Connect with us

Forex

Forex Market Cautious Amid Coronavirus Escalation over Chinese New Year

mm

Published

 on

Forex Market Cautious Amid Coronavirus Escalation over Chinese New Year
  • Market remains cautious as millions travel for Chinese New Year
  • WHO provides some positivity with a recent public announcement
  • Forex markets across Asia remain tentative

As hundreds of millions of people traveled across China on Friday to mark the Chinese New Year and the beginning of the year of the rat, fears remained high across the nation that has been gripped by coronavirus in recent weeks. This has taken its toll on the forex market with the majority of trade remaining stagnant at best. Moving into the weekend will bring a clear chance for reflection in the markets across Asia. A keen eye will be on virus progression over these days. A further spread sure to indicate a negative for the market reopening on Monday.

Holiday travel stokes fear of further spread

The death toll rose to 41 on the day of the Lunar New Year with millions set to travel to home towns across the country. The city at the epicenter of the crisis, Wuhan, still remain on lockdown also, with travel both in and out completely restricted. At the time of writing, Chinese President Xi has also commented on the crisis for the first time, saying that China faced a “grave time” in fighting the virus. This will most certainly impact market sentiment on reopening.

The next several days will be crucial for both the forex market and the country in general as the spread of the virus will remain closely monitored over this holiday period. How much it spreads during this time could really impact the market sentiment coming into next week.

WHO positivity abates some concerns

A statement from the World Health Organization at their Thursday press conference did work to calm the market before the weekend break somewhat. Their statement that the virus does not yet constitute a global health risk, although being high-risk in China certainly injected some positivity into the markets across Asia. This has contributed to balancing many markets to a neutral stance.

Positive steps taken in containment across China including a $145 million investment in the Hubei province to help support containment and recovery efforts have also worked to manage fears in the market. This has included the immediate, and expedited construction of 2 hospitals, expected to be complete within 7-days to help manage the patient flow in Hubei province.

Domino effect across Asia

Other forex markets and currencies across Asia and globally have reacted defensively through the end of the week with both the USD/EUR, and the USD/JPY staying in a neutral position. This lack of strength from the US Dollar could also be factoring in the ongoing impeachment process. Many traders may be holding back on taking a strong position as US President Trump begins to mount his defense. Either way, the next week provides for several geopolitical tests of the forex market.

Forex BrokersReview

Forex Market Cautious Amid Coronavirus Escalation over Chinese New Year
- #1 Broker in USA
- Over 80 Currencies
- Regulated by NFA, CFTC, FCA, FSA, IIROC & CIMA
- Member of the National Futures Association (NFA# 0339826)

Click Here to Visit Forex.com

Forex Market Cautious Amid Coronavirus Escalation over Chinese New Year
- 0.01 Min Lot
- 1:500 Leverage
- Over 50 Currencies
- Windows/Mac/IOS/Android Compatible
- Daily Market Analysis

Click Here to Visit EagleFX
Spread the love

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

Forex

GBP/USD Forex Market Back Above Key Level

mm

Published

on

GBP/USD Forex Market Back Above Key Level
  • Market jumps back above important 1.30 figure after shaky start
  • Pound buoyed by positive CPI
  • No Deal Brexit and China fears still holding traders


The GBP/USD has begun to climb again after a protracted period of uncertainty which has seen it hover around a key benchmark area. 1.30 has been a sticking point for the market over recent days and weeks. This is no surprise given the level of uncertainty that has plagued the geopolitical scene of late. A turbulent Brexit was finally brought to pass, this though is far from done with many of the key negotiations still to come before the end of 2020.

USD Silence Helps the Climb Back

The currency pair is in fact reversing the previous day’s session that saw it close below this key point. It is doing so with the help of a very quiet USD currency and market. This could be related to the news earlier in the week of a revenue warning from Apple. With the DOW Jones, and NASDAQ also down, it is possible that traders are giving the market a slightly wide berth for now and waiting for some more positive news on the global stage.

Consumer Price Index Boost for GBP

The strength of the Pound in this pair can be somewhat attributed to the recent release of economic figures more than the current and ongoing post-Brexit negotiations. Both the CPI (Consumer Price Index), and PPI (Producer Price Index) which measure how price rises and inflation impact both parties, came in stronger than expected.

While this may not spell great news for British consumers at the checkout with inflation reaching a high point, it has given the currency a boost. This number may show that UK production and consumer spending have been very healthy in real terms.

The British CPI managed to jump 1.8% in its year-on-year number for January. This is steadily more than the 1.3% rise of the previous year and again more than the 1.6% expected. All in all, a potential rise in consumer confidence may be garnered from these figures.

Still Worries on the Horizon

Despite the positive movements of the day, there are still challenging points for the pair, and the wider economy to deal with. On a somewhat domestic level, the ongoing negotiations about the future UK relationship with the EU are set to drag on. Latest headlines today show that the UK remain committed to a points-based entry system that will severely limit opportunities to unskilled worked from outside the country.

Finally, in China, there is still the ongoing issue of the Coronavirus. Catching few headlines but the virus is still serving to restrict operations of companies within China and overseas. This widespread supply chain disruption is seen to be behind the Apple revenue warning and the fall of both the DOW and the NASDAQ which is heavily reliant on the Chinese market.

Forex BrokersReview

GBP/USD Forex Market Back Above Key Level
- #1 Broker in USA
- Over 80 Currencies
- Regulated by NFA, CFTC, FCA, FSA, IIROC & CIMA
- Member of the National Futures Association (NFA# 0339826)

Click Here to Visit Forex.com

GBP/USD Forex Market Back Above Key Level
- 0.01 Min Lot
- 1:500 Leverage
- Over 50 Currencies
- Windows/Mac/IOS/Android Compatible
- Daily Market Analysis

Click Here to Visit EagleFX

Spread the love
Continue Reading

Forex

What is Leverage in Forex?

mm

Published

on

Globex Launches Digital Securities Exchange Software

Regardless whether you are a brand new trader in the forex market or someone with extensive experience, you will have certainly encountered one thing on your journey. Leverage. If you are new to forex trading then you may wonder exactly what is meant by this, how you can utilize it, and what kind of leverage is available from your forex broker. Since every top forex broker around the world offers some kind of leverage, we will cover the main points of leveraged trading here. This should help you make the best decision for your trading future when selecting your next broker.

The Basics of Leverage in Forex Trading

In its most simplistic form, leverage is simply money borrowed from a source that can increase the size of position or amount of capital that is available to you. In this case, the source that you are borrowing money from in the form of leverage, is your broker.

The amount of leverage that you can benefit from will depend primarily on two factors:

  • Where your broker is based and regulated.
  • Which assets you want to apply leverage to from your broker.

These are two of the most important factors when looking at how much leverage may be available to you as a standard forex trader. Here we will take a closer look at how much leverage you can expect to receive.

Typical Amounts of Leverage Available in Forex Trading

This varies around the world and between different brokers, but can go up to as much as 100:1 or more with certain brokers. Forex trading leverage is most commonly expressed in this ratio format and indicates in our example that with a $1 balance of your own funds, you could open positions worth as much as $100.

As mentioned, the leverage available will depend heavily on where the broker is regulated. The most prominent example of this is within the EU. Due to ESMA (European Securities and Markets Authority) regulations, all brokers are restricted to offering a maximum leverage of 30:1 regardless of the market traded. Effectively, this means that you can only borrow a maximum of 30 times your capital balance to trade with. The idea here is to protect traders from becoming excessively involved in leveraged trading where losses can mount quickly.

This is typically more than enough leverage and is usually only available within the major forex currency markets which are often viewed as less volatile. With a 30:1 leverage and a deposit of $100, you could hypothetically open positions to the value of $3,000.

In other markets such as minor forex currency pairs, CFDs, and cryptocurrency trading, the leverage available can be considerably lower anywhere from 1:1 (no leverage), through 5:1, 10:1, 20:1 depending on the risk of the market.

If you happen to be a more experienced trader, then of course the broker may be more likely to approve a higher leverage, and for traders who can open professional trading accounts, these limitations can be stretched further.

The Benefits of Leverage in Forex Trading

The key benefit and reason why many traders employ leverage when they are trading forex is the potential profitability.

Forex trading is a huge volume trading market, the biggest in the world of trading. If you have looked at our recent article on forex lot size, then you will know that the typically standard lot size is 100,000 currency units. This can mean a cost of $100,000 to trade just one standard lot.

So, instead of putting a full $100,000 or more on the line, many forex traders will use leverage. Utilizing the maximum EU broker leverage of 30:1, you could then trade with up to $100,000.

This effectively means that through increasing your leverage, you can also increase your purchasing or trading power to take more advantage over changes in the market.

Risk management can also be a second area where, if well-considered, can definitely benefit from utilizing leverage in forex. As mentioned above, you will not want to risk your entire balance on just a few trades in the forex market, instead, you can use leverage to only commit a small percentage of your balance yet still fill the position.

The Cost and Risks of Using Leverage

When you do decide to utilize the leverage on offer from your broker, besides the positive potential and benefits that we have mentioned, there are naturally some costs and risks involved.

Thinking of the costs first, your margin will go up depending upon both the size of the positions you open, and also how those positions move while they are open. Taking a look at our recent article on margin in forex trading will help you to gain a deeper understanding of how the margin works but it is certainly something to keep an eye on when using leverage.

The main risk when dealing with leverage is connected to the increased size of your positions. This means that when the market moves the size of your profits or losses can be greatly amplified. On the positive side, this of course can mean you make money quicker when the market moves in your favor. On the other hand though, you can also rack up quick losses.

Choosing the best forex broker who also provides negative balance protection, and employing an astute risk management plan that you stick by are two things you can do that will help you successfully manage your trading on leverage.

Final Thoughts – How Much Leverage Should I Use?

So, you have opened your forex trading account and been approved for leverage from your broker. The common temptation is to use as much as possible. In reality though, you need to do an impartial assessment of your position and not engage more in leverage than you can afford to lose. Particularly if you are a new trader, the recommendation would be to start small with the leverage and continue learning as much as possible through any educational content provided to help improve your knowledge and skill as a trader.

Forex BrokersReview

What is Leverage in Forex?
- #1 Broker in USA
- Over 80 Currencies
- Regulated by NFA, CFTC, FCA, FSA, IIROC & CIMA
- Member of the National Futures Association (NFA# 0339826)

Click Here to Visit Forex.com

What is Leverage in Forex?
- 0.01 Min Lot
- 1:500 Leverage
- Over 50 Currencies
- Windows/Mac/IOS/Android Compatible
- Daily Market Analysis

Click Here to Visit EagleFX
Spread the love
Continue Reading

Forex

USD Starts to Consolidate as Global Forex Market Takes Stock

mm

Published

on

USD Starts to Consolidate as Global Forex Market Takes Stock
  • USD bullish pattern begins to slow
  • Data and prospect still remains very positive
  • 225,000 non-farm payroll jobs added in January

The USD had shown strength to a certain degree over the closing days of last week in a global forex market that has been dogged with fear in recent days and weeks. With many of these traders now deciding to take some of their profits, the market has started to consolidate gains on currency pairs around the world. This is true of the USD/CHF, USD/JPY, and many other benchmark major forex currency pairs across the market.

What has caused the USD forex market consolidation?

This is a consolidation that had begun just prior to the beginning of the weekend and came after the U.S. had posted better than expected job data. This kind of movement is common across markets particularly when traders have gotten ahead of the projected good news and then look to take their profits on its release. This is precisely what seems to have happened here.

With nothing in particular of huge significance on the US economic calendar for Monday, it may also be a case that traders Stateside see little to gain at the beginning of this week and have adopted a risk-averse approach. This similar approach in Europe has seen several indices slide alongside the 10-years US Treasury bond which has fallen by almost 2%.

New increases still remain very possible

Despite the consolidation, almost every piece of data coming from the USD forex market and wider economy to start the week points in only on direction. This direction is upward. Not least of this can be related to the very good jobs data release. A greater than expected increase on US Non-Farm Payrolls of 225,000 along with another better than expected wage rise number at 3.1% are all excellent. Although this was accompanied by an unemployment increase, that number also remains keenly low at 3.6%.

USD still a global go to currency in times of need

Another huge factor that can continue to bring the market into the USD is the ongoing Coronavirus situation that has now spread around the world. This is good news for nobody and has in fact greatly dented the global economy. With that said though, this, and other types of crisis situations will ultimately serve in bolstering global “safe-haven” currencies.

This likely means the most to the Japanese Yen, the JPY is well-known as the number-one currency that traders flock to in times of difficulty. The USD though is a close second in this area and well above any of the other major forex currencies in terms of trust score among traders. Expect further gains on the USD side of these markets if the virus continues to spread after the Chinese return to work following an extended Lunar New Year Holiday

Forex BrokersReview

USD Starts to Consolidate as Global Forex Market Takes Stock
- #1 Broker in USA
- Over 80 Currencies
- Regulated by NFA, CFTC, FCA, FSA, IIROC & CIMA
- Member of the National Futures Association (NFA# 0339826)

Click Here to Visit Forex.com

USD Starts to Consolidate as Global Forex Market Takes Stock
- 0.01 Min Lot
- 1:500 Leverage
- Over 50 Currencies
- Windows/Mac/IOS/Android Compatible
- Daily Market Analysis

Click Here to Visit EagleFX

Spread the love
Continue Reading

Forex News

Forex Brokers

Forex BrokersReview

- #1 Broker in USA
- Over 80 Currencies
- Regulated by NFA, CFTC, FCA, FSA, IIROC & CIMA
- Member of the National Futures Association (NFA# 0339826)

Click Here to Visit Forex.com

- 0.01 Min Lot
- 1:500 Leverage
- Over 50 Currencies
- Windows/Mac/IOS/Android Compatible
- Daily Market Analysis

Click Here to Visit EagleFX