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| | | | Welcome to the latest issue of EarnForex.com newsletter — August 2015. In this issue of EarnForex.com newsletter, I will remind you about the most important Forex-related events of the last month and will also show you the list of the site's latest updates. | | EDITORIAL: Reminder on Greece | | With all the ado about the Greece calming down a little following the country's resolve to give in to the creditor's demands, it is now a good time to remind you that the while "Greece exiting eurozone" thing was very overrated. Here is the list of important facts that should determine your actions towards weighing Greek crisis in your EUR trading: - Greece will not exit the eurozone even if it defaults and is denied all the external funding. Leaving the eurozone would mean a removal from the European Union, which would be a disaster that no one wants. Most probably, Greece would continue functioning on the euro officially while switching public expenses to some form of government bonds for the duration of crisis. It means that the euro itself will not be affected significantly by the complete blowout of the Greek financial system. The only harm to the currency would be purely sentimental, not rational.
- The fundamental value of the euro is based on the well-faring economies of the Northern Europe. The sizes of German and French economies are colossal compared to Greece. The stress tests suggests that there will be little or no spillover at all to other European countries if Greece defaults and its banking system collapses. However, speculatively, the markets sometimes react to any troubling news from Greece as if the country is some locomotive of the global output that has to be saved at all costs.
- Of course, many market participants are irrational, so you still have to take into account the possibility of panic sale of the euro. It may happen in any case of significant worsening of the situation — be it just some technical delay of debt repayment or a full-scale default. Such irrationalities could be traded — both down (when bad news kick in) and up (when the panic fall is exhausted).
- The whole situation with the Greek debt crisis is running since late 2009 — almost six years now. EUR/USD has been both up and down during the period — going as high up as 1.49 and reaching as low as 1.04. Do not forget about the other factors that affect currency pairs — Greece is not the biggest one of them.
| | Overview of the major currency pairs' performance in July | | EUR/USD — was in a downward movement with deep trough in the middle of the month. It was at the maximum at 1.1215 on July 10, at its minimum at 1.0808 on July 20, finishing the month at 1.0983. GBP/USD — rose and traded sideways following a sharp drop during the first days of July. The highest monthly rate was at 1.5726 on July 1, while the lowest — at 1.5330 on July 8. GBP/USD finished July trading at 1.5622. USD/JPY — fell during first few days but then rallied and entered an uptrend. The pair rose to as high as 124.58 on July 30, reaching a bottom at 120.41 on July 8 and closing the month with the 123.93 rate. EUR/JPY — demonstrated volatility with upswings and downswings, ending the month higher. The monthly high was at 137.78 on July 13, the monthly low — at 133.30 on July 8. Trading ended at 136.12 for this currency pair. GBP/JPY — following a huge drop during the first week, the currency pair regained its losses during the second one and traded without significant direction during the remaining half of the month. The maximum level for this pair was 194.57 on July 30, while the minimum — 184.97 on July 8. The month's trading ended at 193.61 for GBP/JPY. | | Fundamental background of the past month | | In July, the US dollar has been driven mostly by speculations about possible timing of an interest rate hike by the Federal Reserve. While the Fed did not provide hints about the planned date of the rate lift-off, market participants considered the policy statement hawkish enough to believe that a September hike remains in the cards. Greece continued to weigh on the euro during July's trading. Athens capitulated to the demands of foreign creditors even though the Greeks said "no" on the referendum to the austerity measures required to get a bailout. Yet this did not stop talks about the possible "Grexit." The Great Britain pound continued to receive mild support from the outlook for monetary tightening from the Bank of England. Signs of accelerating economic growth supported such outlook. The Japanese yen was somewhat mixed (though rallied against commodity currencies) due to mixed fundamentals. Some of Japan's economic data was good, but the Bank of Japan revised negatively the outlook for this year's economic growth. The Canadian dollar (as well as other commodity-related currencies) sank in July, falling almost 5 percent against the US dollar. The main contributors to the drop were the surprise interest rate cut by Canada's central bank, the slump of crude oil prices, and the declining economy. Australia's central bank refrained from monetary easing in July, but this did not prevent the Australian dollar from falling even more than its Canadian counterpart, tumbling more than 5 percent versus the greenback. The New Zealand dollar was a bit stronger than its Australian and the Canadian peers, though it fell as well. The currency has demonstrated a surprising reaction to the reduction of interest rates by the Reserve Bank of New Zealand. Usually, a currency falls after its central bank slashes rates, but the kiwi actually climbed after the event. Gold did little to make gold bulls happy. The Chinese stock market crash (which also could explain the extremely poor performance of currencies related to growth) and the outlook for tighter monetary policy from the US Federal Reserve were pushing the metal down. | | Interest rate changes in July | | Brazil | 13.75% | +0.50% | 14.25% | | Canada | 0.75% | -0.25% | 0.50% | | Hungary | 1.50% | -0.15% | 1.35% | | New Zealand | 3.25% | -0.25% | 3.00% | | Russian Federation | 11.50% | -0.50% | 11.00% | | South Africa | 5.75% | +0.25% | 6.00% | | Sweden | -0.25% | -0.10% | -0.35% | | | Top 5 Forex brokers of the last month | | Seven new Forex brokers have been added to EarnForex.com since the last issue of the newsletter: - London FX — a regulated Forex broker from UK with a range of low-spread MT4 account types, starting with a hefty minimum of $1,000. The maximum leverage is only 1:100, but there are many instruments to choose from.
- iClickNTrade — an Australian company regulated by ASIC. They offer one account type only — ECN with $500 minimum and 1:500 maximum leverage. The spreads are very low (at least on major currency pairs), and one can also trade oil, gold, and silver with iClickNTrade..
- MTrading — an offshore company with offices in a number of emerging countries. Support MetaTrader 4 platform with both fixed and variable spreads.
- ADS Securities London — a regulated British broker with standard, ECN, and spread betting MT4 account types. The minimum is just $1 except for the ECN accounts.
- FXGlobe — a CySEC-regulated company with $250 minimum to trade via MetaTrader 4 platform.
- IfamDirect — an unregulated Russian company with a number of normal and ECN account types. The minimum size is $100 and the maximum leverage is 1:500.
- Romanov Capital — another Russian company; this one with CRFIN regulation. The only available trading platform is cTrader. The variable spreads are rather low.
You can always view our full list of Forex brokers. | | There were the following important Forex industry news since the last issue of the newsletter: - Brokers restored normal leverage following normalization of the situation with Greek debt repayment.
- Maltese FSA (a popular offshore regulator in Forex industry) has issued new rules of compliance for online Forex companies. It makes the requirements for such companies stricter, providing better protection for customers.
- GFT Forex will move all its retail clients to City Index on August 28-29. Both companies are operated by Gain Capital Holdings Inc.
| | Until the next newsletter issue! | | That is all for the August issue of the EarnForex.com newsletter. If you have questions, comments or just want to see something else in the next monthly issue, please let us know. | | |
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