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CONTENTs FXREINVENTING BANKING 50Reinventing BankingFrom Russia to Iceland to Ecuador 39 48 PLAYING THE WE NEED TO TALK ABOUT DATA MARKET ZONES FOR A PROFIT The accuracy and reliability of macro-economic data07 EDITOR’S NOTE TRADING STRATEGY of Select FX ProductsFUNDAMENTAL ANALYSIS 11 How Experts are Profiting on TRADING PSYCHOLOGY31 Trading GBP: ​Trend Analysis Historical Volatility, Now Through 81 Consistency is the Real Holy Grail19 New Zealand Dollar: Will the December: Shows how to profit from of Trading: how to build an attitudeRBNZ close the interest rate gap? the fourth quarter’s large trading ranges, of discipline and control to reach your coupled with 2015’s increase in volatility trading goalsMONETARY POLICIES 68 Trend following. One more step BOOK REVIEW17 The Future of Central Bank to trading success: Learn a strategy to 78 Systematic Trading by Robert CarverMonetary Policy: Analyses th​ e identify the formation of a new trendconsequences of and get in early TECHNICAL REPORTSdecision Fed’s​September​79 Your Guide to Letting Your Profits 85 Trends and Targets: Run: simple steps to keep losses to a USD Majors, Major Crosses74 Conventional monetary policy has minimum and let profits run Emerging & Asian Marketsfailed. Time for the Nuclear Option 85 Featured Markets: TECHNICAL ANALYSIS AUD/USD, EUR/NOK,TRAINING EUR/ZAR, USD/THB 24 Interview with Jim Martens: Fresh 89 CONFERENCES & SEMINARS21 Ask The Coach: ke​y points to insights from Elliott Wave International’s INTERNATIONAL DATAaccelerate your learning process Senior Currency Strategist 90 FX Spot Monitor 91 Central Bank RatesAUTOMATED TRADING 35 Flaws in Trading with Classical 92 Economic Data - FX Poll64 The Seven Deadly Sins of Automated Technical Analysis: highlights some 93 Markets ViewTrading: what to avoid to save time and technical analysis flaws when applied 94 ECONOMIC CALENDARbuild a sound trading system to Forex and how to trade price action42 Interview with Alex Nekritin: on reversalsManaged Forex and how to choose atrading system MARKET REGULATION 54 A Brief Survey of CFTC Regulation FX TRADER MAGAZINE April - June 2017 3

MANCHESTER UNITED GLOBAL PARTNERSwissquote Bank Ltd (“Swissquote”) is a bank licensed in Switzerland under the supervision of the Swiss Financial Market Supervisory Authority (FINMA). The support onwhich this advertisement is published (such as a newspaper or a magazine) might incidentally be distributed in the USA. Swissquote is not authorized as a bank or broker by anyUS authority (such as the CFTC or the SEC). The products and services presented in this advertisement are in particular not intended to US persons (such as US citizens, USresidents or US entities organized or incorporated under the laws of the USA). This advertisement does not constitute an offer, a solicitation or an invitation to US Persons topurchase or sell any banking or financial products or use any banking or financial services. Swissquote does not open any account for US persons. The products and servicespresented in this advertisement are as a general rule authorized for sale in Switzerland only. They are not intended for any person/s who, based on their nationality, place of

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Read FX Trader Magazine on your mobile The mobile apps give you access to the current edition, archive,​ special supplements and ebooks. Keep up with the forex markets and don’t miss actionable advice from the world’s most influential forex experts. Download and enjoy it today!Receive all issues of FX Trader Magazine directly on your iPad,iPhone and Android device. Browse, search, zoom, bookmarkand share your favourite articles thanks to the mobile editions.

EDITOR’s note FXWhen Monetary Policies Drive the FX SceneWhile China’s current turmoil and it is how the crowd “interprets” the opinion, another option is to followlingering low oil prices are under forex news. In this issue’s interview, Jim asks experienced money managersinvestors’ spotlight, monetary policies us: “How many times have you seen through managed forex tradingseem to be currently driving the FX the news fail to meet expectations, accounts. We interviewed Alexscene more than any other influences. but the market rallies anyway?” and Nekritin who brings light onThe main question remains who will he explains why price patterns can Managed Forex and how to pickmove first on hiking rates - the Federal really help you see the mood of the up a performing trading system.Reserve, or the Bank of England? But crowd before it actually changes. And if you prefer to build your ownour experts don’t seetightening start until Following the same idea, Keith automated strategy,we see deflation risks Raphael continues to write his you will save timedissipate globally. accurate USD forecast looking at the by reading “TheIn this edition, as we dollar and major currencies through Seven Deadly Sins ofanalyse the impact of a technical lens. Automated Trading”.the Fed’s September This gives us food for thought This edition is full ofdecision on the when trying to solve a never-ending other insights fromfinancial markets dilemma: What brings better trading our professional forexand on other central performance, fundamental or experts, who will teachbanks around the technical analysis? you: How to profitworld, we also take a For those who chose not to from the last-months-close look at the BOE experiment both sides of the of-the- year’s volatility;to understand what spectrum to forge a personal How to trade priceForex traders should action reversals; Howexpect from the to build an attitude ofGBP in the closing months of 2015. discipline and controlWe also discuss the consequences of to reach your trading goals; How tothe Reserve Bank of New Zealand’s accelerate your leaning process as apolicy on the New Zealand Dollar trader. You will read a survey of CFTCdevelopments and explain why the regulation of select FX products.medium-term bias for the Kiwi dollar You will learn what are the goalsremains bearish. of Japan’s plan aimed at boostingTo give you a technical analysis view on potential growth and how it can affectcurrent market developments, we’ve the Yen; and, last but not least, youasked Elliott Wave International’s will understand what is happening toSenior Currency Strategist, Jim US Dollar liquidity and the cost ofMartens, what actually drives the FX borrowing in Dollars.scene and his opinion is that it is not Good reading and good trading!the news that moves the markets, but Emmanuelle Festa Bianchet FX TRADER MAGAZINE April - June 2017 7

FX CONTRIBUTORSDavid Aron is Counsel in the Office of General Bloomberg, CNBC Europe, Reuters TV, CNN, Publisher & Chief Editor :Counsel (and temporarily detailed to the Division BBC and Sky News. Prior to joining FxPro in Emmanuelle Festa Bianchetof Market Oversight) at the Commodity Futures July 2013 Angus spent five years as Head of [email protected] Commission. Prior to the CFTC, David Market Analysis at London Capital Group.Aron spent ten years in total with three international Editorial support:law firms. While in private practice, he focused Marc Chandler joined Brown Brothers Ivan Karlukovskihis practice on, among other things, representing Harriman in October 2005 as the Global Head of Stefan Pashaliyskiasset managers, power marketers, commercial and Currency Strategy. Previously he was the Chiefinvestment banks and monoline insurers in CFTC Currency Strategist for HSBC Bank USA and Webmaster:regulation of CPOs and CTAs, energy trading and Mellon Bank. A prolific writer and speaker, Hristo Katzarskicredit derivatives. During the financial crisis, Mr. Chandler’s essays have been published in [email protected] worked in the United Nations Treasury. the Financial Times, Barron’s, Euromoney, Graphic design:Earlier in his career, he worked in the Securities Corporate Finance, and Foreign Affairs. Marc Preslav DobrevInvestments unit of MetLife’s Law Department and holds a Masters in American history from For advertising, contact:in Citibank’s derivatives documentation unit. David Northern Illinois University and a Masters [email protected] also previously worked at the CFTC during in International Political Economy from thethe Brooksley Born era, where, among other things, University of Pittsburgh. He has taught classes www.fxtradermagazine.comhe participated in drafting the Concept Release on on International Political Economy at NewOver-the-Counter Derivatives. York University since the early 1990s. In 2009, Trading carries a high level of risk, and may not beDr.Daniel Fernandez has been actively his first book, Making Sense of the Dollar, was suitable for all investors. The objective of FX Traderinvolved in currency trading during the past 8 published by Bloomberg Press. Magazine is to give readers the tools, training andyears with an active blog on the building and Rob Colville has trained thousands of private information which will help them be better prepared totrading of quantitative Forex trading strategies investors around the globe. He founded “The trade on the foreign exchange. However, any analysis,( and an active online Lazy Trader” to teach his simple and honest news, research, strategy, or other information containedcommunity that develops and researches approach to trading and investing. Rob is member on this magazine is provided as general marketalgorithmic trading methodologies ( of the Society of Technical Analysts (STA) information and does not constitute investment advice.His blog features the only current free and open and regularly writes for FX Street, Forex Peace FX Trader Magazine, will not accept liability for anysource software for the automatic generation of Army and FX Trader Magazine. Rob also works loss or damage, including without limitation to, any lossautomated price action based strategies for Forex as a Business Mentor for The Princes Trust in of profit, which may arise directly or indirectly from usetrading (OpenKantu, http://mechanicalforex. London where he coaches budding entrepreneurs of or reliance on such from disadvantaged backgrounds on how theySam Barry is the CEO of Littlefish FX, who have can build and develop their own business.developed innovative and cutting-edge Order www.thelazytrader.comFlow Systems giving them a bank-level view of the Simon Cotterill ​is​a technical analysis traderForeign Exchange Market. The company’s goal is with an eye on the news.​ His​analysis centres onto democratise the foreign exchange market by Candlestick Charting, to map the markets inproviding individuals with educational materials, order to spot reversal and continuation patterns,analytical tools, trading systems and alternative combined with simple support and resistance,investments based on order flow concepts trendline and Fibonacci applications. Simonand strategies (traditionally the preserve of has reset his trading brain and concentrates onlarge financial institutions). the psychology of trading, by maintaining strictEllen Brown is an attorney, president of The Public discipline, control and a detailed routine. HeBanking Institute, and author of twelve books, implements his trading principles and rules toincluding the best-selling Web of Debt. In ‘The maximise his technical analysis approach. ​Public Bank Solution’, her latest book, she explores​successful public banking models historically and Jarratt Davis is a self-taught trader who has beenglobally. Her articles are at ranked among the world’s top traders betweenAngus Campbell is Senior Analyst at FxPro and has 2008 and 2013 by the Barclay Currency Tradingover twelve years’ experience working in the City Index. Today he trades professionally throughanalysing and commentating on financial markets. an FCA regulated investment company inHe has made regular television appearances on London and he is a regular commentator for8 FX TRADER MAGAZINE April - June 2017

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FX CONTRIBUTORSinternational financial press. He also devotes house which will be officially launched in 2015.his time to sharing his personal strategies with Keith Raphael, worked as Vice-Presidenttraders looking to hone their skills. He is also and Chief Technical Market Analyst atthe author of ‘How to Trade a Currency Fund’. Chase Manhattan Bank in New York until 1993, serving top corporations, fund managers, investment banks, and spot continue on page 10 traders of the world. Surveys by Greenwichcontinue from page 8 Associates and Euromoney, consisting of 400Efthivoulos Grigoriou is Head of Global Research corporations and investment banks worldwide,and Analysis at JFD Brokers. He is a leading ranked his Chart Service number one in 1992 andStrategist and investment specialist applying global 1993. Keith has been seen on CNBC, in the New‘micro – macro’ approach to investing in G10 York Times and Wall Street Journal. He is thecurrencies. Efthivoulos is a highly rated analyst in President of Crosscurrents Investment Advisory.FXandUSEquities;wellversed in commodities and www.crosscurrentsinvestments.comalternative assets. Efthivoulos has great expertise in Stewart Richardson has over 25 years ofanalysis of global economies and markets with a experience in managing global macro funds andparticular focus on the United States and Europe. accounts both on a discretionary and advisoryPrior to joining JFD Brokers, he was a technical basis. Stewart has worked for Coutts, Merrillanalyst at a number of well-known securities firms. Lynch and Royal Bank of Canada. He regularly in the financial press and on CNBC,Steve Jarvis has provided technical analysis Bloomberg TV and Canada’s BNN, and sits onto FX professionals since 1988. Steve is chief the advisory board of a large family office. Stewartanalyst for InterpreTA, Tradermade’s technical was a speaker at the Drobny Macro Conferenceanalysis service. Steve has a strong experience in in London where he focused on opportunities inproviding professional traders with daily & intra- G10 FX. He is a co-founder of RMG technical analysis commentaries with live charts, covering a wide range of major Darren Sinden is a veteran of the financialUS Dollar and Cross-rates, including Eastern markets with 30 years of experience under hisEuropean and Asian rates, plus key Commodities. belt. He has worked in trading, sales, and research roles. He is a regular guest andJoshua Martinez is Market Traders Institute’s commentator on financial television channels(MTI) head analyst. As a trader and an instructor and publications. During his career, Darren hasskilled in both technical and fundamental analysis, been fortunate to act for and advise some majorJosh, also known as FX Pathfinder, has used the hedge funds and investment banks. Darrenmentoring lessons taught to him by his father analyses the markets through a blend of technical(world-renowned trader Jared Martinez) to build and fundamental analysis. Currently, he conductshis own reputation as a successful trader, analyst market research for Admiral Markets UK.and instructor. He has developed several trading and systems including the 3:10 London Steve Ward is the owner of High PerformanceBreakout Strategy that is taught in MTI’s Forex Global and provides coaching and trainingMastery Course, MTI’s Day Trading Course programs for top tier trading institutions, as welland the Auto Aussie Trading System. His time is as retail traders. He was consultant performancespent training tens of thousands of MTI clients in coach to BBC2’s Million Dollar Traders and co-webinars and courses as well as developing premier managed a team of 40 professional proprietarytrading systems based on years of market research. traders in London. He is an approved trainer the London Stock Exchange. He is the authorRazvan Mihai is both an experienced of “7 Professional Coaching Lessons” and “Hightechnical analist and trader. He is certified Performance Trading” as well as “Trader Mind”.as CFTe by IFTA. He worked for one of the www.highperformanceglobal.comtop five European brokerage houses, and wasHead of Research and Content Manager He currently works as AnalysisDirector for a new international brokerage10 FX TRADER MAGAZINE April - June 2017

by Ellen Brown MACROECONOMICS FX Reinventing Banking From Russia to Iceland to EcuadorGlobal developments in finance and • In Ireland, Iceland and the UK, a Alternative,” William Engdahl writes:geopolitics are prompting a rethinking recession-induced shortage of local credit A significant debate is underway inof the structure of banking and of the has prompted proposals for a system of Russia since imposition of westernnature of money itself. Among other public interest banks on the model of the financial sanctions on Russian banks andinteresting news items: Sparkassen of Germany. corporations in 2014. It’s about a proposal• In Russia, vulnerability to Western • In Ecuador, the central bank is presented by the Moscow Patriarchate ofsanctions has led to proposals for responding to a shortage of US dollars the Orthodox Church. The proposal, whicha banking system that is not only (the official Ecuadorian currency) by resembles Islamic interest-free bankingindependent of the West but is based on issuing digital dollars through accounts models in many respects, was first unveileddifferent design principles. to which everyone has access, effectively in December 2014 at the depth of the Ruble• In Iceland, the booms and busts making it a bank of the people. crisis and oil price free-fall. This Augustculminating in the banking crisis of Developments in Russia the idea received a huge boost from the2008-09 have prompted lawmakers to In a November 2015 article titled “Russia endorsement of the Russian Chamber ofconsider a plan to remove the power to Debates Unorthodox Orthodox Financial Commerce and Industry. It could changecreate money from private banks. history for the better depending on what is done and where it further leads. FX TRADER MAGAZINE April - June 2017 11

FX MACROECONOMICSEngdahl notes that the financialsanctions launched by the US Treasuryin 2014 have forced a critical rethinkingamong Russian intellectuals and officials.Like China, Russia has developed aninternal Russian version of SWIFTInterbank payments; and it is nowconsidering a plan to restructure Russia’sbanking system. Engdahl writes:Much as with Islamic banking models Russia is in the process of rethinking everythat ban usury, the Orthodox Financial aspect of her national economic survivalSystem would not allow interest charges onloans. Participants of the system share risks, William Engdahl concludes that Russia Iceland’s government is consideringprofits and losses. Speculative behavior is in “a fascinating process of rethinking a revolutionary monetary proposal –is prohibited . . . . There would be a new every aspect of her national economic removing the power of commercial bankslow-risk bank or credit organization that survival because of the reality of the to create money and handing it to thecontrols all transactions, and investment western attacks,” one that “could produce central bank. The proposal, which wouldfunds or companies that source investors a very healthy transformation away be a turnaround in the history of modernand mediate project financing. . . . Priority from the deadly defects” of the current finance, was part of a report written by awould be ensuring financing of the real banking model. lawmaker from the ruling centrist Progresssector of the economy . . . . Iceland’s Radical Money Plan Party, Frosti Sigurjonsson, entitled “A betterOn September 15, 2013, Sergei Glazyev, monetary system for Iceland”.one of Vladimir Putin’s economic advisers,presented a series of economic proposals Iceland, too, is looking at a radical “The findings will be an importantto the Presidential Russian Security transformation of its money system, contribution to the upcoming discussion,Council that also suggest radical change after suffering the crushing boom/bust here and elsewhere, on money creationis on the horizon. The plan is aimed cycle of the private banking model that and monetary policy,” Prime Ministerat reducing vulnerability to western bankrupted its largest banks in 2008. Sigmundur David Gunnlaugsson said.sanctions and achieving long-term growth According to a March 2015 article in the The report, commissioned by the premier,and economic sovereignty. Particularly UK Telegraph: is aimed at putting an end to a monetaryinteresting is a proposal to provide targetedlending for businesses and industries byproviding them with low-interest loansat 1-4 percent, financed through thecentral bank with quantitative easing(digital money creation). The proposal isto issue 20 trillion rubles for this purposeover a five-year period. Using quantitativeeasing for economic development mirrorsthe proposal of UK Labour Leader JeremyCorbyn for “quantitative easing for people.”12 FX TRADER MAGAZINE April - June 2017

MACROECONOMICS FX model. And in Iceland, public banking is part of the platform of a new political party called the Dawn Party. Ecuador’s Dinero Electronico: A National Digital Currency So far, these banking overhauls are just proposals; but in Ecuador, radical transformation of the banking system is under way.Iceland’s government is considering a Ever since 2000, when Ecuador agreed torevolutionary monetary proposal removing use the US dollar as its official legal tender, it has had to ship boatloads of paper dollars the power of commercial banks into the country just to conduct trade. In order to “seek efficiency in payment systems [and] to promote and contribute to the economic stability of the country,” the government of President Rafael Correa has therefore established the world’s first national digitally-issued currency.system in place through a slew of financial credit in an already sluggish economy. Unlike Bitcoin and similar privatecrises, including the latest one in 2008. One solution is to make the banks, or crypto-currencies (which have beenUnder this “Sovereign Money” proposal, some of them, public institutions. They outlawed in the country), Ecuador’sthe country’s central bank would would still be creating money when they dinero electronico is operated andbecome the only creator of money. made loans, but it would be as agents of backed by the government. TheBanks would continue to manage the government; and the profits would Ecuadorian digital currency is less likeaccounts and payments and would serve be available for public use, on the model Bitcoin than like M-Pesa, a privateas intermediaries between savers and of the US Bank of North Dakota and mobile phone-based money transferlenders. The proposal is a variant of the the German Sparkassen (public savings service started by Vodafone, whichChicago Plan promoted by Kumhof banks). has generated a “mobile money”and Benes of the IMF. In Ireland, three political parties – Sinn revolution in Kenya. Fein, the Green Party and Renua Ireland Western central banks issue digitalPublic Banking Initiatives in (a new party) — are now supporting currency for the use of commercialIceland, Ireland and the UK initiatives for a network of local publicly- banks in their reserve accounts, but it is owned banks on the Sparkassen model. In not available to the public. In Ecuador,A major concern with stripping private the UK, the New Economy Foundation any qualifying person can have anbanks of the power to create money as (NEF) is proposingthat the failed Royal account at the central bank; anddeposits when they make loans is that it Bank of Scotland be transformed into a opening one is as easy as walking into awill seriously reduce the availability of network of public interest banks on that participating financial institution and FX TRADER MAGAZINE April - June 2017 13

FX MACROECONOMICS one cellphone operator to another. What we have here is something everyone can use regardless of the operator they are using. Banking Moves into the 21st CenturyDinero Electronico in Ecuador is radically The catastrophic failures of the transforming the banking system Western banking system mandate a new vision. These transformations, current and proposed, are constructive steps toward streamlining the banking system, eliminating the risks that have devastated individuals and governments, democratizing money, and promoting sustainable and prosperous economies. They also raise some provocative questions:exchanging paper money for electronic government has declared that these are • Would issuing “quantitative easing”money stored on their smartphones. digital US dollars trading at 1 to 1 – take to the tune of 20 trillion rubles forEcuador’s banks and other financial it or leave it – and the people are taking Russian development and trade triggerinstitutions were ordered in May 2015 to it. According to an October 2015 article hyperinflation?adopt the digital payment system within titled “Ecuador’s Digital Currency Is • Could merging the Iceland version ofthe next year, making them “macro- Winning Hearts!”, the currency is actually the Chicago Plan with a public bankingagents” of the Electric Currency System. taking the country by storm; and other initiative return the power to create moneyAccording to a National Assembly countries in Latin America and Africa to the public without collapsing credit?statement: are not far behind. • How does the Ecuadorian nationalElectronic money will stimulate the The president of the Ecuadorian digital currency mesh with the “war oneconomy; it will be possible to attract more Association of Private Banks observes cash” underway in Europe?Ecuadorian citizens, especially those who that the digital currency could be used These and related questions will bedo not have checking or savings accounts to finance the public debt. However, the explored in later articles.and credit cards alone. The electronic government has insisted that this will notcurrency will be backed by the assets of the be done. According to an economist at Ellen BrownCentral Bank of Ecuador. Ecuador’s central bank: Founder of the Public Banking InstituteThat means there is no fear of the bank We did it from the government becausegoing bankrupt or of bank runs or bail- we wanted it to be a democratic product. Author of:ins. Nor can the digital currency be In any other countries, [digital currency] Web of Debtdevalued by speculative short selling. The is provided by private companies, and it is expensive. There are barriers to entry, like and [expensive fees] if you transfer money from The Public Bank Solution14 FX TRADER MAGAZINE April - June 2017

How to Trade a Currency Fund By Jarratt Davis Learn how to: Trade Professionally Build Credibility Find Funds Trade at an Institutional Level Face Fund Trading Psychology Create a Step-by-Step plan Live your Dream Download Jarratt Davis’ PDF eBook here Download the iPad/ iPhone version here Download the Android Mobile version here Download the Kindle version hereJarratt Davis has been ranked among the best performing FX traders between 2008 and 2012 by Barclay CurrencyTraders Index. In this book, Jattatt shares his journey from “Forex novice” to a fully fledged Forex Fund trader.After establishing his career in 2006 and mastering the art of FX trading by teaching himself techniquesonline, Jarratt became one of the few self-taught traders to reach an institutional level. He traded onbehalf of companies and funds in Hong Kong and London, pumping trades worth up to $10 Million atime on a daily basis, and today he is regularly ranked within the top 10 performing currency traders.Today, Jarratt and his team train investors, traders and industry professionals. Jarratt Davis is alsoregularly featured on Bloomberg TV, FX Trader magazine, Currency Trader magazine and

FX TRADING SYSTEMS by Dr. Daniel Fernández PhD Function Based Trailing Stop MechanismsA key to achieving positive results it becomes clear that we should both minimum favorable movement aswith trading systems is to have reduce the amount of money we is the case for a traditional marketadequate mechanisms for exit are willing to lose and increase our movement based trailing Once a position is expectation of profit as time passes To implement a function basedopened a trader must ensure that after a position is opened. trailing stop we only require twolosses are cut short and yet leave In order to ensure that this is the case things: the first is a definition of theenough room for the trade to we can implement function based behavior function that we will beprogress favorably under normal trailing stops that are independent of using and the second is the break-market volatility. This means the market’s price action. This means even point that we want to have.that traders must tolerate certain that the movement of the stop loss Equation 1 describes the genericmovements against their position, will contain an expectation of where form of a trailing stop functionyet be eager to close a position price should be – regardless of whatthat fails to evolve favorably after the market does – allowing a trader tosome time. If we assume that the lose less money as a trade progressesprobability of a favorable outcome without the need for a specificdecreases as a function of time then16 FX TRADER MAGAZINE April - June 2017

TRADING SYSTEMS FXSL(n) where n is the number of would be 50 pips, then 0 pips (break- value then increasing dramaticallybars that have passed since trade even) after 10 bars have passed and after the BE point. On the contraryopen, SL0 is the initially set stop- on 12 bars our SL would then be -22 lower order polynomials give youloss, f(BE) is the behavior function pips which means we would be a much faster move towards break-applied to the desired BE point and 22 pips above break-even. even with a much slow move afterf(n) is the behavior function applied In line with the above the behavior that. Of course the x⁰ value is theto n. Mathematically any function function can be any desired linear case in which the SL is movedcould be used as a behavior function polynomial which will change the linearly before and after the break-but generic polynomial functions are evolution characteristics of the even point with a constant slope.quite effective in describing different trailing stop mechanism. Image 1 The question then becomes if thedesired pathways for price action shows you the behavior of the SL building of systems that achieveevolution. For example if we used x² using several different behavior historically profitable outcomes isas a behavior function, an initial SL functions ranging from x0.25 to possible with this type of functionof 50 pips and a break-even point x⁴ you can see how higher order based trailing criteria. Herein areof 10 bars Equation 1 would be polynomials give you a much slower two simple trading systems usingtransformed into Equation 2. This initial evolution of the SL with the both extremes of the showedmeans that on trade open our SL functions that achieve such results. Both systems have initial SL values 40 of 100% of the daily ATR(20) period indicator and have a 10 bar BE point. 20 The systems trade on the EUR/USD 1H time frame. The trading weeksStop loss value in pips 0 on the data used start on Monday at 4 and end on Friday at 19 (GMT X0.25 +1 non-DST/GMT +2 DST). The X0.5 systems close and reverse positions -20 X0 when opposite signals are received and reset the n and SL0 values in the X2 trailing stop function whenever a X3 signal in the same direction happens. -40 X4 The systems only look for entry/ exit signals at a predetermined hour. 0 2 4 6 8 10 12 The balance curves of both systems Number of bars since trade open back-tested from 1988 to 2015 areImage 1 showed in Image 2, the simulations used a constant spread of 3 pips (0.0003 price units). Data prior to 1999 belongs to the DEM/USD currency pair. FX TRADER MAGAZINE April - June 2017 17

FX TRADING SYSTEMSSystem one – behavior function x4 Cumulative Return 10 20 sys 1, X^4 stop function PerformanceEnter long trade or exit short trade sys 1, X^4 stop functionOpen[5] > Open[21] and sys 1, no trailingOpen[25] > Open[1] and sys 2, X^0.25 stop functioncurrent hour = 4 GMT +1 non-DST/+2 DST sys 2, no trailingEnter short trade or exit long tradeOpen[5] < Open[21] and 5Open[25] < Open[1] andcurrent hour = 4 GMT +1 non-DST/+2 DST 2System two – behavior function x0.25 Weekly ReturnEnter long trade or exit short trade 0.00 0.05 0.10 0.15 1Open[9] > Open[17] andOpen[29] > Open[5] and Drawdowncurrent hour = 8 GMT +1 non-DST/+2 DSTEnter short trade or exit long trade −0.25 −0.15 −0.05Open[9] < Open[17] andOpen[29] < Open[5] andcurrent hour = 8 GMT +1 non-DST/+2 DSTThe results of these two simple 1987−02−27 1990−01−02 1994−01−13 1997−01−07 2000−01−03 2003−01−08 2006−01−03 2009−01−02 2012−01−03 2015−01−06trading systems (see Image 2)show you how the application Image 2of very different trailing stopfunctions can indeed lead and from an R² coefficient of – depending on the behaviorto systems with historically 0.94 to a value of 0.96. The you expect price to followprofitable results that improve correlation between both after entry – and you can alsoon the risk adjusted returns systems with trailing is also adjust the BE point to anyof the unmodified strategies. significantly low (R=0.060) desired value. The degree ofThe stops help decrease the pointing to the value of using flexibility and the potential forstandard deviation of returns different stop functions as a improvement of your strategiesfor the strategies and reduce source of diversification in the is much greater than whentheir maximum drawdown, creation of trading strategies. using simple price action basedincreasing their Sharpe ratio and With function based trailing trailing stops that require somestability. In the case of system stops you have a powerful predetermined movement1 the Sharpe ratio increases mechanism to help you before any action is taken.from 1.38 to 1.41 while the improve the results of yourR² coefficient increases from trading strategies. You can use Daniel Fernández0.95 to 0.97. For system 2 the different behavior functions Founder of Asirikuy.comdifferences are similar, going and Mechanicalforex.comfrom a Sharpe of 1.25 to 1.3818 FX TRADER MAGAZINE April - June 2017

7 Professional Coaching Lessons with Steve Ward Learn how to: Reach High Performance Develop Resilience Discover Solution Focused Trading Lose like a winner Improve trading decisions Overcome Perfectionism Practice Mental Training for Success Download Steve Ward’s PDF eBook here Download the iPad/iPhone version here Download the Android Mobile version hereSteve Ward is currently one of the most respected trading performance and psychology coaches,who works with traders, trading desks and fund managers at investment banks, funds, energycompanies and proprietary trading groups across the globe. He provides coaching and trainingprograms for top tier trading institutions, as well as retail traders. He worked as consultant performancecoach to BBC2’s Million Dollar Traders and co-managed a team of 40 professional proprietary traders in London. He isalso an approved regular trainer at the London Stock Exchange and has written for many leading trading publications.

FX TRADING METHOD by Joshua Martinez Playing the Market Zones for A ProfitEver feel like the market just won’t go Dividing and Conquering the than likely from 7:00 p.m. to 2:00 a.m.,your way? No matter which currency Market the market will drift bearish toward the Dyou’re trading or which timeframe extension and at 2:00 a.m. it will hit the Dyou’re looking at, you and the market The market has an active zone, when extension and the next day the market willaren’t in the same “zone” for payouts… money is flying around, the market’s alive run bullish (fast and aggressive). DuringA major mistake I see some traders make and the profits are there for the taking. the dead zone it took 7 hours (7:00 not knowing when to get in the market. This typically happens between 2 a.m. to 2:00 a.m.) for the market to hit the DMany times, they don’t know how to (with the start of the Euro Session) and 12 extension. However, during the activecouple those prime entry strategies with p.m. ET. After that, the noise and hustle zone, it would take 3 hours to cover theknowing when to hang your hat for a few calms a bit until 2 a.m. the next morning same distance in the market.hours and just stay out of the market. when the market seems to wake up again. Why are there Zones?Some traders think it’s this ungraspable, It’s no mystery… The volume andintuitive thing that only “those mega- Figure One shows what the market looks directional movements of these zonesmillions traders” have that tells them like when you divide it into zones. The stem directly from the market’s 3 majorthat the market’s ripe. The truth is, the active zone is shown below making trading sessions - the Euro Session, themarket can be divided (and conquered) low-to-high/high-to-low movements U.S. Session and the Asian mastering the “zone mentality”; i.e., alongside the choppiness of the dead zone. You’ll notice that when the market’sbeing able to differentiate the active primarily in the Euro Session and inzone versus the dead zone. For example, if the GBP/NZD is on its way bearish toward a D extension at 7:00 p.m. ET and you have 70 pips left, more20 FX TRADER MAGAZINE April - June 2017

TRADING METHOD FX Changing Your Trading Game When you start to view the market through these zones, your trading day almost plans itself.Fig. 1 zone shown in green and the lack thereof Firstly, you know that to trade in red, representing the dead zone. for larger pip counts and fasterthe first few hours of the U.S. Session, The active zone movements carry more movements, you want to trade thethe majority of directional Forex pips, a stronger direction and as a trader, active zone during the hours listedtransactions take place. These are those I read that as simpler, more consistent above. Now, you can always trade thenice and neat trades where you can trading wins than the short, erratic dead zone, but because of the erraticeasily find entries and exits and the moves of the dead zone. movements and slow pace, somewaves are clearer on the charts, simply traders look at their account, theirbecause of the volume and pace of the risk and their profit goals and likemarket during those hours. me, decide to call it a day before the dead zone takes over. Swing traders, market scalpers and day traders love this method as they are typically after higher volatility moves.Figure Two is an example of what trading From Figure Two, you start to see one New traders love this because it helpsin the active zone looks like on the charts major trend of the deadzone - market them build confidence with a fewwith the inherent volatility of the active pullbacks. winning trades from a market zone they can more easily see on the chart. Putting it All Together The active zone is faster. You can time your trades from it, you can judge whether you have a push up or down as well as have higher confidence in your trades. Several automated trading systems also work well in this zone as opposed to the dead zone. The dead zone is where you will see false signals, you wind up holding much longer trades and it is not as accurate. Joshua Martinez Head AnalystFig. 2 Market Traders Institute FX TRADER MAGAZINE April - June 2017 21

BUILDING ROBUST FX TRADING SYSTEMS by Caspar Marney Learn how to: Find a good historical data source Identify an edge Exploit the Volume profile Know your currencies Use price updates as proxy for traded volumes Trade using Marney Volume and Range indicators - disclosed formulas Download Marney’s PDF eBook here Download the iPad/iPhone version here Download the Android Mobile version hereThe author, Caspar Marney, manages assets for some of the world’s leading investment banks andfinancial institutions. He predicted the huge Yen move of 1998 on live television, a move larger than thePound’s exit from the ERM on Black Wednesday. Caspar started his trading career as a spot currencytrader and technical analyst with HSBC in London and moved to SBC Warburg, later UBS, as Global Headof Technical Analysis for FX and precious metals, where he became one of the bank’s most successfulproprietary traders. He is a regular commentator on financial news channels, a visiting Universitylecturer, a frequent guest speaker at trading events as well as regular contributor to trading publications.

by Brian Twomey MARKET WATCH FX EUR/JPY The Odyssey?This article exposes the findings in a 12 sample, 8,000 + exchange rate study encompass-ing pre and post 2008 periods to determine the structural and positional relationships between and among EUR/USD, USD/JPY and EUR/JPYAs the most widely traded and stop dates. The type in risk on markets as EUR/cross pair every year since of attachment EUR/JPY USD is a risk on currencyreported in Triennial Surveys assumes with either EUR/ pair. In the tested tenure fromfrom 2001 and dated as far USD or USD/JPY determines 1/5/2000 to 7/4/2008, EUR/back as 1996, EUR/JPY the period markets trade. USD traveled 6044 pips fromembarks on periodic journeys, From 2000 to 2008, EUR/JPY 0.9773 to 1.5817 while EUR/known periodic expeditions shared an exclusive statistical JPY surged 6776 pips fromalongside definitive start relationship with EUR/USD 102 .08 to 159.84. FX TRADER MAGAZINE April - June 2017 23

FX MARKET WATCHUSD/JPY concludes the year and ongoing. August it’s possible to see over and/triangular relationship for marks not only the eighth year or undershoots in targetthe same time frame as USD/ since EUR/JPY and USD/ prices and exchange rates dueJPY reciprocated because the JPY began their association from skewed data. So precisestatistical parallel between but a new risk on episode is and perfect is the currencyEUR/USD and EUR/JPY was close when EUR/JPY again price, an over or undershootsubstantially is impossibleadverse. unless the calibration isU S D/ J P Y deficient.began 1/2000at 101.51, As an aside tobounced to add structure135.09 on to the concept1/2001 then of marketended its time periods, andon 7/20 08 not addressedat 103.65 for in the currenta 3144-pip study, largerdrop. market protractionsAs a generally lastconsequence about 50 yearsof the August From 2000 to 2008, EUR/JPY shared then comes2008 market an exclusive statistical relationship with a wholesalecrash and the EUR/USD in risk on markets as EUR/USD economic andbeginning of sometimesthe next test is a risk on currency pair politicalseries from change. In the7/4/20 08 official 1982to 4/15/2014, EUR /JPY transfers its loya lt y back to US Gold report for example,transferred its allegiance EUR/USD in risk on markets. Gold vs. Free Float currencyfrom EUR/USD to USD/JPY epochs general durations arein a new risk off market cycle, The correct measurement is roughly 50 years dated froma duration that holds to the the point of departure in EUR/ the 1500’s. If the Decembercurrent day. The assumption JPY. Aug ust 20 08 represented 1971 Smithsonian Agreementis the first term lasted 10 years a wholesale positional change is measured as the free floatfrom the 1998 Asian crisis in EUR/JPY therefore the start commencement date, theto the 2008 crash while the date to view a periodic change current period enters year 45.current period is in its seventh is Aug ust 20 08 other wise Year 50 doesn’t prognosticate24 FX TRADER MAGAZINE April - June 2017

MARKET WATCH FXan imminent or guaranteed It is assumed that the prior statistical adjustments. Anreversion to the Gold standard periods endured from the 1987 abundance of information wasbut it warns the next 50 year Louvre Accords to 1998, then provided to discern that a bigcycle caused possibly by war, from the 1971 Smithsonian move was imminent.economic collapse, political Agreement to the 1985 Plazainstability or all of the above Accords. EUR/JPY and EUR/ Market crashes is a fascinatingis upon us. topic in currencyInside the markets50 year but notinterval are well knownmini crashes, because themarket modern daychanges free float is inand allows year 45 whileEUR/JPY the priorto perform periods wereits function dominatedas not only by Golda cross pair standards.arranged as The optimaltwo opposite comparisonpairs, but it must includealso allows another 50-currency year free floatmarkets to Large market protractions generally last time becausebe fully self currenciescontained about 50 years, then comes a wholesale are priced ine n t i t i e s economic and sometimes political change interest ratesbecause EUR/ rather thanJPY trades Gold. Theinside EUR/USD and USD/ USD reached maximum peaks commonality from 1971 is aJPY. Markets shift therefore in 2008 and USD/JPY its market event or crash occurscross pairs change allegiance as bottom. Therefore it’s also in 10-0year intervals. Ifits intended purpose in design, assumed that the crash was 50 year periods are viewedconstruction and market a means to speed the newly as 12.5 years then possiblyfunction. The 2008 shift was a arranged marriage between 10 year time frames mayresult of a market crash inside EUR/JPY and USD/JPY be understood contextuallya duration of 10 years. rather than take time through as major turning points in trading, time and structural currency markets but also FX TRADER MAGAZINE April - June 2017 25

FX MARKET WATCHMarket crashes is a fascinating topic in gauge to a current Carry trade currency markets but not well known based on FX Points, EUR/JPY should trade 132.59 – 132.48.switches in EUR/JPY, at least FX Points than is paid to EUR/JPY is a currency pairin the modern day 50-year derive compensation to offset whose price movements areterm. The comparison in any price depreciation in long best described long, short andperiod short or long term is positions. Synonymous terms intraday terms as wave patternsfound in FX Points, Forward exist in currency trading or possibly cycles as its purposePoints or better known as the with slight deviations in is to trade inside the bounds ofinterest differential. its definitions: “Forward EUR/USD and USD/JPY andIf Carry Trades are defined as Discount”, “Uncovered never to leave the parameters.interest differential income Interest Parity” and “Interest To trade direct center classifiesand price appreciation then Differential ”. The interest the market as perfectly neutralthe Forward Point or FX differential is translated to and a rare day in the largerPoint characterizes the actual an FX Point. EUR versus JPY EUR/JPY picture. EUR/JPYtrade. The Forward Discount is valued today at 132.54 and waves because its movementsdefines the cost to carry the JPY versus EUR at 0.0075. are subject to the impulses ofposition or the Borrow side. European Eonia trades today EUR/USD and USD/JPY.The appreciation side is the at 1.0192 and Japanese Callpremium but both exemplify Rates trade 1.0760. JPY Brian Twomeythe FX Point or interest minus EUR translates to + is the author ofdifferential. The goal in 56 FX Points and minus 56 Inside the Currency Market:carry trades is to earn more points as EUR minus JPY. Mechanics, Valuation and In the forward market and a Strategies and Using the Z Score to trade Foreign Exchange and Other Financial Instruments: The Step by Step Brian Twomey The complete study from Brian Twomey is available here: A Case Study in Carry Trade and Cross Pair Allegiance Switching, Pre and Post 200826 FX TRADER MAGAZINE April - June 2017

by Samuel Tay RMB Consequences of the IMF’s decision to include the Yuan in the SDR basketThe SDR, Special Drawing balance between countries This basket of currenciesRights, or often called with big external liabilities is altered every 5 years toIMF ’s currenc y, is not in and those flushed with reflect the importance offact a currency, but a IMF’s cash. The value of an SDR different currencies in theunit of account. It plays a is defined as the value of world’s tr a d ing s y stem .marginal role in the global a f i xe d a m o unt o f Ye n , SDRs nevertheless representfinancial system, where it Dollars, Pounds or Euros - a potential claim on thetechnically constitutes an a n d f r o m O c t a l s o of Yuan non-gold foreign exchangeinternational reserve asset – and is expressed in dollars reserves of IMF memberthat helps maintain the at the current exchange rate. FX TRADER MAGAZINE April - June 2017 27

FX FUNDAMENTAL ANALYSIS countries, which can be exchanged for freely usable currencie. IMF members often need to buy SDRs to discharge obligations to the IMF, or the y may wish to sell SDRs in order to adjust the composition of their reserves.Figure 1. SDR Basket Composition Sourse: International Monetary Fund Consequences for the RMBFigure 2. Yuan’s Share in global Payments Sourse: The Econimist On Monday 30th November 2015, the IMF voted to include China’s currenc y into the basket of currencies which compose the SDR. This proved as a victory for China as it confers a de facto reserve status to the currency, since the SDR only consisted of 4 major currencies from the 1990s as mentioned earlier. The new SDR basket will be launched o n O c t 1 st , a n d th e Yua n will have 10.92% weight in the basket, US Dollars 41.73%, Euro 30.93%, British Pound 8.09%, and Japanese Ye n 8 . 3 3 % .Figure 3. Yuan’s Share in global Payments Sourse: SWIFT Although this move naturally helps Chinese to make payments globally more easilly, China is not looking at transforming the Renminbi into a fully or freely convertible currency. In April 2015, Central Bank28 FX TRADER MAGAZINE April - June 2017


FX FUNDAMENTAL ANALYSIS status, allowing discretionary powers to limit speculation flows and restrict capital movements when dealing with balance of payment issues.Figure 4. Chinese Yuan onshore (CNY) / offshore (CNH) to USD Why did the IMF make this d e c i s i o n , s in c e th e Yua n i sGovernor, Zhou Xiaochuan, see the renminbi reach a not fully convertible? Itdefined China’s g oal to “manag ed convertibilit y” seems that IMF ’s criterion for a currency to become partFigure 5. Post SDR Announcement of the basket is not based on its full convertibility nature, but on its degree of convertibility, and its capacity to be ‘freely usable’ as incorporated in 2000. Right after the SDR inclusion announcement, th e o ns h o re Yua n ( C N Y ) tumbled against the dollar, as after some weak trade data, and China decided to escalate the currency war, preparing for any market turbulence caused by the Fed’s decision to hike rates. The market expects that the hike will withdraw $800bn in liquidity from global markets; and from Chinese Foreign Exchange Tr a d e Sy s t e m ( C F ET S ) a s announced on 11th Dec 2015, from an internationally published index, RMB has depreciated against the USD, however, appreciated30 FX TRADER MAGAZINE April - June 2017

FUNDAMENTAL ANALYSIS FXmodestly against a basketof currencies. This broughtfurther weakness to thec ur r e n c y.The spread between onshoreYua n ( C N Y ) a n d o f f s h o reYua n ( C N H ) w i d en e d .D e sp i te a we a ker Yua n(CNY) onshore against thedollar, we saw a bigger gapa g a inst th e o f f s h o re Yua n(CNH).Another big advantage with Figure 6.the SDR implementationfor China is that the Outlook for the USD/CNHreserve status for the in common trading partners;RMB could act as a reason Looking at the chart on the RMB gained betweenfor capital inflows from Figure 6, it is clear that 6-8% in value against thecentral banks globally, for the CNY has lost its value G BP, EUR , AUD, andwhoever is interested against the US dollar, NZD. Using the USD (redto increase the share of but ag ainst the countr y ’s line) as a benchmark totheir reserves invested CNY ’s streng th, commodityin Greater China. This Figure 7. currencies and tradingis something good forChina’s wealthy, asthe enhanced RMBliquidity globally willencourage some edgytycoons interestedto diversify theirinvestments out ofChina. At the sametime, with globalc entral banks owningthe new SDR, thisreduces liquidity problemsdomestically caused bysuch wealth transfer. FX TRADER MAGAZINE April - June 2017 31

FX FUNDAMENTAL ANALYSISFigure 8. on Figure 8, the AUD seems like an overweight trade partner with the Chinese, and if you are a believer that market moves in cycles, we may see the AUD recovering once economic sentiment r e c o v e r s . Ta k i n g U S D / CNY as my benchmark, AUD currently trades a discount to USD/CN Y, and NZD is slightly its prem i um . Va lu ing a cro ss some commodity currencies, it seems likely that the AUD may regain to trade at a premium once global trade resumes activity.Figure 9. Figure 7, I see further In my opinion, AUD/NZD weakness in the USD/CNH, at this moment seems wellpartners are currently where my first target is seen positioned for buying fortrading near 2009 crisis at 6.6800, and on further a position trade, as it islevels. At this current CNH weakness, my second still near its seasonal 10-juncture, this is something target is at 6.8000. year cycle lows. 1.0400disturbing to the net Looking at the chart seems like an excellentexporter nation. spot to maintain my stop loss if I am intendingLooking at the chart on to build long positions in this pair. Looking at a longer term target at 1.2400, however, 1.1600 is my first preferred target. S a m u el Tay Founder Grentone Capital Management32 FX TRADER MAGAZINE April - June 2017

Traders have been Market MARKET WATCH FXlulled into a false specialists aresense of security concerned about The way weby believing that the validity of measureofficial data is the economic economicaccurate data performance will change over the next decadeby Darren Sinden We Need to Talk About DataThe accuracy and reliability of macro-economic data has long been a bone ofcontention for the markets but to some extent it was one which analysts and traders thought they could live with.Not least because if we all share the same information, even if it’s not that accurate,the market will at least be operating on a level playing field. However, recent events have called that “best we can do” attitude into question. FX TRADER MAGAZINE April - June 2017 33

FX MARKET WATCHLess than a month ago Japan moved back we now know the markets were very of which showed any possibility of aninto recession according to official data, as much disappointed by the end result. outright Conservative party majority,Q3 GDP showed a contraction of -0.8%. Reinforcing the old adage that one yet that was the result that we got.Whilst the recession was considered should buy the rumour and sell the be technical rather than actual with At the same time the statisticians, Something has got to changethe data potentially subject to revision, who compile economic data, have yetthe revised figure Markets haveshowed growth of been grappling+1% sticks in one’s with the idea ofcraw, so to speak. trying to generateThat revision is more accurate anda 225% percent reliable economicreversal in absolute data for decades.terms. Such a big In fact insights asdiscrepancy calls to how to achieveinto question the this were thereliability of the data principal toolsin the first place. and advantage of the major GlobalQuestion marks Macro Hedgeare now being Funds for manyasked about years.A u s t r a l i a’sunemployment Most famouslydata after a read demonstratedof 71k new by the Georgejobs created in Soros betNovember, versus against Sterling’sexpectations of Economic data releases can be unreliable continued-10k loss. at best and outright misleading at worst membership of the ERM (the precursor to theWhere does to adjust their methodology to take Euro) and Johns Paulson’s aggressivethe fault lay? account of the modern world and they short against all things subprime,The truth is that there is probably continue to pander to the markets prior to the Credit Crunch.blame on both sides. From the traders’ thirst for single data points, rather thanpoint of view, we have been lulled into a more realistic range based approach. More accurate data, a bettera false sense of security by believing interpretation of what that datathat just because the data is official it Survey based data from which many means and how to take advantage of itmust be accurate. Markets were guilty economic releases are compiled can be was a route map to fame and fortuneof similar self-deception (ahead of the unreliable at best and outright misleading for these mega traders.ECB’s December meeting) through at worst. If you want an example of thistheir interpretation of Mario Draghi’s witness the opinion polls prior to the But if we were in any doubt aboutcomments and intentions. And as UK general election in May 2015, none how the world has changed in recent34 FX TRADER MAGAZINE April - June 2017

MARKET WATCH FXtimes, we need only look at the result of of key data and keep an eye out for I believe this will fall into three categories,December’s ECB volte-face. It had on one comments on the commitments though there could be more.of the world’s leading black box funds, of traders reports and any newsMan Group’s flagship AHL fund, on positioning surveys, such as the New ways of measuringlose 5% of its value in a single day, as a influential Merrill Lynch Fund Manager existing data appointsresult of misreading the ECB tea leaves. Survey (see here for example). Use technical analysis to confirm your The Atlanta Federal Reserve has beenWe are not alone in our thinking. Pure technicians believe that experimenting with a model they callconcerns the chart contains all of the information GDPNow. The model utilises more required for price formation to take regular data releases such as ISMMarket specialists are concerned about place. Thus avoiding the very issues Manufacturing, Retail Sales, Residentialthe validity of the economic data. It’s and inconsistencies we are discussing Construction, Durable Goods andnot just the Admiral Markets research here. Read widely and don’t be afraid to others to predict the level of GDP in theteam. Strategists at Swiss banking question data. Compare and contrast USA on a near real time basispowerhouse UBS also voiced their that data to its prior trends and peers -thoughts in recent note, in which they and if it looks too good to be true, then The predictions are based on longraised similar issues. Namely that rapid there is a good chance it is. standing historical relationships betweenstructural change is “out running” data The near future the underlying data and final GDP readscapture and collation methods that were Markets, the services they use and the inclusive of those notorious revisions.often designed fifty years or more ago. methods they employ are never static It’s still relatively early days, but thisFurthermore that traditional survey and are in a constant state of evolution. predictive approach using modernbased data is increasingly unreliable (see I believe we will see a similar evolution data science seems to be yielding datathis summation of the UBS note). in economic data both in terms of the that is very close to the final reads and data points we look at and the manner considerably more accurate than mostIt’s been clear for some time that current in which they are collected and delivered. traditional market forecasts.methods of measuring inflation areinadequate, after all they did not reflect Chart of GDPNow vs bluesharp price rises seen in the UK and chip consensus forecastselsewhere as the great recession tookhold. Also, they have not captured thereality of today’s continuously fallingprices or indeed the areas where pricesare rising, in particular housing andrents.We need a new paradigmChange will not happen overnight andfor now we must make the best of thetools we have.Be aware of crowded trades particularlyin the run up to and in the aftermath Chart A: GDPNow FX TRADER MAGAZINE April - June 2017 35

FX MARKET WATCH on the International Space Station to allow it photograph the earth from orbit, in very high definition. Chart B: Urthecast how many of us are connected Given the regular orbit of the ISS, to the internet 24/7 via our these images will quickly build upInternet of things smartphones. Compare that to the into a valuable reference libraryThe next technological innovation situation just 15 years ago. In fact for predicting crop yields andwill be the connection of everyday that connectivity in combination commodity prices. Or one coulditems to the internet. Once with new payment systems could count the changes in the numbernetworked these devices will itself provide an instantaneous of cargo ships and containers atbecome a potent source of window on consumer demand, major ports in China, movementinformation. Individual devices spending trends and patterns of vehicles at distribution centresmay not tell us much but they of consumption. Barclay’s bank or train loads of Iron ore movingbecome powerful tools when the already produces similar research across Australia. We may not needdata they produce is aggregated. on a monthly basis via data from to go to space to get this data, asImagine retailers recording its credit card business, but in the drones could provide a similarcustomer foot fall in real time, new era this data could be available service on a more localised scalethen being able to compare the in real time. and the data could then be patchedperformance of all the stores in Direct observation together to give the bigger picture.the same mall at the same time Whilst the internet of things Conclusionand then across the whole country may allow us to get a picture of These technological developmentsor region. Smart Electricity economic activity from the bottom are certainly something Forexand Gas meters could provide up, there are other technological traders should keep a track of inan instantaneous window on developments that will quite the coming years. The marketsenergy demand. Remember that literally give us a top down view by are dominated by speculationpower demand is one of the key recording that activity from above. and data, so those that knowindicators that analysts use to Urthecast is one such venture. how to access the most accuratetry and establish real levels of The company has placed cameras measurements are more likely togrowth in China. If this sounds have an advantage when it comesa bit farfetched, just remember trading the markets. It’s certainly an area of development which is exciting and fast moving - and my prediction is that the way we measure economic performance will change for the better over the course of the next decade. Darren Sinden Market Research Director Admiral Markets36 FX TRADER MAGAZINE April - June 2017

FUNDAMENTAL ANALYSIS FXby Jarratt DavisLooking ahead: what traders canexpect from the major currenciesAlmost every successful trader has move in the next 12 months. At Reserve’s fund rate (which is whatone characteristic in common: they the time of writing this article, US interest rates refer to) hashave an excellent understanding of the Federal Reserve has just been hovering close to zero. Solong-term economic trends. That’s increased US interest rates by this development has significantwhy at the end of every year, I 0.25% - the first time it has done implications which traders needfind it a useful exercise to analyse so since 2006. to be aware of, and which will bethe major currencies and share my For nearly a decade, the Federal explored in the remainder of thisthoughts on how they are likely to article. FX TRADER MAGAZINE April - June 2017 37

FX FUNDAMENTAL ANALYSIS US interest rates will most likely see This adds to the widely anticipated the US dollar appreciate in value well trend of the USD strengthening during into the New Year. . This isn’t to say that the US economy is immune to the effects of a potentialUSD In the immediate term, traders should economic turndown. ApproximatelyDecember’s FOMC interest rate be buying USD on pullbacks against 30% of corporate revenue is generateddecision was the most anticipated weaker currencies. The JPY and away from US shores. The broadersingle event of the year for traders. the CHF appear to be particularly picture is positive for the US though,Throughout 2015, the market has attractive while equities indexes and traders should have confidence inbeen eagerly monitoring data and continue to rally. This is the major the appreciation of the US dollar in .communications from the Federal trend that traders should monitor GDPReserve to assess when they would throughout - those central banksraise interest rates for the first time that are pursuing stimulus packages - In the latter part of 2015, GBP hassince 2006 - which means December’s like the European Central Bank and experienced a period of weakeninghike was widely anticipated by the Bank of Japan - will likely see their against its US counterpart. Coupledmarket commentators and 24/7 news respective currencies exposed against a with economic data that has missedmedia across the globe. strengthening dollar. expectations, an interest rate hike Let’s also consider the macroeconomic from the Bank of England seemsSo what are the implications of this 25 picture for . There’s an expectation very unlikely in the coming months.percentage points hike in US interest that the Federal Reserve will hike Traders should note that sterling interest rates very gradually on four remains a strong currency in the separate occasions throughout next year long term. However, the recent - depending on inflation, the growth Quarterly Inflation Report of wages, unemployment data and the prompted the market to push back participation rate. It’s important to the timing of the first rate hike due remember that the Federal Reserve’s to the Bank of England admitting primary objective is to lift inflation that inflation is likely to remain close to 2% - so the days of high subdued for longer than previously anticipated.A rise in US interest rates will most likely CPI inflation is now expected tosee the US dollar appreciate in value well into the New Yearrates? Well first of all, it’s important interest rates (historically speaking)to mention that this tightening in aren’t going to reappear anytime soon.monetary policy was not unexpected, Having said this, there is some concernwhich means the FOMC decision - that an ever-strengthening dollar willwhile very important - hasn’t caught hurt businesses and investors fromthe markets off-guard. However, this developing economies that have debtdoesn’t change the fact that a rise in in US dollars.38 FX TRADER MAGAZINE April - June 2017

FUNDAMENTAL ANALYSIS FXremain below 1% until the second half On December 3, the European Central change any language in the statement.of . Wage growth has been excellent, Bank cut the deposit rate by 10 bps The message was basically the same,which is registering near 3% for as was expected. However, what the the Reserve Bank of Australia seesseveral months, which is supportive central bank would do with its current signs of improvement in the non-for GBP. quantitative easing programme was mining economy, but accepts that always going to be more significant. with inflation low, there is scope toIn December, the Bank of England lower interest rates further in thekept rates on hold as was expected, Concerning the quantitative easing future. There was no jawboning thethere was no change to the bank programme, despite all the hype, the AUD lower, and it said only thatrate votes, and quantitative easing news was clearly at the less aggressive the currency “is adjusting to theremained steady. The minutes end of market expectations. Particularly significant declines in key commodityleaned to the dovish side, showing because there will be no increase in the prices.” The employment situation hasthat other than ultra hawk Ian €60 billion per month asset purchase been excellent with both the OctoberMcCafferty, there is no support for programme. The earliest cut-off date for and November figures showing stellarearly tightening with the economic the programme was also extended from gains of 58,000 and 71,000 jobs addedscenario at home and globally. September to March 2017. respectively and the unemploymentEUR Other currencies of importance rate moving down to 5.8%.The euro continues to be one The Australian dollar is a neutral The Japanese economy has failedof the weaker major currencies currency while the Reserve Bank of to show any meaningful signs offundamentally, due to the active Australia remain on hold. The central recovery since quantitative easingeasing cycle by the European Central bank is unlikely to cut interest rates was implemented. The Bank of JapanBank. As mentioned in the analysis until they see Q4 inflation data, which are watching CPI - excluding foodof USD, the value of the euro is is not released until January 27. The and energy - to gauge the underlyinglikely to depreciate against its US Reserve Bank of Australia will remain inflation trend. If underlying inflationcounterpart in the coming months. on hold in February if inflation is not of does not pick up, then the Bank ofThe central bank continued to tell concern. Private Capital Expenditure Japan may have to increase the sizemarkets they intended to re-examine for Q3 was a big disappointment of its quantitative easing programmequantitative easing at the December 3 printing at -9.2%. On December 1 the again. On December 7, Japan’s finalmeeting in light of subdued inflation. Reserve Bank of Australia left rates GDP for Q3 beat expectations when unchanged at 2%, and did very little to it was revised higher to 0.3% from the first estimate of -0.2%. The Japanese yen will remain a fundamentally weak currency throughout , especially against currencies of strength like the US dollar. Jarratt Davis FX trader, Funds Manager and Mentor Author of How to Trade a Currency Fund FX TRADER MAGAZINE April - June 2017 39

FX TECHNICAL OUTLOOK by Keith Raphael Annual Long-term Dollar OutlookLong-term Trend Remains shy of 1.1520 for October 2015 on other markets after our forecastsHigher has alleviated various divergences of an approximately 40% range for from the previous decline, allowing 2015 evolved as discussed a year ago.As in the previous three years’ for a continuation of the long-term Lastly, we will again forecast Goldoutlooks, we have been stressing Dollar rally. for the coming year, as the onethe bullish long-term outlook for In addition to our Dollar focus commodity most correlated to thethe U.S. Dollar. Although we have in EUR/USD, USD/JPY, GBP/ U.S. Dollar. Our forecast, whichdeclined in the EUR/USD [for USD, and USD/CHF, we are again has been steadfastly bearish onexample] to only 1.0460 shy of highlighting the USD/RUB as a Gold, will change as we move latethe .9890 long-term objective for potential mover and strong influence into .2015, the forecast corrective rally40 FX TRADER MAGAZINE April - June 2017

TECHNICAL OUTLOOK FXEUR/USD subsequent six months. eroding further in neutral/bearish, GBP/USD we continue to forecast the furtherEUR/USD GBP/USD has been technically decline to 1.4270 through February .In a continuation of the previous forecasts medium-term neutral for five years, in We are now forecasting a subsequentfor the EUR/USD, we have stressed our an increasingly neutral, broad, long-term further decline to 1.3655 into Octobervery long standing view of the bearish outlook. The massive wedge formation in a bearish medium-term outlookseven-year cycle for the EUR/USD. of the last 30 years has now tightened into yearend [1.3655 – 1.5930].Our long-term forecast has continued to relatively to [1.4395 – 2.0145]. After the Only a monthly close back abovestress a top in the EUR/USD since 2009 forecast decline to 1.4815 and rally back 1.5955 would completely neutralize[at 1.4740], as well as the forecast the to 1.5930 left the long-term technicals the bearish long-term momentumsubsequent decline to 1.1555 for March and result in a weak retest of 1.66702014. The decline to only 1.0460 [ shy of GBP/USD over the subsequent three months.the .9890 ongoing long-term objective NOTE: EURGBP retest .7420 thenof the last three years], and retest of .6835 into October1.1715 dampened bearish long-term USD/JPYmomentum for the EUR/USD, but As in the mid-year 2015 quarterlydid not terminate the forecast decline. outlook highlighting the USD/JPY, theWe are forecasting only a weak retest rally to the 124.15 top of the medium-again of 1.1520 into February , then a term consolidation view producedresumption of the decline still to .9890, weak multiple divergences and waning,out to May from January . We are bullish, medium-term momentum.forecasting a subsequent further decline The combination was the furtherto 93.30 strong long-term support into confirmation of the forecast correctionOctober in an even stronger dollar to 115.55 completed in August 2015.outlook than the previous 5 years. Only We continue to forecast a furthera monthly close in EUR/USD back above consolidation view [115.55 – 124.65]1.1520 would dampen the bearish long-term technical aspects of the market andresult in a strong rally to 1.2230 over the FX TRADER MAGAZINE April - June 2017 41

FX TECHNICAL OUTLOOKUSD/JPY presenting USD/CHF in this outlook bullish but not negative by any means. for broader indications of the Dollar Therefore, we are forecasting a decline tothrough the first quarter of . trend. The sharp decline to .7425 in retest .9475 into February , then higherAlthough we do not expect a deeper January 2015 was more pronounced again to 1.0440 into October in a lessdecline than 115.55 through the first but similar to the sharp decline to .7070 bullish long-term outlook for USD/quarter of , we have completed the rally in August 2011, leaving the long-term CHF through . Only a monthly closein USD/JPY at 124.65, for both the technical aspects neutral/bullish for the back below .9070 would terminate themedium-term and long –term outlook Dollar. Once again though, we have forecast rally and commence a declineinto the second half of . As stated in the rallied to only 1.0330 shy of the 1.0525 to .8240 strong long-term supportlast quarterly outlook, only a monthly medium-term objective for last year. The over the subsequent five months.close back above 125.85 (producing a long-term technicals and momentum NOTE: EUR/CHF, the secondaryfurther rally to 135.20 strong long-term are increasingly mixed in neutral/ but important directional indicatorresistance over four months) or now to USD/CHF, is failing to penetratea monthly close back below 115.55 1.1050 weak long-term resistance. We(confirming not only the long-term are forecasting a decline to retest 1.0235top but also producing a decline to into October 2015 which underscoresretest 107.80 over two months) would the waning strength evident in $CHF.alter our consolidation view for most of . USD/RUBNOTE: EURJPY to 117.40 through The previous article in January 2015October [“Ruble in Rubble”] was not an exaggeration but more a realistic comment about the forecast for 2015. The forecast retest of 50.40 for January 2015 followed by the forecast subsequent Ruble collapse of 25% [Dollar rally] to 67.45 underscored theUSD/CHF USD/CHFIn our Long-term Outlook for 2015, Istressed USD/CHF had always beenmy barometer for imminent changesto the U.S. Dollar while tradingcurrencies interbank through the 1980’sand early 1990’s. It is because of thisrespect for USD/CHF that again I am42 FX TRADER MAGAZINE April - June 2017

TECHNICAL OUTLOOK FX would terminate a further decline to 891, and commence a rally to retest 1308 over the subsequent four months.USD/RUB February , then lower through 1044 In summary, the U.S. Dollar remains to 891 very strong long-term support bullish through October in anvolatility and bearish outlook for the in June to complete the long-term extension of the long-standing bullishRuble against the U.S. Dollar. We are decline. We are forecasting a medium- multi-year outlook. We believe thatforecasting a decline from 71.85 strong term consolidation to occur over the we are in the final stage of the Dollarmedium-term resistance into February subsequent six months [891 – 1097] bull market through before a broadto 62.60, then higher to 74.70 through throughDecember .Thisconsolidation 15% consolidation through 2017.July inastillbroad,volatile,neutral/bullish is the formation of a long-term bottom The reluctance of USD/CHF tooutlook for USD/RUB through . We for Gold, reinforced by the expected accelerate through 1.0440 into mid-continue to forecast the broader, longer divergences from the further rally year will underscore our view of thisterm range of (48.65 – 79.50) through in the Dollar into October . Only a waning bull market in the Dollar.early 2017. Only a monthly close back monthly close now back above 1155 Lastly, Gold will also end its forecastbelow 47.70 would again neutralize the bear market mid- , and commencetechnicals for the USD/ RUB and yield a a bottoming consolidation intoretest of 36.70 over a three months. 2017. As always, good luck and good trading! Keith Raphael President Crosscurrents Investment AdvisoryGOLDMost investors are very familiar with GOLDthe correlations of assets with Gold. Theinverse relationship between Gold andthe U.S. Dollar is a hinge pin for thesecorrelations. This strong correlation hasbeen reflected in our long-term bearishoutlook for Gold since May 2012.During the decline to the 1044.55ongoing long-term objective for Gold,the momentum has waned in neutral/bearish. We are forecasting a retest of1155 weak long-term resistance into FX TRADER MAGAZINE April - June 2017 43

FX TECHNICAL REPORT CURRENCY OUTLOOKMAJOR US DOLLAR RATES - FEATURED MARKET – AUD/USDAUD/USD has been heading lower now for over 4 2001 & 2008 lows at .4777 & .6012 (at .7184 & .7208)years since peaking at 1.1079 in July 2011, the highest and more recently the loss of the 14 year uptrend linesince 1982. In my last AUD/USD report for FX connecting those major long-term lows plus the failure toTrader magazine 18 months ago when AUD/USD was hold the .7087 measured move (100% of 1.1079-.8662at .9110 I was talking about a possible decline towards measured from .9504). Note how MACD continues.7946-.7948 (100% lower from the 2013 .8850-.9754 to head lower and current action is contained withinrally / 61.8% retrace of .6012-1.1079), but this proved bearish channels. The chart remains very bearish at thisto be conservative and since achieving that target area stage with the possibility of a return towards the .6012-in January 2015 the signals have remained negative. .6264 area (2008 low / 76.4% retracement of the entireThe latest bearish signals have included the loss of the 2001-2011 advance) over the coming 6 months, possibly61.8% & 76.4% retracements of the advances from the event significantly lower than that on a 12 month view.MAJOR TRENDS AND TARGETS FOR US DOLLAR MAJORSAs at 28 Sep 15 Current level Major trend Major targets Trend change level EUR/USD 1.1180 Down 0.9700 / 0.8232 1.2875 GBP/USD 1.5200 Down 1.4234 / 1.3500 1.6366 USD/JPY 120.05 Up 130.55 / 137.50 105.31 USD/CHF 0.9800 Flat USD/CAD 1.3350 Up 1.3464 / 1.4001 .8701 / 1.0238 AUD/USD .7005 Down .6012 / .5530 1.1922 .816044 FX TRADER MAGAZINE April - June 2017

TECHNICAL REPORT FXFX EMERGING MARKETS – FEATURED RATE – EUR/ZAREUR/ZAR is looking constructive, having started to long-term bull channel (now at 17.458, rising .027 perre-establish bullish monthly candles following the month). Positively aligned & rising 12, 60 & 120 monthretracement of between 50% & 61.8% of the December (1, 5 10 year) moving averages are also indicative of the2010-January 2014 8.7140-15.489 advance to leave a bullish trend, with MACD finally showing signs ofhigher low at 12.673 in April 2015. Over recent weeks turning back up after fully unwinding from the Januarya move through the October 2008 & January 2014 2014 overbought condition. We ideally need to see antops at 15.33 & 15.489 has occurred, suggesting an initial setback leave a higher low now by the 13.545-initial advance towards 16.788 (100% of 7.1590-15.233 14.155 area (November 2014 low / June 2015 high),measured from 8.7140) and possibly the top of the failure to do so would point at a possible trend reversal.MAJOR TRENDS AND TARGETS FOR FX EMERGING MARKETSAs at 28 Sep 15 Current level Major trend Major targets Trend change level EUR/CZK 27.245 Up 29.671 / 30.815 25.485 349.93 / 374.81 295.73EUR/HUF 315.60 Up 4.2650 / 4.3659 4.1558EUR/PLN 4.2365 Up 78.39 / 83.17 4.2913 / 4.5697EUR/RON 4.4130 Flat 3.1335 / 3.5000 3.4014 / 4.0978 15.115 / 16.686USD/ILS 3.9410 Flat 99.931 / 104.61 48.79USD/RUB 65.70 Up 16.788 / 17.458+ 2.1905 11.263USD/TRL 3.0545 Up 57.27USD/ZAR 13.940 Up 13.354EUR/RUR 73.45 UpEUR/ZAR 15.605 Up FX TRADER MAGAZINE April - June 2017 45

FX TECHNICAL REPORTMAJOR CROSS-RATES - FEATURED MARKET - EUR/NOKEUR/NOK has spent the past 3 years steadily on towards 10.934 (100% of 7.2490-9.8687 measuredretracing the previous 4 years 10.151-7.6256 decline. from 8.3146) on a clean break. Longer-term, we doSince reaching a recovery peak at 9.8687 in December not rule out the possibility of 11.423 (100% higher2014, a potential higher low has been left at 8.3146, from 9.8687-8.3146). However, initial failure towith a steady advance having commenced from there. clear the December 2014 peak at 9.8687 followed byMACD is heading higher again, so to the 12, 60 & a reversal under resistance-turned-support at 9.1414-120 month (1, 5 & 10 year) moving averages. This 9.1448 may trigger a setback towards former recentfavours a continued advance over coming months, monthly highs at 8.8678-8.9290, where a higher low isinitially to retest the 2008 peak at 10.151 (close to ideally sought above the May 2015 one 8.3146 for an100% of 8.0795-9.8687 measured from 8.3146) then additional advance.MAJOR TRENDS AND TARGETS FOR MAJOR CROSS-RATESAs at 28 Sep 15 Current level Major trend Major targets Trend change level .6702 / .6537 .8062EUR/GBP .7355 Down 207.96 / 215.85 168.08GBP/JPY 182.45 Up 152.07 / 159.60 126.11 1.0071 / 0.8599 1.2033EUR/JPY 134.20 Up 9.8687 / 10.151 8.5416EUR/CHF 1.0955 Down 9.7151 / 9.9808 9.0568EUR/NOK 9.6150 UpEUR/SEK 9.4500 Up46 FX TRADER MAGAZINE April - June 2017

TECHNICAL REPORT FXSELECTED ASIAN FX RATES – FEATURED MARKET – USD / THBUSD/THB is looking constructive, now pushing 39.160 area (38.2% retracement of entire 1998-2013upwards from a 14-16 year bear channel to attack the 55.750-28.562 decline / 1.618 Fibonacci projection of the2009 lower top at 36.280, this after a number of bullish 28.563-33.143 advance measured from 31.750) over thesignals during recent months, including a break of the coming 6-9 months and possibly 41.155-42.156 (20052014 highs at 33.109-33.143 and a golden cross of the high / 50% retracement of 1998-2013 decline) further12 & 120 month (1 & 10 year) moving averages. The out. Look for former resistance around 33.109-33.143 to2009 high at 36.280 is close to 36.330 measured move revert to solid support on a setback.(100% of 28.563-33.143 measured from 31.750) and thetop of a 2 ½ year bull channel. With MACD looking Steve Jarvisconstructive, we see scope for a continued advance in Chief AnalystUSD/THB, with scope for a move towards the 38.948- TradermadeMAJOR TRENDS AND TARGETS FOR SELECTED ASIAN FX RATESAs at 28 Sep 15 Current level Major trend Major targets Trend change level NZD/USD .6360 Down .5831 / .5492 .7742 1.4732 / 1.5345 1.3153USD/SGD 1.4290 Up 4.8700 / 5.4000 3.6083USD/MYR 4.4265 Up 39.160 / 42.156 33.109 .8982 / .8582 1.0065USD/THB 36.290 Up 1.7473 / 1.8859 1.0494 / 1.1658AUD/CAD .9355 Down 1.9569 / 2.0371 1.4381AUD/NZD 1.1015 Flat 1.5413EUR/AUD 1.5960 UpEUR/NZD 1.7270 Up FX TRADER MAGAZINE April - June 2017 47

FX INTERNATIONAL DATAFX SPOT MONITORCountry Flag USD Spot Last vs USD % Ch 3M % Ch 12M 12mth High 12mth Low EUR= 1.1194 0.3% -12.2%Eurozone GBP= 1.5181 -3.6% -7.0% 1.2836 1.0493 JPY= 120.55 -2.7% 10.9%UK CHF= 0.9784 4.9% 3.4% 1.6245 1.4629 AUD= 0.7019 -8.3% -20.1%Japan CAD= 1.3335 8.3% 20.0% 125.61 105.9 NZD= 0.6384 -6.7% -19.4%Switzerland SEK= 8.4075 1.3% 16.6% 1.02 0.86 NOK= 8.5087 8.6% 33.0%Australia ISK= 127.78 -3.2% 6.6% 0.8854 0.6905 ILS= 3.9386 3.9% 7.2%Canada ZAR= 13.8985 13.9% 24.1% 1.3335 1.1105 EGP= 7.83 2.8% 9.5%New Zealand SAR= 3.7498 0.0% 0.0% 0.7986 0.6255 CZK= 24.32 -0.2% 12.7%Sweden PLN= 3.7728 0.9% 15.1% 8.8211 7.1122 HUF= 280.97 0.7% 15.0%Norway RUB= 65.495 19.6% 70.2% 8.5087 6.4227 TRY= 3.0457 14.3% 34.7%Iceland CNY= 6.3737 2.7% 3.9% 140.18 119.05 HKD= 7.7504 0.0% 0.0%Israel SGD= 1.4251 5.6% 12.2% 4.0452 3.6587 TWD= 33.106 6.8% 9.2%South Africa INR= 66.1598 4.3% 7.9% 13.9629 10.843 KRW= 1192.07 6.2% 14.3%Egypt THB= 36.16 7.0% 12.0% 7.83 7.15 MYR= 4.385 16.4% 34.9%Saudi Arabia IDR= 14680 10.3% 22.6% 3.7595 3.7465 PHP= 46.74 3.7% 4.5%Czech Rep. MXN= 16.965 9.1% 26.8% 25.985 21.45 BRL= 3.9768 27.1% 63.8%Poland CLP= 700.2 10.3% 17.0% 3.948 3.2794 VEB= 2150 0.0% 0.0%Hungary COP= 3072.5 18.9% 52.1% 290.95 239.22Russia 70.844 39.1375Turkey 3.0568 2.1981China 6.4114 6.1107Hong Kong 7.7706 7.7493Singapore 1.4273 1.2691Taiwan 33.106 30.334India 66.8755 60.995South Korea 1202.4 1044.1Thailand 36.24 32.25Malaysia 4.385 3.239Indonesia 14680 11995Philippines 47.01 43.99Mexico 17.2015 13.3348Brazil 4.1775 2.3765Chile 706.06 574.82Venezuela 2150 2150Colombia 3260 2012Levels Date: 25-Sep-15 Source: Thomson Reuters48 FX TRADER MAGAZINE April - June 2017

INTERNATIONAL DATA FXCENTRAL BANKSCountry Flag Central Bank Rate Name Actual Previous FED Fed fundsUSA ECB Refi 0.25 0.125 BOE Bank RepoEurozone BOJ O/N Call 0.05 0.05 SNB 3 mth LiborUK RBA Cash 0.50 0.50 BOC O/N FundingJapan RBNZ Cash 0.10 0.10 Riksbank RepoSwitzerland Norges Bank Depo -0.25 -0.25 CBI PolicyAustralia BOI Short Term Lending 2.00 2.00 Reserve Bank RepurchaseCanada CBE O/N Depo 0.5 0.50 CNB 2 Week RepoNew Zealand NBP 28 Day Intervention 2.75 3.00 MNB 2 Week DepoSweden CBR Refinancing -0.35 -0.35 TCMB O/N BorrowingNorway PBC 1 Year Lending 0.75 1.00 CBC DiscountIceland RBI Repo 6.25 6.25 BOK O/N CallIsrael BOT Repo 0.1 0.10 BI BISouth Africa BSP Repo 6.0 6.00 BDM TargetEgypt BCB Selic 9.75 9.75 CBC MPRCzech Rep. 0.05 0.05Poland 1.50 1.50Hungary 1.35 1.35Russia 8.25 8.25Turkey 7.5 7.50China 4.60 4.85Taiwan 1.50 1.50India 7.25 7.25South Korea 1.47 1.49Thailand 1.75 1.75Indonesia 7.50 7.50Philippines 4.0 4.00Mexico 3.00 3.00Brazil 14.25 14.25Chile 3.00 3.00Levels Date: 25-Sep-15 Source: Thomson Reuters FX TRADER MAGAZINE April - June 2017 49

FX INTERNATIONAL DATAECONOMIC DATA GDP CPI Industrial Production Unemployment y-o-y y-o-y level y-o-y +0.2 -0.4 5.1 0.1 0.6 10.9USA 2.43 0.0 -0.4 5.5 -0.1 -0.8 3.3Eurozone 1.5 -1.4 NA 3.3 +1.5 NA 6.2UK 2.6 1.3 NA 7.0 0.3 NA 69.3Japan -0.4 -0.2 -3.0 6.4 2.0 -1.6 3.1Switzerland 1.2 4.6 5.60 25.0 0.3 4.6 6.2Australia 2.0 -0.60 5.30 10.0 0.0 3.4 6.8Canada -0.5 0.4 -4.3 5.3 2.0 6.1 NANew Zealand (participation) 2.4 NA 4.2 NA 0.20 0.70 4.72Sweden 3.3 0.22 -8.90 7.6Norway -0.1 Source: Thomson ReutersSouth Africa 1.2Czech Rep. 4.4Poland 3.3Hungary 3.3Russia -4.6China 7.0India 7.3Mexico 2.2Brazil -2.6Levels Date: 25-Sep-15FX POLL3 Month Days since Poll Poll Median Poll Min Poll Max Poll Mean Std Deviation Spot@Poll Date 1.080 1.000 1.2000 1.0851EurUsd 25 1.540 1.450 1.6700 1.5435 0.0388 1.1121 0.700 0.640 0.7500 0.706GbpUsd 25 124.00 115.00 132.00 124.19 0.0421 1.5255 0.990 0.920 1.0850 0.9955AudUsd 25 1.330 1.230 1.3750 1.3242 0.0210 0.7015 133.74 126.30 154.44 134.66UsdJpy 25 1.0800 0.970 1.3000 1.0801 3.4500 120.06 0.7013 0.6800 0.7468 0.7042UsdChf 25 190.32 178.35 215.16 191.67 0.0408 0.9728 Poll MaxUsdCad 25 Poll Median Poll Min 1.2000 Poll Mean 0.0322 1.3174 1.0700 0.9000 1.7000 1.0735EurJpy 25 1.5400 1.2800 0.8000 1.5374 4.9500 133.53 0.7058 0.6400 139.00 0.712EurChf 25 127.50 115.00 1.1500 127.4 0.0426 1.0824 1.0300 0.8700 1.3830 1.0301EurGbp 25 1.3000 1.1000 152.95 1.2966 0.0160 0.7286 136.64 116.85 1.3000 136.38GbpJpy 25 1.1000 0.9500 0.7969 1.1014 7.6600 183.14 0.6968 0.6490 217.10 0.69881 Year Days since Poll 195.06 165.12 195.75 Std Deviation Spot@Poll DateEurUsd 25 0.0648 1.1121GbpUsd 25 0.0868 1.5255AudUsd 25 0.0405 0.7015UsdJpy 25 4.5600 120.06UsdChf 25 0.0594 0.9728UsdCad 25 0.0627 1.3174EurJpy 25 7.9200 133.53EurChf 25 0.0514 1.0824EurGbp 25 0.0336 0.7286GbpJpy 25 11.3100 183.14Levels Date: 25-Sep-15 Source: Thomson Reuters50 FX TRADER MAGAZINE April - June 2017

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