Press review - page 486

[Sergey Golubev]

Weekly Outlook: 2017, February 12 - February 19 (based on the article)



GDP data from Japan and Germany, Inflation data from the UK and the US, Janet Yellen’s testimony before the US Senate, US retail sales, Crude Oil Inventories, Building Permits, Philly Fed Manufacturing Index and Employment figures from the US, The UK and Australia. These are the main events on Forex calendar.

1. Japan GDP data: Sun 23:50. Economists expect a 0.3% growth rate in the final quarter of 2016.
2. German GDP data: Tuesday, 7:00. Analysts expect a  growth rate of 0.5% in the fourth quarter of 2016.
3. UK Inflation data: Tuesday, 09:30. CPI is expected to rise 1.9% in January.
4. US PPI: Tuesday, 13:30. Producer prices are estimated to gain 0.3% in January.
5. Janet Yellen speaks: Tuesday, 15:00. The chair of the Federal Reserve Janet Yellen will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC.
6. UK Employment data: Wednesday, 9:30. UK jobless claims are expected to increase 1,100 in January.
7. US Inflation data: Wednesday, 13:30. Economists expect a 0.3% gain in consumer prices and a  0.2% rise for core CPI.
8. US Retail sales: Tuesday, 13:30. Retail sales are expected to rise by 0.1% and core sales are estimated a 0.4% gain in January.
9. US Crude Oil Inventories: Wednesday, 15:30.
10. Australian employment data: Thursday, 0:30.
11. US Building Permits: Thursday, 13:30. 
12. US Philly Fed Manufacturing Index: Thursday, 13:30.
13. US Unemployment Claims: Thursday, 13:30. The four-week moving average of claims fell 3,750 to 244,250, the lowest level since November 1973.

[Sergey Golubev]

Weekly EUR/USD Outlook: 2017, February 12 - February 19 (based on the article)



EUR/USD was unable to take advantage of the greenback’s weakness and suffered trouble of its own. GDP numbers stand out and also the ECB meeting minutes should be watched.

1. German GDP: Tuesday, 7:00. An accelerated level of growth is expected for Q4, in line with other European countries that have already published their inflation figures.
2. German CPI (final): Tuesday, 7:00.
   
3. Italian GDP: Tuesday, 9:00. The data for Q4 could be positive.
4. Flash GDP: Tuesday,10:00.
   
5. German ZEW Economic Sentiment: Tuesday, 10:00. The all-European number stood at 23.2 points.
6. Industrial Production: Tuesday, 10:00. The data for December will probably be negative due to Germany’s poor performance.
7. Trade Balance: Wednesday, 10:00.
   
8. ECB Meeting Minutes: Thursday, 12:30. Four weeks after the European Central Bank stuck to its dovish tone, the minutes from the meeting are released. It will be interesting to see whether some members were opposed to dismissing the recent rise in inflation as only energy-based or if some of the German members wanted to express a more upbeat tone.
9. Current Account: Friday, 9:00. A surplus of 36.1 billion was seen in November.

[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]

Markets To Watch In The Week Ahead (based on the article)

"The April crude oil contract rallied sharply from Wednesday's low at $51.86 on news that the OPEC measures to reduce production are actually working. Crude sill closed the week a bit lower so this week's close will be important."

"The Comex gold futures have rallied $100 from the mid December lows and have retraced 50% of the decline from the July highs.  The former support, line a, is now important resistance. It is in the 1284 area along with the weekly starc+ band and the 61.8% resistance level."

• "The weekly Nasdaq 100 A/D line broke out to the upside in early January (see arrow) and has since accelerated to the upside in impressive fashion. The A/D line is well above its rising WMA as is the daily A/D line which has also made new highs."
• "The strong close last week favors more gains this month. The completion of the daily flag formation in the S&P futures has upside targets at 2330 and then 2340.  The recent buying in the small cap stocks indicates that they could start leading on the upside."
• "I do expect to see a 5% or more correction sometime this spring but is may have to wait until April as some investors try to get a jump on the sell in May phenomenon. There should be plenty of warning before such a correction. There are still some sector ETFs that look attractive for new buying."

[Sergey Golubev]

USD/JPY Intra-Day Fundamentals: Japan Gross Domestic Product and 27 pips range price movement

2017-02-12 23:50 GMT | [JPY - GDP]

• past data is 0.3%
• forecast data is 0.3%
• actual data is 0.2% according to the latest press release

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

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

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From japantimes article:

• "The world’s third-largest economy grew 0.2 percent in the last quarter, from the previous quarter, according to preliminary data, the slowest pace for the year. Quarterly growth peaked at 0.6 percent in the first quarter of 2016 and slowed from that rate."
• "Japan’s economy expanded at a slightly slower than expected 1.0 percent annual pace in 2016, helped by an uptick in exports, the Cabinet Office reported Monday."

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USD/JPY M5: 27 pips range price movement by Japan Gross Domestic Product news event

[Sergey Golubev]

EURUSD - bearish ranging within hihh/low of the last weekly bar waiting for the direction of the strong trend to be started  (based on the article)

Daily price is located below 100-day SMA/200-day SMA reversal levels: the price is on breaking low of the last weekly bar at 1.0607 to below for the bearish trend to be resumed. Alternative, if the price breaks last weekly bar high at 1.0790 to above so the secondary rally within the primary bearish market condition will be started.

• "The Euro looks vulnerable to deeper losses after dropping to the lowest level in a month against the US Dollar, with prices seemingly poised to test below the 1.06 figure. The single currency reversed downward as expected after a test above the 1.08 threshold, completing a bearish Rising Wedge chart pattern."
• "A daily close below the 14.6% Fibonacci expansion at 1.0643 has exposed the 23.6% level at 1.0528 as the next downside barrier. A further push below that targets the 38.2% Fib at 1.0341. Alternatively, a reversal back above 1.0643 sees the next major upside threshold at 1.0828, the 38.2% Fib retracement."

[Sergey Golubev]

USD/CNH Intra-Day Fundamentals: China Consumer Price Index and 29 pips range price movement

2017-02-14 01:30 GMT | [CNY - CPI]

• past data is 2.1%
• forecast data is 2.4%
• actual data is 2.5% according to the latest press release

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

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

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From rttnews article:

• "Consumer prices in China were up 2.5 percent on year in January, the National Bureau of Statistics said on Tuesday."
• "The bureau also said that producer prices climbed an annual 6.9 percent - topping expectations for 6.6 percent and up sharply from 5.5 percent in the previous month."

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USD/CNH M5: 29 pips range price movement by China Consumer Price Index news event

 

[Sergey Golubev]

GBP/USD Intra-Day Fundamentals: U.K. Consumer Price Index and 73 pips range price movement

2017-02-14 09:30 GMT | [GBP - CPI]

• past data is 1.6%
• forecast data is 1.9%
• actual data is 1.8% according to the latest press release

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

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

==========

From official report:

• "The Consumer Prices Index (CPI) rose by 1.8% in the year to January 2017, compared with a 1.6% rise in the year to December 2016."
• "CPIH (not a National Statistic) rose by 2.0% in the year to January 2017, compared with a 1.7% rise in the year to December 2016."

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GBP/USD M5: 73 pips range price movement by .K. Consumer Price Index news event

[Sergey Golubev]

Intra-Day Fundamentals - EUR/USD, NZD/USD, and Dow Jones Industrial Average: U.S. Producer Price Index

2017-02-14 13:30 GMT | [USD - PPI]

• past data is 0.3%
• forecast data is 0.3%
• actual data is 0.6% 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.

==========

From official report:

• "The Producer Price Index for final demand increased 0.6 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in December and 0.5 percent in November. On an unadjusted basis, the final demand index climbed 1.6 percent for the 12 months ended January 2017."

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EUR/USD M5: 14 pips range price movement by U.S. Producer Price Index news events

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NZD/USD M5: 11 pips range price movement by U.S. Producer Price Index news events

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DJIA M5: range price movement by U.S. Producer Price Index news events

[Sergey Golubev]

Apple (AAPL) - Warren Buffett has been buying shares of Apple hand over fist (based on the article)

Apple shares broke 122.32 resistance level to above for good breakout: the price broke 132.93 resistance level as well for the long-term bullish breakout to be continuing.

• "Shares of Apple have climbed 42% in the last twelve months and notched a new all-time record on Tuesday, in a show of renewed investor confidence in the iPhone maker. If Buffett hasn't touched his position since the end of last year, it's now worth a whopping $7.7 billion."
• "In a regulatory filing on Tuesday, Buffett's Berkshire Hathaway disclosed that it has almost quadrupled its stake in Apple. As of year-end, it owned some 57 million shares, up from 15 million shares in the third quarter. That stake was worth approximately $6.6 billion as of December 31."