19 / 09 / 2018 | Market News

BoJ keeps rates on hold, UK CPI rises in August 2018

This week is one of those that keep investors and traders’ attention at the top level. As September is already reaching its end, the global markets are already warming up after the brief summer interruption. Last week, the European Central Bank (ECB) and the Bank of England (BoE) decided to keep their interest rates unchanged, a set of decisions that didn't surprise the experienced analysts. 

BoJ keeps interest rates unchanged

On Wednesday September 19th 2018 the Bank of Japan’s (BoJ) governing board convened to decide on interest rates. The BoJ’s policymakers announced that they would keep borrowing costs unchanged at -0.1%. The decision was widely anticipated by analysts. A report by Danske Bank published right after the meeting noted that “the BoJ also maintained its forward guidance and left its asset purchases unchanged. The BoJ has clearly shifted to autopilot mode after it announced some policy tweaks at the July meeting, and an unchanged signal from the BoJ today was fully expected. Hence, no reaction in the US Dollar/Japanese Yen rate or the Japanese fixed income market.” In their report, the Danske Bank’s economists stressed that they expect the BoJ to keep its current monetary policy intact until the end of 2019 at least. 

On Tuesday September 18th 2018, the Japanese Finance Minister Taro Aso made some comments regarding the BoJ’s meeting. Taro Aso, speaking on Reuters, said that the BoJ is authorized to decide on monetary policy matters and that he believes that the central bank’s target is to pursue the appropriate policy to achieve price stability. 
Japan’s Finance Minister continued his comments on Reuters noting that he is fully aware that the BoJ’s 2% Consumer Price Index (CPI) inflation will take a long time to achieve. Taro Aso mentioned that any debate on BoJ’s exit strategy would probably cause market confusion which he would prefer to be avoided. Aso also urged the United States (US) and China to continue negotiations regarding trade tariffs to prevent the fallout on other countries.   
   
The Reuters media agency published the results of a poll conducted earlier in the week. The survey was associated with the BoJ’s monetary policy. The majority of economists polled said that the BoJ is unlikely to unwind the massive stimulus until 2020 or later. The poll showed that most of them expect the BOJ to scale back on stimulus measures, not add to them. The economists’ forecast showed that the core CPI inflation is likely to remain the same for the following fiscal year (until March 2020). They also stressed that the expected sales tax hike would likely hurt the economy and would push Japan’s Gross Domestic Product (GDP) lower. 

UK Consumer Price Index inflation

On Wednesday September 19th 2018, the Office for National Statistics (ONS) published its August 2018 CPI inflation report. The report showed that the UK’s CPI inflation rose to 2.7%, on an annualised basis, from the 2.5% figure recorded in July 2018. On a monthly basis, the UK’s headline inflation ticked higher to 0.7%, 0.2% more than in July 2018. According to the ONS services, the core CPI inflation also jumped to 2.1% in August 2018 on a year-to-year basis from 1.8% in July 2018. 

The ONS accompanying report said that the rising transport, clothing and recreational goods prices drove the cost of living higher in August 2018 as the UK’s CPI inflation hit its highest level in the last six months. Right after the ONS CPI inflation report was published, the British Pound jumped to an eight-week high against the US Dollar as traders calculated that higher inflation would press the Bank of England (BoE) to raise borrowing costs earlier than previously thought. 

Trade the Japanese Yen and the British Pound on STO

STO offers traders the opportunity to choose from a selection of over 30 currency pairs for a bespoke trading experience. STO clients can trade major, minor and exotic currency pairs with spreads starting from 0.0 pips. STO offers a daily comprehensive fundamental and technical analysis which could help traders build their trading strategy.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66.52% of retail investor accounts lose money when trading CFDs with AFX Capital Markets Ltd. 64.84 % of retail investor accounts lose money when trading CFDs with AFX Markets Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information about the key risks associated with CFDs, please refer to our full Risk Disclosure.
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14 / 09 / 2018 | Market News

Eurostat to release its August 2018 Eurozone CPI inflation report

Next week will start strong on Monday September 17th 2018 with the global financial markets expecting to scrutinise data regarding the Eurozone’s Consumer Price Index (CPI) inflation. On Monday, Eurostat which is the official statistical office of the European Union (EU) will be releasing the finalised inflation data as it was recorded by the EU’s services during August 2018. 

Eurozone CPI inflation estimates

The CPI is an indicator used to measure the rate at which the prices of goods and services bought by households rise or fall, which is the rate of inflation, referred to as the CPI inflation. Eurostat will also include core CPI data in the data release, which measures price movements excluding the ones of volatile components such as food, energy, alcohol and tobacco.

A poll by Bloomberg published on September 11th 2018 showed that the majority of economists expect the Euro bloc’s CPI inflation to come in at 2% in August 2018 on an annualised basis, matching the July’s 2018 reading. On a month-to-month basis, the CPI inflation is likely to come in at 0.2%, significantly higher than the -0.3% figure recorded in July 2018. Analysts suggest that the finalised data regarding the core CPI inflation during August 2018 will show that it remained stable at 1%. 

The ECB aims to keep inflation below, but close to, 2% over the medium term. However, the ECB’s monetary policy so far, despite the quantitative easing (QE) programme applied in recent years, has not succeeded yet in bringing inflation close to its target. A report by BNP Paribas, which is one of the largest banks in terms of capitalisation in Europe, said that Eurozone inflation has grown quickly since the beginning of the year and is near or above 2% in France and in the whole Eurozone which is at its highest since 2012. 

BNP Paribas’ analysts noted that “this is not really welcome for households and especially those with low income because it affects daily expenses such as food and energy, which are hard to cut back on. The energy sector explains about 70% of the inflation increase since the beginning of the year. This pick-up in prices might be unwelcome but could be temporary as energy prices are, by nature, volatile.” In the report, it was stressed that the European Central Bank (ECB) focuses on core CPI inflation and that it aims for a non-transitory headline CPI inflation rate of 2% without being in need to increase its interest rates. 

ECB keeps interest rates unchanged

The ECB’s governing board, headed by Mario Draghi, convened in Frankfurt on Thursday September 13th 2018 to decide on interest rates. The Eurozone’s central bank board announced that it would keep interest rates unchanged at 0%. The decision was expected by economists. A report published by Westpac said that the ECB’s board meeting affirmed the forward guidance set out in June 2018. “Risks to the outlook continue to be described as ‘balanced’ but it is here Draghi touched on some particularly prescient issues. In June, we were told that asset purchases will be tapered again from October before ending completely in December, and that interest rates are on hold until the end of next summer. The ECB’s macroeconomic projections saw a slight downward revision in the growth outlook due to lower external demand,” was noted in the report. 

Trade the Euro on STO

The Euro to US Dollar, the Euro to British Pound and the Euro to Japanese Yen are just three of the currency pairs you can trade with on the STO platform. STO clients can select from a variety of over 30 currency pairs and plan the suitable trading strategy for them. STO provides traders with a daily fundamental and technical analysis that aims to help them reduce the trading risks.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66.52% of retail investor accounts lose money when trading CFDs with AFX Capital Markets Ltd. 64.84 % of retail investor accounts lose money when trading CFDs with AFX Markets Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information about the key risks associated with CFDs, please refer to our full Risk Disclosure.
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12 / 09 / 2018 | Market News

BoE decides on interest rates

The Bank of England’s (BoE) governing board meeting scheduled for Thursday September 13th  2018 will attract the attention of investors and traders. The BoE’s meeting is important because its results will indicate how the central bank’s policymakers perceive the condition of the United Kingdom’s (UK) economy. Right after the meeting, the BoE will publish its monetary policy summary and will announce whether it’s going to lift interest rates or keep them on hold. 

Monetary Policy Committee (MPC) to convene

The majority of economists polled by Reuters on September 10th 2018 suggested that the Monetary Policy Committee (MPC) will decide to keep the BoE’s benchmark interest rate unchanged at 0.75%. The MPC voted unanimously to raise borrowing costs by 0.25% on its August 2nd 2018 meeting because as its statement issued right after the end of the meeting said “recent data appeared to confirm that the dip in output in the first quarter of 2018 was temporary and that the labour market has continued to tighten and wage growth has firmed.” The MPC noted that an ongoing tightening of monetary policy over the forecast period will be appropriate to return the Consumer Price Index (CPI) inflation sustainably to the 2% target.  

Bank reports

A report by Nomura, which is one of the largest financial services group with headquarters in Asia, said that the BoE is not expected to change policy or reveal something new following its decision to raise interest rates in August 2018. Nomura’s analysts suggest that even though the economic data have softened a little relative to the market’s expectations, they doubt that it will have a material influence in the BoE’s September 2018 policy statement. They also add that they expect the decisions to keep rates and QE on hold to be unanimous.

Danske Bank’s economists seem to agree with their Nomura counterparts. In a report distributed to Danske Bank’s clients, it is said that “regarding the BoE, we expect a rather uneventful meeting and hence the British Pound will stay focused on Brexit negotiations, which bodes for volatility ahead of the key Tory Party conference in late September. Communication from both the EU and the UK has been remarkably positive and solution-seeking lately, which has helped reduce the Brexit risk premium somewhat.”

Analysts at Barclays suggest that the BoE’s governing board will reiterate its “gradual and limited” rhetoric in its post-meeting statement. “The BoE will meet next week for its September meeting, six weeks after hiking its bank rate to 0.75% in August 2018. Given little movement in data published since, we expect the MPC to maintain all monetary policy parameters unchanged (bank rates, asset purchase targets) by unanimous votes as it reiterates its gradual and limited rhetoric. While we see little scope for market-moving revelations, there will nonetheless be some focus on whether Governor Carney's mandate extension until 2020 is confirmed and how the Bank will deal with yearend Brexit uncertainty. Indeed, it looks increasingly likely that the Bank will have to update its forecast (next Inflation Report to be published on November 1st 2018) without confirmation of a Withdrawal Agreement.”

Trade the British Pound on STO

The British Pound against the Euro, the US Dollar against the British Pound and the British Pound against the Japanese Yen are just three of the major currency pairs that you can trade with on the STO platform. STO provides its clients with all the necessary educational material such as webinars to help them with preparing a suitable trading strategy.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66.52% of retail investor accounts lose money when trading CFDs with AFX Capital Markets Ltd. 64.84 % of retail investor accounts lose money when trading CFDs with AFX Markets Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information about the key risks associated with CFDs, please refer to our full Risk Disclosure.
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06 / 09 / 2018 | Market News

US NFPs and Eurozone GDP growth in the spotlight

Friday September 7th 2018 may be the last day of this week but it will be the most important for economists which will be expecting to scrutinise financial data coming from both sides of the Atlantic ocean. On Friday the US Department of Labour is expected to publish the August 2018 Nonfarm Payrolls data and the average hourly earnings as they were recorded in the same month. In Europe, market analysts will have the chance to examine data regarding the Eurozone’s Gross Domestic Product (GDP) growth rate.

US Nonfarm Payrolls (NFPs)

Nonfarm Payrolls data is released by the US Department of Labour and represents the number of new jobs created during the previous month, in all non-agricultural business. New farm employees are excluded due to the seasonality of their profession. NFPs are regarded as an important indicator of economic conditions because they move closely in line with the overall economy. 

Economists anticipate a rise in the NFPs figure. More specifically, they expect the data to show that 190,000 new jobs were added to the US economy during August 2018. In July 2018, according to data published on August 3rd 2018, NFPs disappointed the markets coming in at 157,000. The figure was well below analysts’ expectations of 190,000 new jobs having been added to the US economy and far below the June 2018 reading of 248,000. The accompanying report for July 2018, released by the US Department of Labour, mentioned that job gains occurred in professional and business services, in manufacturing, and in health care and social assistance.

Average Hourly Earnings-Unemployment Rate

The US Department of Labour is going to release data regarding the average hourly earnings in August 2018. Economists forecast that the average hourly earnings increased by 2.8%, on an annualised basis. If the forecast is confirmed, the figure will be slightly higher than the July 2018 2.7% reading. On a month-to-month basis, average hourly earnings are expected to have risen by 0.3%, matching the July 2018 figure. 

In the same report, market analysts will have the opportunity to check the latest data regarding the unemployment rate in the US. Economists suggest that the unemployment rate will come in at 3.9% in August 2018, matching July’s reading. In July 2018, the rate had fallen by 0.1% when compared with June 2018, in line with market expectations. The jobless rate had touched an 18-year low in May 2018. The labour force participation rate had remained unchanged in July 2018 over the month and over the year, coming in at 62.9%.

Eurozone GDP growth

On Friday September 7th 2018 Eurostat which is the official statistical office of the European Union (EU) will publish its Eurozone GDP growth rate report for the second quarter of 2018 (Q2 2018). The consensus among economists is that the Euro bloc’s GDP expanded by 2.2% on an annualised basis during the second quarter of the year, matching the figure recorded in the first quarter. On a quarterly basis, the Eurozone’s GDP growth rate is likely to come in at 0.4%. 

Trade the US Dollar and the Euro on the STO platform

The US Dollar against the Euro, the Euro against the Japanese Yen and the British Pound against the US Dollar are just three of the major currency pairs that you can trade with on the STO platform. STO provides its clients with all the necessary educational material such as webinars to help them with preparing a suitable trading strategy.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66.52% of retail investor accounts lose money when trading CFDs with AFX Capital Markets Ltd.  64.84 % of retail investor accounts lose money when trading CFDs with AFX Markets Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information about the key risks associated with CFDs, please refer to our full Risk Disclosure.
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05 / 09 / 2018 | Market News

Meet Litecoin

Traders always want to take advantage of opportunities that may come up in global markets. Sometimes, opportunities can occur because of market fluctuations and the consequences that affect the market. Other times, opportunities are created by brand new markets and products that attract traders’ attention. Cryptocurrencies is one of these markets that emerged in the last few years and made the headlines of global news outlets multiple times either for the technology that is used to support them or for their value fluctuations. 

Some programmers thought that the financial crisis was an opportunity to find ways to bypass the monetary policies of central banks and the problems that they create to simple consumers. One of the most important ideas that came up was the invention of new currencies that wouldn’t be affected by any financial crisis or by any decision of a central bank’s governing board. The term “cryptocurrency” refers to a currency associated with the internet that uses cryptography, the process of converting legible information into code, to track purchases and transfers. 

Bitcoin might be the most famous cryptocurrency in the last few years but its competitors such as Ethereum and Litecoin have started to gain ground and supporters. This article will give you a glance at what Litecoin has to offer and why you should consider trading with it on the STO platform. 

Litecoin (LTC) is a decentralized peer-to-peer cryptocurrency that went live on October 13th, 2011. Litecoin is the creation of Charlie Lee, a Google employee and former Engineering Director at Coinbase which is regarded as one of the most secure digital currency exchanges in the world, headquartered in California, USA. Since 2011, Litecoin has come a long way making it into the top-10 market cap cryptocurrencies. 

One of the reasons that Litecoin is becoming more popular as time passes is that it presents a useful application of the Bitcoin blockchain. Charlie Lee and his associates wanted Litecoin to reduce significantly the time needed to process a transaction. That’s why it was proposed as an innovative solution to cases of bottlenecks and scalability issues that Bitcoin traders were facing up to at the time. 

Litecoin creators managed to improve the Bitcoin blockchain by increasing the number of transactions that can be processed within a specific time period. Statistics show that Litecoin is capable of facilitating payments almost four times faster than its most famous adversary.  Litecoin is frequently compared with Bitcoin since the ways they function are similar. However, one of Litecoin’s significant advantages is that the cost of transactions involving it is almost 50 times cheaper than the one in Bitcoin transactions. Litecoin can also confirm transactions much faster than Bitcoin, a feature which is useful when trading cryptocurrencies.

Charlie Lee wanted to ensure that the Litecoin’s network would distribute hash power more evenly than Bitcoin’s network. He believed that the Bitcoin’s hash power was distributed among a small and less decentralised subset of miners and that’s why he tried to keep the Litecoin’s hashing power as decentralised as he could. Litecoin was not founded to go against the Bitcoin but its technological advantages have improved the potential of cryptocurrencies as a whole. 

Trading Cryptocurrency CFDs on STO

Using the STO Crypto Account, our clients are able to trade Cryptocurrency Contracts for Difference (CFDs) with competitive trading conditions. STO clients can trade CFDs on three of most important cryptocurrencies such as Bitcoin, Litecoin and Ethereum. 

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.66.52% of retail investor accounts lose money when trading CFDs with AFX Capital Markets Ltd. 64.84% of retail investor accounts lose money when trading CFDs with AFX Markets Ltd. ​You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information about the key risks associated with CFDs, please refer to our full Risk Disclosure.
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04 / 09 / 2018 | Market News

Australian GDP growth and BoC interest rate decision in focus

On Wednesday September 5th 2018, economists will be focusing on economic data coming from Australia and Canada. The Australian and the Canadian economies have been a topic of conversation among market analysts in the last few weeks as they have been affected by the additional trade tariffs imposed by the United States (US) administration. The ongoing trade negotiations between the three countries have made the headlines multiple times since the new taxes can affect their industries’ productivity.

On Wednesday, the Australian Bureau of Statistics (ABS) will release a report regarding the country’s Gross Domestic Product (GDP) growth during the second quarter of 2018. The GDP shows the monetary value of all the goods, services and structures produced within a country’s economy in a given period of time. The GDP reading is an indicator of market activity because it shows the pace at which a country’s economy is expanding or shrinking. In general, a high reading could help the Australian Dollar’s value surge while a low reading could be negative for the Australian currency.

Australian GDP growth rate in Q2 2018

According to a Reuters poll, published on Friday August 31st 2018, the consensus among economists is that the Australian GDP grew by 2.8%, on an annualised basis, during the second quarter of 2018. If confirmed, the figure will be significantly lower than the one recorded by the ABS in the first quarter of the year which came in at 3.1% on a year-to-year basis. The ABS report will also include a GDP growth rate figure on a quarter-to-quarter basis which is expected to come in at 0.7% in the second quarter of 2018, slightly lower than the 1.0% figure recorded in the first three months of this year. 

A National Australia Bank (NAB) report, published on August 29th 2018, regarding the GDP growth rate said that the GDP is likely to increase by just under 3.0% in 2018 and 2019. NAB’s analysts noted that growth will be driven by mining exports, public infrastructure investment and a continued recovery in non-mining business investment. “These trends are evident across most of the states, although the upturn in commodity exports as mining projects move to the production phase is concentrated in Western Australia, Queensland and the Northern Territory. household consumption growth will likely remain soft and dwelling investment is likely to ease. The NAB Monthly Business Survey showed that business conditions continued their downward trend evident since earlier in the year,” was stressed in the report. 

On Tuesday September 4th 2018, the Reserve Bank of Australia (RBA) had its September monetary policy meeting. Its board announced that it decided to keep borrowing costs stable at 1.5% on a widely expected move. This was the 25th month in a row that the RBA’s governing board kept interest rates unchanged. The RBA’s Governor Philip Lowe said that “in the first half of 2018, the economy is estimated to have grown at an above-trend rate, business conditions are positive and non-mining business investment is expected to increase,” adding that the Australian central bank is in no hurry to hike rates, given that inflation remains low. 

Bank of Canada interest rate decision

On Wednesday September 5th 2018, the Bank of Canada (BoC) will have its September 2018 monetary policy meeting. The majority of economists polled by Reuters on Friday August 31st 2018 suggested that the BoC board will keep its benchmark interest rate unchanged at 1.5%. Analysts at the Canadian Imperial Bank of Commerce (CIBC) share their opinion in their latest report released on August 30th 2018. 

“Canada’s 2.9% growth rate over the second quarter does wash away concerns about Q1’s modest 1.4% pace (1.3% prior to revision). However, the first half only exceeded the Bank of Canada’s estimate of potential growth by a slim margin and will therefore only nudge central bankers towards a rate hike in October, rather than doing anything to force their hand in September,” was noted in the CIBC report.

Trade the Australian and the Canadian Dollar on STO

The Australian Dollar against the US Dollar and the Canadian Dollar against the British Pound and the Euro are just three of the currency pairs you can trade with on the STO platform. STO provides its clients with all the necessary educational material such as webinars to help them with preparing a suitable trading strategy. 

Trading Forex and CFDs, which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
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03 / 09 / 2018 | Market News

The key characteristics of investors

Being an investor isn’t an easy task. Dedicating capital to investments is a case that involves a significant amount of risk regardless if markets are moving upwards or downwards since there is no guarantee that the investment plan will prove fruitful. Although investing can result in loss of funds, some people feel that it is natural to risk some in order to gain more. 

The behavioural habits of investors can be diverse thus making it difficult for an observer to track shared characteristics among them. However, it’s not impossible and in this article, we’ll talk about the most common personality traits and characteristics that distinguish successful investors from the rest. 

Eager to learn

While many people think that investing is all about instinct and fast decisions, some successful investors don’t share the same opinion. In various interviews available on the internet, famous investors have shown that they believe in being proactive learners and that they tend to spend much more time reading than average people. 

Investors who want to execute their investment plans successfully are voracious readers most of the time. They study continuously to improve their skills and themselves in order to have a competitive advantage over their rivals. Reading books, magazines, following webinars and attending seminars is a part of their everyday routine. 

Patience and emotional control are virtues

Investing is definitely not a walk in the park for most people. The fast change of pace in the investment world requires investors to have control over their emotions and, most of all, to be patient when everyone else is not. Since markets don’t move in general according to their will, investors should be ready to face the surges and declines and try to increase their gains or limit their losses accordingly. 

Using trends to their advantage

An old saying which most veteran traders know is that “it is best to trade with the trend”. Determining the direction of the trend could help traders in executing their strategies successfully, but there is always a high probability of making mistakes in calculations and projections. Average investors tend to panic over market fluctuations but the experienced and professional investors, most of the time, know how to use trends to their advantage. A company crisis, incidents that show an increase in political instability in some countries and the market sentiment are becoming advantages rather than disadvantages when thinking over a strategy. 

Persistence and risk

Persistence is one of the key characteristics of a successful investor. Having done his research, determining the steps that he is going to follow in order to execute his strategy is just the beginning of the journey. Sticking to an investing strategy in times that things don’t look positive requires a great deal of persistence. 

In this case, the investor should be ready to take risks. The risk is a significant part of an investing strategy. Experienced investors accept that they might fail and they know that they should be prepared for that. Hedging is one of the ways that investors manage their risks, reducing the possibility of losing capital. 

STO and Investo

Our consolidated experience in portfolio management helped us develop an investment strategy for STO clients called “Investo”. Our “Investo” strategy is suitable for individuals who seek long-term investment goals, and who want to trade Forex and CFDs but lack the advanced knowledge of a professional portfolio manager or the necessary time to trade. Trading CFDs requires the potential investor to have sufficient knowledge and experience to understand the nature and the risks involved in trading CFD and the management of his/her portfolio of leveraged derivative products.

Trading Forex and CFDs (Contracts for Difference), which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
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30 / 08 / 2018 | Market News

Eurozone CPI inflation likely to have remained stable in August 2018

The European Union’s (EU) economy will be in the spotlight on Friday August 31st 2018. On that day Eurostat, which is the official statistical office of the EU, will be publishing preliminary data regarding the Eurozone’s Consumer Price Index (CPI) inflation in August 2018. Even though the data is preliminary, it plays a great role in how economists form their opinions on the Euro bloc’s economy. 

The CPI is an indicator used to measure the rate at which the prices of goods and services bought by households rise or fall, which is the rate of inflation, referred to as the CPI inflation. Eurostat will also include core CPI inflation data in the release, which measures price movements excluding the ones of volatile components such as food, energy, alcohol and tobacco.

Economists expect the preliminary data to show that the CPI inflation stood at 2.1% on an annualised basis during August 2018. If confirmed the figure will be the same as July’s 2018 and the highest recorded reading since December 2012. Inflation in the Eurozone picked up during the summer months of 2018, giving the highest readings in the last five and a half years. Market analysts that scrutinised the data provided by Eurostat said that the reasons behind the inflation’s rise were the surge of prices in the energy and services sector while food prices rose at a softer pace.

Eurostat will also release data regarding the Eurozone’s core CPI inflation. Some market analysts suggest that the core CPI inflation figure provides a better presentation of inflation in the economy. According to the forecast, the Euro bloc’s core CPI inflation is expected to come in at 1.1%, unchanged from July 2018. Core CPI inflation in the Euro bloc also rose during the summer months from 0.9% in June 2018 to 1.1% in July 2018. 

Danske Bank released a report on Friday August 24th 2018 in which it informed its clients that Eurozone’s headline inflation is set to tick lower in August 2018, while underlying inflation continues to move upwards. “In July 2018, headline inflation reached 2.14% y/y, the highest level since 2012 and just above the ECB’s target. We expect the August print to decrease slightly to 2.08% y/y as the positive contribution from energy prices has peaked. Core inflation remains muted at 1.07% year-on-year in July 2018 – a level it has been fluctuating around since the beginning of 2017. We expect the August 2018 figure to edge up marginally to 1.12% year-on-year,” said the Danske Bank’s report.

An Internationale Nederlanden Groep (ING) report published on Monday August 27th 2018 said that investors will be looking to leading Eurozone economic indicators to gauge the European Central Bank’s mood at the mid-September 2018 monetary policy meeting. “The flash August EZ CPI data (Friday August 31st 2018) will be closely watched to see if inflation remains sticky above 2%. Political risks remain a short-term limiting factor for the Euro,” was noted in the report. 

As said in the ING report, investors and traders will have the opportunity to scrutinise the inflation reports coming from France and Italy. On Friday August 31st 2018, the INSEE, which is the official French statistical office, will publish the preliminary CPI inflation data for August 2018. Market analysts suggest that the report will show a modest pick up of 0.5% in inflation, on a month-to-month basis. In Italy, the report to be released by the Istituto Nazionale di Statistica, which is the official Italian statistical office, is expected to show an inflation drop during August 2018, from 1.5% to 1.4% on a yearly basis. 

Trade the Euro on STO

STO offers its clients over 30 currency pairs to choose from for a bespoke trading experience, including major, minor and exotic ones. A daily technical and fundamental analysis is also available to STO clients in order to help them execute their trading strategies.

Trading Forex and CFDs, which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
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29 / 08 / 2018 | Market News

Advantages and disadvantages of social trading

The influence of the social media has been transmitted to the world of trading and investing. The leaders of the investment and trading sectors saw the potential of using the new technologies to improve their skills and benefit as much as possible. The result of these efforts is the commonly known online as social trading which aims to transform trading in ways that couldn’t be done until now.

According to a KPMG report published on September 2016 ‘the idea of using social platforms for trading was introduced to the market shortly after the 2008 crisis, offering the possibility for everyone (nearly) to join and to trade in the same way as the trader(s) you were following. The easy registration and low (nearly free) service fees have positioned these offerings as strong alternatives to traditional fund managers who are fighting against decreasing industry returns themselves.’

Social trading works by giving people with limited financial knowledge insight into the stock exchange by allowing a real-time analysis of individual trader performance. Seen as one of the most significant shifts in trading, social trading has the potential to open up opportunities for those interested in stock markets.

Advantages of social trading

Quick access to trading information

Beginner traders have the opportunity to cut down on the research for useful trading information. The reason is because, thanks to the social trading network they are a part of, they can get information from experienced professional traders from across the world. The interaction with skilled traders allows them to enhance their trading capabilities and increase their chances for success. 

Easiness

Trading isn’t an easy task since traders have to plan their strategies and execute them, taking into consideration numerous factors. Being a part of a social trading network enables the more inexperienced traders to monitor and follow other traders, evading the need to conduct a technical or fundamental analysis. 

Avoiding personal biases in trading

Belonging to a social trading community or group means that it becomes easier for traders to view the market fluctuations from a more unbiased perspective. Traders that work together will find it easier to discuss and analyse market activity, making decisions which won’t be affected by personal biases. 

Disadvantages of social trading

Poor risk management

Some people involved in trading start investing money on social trading platforms without even knowing the fundamentals of trading. Sometimes traders don’t focus on learning what the basic terms of trading mean and become exposed to dangers such as losing their capital. 

No diversification

Financial advisors stress the need for diversification. Sometimes beginner traders tend to trust a trader that they believe has devised the right strategy which can bring the right results. Believing that they are doing the right thing, they invest all their funds in one trader and follow his strategy. If the market moves in their favour, there is a chance of getting the result they want, but if the market moves against them they may lose their capital.

Trading with STO

STO has set as a goal to offer an optimal trading experience to its clients. STO pays special attention to its clients’ education by arranging educational courses such as webinars and providing its clients with the latest market news reports. STO account owners are able to trade on the most active shares in the US, German and Italian stock markets

Trading Forex and CFDs (Contracts for Difference), which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
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28 / 08 / 2018 | Market News

Economists to scrutinise US GDP growth data

On Wednesday August 29th 2018, the financial news is going to be dominated by data coming from the United States (US) economy. On that day, the US Bureau of Economic Analysis (BEA) will publish its preliminary report regarding the growth of the country’s Gross Domestic Product during the second quarter of 2018. Data such as this attract the attention of economists because it is related to one of the largest economies in the world and its effect could make markets fluctuate. 

Market analysts will be expecting to scrutinise the report regarding the US GDP growth in the March-May 2018. This will be the second estimate published by the US BEA. The GDP shows the monetary value of all the goods, services and structures produced within a country’s economy in a given period of time. The GDP reading is an indicator of market activity because it shows the pace at which a country’s economy is expanding or shrinking. In general, a high reading could help the US Dollar’s value surge while a low reading could be negative for the US currency.

According to the analysts’ forecast, the US GDP grew by 4.0%, on an annualised basis, during the second quarter of 2018, 0.1% lower than the previous estimate. Market analysts also expect data to show that the US GDP increased by 3.0%, on a month-to-month basis, in the same time period. If the figure is confirmed, it will be in line with the previous estimate. On August 17th 2018, Nomura’s economists published a report in which they said that the weaker than expected housing starts in July 2018 had an effect on GDP growth. “Weaker-than-expected housing starts in July 2018 and downward revisions to previous months suggest more drag from residential investment on real GDP growth in Q2 2018 and Q3 2018. After rounding, however, our tracking estimates remain at 3.9% quarter on quarter for Q2 and 3.1% for Q3,” said the report. 

Fed monitors US GDP growth

The first US GDP growth estimate published by the BEA at the beginning of August 2018 had shown a growth rate of 4.1% on an annualised basis, which was the fastest rate recorded in the last four years. President Donald Trump capitalised on this, saying that the result is due to his actions. Some economists stressed that the elevated growth rate was the outcome of Chinese importers rushing to buy US made products before the Chinese administration imposed its own tariffs on them. 

Economists suggest that if exports have played a substantial role in the US GDP growth case, markets may think that it will be a one-off since the “tariff effect” will probably evaporate by the end of the second quarter of 2018 and there is a high probability that the growth during the third quarter of the year will be dragged down by exports. The US Federal Reserve (Fed) monitors the GDP growth closely and adjusts its policies accordingly. Market analysts believe that the Fed’s board will probably proceed in raising borrowing costs in its upcoming meeting at the end of September 2018. 

The consensus among economists is that if the second GDP growth estimate for the second quarter of 2018 exceeds expectations, the US Dollar’s value will jump. A reading below 4% could cause disappointment in the markets and could be a blow to President Donald Trump since he was one of the first to talk about the robust rate of growth when the first estimate was published. 

STO and trading the US Dollar

The US Dollar against the Euro, the US Dollar against the British Pound and the US Dollar against the Japanese Yen are just three of the major currency pairs that you can trade with on the STO platform. STO provides its clients with all the necessary educational material such as webinars to help them with preparing the suitable trading strategy. 

Trading Forex and CFDs, which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.


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