EUR/USD Intra-Day Fundamentals: German Ifo Business Climate and 20 pips range price movement
2016-10-25 08:00 GMT | [EUR - German Ifo Business Climate]
if actual > forecast (or previous one) = good for currency (for EUR in our case)
[EUR - German Ifo Business Climate] = Level of a composite index based on surveyed manufacturers, builders, wholesalers, and retailers.
From official report:
EUR/USD M5: 20 pips range price movement by German Ifo Business Climate news event
Intra-Day Fundamentals - EUR/USD and USD/JPY : The Conference Board Consumer Confidence2016-10-25 14:00 GMT | [USD - CB Consumer Confidence]
if actual > forecast (or previous one) = good for currency (for USD in our case)
[USD - CB Consumer Confidence] = Level of a composite index based on surveyed households.
"Consumer confidence retreated in October, after back-to-back monthly
gains,” said Lynn Franco, Director of Economic Indicators at The
Conference Board. “Consumers’ assessment of current business and
employment conditions softened, while optimism regarding the short-term
outlook retreated somewhat. However, consumers’ expectations regarding
their income prospects in the coming months were relatively unchanged.
Overall, sentiment is that the economy will continue to expand in the
near-term, but at a moderate pace."
EUR/USD M5: 43 pips range price movement by The Conference Board Consumer Confidence news events
USD/JPY M5: 74 pips range price movement by The Conference Board Consumer Confidence news events
AUD/USD Intra-Day Fundamentals: Australia Consumer Price Index (CPI) and 20 pips range price movement
2016-10-26 00:30 GMT | [AUD - CPI]
if actual > forecast (or previous one) = good for currency (for AUD in our case)
[AUD - CPI] = Change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
AUD/USD M5: 20 pips range price movement by Australia Consumer Price Index (CPI) news event
Forum on trading, automated trading systems and testing trading strategies
Achmad Armawijaya, 2016.10.26 11:00
A currency carry trade is a strategy
in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a
different currency yielding a higher interest rate. A trader using this strategy attempts to capture
the difference between the rates, which can often be substantial, depending on
the amount of leverage used.
Now it is Japan's lowest interest rate 0.5%
- The highest interest rate is New Zealand 8:25%
- We borrow money from Japan then saved to New Zealand
- We can get 8:25% but pay 0.5%, it is 7.95%
Well above transaction is called CARRY TRADE
this small scale this is the calculation of swap / overnight, so the profit you
earn from the difference in interest rates.
Forex market is a market
that can not be predicted accurately, yes we can predicted it base on technical
analysist or fundamental analysist, but however, we still can not understand
the direction of currency movements, therefore came
this carry trader it is one that is
quite popular system used to generate profits by investors and financial
managers in the biggest financial firms in the world. Without the carry trade,
forex trading is a hotbed of speculators. those who only focus on carry trade
can be regarded as true that forex investors. Because how great the speculators
(eg George Soros), one day he would return to the carry trade. Its basic as
carry trade is impossible to resist forever.
Those of us, small players,
at least have to pay attention to this in order not to be brought current. If
you play in the long term, ex, one week a transaction, should follow the flow
of the carry trade. Do not follow the flow of speculators.
One advantage of the carry
trade in the spot forex market is the payment of interest occur every day based
on your position. Even if you keep your position open longer than one day,
which is actually the case broker closes your position and then open it again
the next day, and then they gave debit or credit payment of the interest rate
differentials between the currency pair you are trading. It is also known by
the term "roll over".
Leverage factor applied by
the forex broker makes the carry trade is very popular in the spot forex
market. Almost all forex trading on margin, meaning you only need a small
amount of money to be able to open a position. In fact there are only
membutuhkun only 1% - 2% margin to open a position.
whether profitable if Carry Trader maintains his position for 1 year?
As an example:
George Soros has a cash of $ 10,000 and decided to use the money as capital for
forex trading. He opened an account with a forex broker, then find the currency
pair has a different interest rate of + 5% per year.
Broker choice requires only 1% deposit to open a position (100: 1 leverage), so
as to position 1 lot ($ 100,000) needed only $ 1,000 as margin. George Soros
now control the currency position amounted to $ 100,000 and receive a 5%
interest per year.
What happens to the George Soros account if he maintains
his position for 1 year?
There are three possibilities occur:
of currency positions suffered losses.
Currency bought moves down so George Soros suffered losses. When the losses
that occurred reaching the margin, then the George Soros open positions will be
closed so that on his account only the remaining $ 1,000, the amount set aside
pairs remain on the same exchange rate at the end of the year.
In this case George Soros does not make a profit from changes in currency
prices, but profit from the difference in interest rate of 5% per year. For
transactions of $ 100,000 he received $ 5,000 from interest payments. Of the $
10,000 that he used as capital (margin), he had to get 50% profit.
of currency positions increased.
The currency pair is bought to increase the price, so it's not just George
Soros profit from interest rate payments, but also of the increase in the
exchange rate of the currency bought.
With the leverage factor of 100: 1, George Soros has the
potential to generate profit by 50% per year based on an initial capital of $
10,000, well above the profit obtained when he was just depositing the money in
Carry trades work when
there is a change in the financial conditions that will occur gradually,
allowing investors or speculators enough time to close the trade and lock in
profits. But if the environment changes unexpectedly, investors and speculators
also could be forced to close their carry trades investment as quickly as
possible. Unfortunately, this kind of reversal was calculated as investments
carry trades which have unpredictable consequences that have the potential to
destroy the global economy.
in average daily range high
previously described volatility is a major factor that must be considered the
carry trader. In case of extreme sentiment on financial markets, the volatility
will increase. This can be observed in the average daily price movement range
(average daily range). When changes in average daily range the greater the
volatility is also higher. This can be monitored by the technical indicator
Average True Range (ATR), which usually are used to determine the magnitude of
change range at a given time period.
cuts interest rate
the state of the global economy is at high risk and have a negative impact on
the market, some of the central bank will conduct a policy of cutting interest
rates. This will cause the carry trader review the trading position is
typically direncankan in the long run. Volatility due to interest rate cuts
typically occur while the (short term), but because the cut is usually the
target currency carry trade (eg interest rate cut the Australian dollar, if
traders buy AUD / JPY), then in the long term profit from the difference in
interest rates obviously will be reduced.
small frequency, the government can intervene in the forex market if the
exchange rate is considered too strong or too weak in accordance with the
expected reference to the central bank. With the intervention of the value of
the currency will strengthen or weaken rapidly which of course affects the
exchange rate volatility and carry trade currency pairs. As is known, the
central bank of Japan (BoJ) often intervene in its currency.
conditions for the carry trade
Extreme market sentiment is not always the case, as well as high volatility.
Forex market, and also the stock market will usually recover (recover) along
with the increasing returns that result. Investors usually wait state is most
suitable or close to ideal for the carry trade, ie if the global economy is
growing rapidly with the level of interest rates in some countries are already
The carry trade is great for the big trading outfits,
but it doesn’t help the average person. And that is why there is such great
EUR/USD Intra-Day Fundamentals: New Home Sales and 14 pips range price movement
2016-10-26 14:00 GMT | [USD - New Home Sales]
[USD - New Home Sales] = Annualized number of new single-family homes that were sold during the previous month.
From market watch article: New-home sales run at annual 593,000 rate in September as market grinds slowly higher
EUR/USD M5: 14 pips range price movement by New Home Sales news event
NZD/USD Intra-Day Fundamentals: NZ Overseas Merchandise Trade and 12 pips range price movement
2016-10-26 21:45 GMT | [NZD - Trade Balance]
if actual > forecast (or previous one) = good for currency (for NZD in our case)
[NZD - Trade Balance] = Difference in value between imported and exported goods during the reported month.
NZD/USD M5: 12 pips range price movement by New Zealand Trade Balance news event
Trading the News: U.K. Gross Domestic Product (GDP) (adapted from the article)
Bullish GBP Trade: U.K. GDP Expands Annualized 2.1% or Greater
is located below 100-day SMA (100 SMA) and 200-day SMA (200 SMA) for the bearish area of the chart for the ranging within the narrow support/resistance levels. Descending triangle pattern was formed by the price with 1.2081 support level to be crossed for the bearish trend to be resumed.
GBP/USD M5: 31 pips range price movement by U.K. Gross Domestic Product news event:
Intra-Day Fundamentals - EUR/USD and USD/CNH : Durable Goods Orders2016-10-27 12:30 GMT | [USD - Durable Goods Orders]
[USD - Durable Goods Orders] = Change in the total value of new purchase orders placed with manufacturers for durable goods.
From Market Watch article: Durable-goods orders soften in September
EUR/USD M5: 17 pips range price movement by Durable Goods Orders news events
USD/CNH M5: 28 pips price movement by Durable Goods Orders news events
S&P 500 Intra-Day Technicals: H1 bearish reversal (adapted from the article)
H1 price broke 100 SMA/200 SMA levels to be reversed to the primary bearish market condition with 2,126 support level to be broken for the bearish trend to be continuing with 2,124/2,123 levels to re-enter.
The most likely scenario for H1 price movement is the following: the price will cross 2,126 level to below with 2,124/2,123 next level to be broken for the bearish trend to be continuing.
Something Interesting to Read October 2016
Sergey Golubev, 2016.10.28 08:14
GDP is one economic model among several that could serve the
purpose, but its use conveniently leads to policies that reflect the
thinking of a particular school of economic monetary and fiscal policy
We all know that in operating a business we need to be able to
measure the profits of our company and then adjust our prices and
production to make sure that there are enough profits to adequately fund
the company. That is a relatively straightforward process, since the
amount of money in the bank at the end of the month is a real number.
GDP: A Brief But Affectionate History is a fascinating 140-page
book that I cannot recommend highly enough. This is simply the best
book on GDP that I’ve ever seen. You can read it on a few hours’ plane
ride or a lazy Sunday afternoon. And Ms. Coyle actually makes a
relatively dry subject interesting and at times a page-turner. She has a
Ms. Coyle starts with the predecessors to Adam Smith and takes us
through the 17th century right up until today with the development of
GDP, so we see the ebb and flow of ideas through time. Who knew the
early developers of the model did not want to include defense spending,
as they saw it as a wasteful, nonproductive activity? Or that Adam Smith
thought the inclusion of services in the concept was misleading. “The
provision of more services was a cost to the national economy, in his
view. A servant was a cost to his employer, and did not create
anything. Importantly, money spent on warfare or the interest on
government debt was also being used unproductively. The nation’s wealth
was its stock of physical assets less the national debt. National income
was what derived from the national wealth.”