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| | | | Welcome to the latest issue of EarnForex.com newsletter — August 2016. 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: Brexit — The Future | | With more than a month after the announcement of the Brexit vote results, and with the initial turmoil over, it is now time to have a calm look at the possible scenarios of the UK and the EU future. As Forex traders, we are particularly interested in the effect of different outcomes on currencies. Analysts point out the following future paths as the most probable ones: - The UK proceeds with the withdrawal process as soon as possible. In this case, the country loses its market share in the EU without having time and leverage to negotiate a "mild exit." As a result, the UK economy suffers more damage while consumer and business sentiment deteriorates. GBP/USD is expected to remain in strong downtrend with parity a probable option by the end of the year.
- The UK starts implementing the withdrawal procedure but very slowly. There is a number of options for the UK to delay the actual Brexit process (parliamentary approval, more referendums, plain waiting). This would allow the country to negotiate the terms with the European Union and other countries, making Brexit as painless as possible. It would slowly raise the consumer and business confidence and will exert lower pressure on the UK economy. GBP/USD may still fall slightly in this case but will eventually switch to an uptrend to regain some of its huge losses.
- The UK refuses to actually leave the EU. The referendum is not legally binding and there are ways to avoid leaving the EU without the political elite losing much face. The outcome in this case is a return to a status quo with some minor modifications — as much as the UK will manage to negotiate before putting down the idea of Brexit. This scenario, although the most GBP-positive, is the least predictable one as it will necessarily involve a lot of political drama, surprise, and unexpected situations. Traders would have to follow and react to the news closely while remaining long-term bullish on GBP/USD.
- The withdrawal is slow and painful. There is a tiny chance that realpolitik fails and the UK/EU discussion ends up full of hostility, grudge, and poor judgment. The situation gets really ugly for both the UK and the EU in this case. The scenario is definitely bearish for both GBP and EUR — it is traders' true chance to see both GBP/USD and EUR/USD below parity quite soon. Abundance of news similar to this is a sure signal we are heading towards this scenario.
The second path (slow withdrawal) is the most likely one, but, as a trader, you need to be prepared to earn profit from any of the mentioned scenarios. Brexit is a truly rare event and still has potential in producing money making opportunities for swing traders and long-term traders alike. | | Overview of the major currency pairs' performance in July | | EUR/USD — was in a downtrend during the month but managed to pare losses during three final days. It was at the maximum at 1.1197 on July 29, at its minimum at 1.0951 on July 25, finishing the month at 1.1174. GBP/USD — demonstrated a deep trough during the first decade but then recovered and traded sideways. The highest monthly rate was at 1.3480 on July 15, while the lowest — at 1.2795 on July 6. GBP/USD finished July trading at 1.3222. USD/JPY — rallied in the middle of the month but lost its gains in the last several trading days. The pair rose to as high as 107.48 on July 21, reaching a bottom at 99.98 on July 8 and closing the month with the 102.04 rate. EUR/JPY — traded much similarly to USD/JPY. The monthly high was at 118.46 on July 21, the monthly low — at 110.82 on July 6. Trading ended at 114.03 for this currency pair. GBP/JPY — went through a complete wave cycle - down, then up, then back to starting level. The maximum level for this pair was 143.22 on July 15, while the minimum — 128.67 on July 6. The month's trading ended at 134.92 for GBP/JPY. | | Fundamental background of the past month | | The US dollar experienced a rough month in July. The Federal Reserve did not perform an interest rate hike, GDP demonstrated a disappointing performance, and nonfarm payrolls failed to boost the currency. The euro continued its struggle to recover from the Brexit aftershock. The European Central Bank kept monetary policy unchanged, preferring to take a "wait and see" approach. Unsurprisingly, the Great Britain pound continued to suffer from the Brexit, touching multi-year lows. The currency received some support from the announcement of a new prime minister and the delay of monetary easing by the Bank of England. Brexit fears were beneficial to the Japanese yen. Additionally, the currency got unexpected support from the Bank of Japan, which kept the size of overall asset purchase program unchanged, disappointing those economists who were counting on additional stimulus. The Canadian dollar was mostly lower, following struggling crude oil prices. The Australian dollar was surprisingly resilient even though Standard & Poor's cut Australia's credit rating and market participants were anticipating an interest rate cut in August. The Aussie got help from unexpectedly robust inflation that reduced chances for lower interest rates. The New Zealand dollar was also demonstrating resilience, shrugging off pressure from prospects for an interest rate reduction that was plaguing the New Zealand currency as well. Passiveness of the Federal Reserve and the European Central Bank, as well as the disappointing US economic growth, supported gold, allowing the metal to end July with gains. | | Interest rate changes in July | | Malaysia | 3.25% | -0.25% | 3.00% | | Taiwan | 1.50% | -0.125% | 1.375% | | Turkey | 9.00% | -0.25% | 8.75% | You can see the current interest rates by the world's central banks in our interest rate table. | | Top 5 Forex brokers of the last month | | One new Forex book has been published on EarnForex.com since the last issue of the newsletter: You can always browse the previously uploaded books. | | One new Forex article has been published on EarnForex.com since the last issue of the newsletter: You can always browse the previously uploaded articles. | | Five new Forex brokers have been added to EarnForex.com since the last issue of the newsletter: - FX Giants — a UK-regulated company with an interesting range of account types — from micro to zero spread, to zero commission STP. Only MetaTrader 4 is available as a trading platform. The maximum leverage is 1:500.
- Milton Markets — a Forex broker registered in New Zealand with accounts starting from $250. The leverage on Forex and CFDs is maxed out at 1:800. Trading is done via MT4.
- JCMFX — an offshore company registered in Saint Vincent and the Grenadines. JCMFX offers Forex, CFD, and gold & silver trading starting from $100 via MT4 platform.
- Hydra Markets — a Georgian Forex broker with standard and ECN accounts — both with $100 minimum account size and 1:1000 maximum leverage.
- Adamant Finance — yet another offshore FX company from Saint Vincent and the Grenadines. They offer trading accounts starting from as little as $1. The maximum leverage is 1:500, and the only trading platform available is MetaTrader 4.
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: - Some brokers have switched USD/TRY (US dollar vs. Turkish lira) trading in "close only" mode or lowered the leverage significantly on this pair, following a coup d'état attempt in Turkey.
- RoboForex stopped offering binary options trading via its RoboOption website. Probably, due to regulatory restrictions.
| | 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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