Press review - page 417

[Sergey Golubev]

USD/CNH Intra-Day Fundamentals: China Trade Balance and 46 pips price movement

2016-07-13 07:00 GMT | [CNY - Trade Balance]

• past data is 325B
• forecast data is 323B
• actual data is 311B according to the latest press release

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CNY - Trade Balance] = Difference in value between imported and exported goods during the previous month.

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• China June trade balance +CNY311.2 bln; May +CNY324.8 bln
• China June exports +1.3% Y/Y VS Median -4.5% Y/Y
• China June imports -2.3% Y/Y VS Median -4.2% Y/Y

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USD/CNH M5: 46 pips price movement by China Trade Balance news event :

[Sergey Golubev]

USD/CAD Intra-Day Fundamentals: Bank of Canada Overnight Rate, BoC Monetary Policy Report and 101 pips price movement

2016-07-13 14:00 GMT | [CAD - Overnight Rate]

• past data is 0.50%
• forecast data is 0.50%
• actual data is 0.50% according to the latest press release

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CAD - Overnight Rate] = Interest rate at which major financial institutions borrow and lend overnight funds between themselves.

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"Overall, the risks to the profile for inflation are roughly balanced, although the implications of the Brexit vote are highly uncertain and difficult to forecast. At the same time, financial vulnerabilities are elevated and rising, particularly in the greater Vancouver and Toronto areas. The Bank’s Governing Council judges that the overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent."

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USD/CAD M5: 101 pips price movement by Bank of Canada Overnight Rate news event :

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2013.07.01 07:19

Just next educational article about ECN and so on - Market Makers Vs. Electronic Communications Networks

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The foreign exchange market (forex or FX) is an unregulated global market in which trading does not occur on an exchange and does not have a physical address of doing business. Unlike equities, which are traded through exchanges worldwide, such as the New York Stock Exchange or the London Stock Exchange, foreign exchange transactions take place over-the-counter (OTC) between agreeable buyers and sellers from all over the world. This network of market participants is not centralized, therefore, the exchange rate of any currency pair at any one time can vary from one broker to another.

How Market Makers Work

Market makers "make" or set both the bid and the ask prices on their systems and display them publicly on their quote screens. They stand prepared to make transactions at these prices with their customers, who range from banks to retail forex traders. In doing this, market makers provide some liquidity to the market. As counterparties to each forex transaction in terms of pricing, market makers must take the opposite side of your trade. In other words, whenever you sell, they must buy from you, and vice versa.

The exchange rates that market makers set, are based on their own best interests. On paper, the way they generate profits for the company through their market-making activities, is with the spread that is charged to their customers. The spread is the difference between the bid and the ask price, and is often fixed by each market maker. Usually, spreads are kept fairly reasonable as a result of the stiff competition between numerous market makers. As counterparties, many of them will then try to hedge, or cover, your order by passing it on to someone else. There are also times in which market makers may decide to hold your order and trade against you.

There are two main types of market makers: retail and institutional. Institutional market makers can be banks or other large corporations that usually offer a bid/ask quote to other banks, institutions, ECNs or even retail market makers. Retail market makers are usually companies dedicated to offering retail forex trading services to individual traders.

Pros:

• The trading platform usually comes with free charting software and news feeds. (For related reading, see Forex: Demo Before You Dive In.)
• Some of them have more user-friendly trading platforms.
• Currency price movements can be less volatile, compared to currency prices quoted on ECNs, although this can be a disadvantage to scalpers.

Cons:

• Market makers can present a clear conflict of interest in order execution, because they may trade against you.
• They may display worse bid/ask prices than what you could get from another market maker or ECN.
• It is possible for market makers to manipulate currency prices to run their customers' stops or not let customers' trades reach profit objectives. Market makers may also move their currency quotes 10 to 15 pips away from other market rates.
• A huge amount of slippage can occur when news is released. Market makers' quote display and order placing systems may also "freeze" during times of high market volatility.
• Many market makers frown on scalping practices and have a tendency to put scalpers on "manual execution," which means their orders may not get filled at the prices they want.

How ECNs Work

ECNs pass on prices from multiple market participants, such as banks and market makers, as well as other traders connected to the ECN, and display the best bid/ask quotes on their trading platforms based on these prices. ECN-type brokers also serve as counterparties to forex transactions, but they operate on a settlement, rather than pricing basis. Unlike fixed spreads, which are offered by some market makers, spreads of currency pairs vary on ECNs, depending on the pair's trading activities. During very active trading periods, you can sometimes get no ECN spread at all, particularly in very liquid currency pairs such as the majors (EUR/USD, USD/JPY, GBP/USD and USD/CHF) and some currency crosses.

Electronic networks make money by charging customers a fixed commission for each transaction. Authentic ECNs do not play any role in making or setting prices, therefore, the risks of price manipulation are reduced for retail traders. (For more insight, see Direct Access Trading Systems.)

Just like with market makers, there are also two main types of ECNs: retail and institutional. Institutional ECNs relay the best bid/ask from many institutional market makers such as banks, to other banks and institutions such as hedge funds or large corporations. Retail ECNs, on the other hand, offer quotes from a few banks and other traders on the ECN to the retail trader.

Pros:

• You can usually get better bid/ask prices because they are derived from several sources.
• It is possible to trade on prices that have very little or no spread at certain times.
• Genuine ECN brokers will not trade against you, as they will pass on your orders to a bank or another customer on the opposite side of the transaction.
• Prices may be more volatile, which will be better for scalping purposes.
• Since you are able to offer a price between the bid and ask, you can take on the role as a market maker to other traders on the ECN.

Cons:

• Many of them do not offer integrated charting and news feeds.
• Their trading platforms tend to be less user-friendly.
• It may be more difficult to calculate stop-loss and breakeven points in pips in advance, because of variable spreads between the bid and the ask prices.
• Traders have to pay commissions for each transaction.

The Bottom Line

The type of broker that you use can significantly impact your trading performance. If a broker does not execute your trades in a timely fashion at the price you want, what could have been a good trading opportunity can quickly turn into an unexpected loss; therefore, it is important that you carefully weigh the pros and cons of each broker before deciding which one to trade through.

[Sergey Golubev]

AUD/USD Intra-Day Fundamentals: Australian Employment Change and 38 pips price movement

2016-07-14 01:30 GMT | [AUD - Employment Change]

• past data is 19.2K
• forecast data is 10.1K
• actual data is 7.9K according to the latest press release

if actual > forecast (or previous one) = good for currency (for AUD in our case)

[AUD - Employment Change] = Change in the number of employed people during the previous month.

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TREND ESTIMATES (MONTHLY CHANGE)

• Employment increased 8,300 to 11,933,400.
• Unemployment decreased 200 to 725,900.
• Unemployment rate remained steady at 5.7%.
• Participation rate remained steady at 64.8%.
• Monthly hours worked in all jobs decreased 0.7 million hours to 1,635.1 million hours.

SEASONALLY ADJUSTED ESTIMATES (MONTHLY CHANGE)

• Employment increased 7,900 to 11,939,600. Full-time employment increased 38,400 to 8,198,900 and part-time employment decreased 30,600 to 3,740,700.
• Unemployment increased 9,900 to 734,200. The number of unemployed persons looking for full-time work decreased 9,200 to 496,700 and the number of unemployed persons only looking for part-time work increased 19,000 to 237,500.
• Unemployment rate increased by 0.1 pts to 5.8%.
• Participation rate increased by less than 0.1 pts to 64.9%.
• Monthly hours worked in all jobs decreased 4.3 million hours to 1,640.0 million hours.

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AUD/USD M5: 38 pips price movement by Australian Employment Change news event :

[Sergey Golubev]

Trading News Events: BoE Official Bank Rate and Monetary Policy Summary (adapted from the article)

2016-07-14 11:00 GMT | [GBP - Official Bank Rate]

• past data is 0.50%
• forecast data is 0.25%
• actual data is n/a according to the latest press release

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Official Bank Rate] = Interest rate at which the BOE lends to financial institutions overnight.

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What’s Expected:

Why Is This Event Important:

"With the U.K. positioned to leave the European Union (EU), the BoE may have little choice but to further support the economy in 2016 as Governor Mark Carney tries to avoid a recession. A material shift in the policy outlook is likely to drag on the sterling as interest-rate expectations falter."

• "The near-term rebound in GBP/USD may unravel amid the failed attempt to test the monthly opening range, with the British Pound at risk of facing near-term headwind should the BoE talk up expectations for additional monetary support."
  
• "Above expectations: 0.5% to 0.9%: An unexpected higher reading can send the pair below one support line."
  
• Key Resistance: "1.4880 (50% retracement) to 1.4930 (38.2% expansion)."
  
• Key Support: "1.2460 (61.8% expansion) to 1.2500 pivot."
• Bearish trade: "Need red, five-minute candle following the rate decision to consider a short GBP/USD trade."
• Bullish trade: "Need green, five-minute candle to favor a long GBP/USD trade."
  

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GBP/USD H1: ranging inside Ichimoku cloud for direction. The price is on ranging bearish market condition to be located inside Ichimoku cloud and near below Senlou Span line which is the border between the primary bearish and the primary bullish trend on the chart. Price is breaking Senkou Span line to above for the 1.3275 resistance level as a next target for the primary bullish reversal.

If the price breaks 1.3106 support level to below on close H1 bar so the primary bearish trend will be resumed without ranging up to the new bottom to be formed.
If the price breaks 1.3275 resistance to above on close H1 bar so the reversal of the price movement from the ranging bearish to the primary bullish market condition will be started.
If not so the price will be continuing with the ranging within the levels for direction.

Resistance	Support
1.3275	1.3119
1.3340	1.3106

[Sergey Golubev]

GBP/USD Intra-Day Fundamentals: BoE Official Bank Rate and 235 pips price movement

2016-07-14 11:00 GMT | [GBP - Official Bank Rate]

• past data is 0.50%
• forecast data is 0.25%
• actual data is 0.50% according to the latest press release

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Official Bank Rate] = Interest rate at which the BOE lends to financial institutions overnight.

==========

"The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target and in a way that helps to sustain growth and employment.  At its meeting ending on 13 July 2016, the MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%, with one member voting for a cut in Bank Rate to 0.25%.  The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.  Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate.  In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August.  The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round."

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GBP/USD M5: 235 pips price movement by BoE Official Bank Rate news event :

[Sergey Golubev]

EUR/USD Intra-Day Fundamentals: U.S. Producer Price Index and 42 pips price movement

2016-07-14 12:30 GMT | [USD - PPI]

• past data is 0.4%
• forecast data is 0.3%
• actual data is 0.5% according to the latest press release

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - PPI] = Change in the price of finished goods and services sold by producers.

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• "The Producer Price Index for final demand increased 0.5 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.4 percent in May and 0.2 percent in April. On an unadjusted basis, the final demand index advanced 0.3 percent for the 12 months ended in June, the largest 12-month increase since moving up 0.9 percent in December 2014."
• "In June, the advance in the final demand index was led by prices for final demand services, which rose 0.4 percent. The index for final demand goods advanced 0.8 percent."
• "Prices for final demand less foods, energy, and trade services rose 0.3 percent in June after declining 0.1 percent in May. For the 12 months ended in June, the index for final demand less foods, energy, and trade services increased 0.9 percent."

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EUR/USD M5: 42 pips price movement by U.S. Producer Price Index news event :

[Sergey Golubev]

USD/CNH Intra-Day Fundamentals: China Gross Domestic Product and 60 pips price movement

2016-07-15 02:00 GMT | [CNY - GDP]

• past data is 6.7%
• forecast data is 6.6%
• actual data is 6.7% according to the latest press release

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CNY - GDP] = Change in the inflation-adjusted value of all goods and services produced by the economy.

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From news.com.au article:

• "China's economy grew 6.7 per cent in the second quarter from a year earlier, steady from the first quarter and slightly better than expected as the government stepped up efforts to stabilise growth in the world's second-largest economy."
• "Analysts polled by Reuters had predicted gross domestic product (GDP) would ease to 6.6 per cent in the second quarter, which would have been the weakest since the global financial crisis, and had predicted a further loss of steam later this year."
• "Second quarter GDP rose 1.8 per cent quarter-on-quarter, also slightly better than expected, the statistics bureau said on Friday."
• "While fears of a hard landing have eased, investors fear a further slowdown in China and any major fallout from Brexit would leave the world even more vulnerable to the risk of a global recession."
• "China's statistics bureau said that the economy still faces downward pressure, but that economic growth in the first half lays a good foundation for achieving 2016 target."
• "Policymakers have said the economy remains largely steady, but analysts expect more support measures in the coming months as private investment falters, forcing the government to do more of the heavy lifting."
• "The government boosted spending by 19.9 per cent in June, the finance ministry said on Friday, picking up from a 17.6 per cent increase in May."

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USD/CNH M5: 60 pips price movement by China Gross Domestic Product news event :

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Cuong Truong, 2016.07.15 10:20

British leader May builds Brexit army

http://www.cnn.com/2016/07/14/europe/britain-brexit-whats-next/

[Sergey Golubev]

EUR/USD Intra-Day Fundamentals: Euro Consumer Price Index

2016-07-15 09:00 GMT | [EUR - CPI]

• past data is 0.1%
• forecast data is 0.1%
• actual data is 0.1% according to the latest press release

if actual > forecast (or previous one) = good for currency (for EUR in our case)

[EUR - CPI] = Change in the price of goods and services purchased by consumers.

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Eurostat said that Euro zone CPI remained unchanged at a seasonally adjusted annual rate of 0.1%, from 0.1% in the preceding month.

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EUR/USD M5: price movement by Euro Consumer Price Index news event :