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| | | | Welcome to the latest issue of EarnForex.com newsletter — March 2017. 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: Quantitative Easing 101 | | Is quantitative easing (QE) over? How does it affect Forex? What should traders know about QE? Quantitative easing is when a central bank buys government and corporate bonds in huge amounts to support market liquidity and to boost inflation. So what does it have to do with Forex? QE increases the currency supply in financial markets, driving the exchange rate down. When several countries engage in QE, the country doing the most bond purchases normally will get the most devaluation. On the contrary, when QE is tapered or stopped, the currency tends to appreciate. Moreover, the currency may rally significantly even on slight news of QE termination. You have probably heard that the QE is over, but in reality it is not that simple. When QE is halted, it means that the central banks stops buying new bonds but will continue renewing the bonds as they mature, keeping the balance sheet size constant. When QE is unwound, the central bank either lets the bonds mature or sells them outright. This has not happened with the US QE yet. Here is the list of the post-2007 quantitative easing programs enacted by the major central banks and their current status: - The US Federal Reserve ran a series of QE from November 2008 through October 2014, accumulating $4.5 trillion balance sheet. The QE was stopped, but the acquired bonds are renewed as they mature.
- The Bank of England ran a QE program from 2009 through 2012, accumulating £375 billion. It was renewed in August 2016 to buy additional £70 billion in assets.
- The European Central Bank ran a number of QE-like programs since July 2009 with current purchase rate at €80 billion (going down to €60 billion in April 2017). The total QE holdings were at €1.6 trillion as of January 2017.
- The Bank of Japan used QE since October 2010, then strengthened it significantly in April 2013. The current BoJ balance sheet is worth ¥482 trillion ($4.3 trillion) and the QE is ongoing.
As a trader, you have to monitor the QE program announcements from central banks to use the knowledge in your fundamental analysis. Alternatively, you may try to bank on the QE related news as a day trader. | | Overview of the major currency pairs' performance in February | | EUR/USD — was in a downtrend in February. It was at the maximum at 1.0828 on February 2, at its minimum at 1.0493 on February 22, finishing the month at 1.0580. GBP/USD — declined somewhat in February. The highest monthly rate was at 1.2706 on February 2, while the lowest — at 1.2346 on February 7. GBP/USD finished February trading at 1.2382. USD/JPY — first rose then fell in February. The pair rose to as high as 114.95 on February 15, reaching a bottom at 111.58 on February 7 and closing the month with the 112.76 rate. EUR/JPY — declined during the month. The monthly high was at 122.51 on February 1, the monthly low — at 118.24 on February 24. Trading ended at 119.25 for this currency pair. GBP/JPY — traded mostly sideways with a slight bearish bias in February. The maximum level for this pair was 144.12 on February 1, while the minimum — 138.53 on February 7. The month's trading ended at 139.58 for GBP/JPY. | | Fundamental background of the past month | | The US dollar was firm in February, driven by hopes that reforms planned by the new President Donald Trump will boost economic growth. Additionally, the hawkish policy minutes from the Federal Reserve and comments from Fed officials hinted at an interest rate hike soon, perhaps even in March. The euro was under pressure from the uncertain political landscape in Europe ahead of upcoming elections this year. The French presidential elections draw the most attention as of now due to concerns about potential victory of anti-EU candidate Marine Le Pen. The problem of the bailout for indebted Greece was another negative factor for the shared European currency. Brexit fears remained a major detrimental factor to the Great Britain pound, coupled with the potential independence referendum in Scotland. The Japanese yen found strength in the political concerns of Europe and the United States. Adding to the appeal of the currency were the comments from Bank of Japan Governor Haruhiko Kuroda, who signaled that another interest rate cut is unlikely. The Australian dollar reached multi-year highs against some of its rivals in February thanks to hawkish remarks from the Reserve Bank of Australian and positive macroeconomic data from Australia and China. Gold demonstrated amazing performance in February, rising for four consecutive weeks, as political uncertainty benefited the precious metal. | | Interest rate changes in February | | Brazil | 13.00% | -0.75% | 12.25% | | Mexico | 5.75% | +0.50% | 6.25% | You can see the current interest rates by the world's central banks in our interest rate table. | | MetaTrader expert advisors | | One new expert advisor has been added to EarnForex.com since the last newsletter issue: You can always browse the previously added MetaTrader EAs. | | One new interview has been published on EarnForex.com since the last issue of the newsletter: You can always read the previous interviews published on EarnForex.com. | | Top 5 Forex brokers of the last month | | Four new Forex brokers have been added to EarnForex.com since the last issue of the newsletter: - TryMarkets — a brand new offshore Forex broker registered in Belize but with offices in the UAE and the UK. It is a generic MT4 brokerage with rather low fixed spreads on currency pairs.
- NTFX — a CySEC-regulated MT4 broker with 1:500 leverage on Forex and $30 minimum account size.
- Financial Spreads — an introducing broker for the UK-regulated company FINSA Europe Ltd. The broker offers spread betting and CFD trading with tight fixed spreads using CloudTrade platform. Accounts can be opened with as little as $1.
- CMS Trader — a suspiciously looking unregulated Forex broker with $500 minimum account size and 1:400 maximum leverage. The only trading platform it offers is Sirix Station.
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: - US regulator CFTC ordered FXCM to pay a $7 million penalty for fraudulent activity and banned FXCM from the US Forex market. The US traders of FXCM have been transferred to Forex.com.
| | Until the next newsletter issue! | | That is all for the March 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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