Article Library

35/65
Ranking
We usually don't comment on other central bank decisions, but one has to say that the decision the Fed took was appropriate given the position of the U.S. economy... and it was perfectly communicated and flawlessly executed.
-ECB President Mario Draghi, January 2016
A technical trader once told me that fundamentals don't drive the markets and using it does not give traders an edge. He further stated that when the price moves in the opposite direction of what's expected, a fundamental analyst will say "it was priced in".
The fact remains that many, if not most new traders, will solely rely on technicals. Similar to all aspects of trading, fundamental analysis can be difficult to comprehend. As a result, it is also difficult to profit from it without a sound understanding.
While there are several aspects of fundamental analysis, the Federal Reserve made one thing very clear at their March meeting. I hope to convey this and how to profit during the Fed tightening cycle. This one piece of information should allow traders to profit that normally do not follow fundamental developments.
To provide a backdrop to the above quote from ECB's Draghi, it was made during a time where he had gre…
Read article
Translate to English Show original
gargantua avatar
gargantua 21 Apr.

good article

orto leave comments
38/69
Ranking
Trade the Japanese yen is considered difficult from the point of view of fundamental analysis, primarily because of the close links with the Asian stock market, us Treasury securities and interest rates. To ignore the third largest global asset clearly not worth it, so try to adapt to its special Eastern "logic". One of the oldest world currencies initially was equal to 1.5 grams of gold. The gold standard in Japan, several times overturned, in the end, after several strong devaluations, when the status of the international in 1953, the IMF has identified the equivalent of just 2.5 mg "the market" of gold. In the period from 1949 to 1971, the yen was rigidly pegged to the us dollar (us$1= ¥360) now has a floating exchange rate and is traditionally considered the second reserve currency after the dollar. Today the Japanese yen in world foreign exchange reserves is around 4%, yen assets, "holding" approximately 29% of the world stock market, as well as the basic currency pair USD/JPY accounts for nearly 15% of the turnover of the Forex, and 5-6% yield yen crosses pairs. Japan confidently holds the third position among world economies, Japanese exports of high-tech focuses on all bas…
Read article
Translate to English Show original
killer195175 avatar

bravo.

VictoriaVika avatar

nice one :)

anna_n avatar
anna_n 25 Dec.

отлично!

vitaliani86 avatar

очень хорошая статья

Yuliya_N avatar
Yuliya_N 29 Dec.

Thanks for useful information!

orto leave comments
15/58
Ranking

Introduction
The global economy is in turmoil and central banks from the breath and width of the globe are struggling to spur economic growth in 2016. They have deployed most the weapons in their arsenal in a desperate attempt to spark economic growth, including negative interest rates and massive stimulus packages but the much need growth remains elusive. Consequently, central banks are looking for new ways to spark economic growth, and the use of unconventional means such as "helicopter money," have become topical issues.
This article seeks to demystify the concept of helicopter money, making it clearer and easier to understand to the ordinary person.

What is Helicopter Money?

Helicopter money is a reference to an idea made popular by the American economist Milton Friedman in 1969 in his paper “The Optimum Quantity of Money.”
The basic principle is that if a central bank wants to raise inflation and output in an economy that is running substantially below potential or targeted levels, one of the most effective tools would be simply to give everyone direct money transfers. In theory, people would see this as a permanent one-off expansion of the amount of money in circulat…
Read article
Translate to English Show original
Natalia_Kisenko avatar

well done!

olya2517 avatar
olya2517 23 Sep.

very good

Armands avatar
Armands 25 Sep.

Instead of giving more money directly to everyone, they give it to selected ones!

VictoriaVika avatar

great article!

Sharpshooter avatar

Точно. Так и вливают они обычно)

orto leave comments
32/57
Ranking
The markets are quite, not just because its August and many investors are on leave but also in anticipation to Jackson Hole meeting. So, why is this tiny place usually known for its winter ski complex, such an important economic event ?
Many of the world’s most powerful financial players and policymakers will gather for three days in Jackson Hole, a mountain resort in Wyoming. It goes back to 1978, when the first meeting of such kind was held and since then it offers a chance for central bankers, finance ministers and academics to talk about the world economy in a public but informal setting. The event is formally the Federal Reserve Bank of Kansas City’s “Economic Symposium”. All 12 of the Fed’s district banks organize research conferences. So how did Jackson Hole become Davos for central bankers?
The first one, on “World Agricultural Trade: The Potential for Growth”, took place in Kansas City, Missouri, where the bank is based. In 1982 the conference moved to Jackson Hole (which is in the Kansas City district) and persuaded Paul Volcker, then chairman of the Fed and an avid fly-fisherman, to attend. In a textbook case of network effects, Volcker’s regular attendance attracted oth…
Read article
Translate to English Show original
Sennna88 avatar
Sennna88 30 Aug.

thanks!

s_amira avatar
s_amira 31 Aug.

Good article!

TInna avatar
TInna 1 Sep.

good! very very!!!

amerfx86 avatar
amerfx86 2 Sep.

great story, well done

sonjatrader avatar

Great article Senna

orto leave comments
5/47
Ranking
Introduction
As the global oil and energy prices plummeted in 2015, so did the inflation and growth rates. This left most central banks in quandary as inflation and growth rate numbers ran far below their targeted levels.
This article looks at the successes and failures of the current expansionary monetary policy regimes in the world with particular emphasis on the economies employing the negative interest rate policy.
What is Negative interest rate policy?

A negative interest rate policy is a monetary policy tool whereby nominal target interest rates are set with a negative value.
Rationale for Negative Interest Rate Policy

During periods of economic downturn and deflationary pressures, central banks often lower rates to stimulate growth and to raise the inflation rate. The main objective of negative rates is that they provide an incentive for private banks to make loans. With the negative interest in place, storing money at the central bank in the form of reserves or holding lots of cash will become unattractive and projects that were not worth funding even in a low-interest-rate environment might now look worthwhile.
In some cases, central banks turn to negative rates to lower…
Read article
Translate to English Show original
juraj avatar
juraj 3 Aug.


Ilolor- it does not matter what the CBs state on their website, important is what they actually DO and how they make their decision.

https://fred.stlouisfed.org/series/PCEPILFE/#0

Fed never even declared its 2% target in the way ECB did, yet we are presuming they want to achieve 2% inflation. Their models are based upon PCE numbers and when you look at the history it becomes clear that FED always acted as if they were targeting core PCE. They were ok with headline inflation of 3%+ yet core PCE was at roughly 2% so they did nothing. Back 3 years ago when headline surpassed 2%,

juraj avatar
juraj 3 Aug.

Fed was in no hurry to lift the accommodation  because core PCE was still well below 2%.

If ECB officials declined to cut rates and step up QE saying core inflation was still positive and much better than headline, then they are de facto targeting core and not headline.

And if BoJ is refusing to step up easing for 2 years because core inflation is faring well, even though headline is back below 0 then they cannot be targeting headline inflation, no matter what their website says.

And lastly there are good reasons why you should overlook supply shocks (food&energy)

juraj avatar
juraj 3 Aug.

I am finished here- the comment system is a piece of... limiting me to under 600 characters which makes it impossible to express my intricate arguments.

Take care, it was a nice talk to you.

Mattie avatar
Mattie 3 Aug.

More often than not, it is for political reasons that the Fed Banks raise or lower rates. 

FXRabbit avatar
FXRabbit 26 Aug.

Very interesting article!

orto leave comments
2/43
Ranking
In this article we’re going to look at both the technical setup as well as the fundamental themes that have been dictating the movements in the FX Market for the month of September and what’s going to drive the market forward in the coming month. The fact that we haven’t been able to see a rally in the equity market and a continuous decline in the US Dollar it tells us that something significant is happening, and that is a shift in the belief of monetary policy and its influences over the markets. We know that the monetary policy is one of the more proactive, impressive and constantly present mover in the market, it’s a theme that has been responsible for much of the moves that we had over the past month and year as well.
  • EUR/USD Fundamental&Technical Analysis

Without a doubt the major event of the month of September was the FED rate decision to hold interest rates near historically low level. However, despite no rate hike the Fed still remains one of the major Central Banks that still has a hawkish stance and the fact that they have stopped easing it’s reason enough to support the US Dollar at least in the short term. In comparison, the ECB is on the other side of the monetary …
Read article
Translate to English Show original
Daytrader21 avatar

Thank you all for the good words

Decebal avatar
Decebal 23 Oct.

Supetr article!

foreignexchange avatar

Great article, thanks Daytrader21

Olga18375 avatar
Olga18375 28 Oct.

Great, long, useful, interesting!! And this is all words for you) Because you have a good article)!

marius24 avatar
marius24 29 Oct.

as usual this article is well written and so far you predicted quite precisely Eur/usd

orto leave comments
17/53
Ranking
The announcement
The Bank of England has decided to change it’s communication form and has squeezed in many releases into one announcement starting this month. The previous form of communicating was criticized for being inconsistent as information was divided into many releases across two weeks interval.
For the first time under the new order information was provided on the 6th of August. The Monetary Policy Committee vote took place as well as the minutes report, both on one day. The Monetary Policy Committee has voted against a rate hike with the votes divided 1 to 8, with 1 for and 8 against.
The consensus was at 2 to 9 with Ian McCafferty and Martin Weale voting for and possibly a third person as well. This outcome was disappointing for the market. The minutes have shown that there is a divide when it comes to the time of starting to cut down on the QE program. Additionally the inflation report was provided. The forecasts concerning inflation rate have been lowered for the rest of the year. The 2015 forecast has been lowered from 0.6% to 0.3%. It has also been mentioned that the downward pressures from low energy prices may persist until mid 2016. Howoever, by that time inflat…
Read article
Translate to English Show original
al_dcdemo avatar
al_dcdemo 29 Aug.

Useful information, very well explained and written. Nice job!

WallStreet6 avatar

Thanks:)

Olga18375 avatar
Olga18375 29 Aug.

Interesting post! Good job)

foreignexchange avatar

great

Margoshka avatar
Margoshka 30 Aug.

))yes!great

orto leave comments
13/58
Ranking
I have decided to write a follow up to my previous article about GBP due to the fact that last week there was important news coming from the UK which gives insight into the upcoming monetary policy of the Bank of England.
The week in review
On the 14th of July we saw the release of the Consumer Price Index for June which disappointed as it retreated to 0.0% YoY and MoM from 0.1% growth in May. Although the reading was better than in April which saw a drop of -0.1% which was the lowest level in over 50 years, the retreat comes in as a hindrance to the plan of the BoE of embarking on a rate hike schedule. The core CPI, which measures price changes among energy, food, alcohol and tobacco, has slowed to0.8% from 0.9% in May.
These data releases gave a bearish perspective for the GBP. However, afterwards the governor of Bank of England MarkCarney said in his statement that the BoE expects inflation to pick up later this year when the effects of lower oil and food prices subside. Thus, the time for interest rate hikes, which are going to be gradual, is coming closer, however he did not specify when. He said, "the point at which interest rates may begin to rise is moving closer with the p…
Read article
Translate to English Show original
Milian avatar
Milian 28 July

great)))

pipx avatar
pipx 28 July

I was sure the cable would hit 1.6 and went long this month in the trader contest boy was I wrong :-) In August I believe it will. Lets wait and see

WallStreet6 avatar

Thanks:) Yes, I think it may continue to appreciate in August and maybe even hit the 1.60 level. Especially that today's GDP came on target. But later on I think it will go the other way:)

sarah_gio avatar
sarah_gio 29 July

+1

Margoshka avatar
Margoshka 30 July

very interesting

orto leave comments
2/44
Ranking
The US Dollar has been on the spotlight since beginning of the year as momentum has surprised everyone. Retracements continue to be shallow. The dollar bullish trend is well mature on its own and I thought it's the perfect time to reinforce my view on the dollar as many are asking: what's next for the US Dollar?
This is the US dollar's fastest rise in 40 years, and it's up 14% on this year alone, and I was one of the few to speak about the dollar rally, even before the trend to be put in motion.
Explaining the dollar's incredible turnaround, at current speed and velocity is not quite hard to explain if you have been following my articles. There are plenty of evidences, from my side, as I was preparing for this kind of move. To understand better what it's happening with the dollar i'll suggest to go over and re-read my previous articles here:
Read article
Translate to English Show original
Daytrader21 avatar

For those who are interested to find more about my own view on the US Dollar, I wrote last week an blog post talking about the 1980-1985 US Dollar analog which fits perfectly to current market environment and also it's a fractal for current price action. See link above.

foreignexchange avatar

Thanks, this article is interesting and qualitatively. Did you also have some correlation analysis with labour market ?
Great article 

Daytrader21 avatar

foreignexchange Unfortunately I never looked into that stuff, when it comes with the currency market the 2 most important things I look at are inflation and interest rates I think that anything else will just alter the view of the market, of course this is just my own opinion. Thanks

Illya avatar
Illya 27 May

It looks like you spend a lot of time for this report.Good job!!!

Daytrader21 avatar

@lllya It takes some times to put all the pieces together and also I do a lot of research because I want to provide high content to my readers. Thanks for the good words.

orto leave comments
4/46
Ranking

Introduction


In 2015, the divergence in monetary policy among the world's central banks is expected to be a key theme. For now, the scorecard seems to be tilted toward monetary easing. In January 2015, fourteen central banks engaged in some form of monetary policy loosening, generally in the form of interest rate cuts or asset purchases.
Fig 1: Central banks actions calendar 2015.
Some of actions included Denmark's central bank aggressive slashing of interest rates four times in a three-week period and the European Central Bank (ECB) announced plans to step up its quantitative easing. Canada cut the benchmark interest by 25 basis points to 0.75% whilst the Reserve bank of Australia RBA followed with a similar 25 basis point cut to 2.25% in its February 2015 meeting.
Having witnessed all the action from across the globe the investing public anxiously awaits the next move from the US Federal Reserve (Fed), having ended the quantitative easing program in October 2014. This article looks at the state of monetary policy in the United States.
January 28, 2015 monetary policy statement
Having announced the end on the quantitative e…
Read article
Translate to English Show original
aizana avatar
aizana 20 Mar.

Удачи в конкурсе

Vitalinka_Pavlenko avatar

excellent article.

Violetameynell avatar

GREAT!!!

sonjatrader avatar

Very interesting article Ilolor!!!

Julia_Zhulinskaya avatar

very good

orto leave comments
3/33
Ranking

If the main macro theme of 2014 was the broad based dollar strength, the general consensus for 2015 is for further appreciation of the dollar. The implication of a strong dollar, and with the pick up in volatility, have also set in motion other trends, like the bearish commodity trends(see Metals and Oil), the carry trade has died (see AUD/USD and NZD/USD) and last but not least EUR/USD has finally started trading to the downside.
The broad based dollar strength can have a big impact on US economy, like lower inflation and this can be the trigger, next year 2015, for a considerable correction in the equity market but without altering the secular bull trend. I'm making a bold call here that the equity market will have a severe correction in 2015, once we complete a PI cycle from the 2007 high. "PI" the magic number has the following significance:
  • PI=3,141;
  • Multiply (Pi)*1000=3141;
  • 3141 days equal 8.6 year;
  • If you add 8.6 years to the 2007 high it bring us to October 2015 as the next intermediate top.

Because of the dollar's role as the world's primary reserve currency, the impact of the broad based dollar strength can trigger some "consequences" in other part of the world such…
Read article
Translate to English Show original
Daytrader21 avatar

JockPippin I really don't understand what are you trying to say.

WallStreetBlog avatar

Thanks!!!

salamandra avatar
salamandra 28 Dec.

Багато з чим не погоджуюсь... Але робота сподобалась в плані знаходження позиційного планування і інвестування...

foreignexchange avatar

Good Evening Daytrader21, thanks for the article. It could be very interesting. I like the article even there are parts that could be explained differently. HMM can probably prove mathematically the assumption in fig 5, maybe also other different stochastic processes ...... but I suppose that fractals are not so indicated. You should need a kind of  complex quadratic polynomials to calculate  swing below 1.3490. But if it is just your intuition it could be statistically compatible with other parametric models.  But .. GOOD JOB and THANK YOU VERY MUCH. Good trading 

marius24 avatar
marius24 30 Dec.

yap. I like this article. Let's see if you are right when 2015 ends. Good luck bro with your trading and hope you put all this work into practice.

orto leave comments
2/22
Ranking

Introduction
For the first time since October 2008, we are witnessing the USDZAR trading above 11. With Mr Lesetja Kganyago taking over as Governor of the Reserve Bank of South Africa (RBSA) on the 9th of November 2014, the investment community is eagerly waiting for action.
This Article looks at the fundamental and technical aspects affecting the rand.
Monetary policy

The monetary policy in South Africa (RSA) endeavors to create a stable financial environment that is essential for economic growth and employment creation.
  • Inflation
In February 2000 the RBSA introduced an inflation targeting framework and under this framework the inflation target was specified as a range between 3% and 6%. This band, together with the actual inflation rates achieved are shown in Fig 1.
Fig 1
As of September 2014 the inflation rate in RSA was 5.9%. This shows that inflation is close to the upper bound of the range and there is need from the central bank authorities to keep it in check. However inflation is not at problem at the moment and there is no need for action at the moment.
[list][/list]…
Read article
Translate to English Show original
Alexana5 avatar
Alexana5 17 Nov.

Great!

Ifuga avatar
Ifuga 19 Nov.

Great analysis as usual.

WallStreet6 avatar

Now that's what I call a thorought analysis of the economic situation. It's great to get so much insight from South Africa- maybe I'll even start trading on the ZAR

Valeriia_Novikova avatar

Thanks - good article!

foreignexchange avatar

Good Job, good analysis and good informations 

orto leave comments
4/23
Ranking
I'm sure that most of you guys are exasperated about the current never-ending low volatility environment(see Figure 1) as current market conditions has become increasingly challenging. The Forex Exchange market has been in a very deep sleep for the most part of this year and swing trading opportunities have vanished away and that's one of the reasons why in current low volatility environment the Carry Trading Strategy are preferred more as it makes sense that investors who are chasing yield to rush in and park their money with high yield currencies in seek for return, you can read more about this in my previous article here: Carry Trade Returns
Before going any further we need to define "Volatility", and the way I like to look at it is from two key perspective:
  1. How many times it moves(up and down) in a given period of time --> Frequency.
  2. How faster and bold is the move-->Severity.
In this regard the best definition of volatility I found it to be:"Volatility refers to the frequency and severity with which the market price of an investment fluctuates."
Figure 1. JPMorgan global-currency volatility index.


[list]
  • Why is Volatility so Low
  • Read article
    Translate to English Show original
    gino32 avatar
    gino32 22 Sep.

    Likerty are you talking about VSA accumulation (wyckoff market cycle)?

    gino32 avatar
    gino32 23 Sep.

    Daytrader21 well what i think of low vol periods its simple "calm before the storm" meaning possible breaks may happen so search for technical patterns..in that chart you have a clear break, supported with 1y clear bond rate differential divergence..

    Daytrader21 avatar

    gino32 That's correct because volatility tends to revert to the means. However volatility is greatest at turning point and tend to vanish as the trend develops.

    OneGoodTrade avatar

    The topic deserves one article by itself...what is volatility exactly. Good work.

    Daytrader21 avatar

    OneGoodTrade I already answered your question and article gives an comprehensive definition of volatility. You're right, there are many more things to be written about volatility but my article focuses only on the low volatility environment and how to profit from it.

    orto leave comments
    2/21
    Ranking

    Introduction
    During the press conference that followed the ECB monetary policy statement of 7 August 2014 the ECB president Mario Draghi made an interesting comment on the value of the Euro currency. As part of his response to the question, “The idea that a lot of economists think that QE was undertaken as an insurance policy against a big shock, and now there’s very little wiggle room if there is such a shock for the ECB with inflation at 0.4 %.” he saidthe fundamentals for a weaker exchange rate are today much better than they were two or three months ago..” Without being too dovish on the day the ECB may have given an important clue on how they would like to see the EUR trade against the major currencies.
    This article will be an assessment of the various fundamentals that affect the EUR and how they have fared over the past 3 months or so and the possible outlook for the EUR in the coming months.
    EUR exchange rates.
    The Euro has weakened against the major currencies in the past 3 months. This situation is depicted by the daily charts of the EURUSD and the EURGBP in fig 1 and fig 2 below.

    Fig 1.
    Daily chart of EURUSD since 30/04/2014
    Fig 2. Daily
    Read article
    Translate to English Show original
    Elani avatar
    Elani 19 Aug.

    yes it seems the fundamentals you mentioned will really affect EUR.

    ilonalt avatar
    ilonalt 22 Aug.

    few month ago when euro was about 1.39, i said to my husband that in summer time it will be 1.32 - 1.30, and i was right. During that time I had some profitable  sell trades of eur/usd.

    llolor avatar
    llolor 30 Aug.

    Thank you all

    orto leave comments
    18/30
    Ranking
    FUNDAMENTAL MOVEMENT , RULES SHORT VIEV As i see many traders have a little troubled too read when forex market does not move according to purely technical rules , when is fundamental movement activated. So i decided to bring this fundamental principles , and will try to shed light on the time and period that can be expected. Briefly and succinctly as possible clearly show these issues using simple words too evryone , even beginner would be able catch point . Fundamental rules give us - they say , are designed - such a way that the value of money is closley correlated with supply and demand of the currency - a simple an explanation saying value of money fall when we have it a lot on market economy and they not are invested , in inverse proportion when little or not enough on market . For example when market of country has large amounts free money or extra pumped (print-QE)value of this currency will fall and thing will be analogous to inflation , vice versa when money a little available in market and know they invested - value should be grow up.Based on example of last period , reprint us dolars - we hear form many sides call them cheap cash , loses its value through cos not genera…
    Read article
    Translate to English Show original
    Likerty avatar
    Likerty 6 Nov.

    In my opinion fundamentals are ust too complex for everage folk to understand - it is a bit simplier with techs as these come in exact numbers..

    SpecialFX avatar

    I think one of the reasons most retail traders do not care about fundamentals is because they focus on very short term trading, where fundamentals are mostly irrelevant. But it is always good to know the inner workings of the market (and fundamentals are what ultimately move the markets, no matter what the technical indicators or patterns indicate), so even if people do not open trades based on fundamentals, they should still pay some attention to them :)

    doctortyby avatar
    doctortyby 26 Nov.

    Fundamentals combined from US and Eurozone show the main possible market movers in the near future : US Fiscal Cliff, Greece Bailout, possible Spain Bailout request, eurozone Budget.

    WallStreetBlog avatar

    good article!!!

    xtrader360 avatar
    xtrader360 16 July

    good article

    orto leave comments