Press review - page 78
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ECB's Coeure Seeks Earlier Launch Of Bank Resolution Mechanism
European Central Bank Executive Board member Benoit Coeure said on Wednesday that the proposed mechanism to deal with bank failures must be implemented earlier than planned.
In a speech delivered in Brussels, Coeure said the Single Resolution Mechanism (SRM) should allow for lean decision-making during emergencies. He also sought "robust and common" resolution financing arrangements.
"In this regard, the period of ten years for moving towards a genuinely common Single Resolution Fund (SRF) is too long and should be shortened, possibly to five years," Coeure said.
2013-01-22 15:00 GMT (or 16:00 MQ MT5 time) | [CAD - Overnight Rate]
if actual > forecast = good for currency (for CAD in our case)
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Bank of Canada Maintains Overnight Rates Target At 1 Per Cent
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
Inflation in Canada has moved further below the 2 per cent target, owing largely to significant excess supply in the economy and heightened competition in the retail sector. The path for inflation is now expected to be lower than previously anticipated for most of the projection period. The Bank expects inflation to return to the 2 per cent target in about two years, as the effects of retail competition dissipate and excess capacity is absorbed.
As U.S. Looks for Energy Independence, Oil Production Expected to Zoom (based on forexminute.com article)
So that the U.S. is not dependent on foreign oil supply amid disturbances in Libya and economic sanctions on Iran, the United States continued its relentless rise in crude oil production in 2013 and 2014. In its statement the International Energy Agency (IEA) said that exceeding even the most bullish of expectations, a surge in U.S. oil production was seen last year.
Now, the data from EIA are being attested by IEA; however, IEA is showing concern about it as it may hit the wall and heavily impact oil prices in the U.S. Though it may sound good for the U.S. which wants to become completely energy independent by 2020, it may raise the issue of the looming crude 'wall.'
The U.S. must plan how to consume that produced oil so that oil prices remain competitive and not stagnate that may risk investments.
2013-01-23 01:45 GMT (or 02:45 MQ MT5 time) | [CNY - HSBC Manufacturing PMI]
if actual > forecast = good for currency (for CNY in our case)
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HSBC flash PMI fell to 49.6, said the investment bank is no need to worry too much seasonal effects
HSBC China Manufacturing January purchasing managers' index (PMI) fell to 49.6 in the initial accident six months low, and is also the first time in six months below 50, below market expectations, triggering two to stock market volatility. HSBC considers presetting macro policy fine-tuning space for steady growth, but the investment bank Merrill Lynch believes, PMI initial decline may be related to the Spring Festival approaching, small businesses have begun to leave about, I believe a quarter GDP growth will remain stable.
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China HSBC Manufacturing PMI Dips Into Contraction
"The marginal contraction of January's headline HSBC Flash China Manufacturing PMI was mainly dragged by cooling domestic demand conditions. This implies softening growth momentum for manufacturing sectors, which has already weighed on employment growth," said Hongbin Qu, Chief Economist, China and Co- Head of Asian Economic Research at HSBC.
Margin Call (adapted from dailyfx.com article)
To get a grasp on what a margin call is, you should understand the purpose and use of Margin & Leverage. Margin & Leverage are two sides of the same coin. The purpose of either is to help you control a contract larger than your account balance. Simply put, margin is the amount required to hold the trade open. Leverage is the multiple of exposure to account equity. Therefore, if you have an account with a value of $10,000 but you would like to buy a 100,000 contract for EURUSD, you would be required to put up $800 for margin in an account leaving $9,200 in usable margin. Usable Margin should be seen as a safety net and you should protect your usable margin at all costs.
Causes of a Margin Call
To understand the cause of a margin call is the first step. The second and more beneficial step is learning understanding how to stay far away from a potential margin call. The short answer as to understand what causes a margin call is simple, you’ve run out of usable margin.
The second and promised more beneficial step is to understand what depletes your usable margin and stay away from those activities. In risk of oversimplifying the causes, here are the top causes for margin calls which you should avoid like the plague (presented in no specific order):
What Happens When A Margin Call Takes Place?
When a margin call takes place, you are liquidated or closed out of your trades. The purpose is two-fold: you no longer have the money in your account to hold the losing positions and the broker is now on the line for your losses which is equally bad for the broker.
How to Avoid Margin Calls
Leverage is often and fittingly referred to as a double-edged sword. The purpose of that statement is that the larger leverage you use to hold a trade greater than some large multiple of your account, the less usable margin you have to absorb any losses. The sword only cuts deeper if an over-leveraged trade goes against you as the gains can quickly deplete your account and when your usable margin % hits, zero, you will receive a margin call. This only gives further credence to the reason of using protective stops while cutting your losses as short as possible.
Trading the News: Canada Retail Sales (based on this article)
A rebound in Canada Retail Sales may spark a near-term correction in the USDCAD as it raises the fundamental outlook for growth and inflation
What’s Expected:
Time of release: 01/23/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 0.2%
Previous: -0.1%
Forecast: -0.1% to 0.2%
Why Is This Event Important:
In light of the recent comments from the BoC, it seems as though Governor Stephen Poloz may revert back to an easing cycle as the persistent slack in the real economy raises the threat for disinflation, and the central bank may turn increasingly dovish over the coming months should we see a further slowdown in the economic recovery..
How To Trade This Event Risk
Bullish CAD Trade: Household Spending Rises 0.2% or More
- Need red, five-minute candle following a positive print to consider a short USDCAD trade
- If reaction favors a long Canadian dollar trade, sell USDCAD with two separate position
- Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bearish CAD Trade: Private Consumption Disappoints2013-01-23 13:30 GMT (or 14:30 MQ MT5 time) | [CAD - Retail Sales]
if actual > forecast = good for currency (for CAD in our case)
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USD/CAD off highs after Canadian retail sales data
The U.S. dollar pulled back from four-and-a-half year highs against the Canadian dollar on Thursday as a sharper-than-expected increase in Canadian retail sales prompted investors to take profits.
USD/CAD retreated from 1.1174, the highest since July 2009, to trade at 1.1105, just 0.18% higher for the day.
The pair was likely to find support at 1.1050 and resistance at 1.1174, the session high.
The Canadian dollar found support after official data showed that retail sales rose 0.6% in November, surpassing expectations for a 0.3% increased, recovering from a 0.1% decline in October.
Trading the News: Canada Consumer Price Index (based on dailyfx article)
What’s Expected:
Time of release: 01/24/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 1.3%
Previous: 0.9%
DailyFX Forecast: 1.0% to 1.3%
Why Is This Event Important:
It seems as though the Bank of Canada (BoC) may revert back toits easing cycle as the persistent slack in the real economy continues to drag on growth and inflation, and Governor Stephen Poloz may continue to talk up bets for lower borrowing costs in an effort to encourage a ‘soft-landing’ for the Canadian economy.
How To Trade This Event Risk
Bullish CAD Trade: Canada Inflation Climbs to 1.3% or Higher
- Need red, five-minute candle after the CPI report to consider short USDCAD entry
- If the market reaction favors a long Canadian dollar trade, establish short with two position
- Set stop at the near-by swing low/reasonable distance from cost; use at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bbearish CAD Trade: Canada Consumer Prices DisappointNovember 2013 Canada Consumer Price Index :
Forex Market Size (based on this article)
According to the Bank for International Settlements, foreign-exchange trading increased to an average of $5.3 trillion a day. To put this into perspective, this averages out to be $220 billion per hour. The foreign exchange market is largely made up of institutional investors, corporations, governments, banks, as well as currency speculators. Roughly 90% of this volume is generated by currency speculators capitalizing on intraday price movements.
Unlike the stock and futures market that are housed in central physical exchanges, the Foreign exchange market is an over-the-counter market, decentralized market completely housed electronically. Banks from Hong Kong to Zurich and from London to New York. Though most investors are familiar with the stock market, they are unaware how small in volume it is in relation to the Forex market.
As the most traded currency, the US dollar makes up 85% of Forex trading volume. At nearly 40% of trading volume, the euro is ahead of the third place Japanese yen that takes almost 20%. With volume concentrated mainly in the US Dollar, Euro and Yen, Forex traders can focus their attention on just a handful of major pairs. In addition, the greater liquidity found in the Forex market is conducive to long, well-defined trends that respond well to technical analysis and charting methods.
2013-01-24 13:30 GMT (or 14:30 MQ MT5 time) | [CAD - CPI]
if actual > forecast = good for currency (for CAD in our case)
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