Trade Forex as Sterling Falls Following BoE Announcement - wallstreet-online.de
LONDON, June 18, 2012 /PRNewswire/ --
On Friday, June 15, the pound fell against the US dollar following the Bank of England´s announcement of an emergency liquidity package the day before. But how will you profit from this fall?
In the guide below, we show you how you can profit from the depreciating sterling through a spot forex trading account from City Index [http://www.cityindex.co.uk/forex-trading ].
BoE Announces Emergency Liquidity Package
On Thursday evening last week (14 June), Governor Mervyn King suggested more quantative easing (QE) could be on its way as the Bank of England announced an emergency liquidity package to support the British banking system.
In his keynote speech, King said that the BoE would also be providing cheap long-term funding to encourage lending to businesses and consumers.
Pound Depreciates against Dollar
Whilst many investors in the marketplace said the measures planned by King would support the UK economy; further suggestions of monetary easing prompted investors to sell-off sterling in early London trade on Friday (15 June).
How to Trade Forex
With a City Index forex trading account [http://www.cityindex.co.uk/forex-trading/features-of-forex-trading.aspx ] you can take a position on the future price movement of 37 currency pairs within the foreign exchange market.
As a global currency market - trading 24-hours a day from Sunday evening to Friday night - forex offers traders multiple opportunities to potentially profit from fast-moving major, minor and exotic currency pairs.
Unlike in traditional equity markets, trading forex with City Index allows you to profit from market movements - regardless of whether they are rising or falling.
With this in mind, using the example above whereby the pound depreciates against the US dollar - traders have the potential to ´go short´ and sell the pound with the aim of potentially profiting from every pip that it depreciates further.
In addition, as a leveraged product - forex trading requires only a small percentage of the underlying market´s total value as an initial deposit.
This enables traders to control a relatively large exposure for only a small amount, gain greater access to the global currency markets and possibly magnify gains.
It is important to remember, however, that as a leverage product, you also run the risk of losing more than your initial deposit. A forex risk management strategy [http://www.cityindex.co.uk/forex-trading/risk-management-orders.aspx ] should be used in order to limit potential losses.
Start Trading Forex
To start trading forex across a range of trading platforms - including mobile - you can apply for a forex trading account with City Index through their website: http:http://www.cityindex.co.uk
Read More Forex Trading Tips
If you found this article helpful, you may want to read more just like this. You can access a range of free forex trading tips [http://www.cityindex.co.uk/forex-trading-tips ], guides and articles through the City Index website also.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting [http://www.cityindex.co.uk/spread-betting ].
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk for details.
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Forex Flash: The euro crisis is not over yet – HSBC - NASDAQ
FXstreet.com (Barcelona) - The news of that the election results in Greece yielded 162 seats for pro bail-out parties has sparked rallies in major stock markets and a short lived rally for the single currency. According to HSBC this should not make investors forget that the even the pro bail-out parties have expressed their wish to renegotiate the terms of the EU support. HSBC considers that "a temporary relief rally in the euro and risk assets does not mean that uncertainty has been eliminated. Antonis Samaras, the New Democracy leader, has said that he, too, wants to renegotiate some of the terms of the bail-out which means that a temporary halt to Troika funding cannot be ruled out. More immediately, ND needs to form a coalition involving PASOK, which has suggested forming a national unity government including SYRIZA."
HSBC adds that "while a coalition of pro-bailout parties would put the idea of a Greek euro exit on the backburner for now, it would not alter the underlying problems in the eurozone itself, including Spain, and the urgent need for a response at the June 28-29 European Council summit."
MONEY MARKETS-Spanish bond shortage distorts repo - Reuters UK
* Spanish bond shortage distorts repo market
* Italian rates rise but market still functioning
* Interbank cash rates fall on rate cut expectations
By Kirsten Donovan
LONDON, June 18 (Reuters) - A lack of available Spanish government bonds, due to so many being used to obtain funding at the European Central Bank, is distorting pricing in repo markets and causing investors headaches as they seek to cover hefty short positions.
As international investors sold Spanish government bonds this year, domestic banks bought them and parked them at the ECB in return for funds - particularly during the two recent three-year funding operations.
As a result, investors who need the bonds because of their own short positions must pay a premium for the paper.
When this happens in repo markets - where banks commonly use government bonds as collateral to raise funding - bonds are said to be trading "special".
Effectively, the investor who needs the bonds pays a premium to their counterparty in the trade - the opposite of a typical repo trade where the party borrowing cash pays the premium.
"There's some good evidence of a collateral shortage out there," said ICAP rate strategist Chris Clark. "Quite a lot may be being used at the ECB and the market short (positions) out there will be increasing the demand for specific bonds."
It is the opposite of what might be expected when a country's debt comes under pressure. Then counterparties are usually more reluctant to be left holding the bonds.
"The collateral just isn't there. That's one of the problems and the few bonds that are still available are highly sought after by people who want to cover their short positions," said Commerzbank rate strategist Benjamin Schroeder.
Ten-year Spanish government bond yields have risen more than 130 basis points since the start of May, while two-year yields are up over 2 percentage points.
That prompted international clearing house LCH.Clearnet SA to increase the cost of using Spanish bonds to raise funds via its repo service last month. Analysts said their trading desks had since seen volumes over the platform drop.
"It's a further segregation of European money markets, where banks are retreating from central clearing houses and going back to domestic clearing or bilateral agreements," Schroeder said.
As the euro zone debt crisis intensified this month, mainly due to worries about Spain's banking sector, Italian general collateral (GC) repo rates, paid to borrow funds against a basket of government bonds, have been pushed higher.
There is little trade in the Spanish general collateral market but banks are still able to borrow using Italian bonds as collateral, despite Italy being seen as vulnerable to contagion from worries about Spain.
Three-month Italian GC rates rose to 0.42 percent at the end of last week, compared to the Eonia overnight rate at around 30 basis points, according to ICAP. The Italian rate had traded below Eonia from the time of the ECB's second three-year funding operation at the end of February until the end of May.
"There's been a rise in Italian general collateral rates, both outright and relative to the Eonia OIS curve," ICAP's Clark said. "Despite a reduction in the amount of term activity that goes on, the Italian market is still very much functional."
RATE SPECULATION
Three-month Euribor interbank lending rates eased again, hitting their lowest since the second quarter of 2010 as speculation grew the ECB may cut interest rates.
ECB president Mario Draghi heightened expectations the bank could cut interest rates or take further policy action soon after saying on Friday that the euro zone economy faced serious risks and no inflation threat.
September and December Euribor futures contracts rallied to contract highs, pushing implied rates lower.
Markets are pricing in a 50 percent chance of a 12.5 basis point cut in the ECB's 0.25 percent deposit rate this year, and a 25 percent of the rate being cut to zero, according to RBS.
China money rates up sharply on tighter liquidity - Reuters UK
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Forex Trading Strategies That Are Working Right Now - PRLog (free press release)
Forex traders are normally spoilt by incredible trending markets but recent volatility and uncertainty has meant that traditional trend following systems have been underperforming and smart Forex traders have had to find alternative ways to profit from the markets.
“Forex markets typically trend very well under ‘normal’ market conditions and allow an element of predictability. With the current Euro Zone crisis, Greek and French elections, we’ve seen a shift away from trending markets and a move to volatile, choppy markets.” Says Ashley Jessen, Head Sales trader at Capital CFDs http://www.capitalcfds.com.au in Sydney.
“The EUR/USD was range bound from February to May this year and trend followers would have been chopped in and out of the markets, whereas range bound system traders were able to buy weakness and sell support and profit in between.” Ashley said.
“Ideally you’ll want to get to know your oscillators like the stochastic, RSI and Bollinger Band indicators that are brilliant at looking for overbought and oversold markets. The beauty of becoming proficient in these tools is that they can be applied across all time frames, from 5 minute, hourly and daily charts. Smart traders will always have multiple trading systems including trending, range bound and volatile breakout style systems” said Ashley Jessen.
“Traders have to be flexible in the current market environment if they are to survive and thrive. Those who understand the different styles of markets and have trading systems and methodologies for each market type will prosper, no matter what the Euro Zone, G20 meeting or Ben Bernanke have to say.”
For more information on the Capital CFDs and to grab a free copy of their intuitive and simple to use trading software, head over to http://www.capitalcfds.com.au
Capital CFDs is a trading name of London Capital Group Pty Limited and is fully owned by London Capital Group Holdings Plc which is listed on the London Stock Exchange. London Capital Group transacts over 30,000 trades each day and has over 70,000 clients globally. Capital CFDs is regulated by ASIC under AFSL 364264
While Capital CFDs attempts to ensure that the information herein is accurate at the date the information was produced, however, Capital CFDs does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of any of the information provided herein and under no circumstances are they to be considered an offer, solicitation to invest or be construed as giving investment advice.
Tough luck, Generation X: Only half of wealthy Baby Boomers to leave money for their kids...and ONE THIRD would rather give it to charity - Daily Mail
- Baby Boomers defined as people between the ages of 47 and 66
- Generation X refers to people born between early 1960s and early 1980s
- 55 per cent of Baby Boomers believe it's important to leave money to offspring
- Most Baby Boomers believe each generation should earn its own wealth
- Three-quarters of people younger than 46 favor leaving money to kids
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When members of the Baby Boomers generation die in the next 50 years, they will leave trillions of dollars in wealth behind, but their children should not hold their breath for a large inheritance.
According to the U.S. Trust Insights on Wealth and Worth annual study released on Monday, only 55 per cent of Baby Boomers - those between the ages of 47 to 66 - think it is important to leave money for their offspring.
U.S. Trust commissioned an independent, national survey of 642 high net worth adults, who were not clients, with at least $3million in investable assets.
Givers: A study found that 31 per cent of wealthy Baby Boomers would prefer to leave their money to charity
One of three Baby Boomers surveyed – about 31 per cent - don’t think it is important to leave a financial inheritance and said they would rather leave money to charity than to their children.
By contrast, three-quarters of wealthy people under age 46 said it's a priority to leave inheritance for their children.
The top reason for not wanting to leave money for their kids is the belief shared by some Baby Boomers that each subsequent generation should work to earn its own wealth.
Following closely behind is the thought that it is more important to invest in children’s success while they are growing up.
‘Our survey points to a shift in generational behavior and outlook, most likely shaped by personal experience and societal responses to economic realities,’ said Keith Banks, president of U.S. Trust.
Banks added that well-off parents are concerned that the next generation is not prepared to inherit wealth, which is not surprising considering the fact that most of the Baby Boomers surveyed don't talk to their kids about money: just 37 per cent said they've fully disclosed their net worth to their children.
Kept in the dark: Just 37 per cent of Baby Boomers said they've fully disclosed their net worth to their kids
Those over age 67 said they weren't having this discussion because they were raised to avoid money talk, while younger respondents said they didn't want to inhibit their kids' work ethic.
Unlike the majority of people from her generation, 63-year-old Kathleen Taylor, of Chimacum, Washington, taught her two grown children since they were young to be responsible for their own money.
That is why she plans to leave most of her money to her children and some money to charitable causes, ABC News reported.
One way Taylor and her husband taught their children about responsible spending was providing the value of college tuition, room and board to each of them and putting them in charge of paying the bills.
‘People thought we were crazy,’ she told ABC.
The Taylors plan to start a college fund once their children start having their own kids. And they intend to add to it on their grandchildren’s birthdays as long as Taylor and her husband are alive.
Mrs Taylor said she hopes her own children will do the same for their great-grandchildren.
The U.S. Trust study also has found that 42 per cent of Baby Boomers and 54 per cent of those under age 46 are paying medical costs for their parents or other relatives.
I know it's just your headline writer I'm taking issue with here and not the author of the piece, but in general most of the children of the Boomers fall into the generation know as Gen Y / The Millenials. Gen X's parents are to be found with higher frequency among the Silent Generation.
- Patrick, Miami, Florida, USA, 18/6/2012 19:47
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