Theunis will provide practical step-by-step demonstrations and teach participants two trading strategies. Guests will also have the chance to ask Theunis their most pressing industry questions. Register today to learn from the comfort of your own home! All the material presented in webinars from South Africa has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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FXTM Forex Educator Theunis Kruger has always been fascinated by economics, with a particular interest in ‘wave’ formations and how they can be used to forecast and analyse trends in the financial markets. He began to trade personally as a hobby, but his keen insights and aptitude soon paved the path towards a successful career. With a decade of solid trading experience to his name, Theunis now enjoys sharing his forex knowledge with others. He also has experience in real estate and holds a degree in Town and Regional planning, complimenting his passion for securing a healthy financial future.

2020 Market Outlook: Trading Opportunities in Q1 – Webinar Jan 23

Join for a free and interactive webinar on trading opportunities in Q1 2020! This valuable and interactive session examines the global economy’s prospects in detail, and highlights key topics and risks to watch out for in the months ahead across major currencies, commodities, and selected stocks. Packed with detailed insights from our experienced team of dedicated market analysts, this webinar will give you all the knowledge you need to plan your next move. Don’t miss out, sign up today to learn from the comfort of your own home!

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Lukman Otunuga has been a Research Analyst at FXTM since 2015. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis. His in-depth analysis on global currency and commodity markets is often cited by leading international media, including the Associated Press (AP), BBC, CNBC, CNN, Marketwatch, NASDAQ, and The Telegraph. He has also appeared on Africa’s biggest television network, NTA 2. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance.

Jameel Ahmad is the Global Head of Currency Strategy and Market Research at FXTM. Since joining the company in 2014, he has played a key role in building the international profile of FXTM across Europe, the Middle East, Africa and Asia through media tours, broadcast interviews and seminars.
Specialising in financial market developments, with a particular emphasis on global currencies, commodities and emerging markets, Jameel is frequently featured in leading media outlets, including the Financial Times, Wall Street Journal, Forbes, Sky News, and Reuters. He is also a highly sought broadcast commentator, and can be seen regularly on Al-Jazeera, BBC, Bloomberg, CGTN, CNBC and Sky News.

Jameel holds a BA (Hons) degree in Business Studies with Accountancy & Finance from the University of the West of England. More recently, he completed an executive education course in Unconventional Monetary Policy at the Barcelona Graduate School of Economics

Fundamental Analysis and its Impact on the FX Market – Webinar Jan 20

Fundamental analysis assesses the economic factors affecting a trading instrument and is an important part of many traders’ strategies. Learn more about how key economic indicators such as interest rates, GDP, and inflation – as well as non-economic factors such as political instability and black swan events – may impact currency values. Don’t miss out on the chance to learn from one of our experts from the comfort of your own home! All the material presented in webinars from South Africa has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

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Bilal Jafar is a Forex Educator with FXTM. He holds an MBA in Finance from the Institute of Business & Management, Lahore, and has over eight years of experience in the financial markets. He started his journey as a forex trader and also worked in different positions within sales and education. In 2015, he founded and began serving as the Editor of Pak Economy, one of Pakistan’s leading business and financial magazines. After working as a Business Development Manager with FXTM, he then joined the Education department to pursue his passion for sharing his forex knowledge. His diverse experience in sales, media and education gives him an extra edge that helps him better understand traders’ educational needs.

ECB Minutes in Focus as Investors Lookout for Clues on Inflation Target

ECB’s new leadership is facing a tough year in 2020, with a new president, a new chief economist and the latest addition of two new executive board members makes the bank’s action difficult to predict. Investors are eagerly waiting for signs on ECB’s strategy review as ECB president Christine Lagarde is due to speak on Thursday, a few hours after the release of ECB minutes. Christine Lagarde also refrained ECB’s policymakers from discussing the strategy review publicly as she is planning to formally announce it on January 23.

The ECB re-launched its Quantitative Easing program under Mario Draghi back in September 2019 to aid the ailing Eurozone economy but a few policymakers opposed the decision. The biggest challenge for Christine Lagarde in her strategy review will be the inflation target for the Eurozone area as ECB has consistently failed to meet the inflation target of close to 2%. Since nothing much happened in the December meeting, investors will be scrutinizing details regarding amendment of the Inflation target.

The Euro remained under pressure against the US Dollar since December 31 but the bulls managed to keep the price above the key psychological level of 1.11000. As of writing, the price is hovering around 1.11500. Price action in the EURGBP has been interesting, after falling to the lowest level in three years against the Pound in December. Euro saw a recovery in January as price jumped above 0.85000. EURGBP is currently hovering around 0.85590.

On the technical side, EURGBP on the 4-Hour timeframe has been following an uptrend since January 8. The price jumped above the key level of 0.85000 and registered the highest level of period under study at 0.85953 on January 14. Bulls managed to keep the price above 0.85000 but failed to close above 0.86000. As of writing, the EURGBP is hovering around 0.85590 with positive Moving Average Convergence Divergence but momentum slightly below the 100 level. The pair is currently trading above the 50 period simple moving average with Relative Strength Index above 50 which supports the recent bullish price move. Resistance level lies at 0.855953 while the support level lies at 0.84546. Bulls are eyeing a push above 0.86000, but a close below 0.85000 could strengthen the argument for further bearish movements.

For more information, please visit: FXTM


Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Central Banks: No Power to Fight The Recession?

US-Sino trade tensions, Brexit uncertainties, the global economic slowdown, and risks of the recession made the world central banks ease their monetary policy significantly.

The Federal Reserve cut the rate 3 times. However, the bank had room to loosen after 4 rate hikes in 2018. While the ECB didn’t have much space to loosen with 0 rate. The monetary policy is supposed to be quiet during 2020. What if the market uncertainties prevail and the risks of the recession renew? The central banks should have more opportunities to stimulate the economy. However, low rates for most of the central banks and negative for some of them mean the banks are at the edge.

The main mood of the world monetary policy will stay on the dovish side. Although according to Bloomberg, the major central banks are anticipated to keep the rates unchanged during 2020, risks of the too dovish policy exist.

Screen Shot 2020-01-13 at 4.22.48 AM.png

Fed

The Federal Reserve feels comfortable keeping the rate on hold. However, other measures are in the arena. The central bank bought Treasury bills to restore sufficient reserves in the banking system. There is an opinion the bank will have to increase purchases to short-term coupon securities. Currently, Mr. Powell is ready for the increase, but the step may be taken if necessary.

Other measures

The former Federal Reserve chairs Ben Bernanke and Janet Yellen called for a big role of the fiscal policy in case of the next economic downturn. Mr. Bernanke declared the purchase of government securities and mortgage-backed assets may push down long-term interest rates. Asset purchases (QE) and the “forward guidance” confirming lower interest rates could provide some stimulus.

ECB

The deposit rate is anticipated to stay on hold at the level of -0.50 for 2020. Previously, Mr. Draghi’s contentious stimulus package caused mixed reactions. Policymakers signal squeezed bank profitability and risks to financial stability as the opposite side of such policy. Draghi’s successor Christine Lagarde is expected to assess negative rates. However, the stimulus will take place if needed and more likely they will.

Other measures

The new President may launch dual interest rates. Such a policy may be more efficient than the quantitative easing, negative interest rate or forward guidance. Using a dual rate, the central bank will set different rates for loans and deposits.

Although Mario Draghi was the one who kept the rates on the record minimums for long, he warns about the risks of Japanification. The situation may copy the Japanese monetary stance, where the Bank of Japan has to keep interest rates at near to zero level and purchase bonds.

BOE

According to Bloomberg, the rate is expected to be held at 0.75. Nevertheless, supporting measures are likely to be used. In March, the central bank will have the new Governor – Mr. Carney will be replaced by Andrew Bailey. The successor will meet with a global slowdown and a constant shortage of investment. Currently, most of the policy makers argue for the additional rate cuts. The future path will depend on the Brexit outcome and economic recovery.

Other measures

In the recent interview with the Financial Times the governor of the Bank of England Mr. Carney warned the global economy might appear in a “liquidity trap”. In such a situation, the monetary policy of the banks loses its effectiveness in producing increased spending and reanimation of economic growth. If the recession happens, the central banks have a limited way to stimulate the economy.

At the same time, the present governor insisted the BoE could still cut interest rates to close to zero and ease banks’ capital requirements to enable them to lend more.

To conclude, we can say that the major central banks will unlikely to turn the mood to hawkish in 2020. The rate cut is not the best way to boost the economy so the banks are expected to implement additional stimulating measures. As for the domestic currencies, they are supposed to be under pressure in the case of the prolonged dovish policy.


Note for investors

All the information above is signaling the change in the way we determine the strength of the domestic currency. If before the rate cut signaled the weakness of the currency, it’s more likely that in 2020, investors will look at other easing measures. In this case, the economic calendar is not the major way to predict the currency moves. Check the news with FBS to get the recent updates on the monetary policy.  

How cTrader Puts Traders First?

In this article, I will try to explain why Traders First™ is not just a catchphrase, empty of meaning, but rather a solid business strategy to which we remain committed even a decade after we started working on this project.

So how does cTrader place Traders First™? The common perception would be that because there is no fee charged to the traders for using the platform, then Spotware’s direct clients are brokers. Thus it is their needs that Spotware has to fulfill as at the end they pay the bill. While there is a portion of truth in this statement, indeed brokers pay the bill and we care about them as much, what is not mentioned is what the bill consists of. cTrader is not offered on a traditional software licensing basis, where the client pays for a license to the software company and a support fee to keep the software up and running. Instead cTrader is offered on a platform-as-a-service basis and brokers pay fees based on the volume traded on the platform. This means that the more traders trade, the more money we make. And when do traders trade more? Of course when they are successful. Hence, cTrader aims to attract successful traders and enable them to remain successful in the long term. We want traders to succeed, it is a win-win situation for us.

So how do we put Traders First™ in action? The pillars of our strategy are the following:

  • Intervention-free platform. We host and manage everything on our infrastructure. Brokers cannot mess with price feeds, your orders, your trading and your trading history. Brokers just get a back end application allowing them to setup accounts, symbols, commissions, spreads, monitor the activity and, essentially, do what a broker’s job is to do.
  • Feature rich platform. We aim to provide traders a platform with advanced trading features that allows them to have a competitive advantage compared to traders using other platforms.
  • Continuous community driven development. We continuously improve the platform with enhancements stemming mostly from community feedback. We interact with traders through various channels on a daily basis and we update and upgrade the platform several times a year.
  • Top notch infrastructure. We are not stingy when it comes to infrastructure. We host our platform on high end hardware supported by a worldwide proxy network ensuring a fast and reliable operation all around market hours.
  • Transparency. We believe in transparency. All trading activity is logged and presented to traders in an easy to understand manner so that they always know what happened with their trades.

Summarizing the above, we have built a business deeply dependent on traders’ success. This is why based on internal reports there are about 35% more successful traders on cTrader, than the industry average. For us, the more the traders stay on our platform, the better. And the more successful they are, the more they stay. We have no interest in scam brokers and we have nothing to gain if traders lose their money and abandon the platform. Therefore every trader should rest assured that cTrader is on her or his side, always putting Traders First™.

More information: https://spotware.com/

Written by Panagiotis Charalampous, Head of Community Management of cTrader at Spotware

Asia Trading Cup Makes History in Macau

Press Release

15th January 2020

Macau, China

With what can be described as a high-octane, high-energy atmosphere, finalists executed their strategies over the US non-farm payroll data in a bid to get the largest percentage return and be crowned the grand champion.

With a minimum cash prize pool of $150,000 USD throughout the competition, the winner of the grand final night alone took home a cool $53,000 USD.

Here are the 3 champions, along with their percentage returns:

Winners Rank Percentage Return (%)
Mr. Haodong Nie 1st 9.79%
Mr. Zhanfeng Wu 2nd 5.64%
Mr. Shaotao Yu 3rd 3.79%

The competition, which was started last year by the Australian CFD broker ACY Securities, was streamed live from Macau with thousands of people tuning in to witness contestants showing off their trading prowess on one of the biggest live trading stages in the world.

ACY Securities Director and Co-founder Jimmy Ye said he was impressed by the calibre of talent at the event.

“The Asia Trading Cup personifies what it takes to become one of the best traders in the world. Contestants have proven they have incredible trading talent to qualify for this event and their skills are put to the test in the toughest environment of all – live in front of thousands of people” said Mr Ye.

“What impressed me the most about the competition is how focused and prepared each contestant was leading up to the final. Their steely determination combined with an impressive belief in their strategies, meant it was always going to be a close result” Mr Ye continued on to say.

Given the success of the Asia Trading Cup in 2018 and 2019, ACY Securities have announced that the next instalment of the competition will be rolled out internationally and will be renamed the Trading Cup.

For more information visit https://www.asiatradingcup.com/en/tournament2019/

Photographs for media use:

 

2020 Kicks off with US-Iran and Climate Change Crisis

The start of the year was marred by the escalating tensions between the US and Iran while extreme weather conditions across the global triggered fierce debates about climate change.

What do we know so far about the tensions between Iran and the US?

  • Iranian-backed militia killed an American Defense Contractor
  • The US retaliated with missile strikes
  • The American Embassy in Baghdad was attacked
  • US airstrikes killed top Iranian military official, General Qassem Soleimani
  • Iran responded by launching missile strikes at two bases hosting U.S. forces in Iraq

As the world witnesses the rising tensions between the US and Iran, and a uniting Iran over the assassination of one of the most influential and powerful men, the downing of Ukraine International Airlines flight PS752 has caused an international outrage and brought internal division within Iran.

Beyond Economic War

The existential conflict between the US and Iran moved beyond an economic war. In 2019, the US announced further economic sanctions on Iran which brought the latter into a deeper recession. As a significant buyer of crude from Iran, China sees the situation as an impediment that can hurt its economy. The Iran risks may therefore overshadow the trade deal.

Investors have already pricedin some extent of the risks associated with Iran since President Trump pulled out of the 2015 nuclear deal and started to impose sanctions. Even though the headlines brought Iran back on the geopolitical risks radar and caused a spike in volatility, we do not see the conflict changing the investment landscape at this stage.

Climate Change

2020 is set to be the confirmation of a new era for climate change. As we entered a new decade, the extreme weather conditions around the world have forced leaders of many countries to reassess their actions over climate change and transform the global energy system.

In Australia, the unprecedented and raging bushfires across the country act as a warning to the world and has even challenged a reluctant Prime Minister to take more action

Energy Sector

Oil prices experienced their largest weekly drop since July 2019 despite the tensions in the Middle East. Coincidently, markets were hit by two contradictory themes for the oil and gas industry: Iran Risks and Climate Change.

Source: Bloomberg Terminal

It should be highlighted that the energy sector emerged as the worst-performing sector of S&P500 in the last decade. Investors are stepping into 2020 being accustomed to the global oil glut and the gradual shift in the oil and gas industry.

Iran risks fuelled expectations of a reduction in supply while the “green” shift lowers demand expectations.

Eyes are now on the US-China trade deal!

Stock Markets

Despite an erratic few weeks of trading, global stock markets have performed quite well:

  • Major equity benchmarks traded at a record high
  • US stock indices are trading higher by 1% and above
  • Most European Bourses are also experiencing similar gains
  • Australian benchmark outshines its peers with more than 4% gain
  • FTSE100 is lagging slightly behind with 1% gain

Brexit will remain the dominant factor for the UK markets. Despite the volatile year 2019, the FTSE100 posted two-digit gains. The Tory win had pushed the index above the 7,500 mark. Looking ahead, the Footsie is expected to rebound and investors are eyeing the next target at 8,000 level for 2020.

However, given that a large amount of earnings of the index is derived from overseas, an appreciation of the Sterling may hinder the performance of the FTSE100 to play catch up with its global peers.

Source: Bloomberg

Are Re-Pricing Risks Required?

The killing of the Iranian key commander took the markets by surprise. Heightened geopolitical risks have somehow become the new normal and unless there is any serious escalation, medium to long-term effect on the markets would be limited. In a new world of higher tariffs, de-globalisation, and historic low levels of interest rates, the most significant risks for 2020 are:

  • Trade deal outcome.
  • Central Banks.

Deepta Bolaky, Market Analyst at GO Markets.

Read Our GO Markets Review

About GO Markets

GO Markets was established in Australia in 2006 as a provider of online CFD trading services. For over a decade we have positioned ourselves as a firmly trusted and leading global regulated CFD provider. Traders can access more than 250 tradeable CFD instruments including Forex, Shares, Indices and Commodities.


Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.