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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23 / 08 / 2018 | Market News

US trade tariffs and FOMC minutes in focus

The United States (US) administration decided to impose new tariffs on $16bn worth of imported products made in China. The new round of tariffs comes as US and Chinese officials meet to negotiate trade policies in Washington. Starting on Thursday August 23rd 2018, the US authorities began collecting an additional 25% duties on hundreds of products including chemicals, motorbikes, plastics.

The Chinese government answered back by imposing new tariffs on $16bn worth of imports from the US, including fuel, steel products, medical equipment. The Chinese Commerce Ministry announced that it will file a complaint to the World Trade Organisation (WTO) against the US. The Ministry also stressed that it “resolutely opposes the latest tariffs and will fight back against them.”

FOMC minutes

On Wednesday August 22nd 2018 the US Federal Reserve published the minutes of the Federal Open Market Committee (FOMC) meeting which took place on July 31st and August 1st 2018. During the FOMC meeting, its members noted that “the indicators of longer-term inflation expectations are little changed, on balance. The stance of monetary policy remains accommodative, thereby supporting strong labour market conditions and a sustained return to 2% inflation.” 

The FOMC’s members stressed that “further gradual increases in the target range for the federal funds rate will be consistent with the sustained expansion of economic activity, strong labour market conditions and inflation objective.” The FOMC meeting minutes revealed that the issue of trade tensions between the US, the European Union and China was discussed, noting that “trade policies could move in a direction that would have significant negative effects on economic growth.”

The US President against Fed’s actions

The US President Donald Trump attracts the glaring lights of publicity every time he makes a statement to journalists or on social media such as Twitter. His statements attract the attention of commentators whether they are about the economy, migration or other important issues concerning the US. 

This week it was the turn of the US Federal Reserve (Fed) to become the target of the US President’s comments. The President told Reuters reporters, in an interview on Monday August 20th 2018, that he isn’t “thrilled” with the Fed’s actions regarding the hiking of its benchmark interest rates. In the past, very few US Presidents have talked against the Fed’s monetary policy actions and strategies as the independence of the US central bank is regarded as paramount to the economic stability. 

In July 2018, President Donald Trump had made investors worry when he spoke against the Fed’s will to tighten its monetary policy. On Monday August 20th 2018, the US President repeated that “the Fed should be more accommodating on interest rates.” He also noted that he won’t stop expressing his opinion over the exercised monetary policies if the Fed continues on the same path. 

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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22 / 08 / 2018 | Market News

How to fight stress when investing

Investors should be ready to make the right decisions at the right time if they want to take advantage of a market upturn or reduce their risks during a market downturn. However, even the best and most experienced investors may have difficulty evaluating the market and take emotion out of investing correctly.

Especially in time periods when events such as sovereign debt crises or stock market crashes torment the global financial system, it is possible that investors will get anxious and make mistakes regarding their portfolio. While markets are rising, average investors are satisfied with making profits but when a market downturn occurs only the most disciplined ones keep their calmness and assess the situation without falling victims to their emotional condition. 

Sometimes investors tend to forget that throughout history markets followed a natural cycle. Asset prices are increasing until they reach a certain point, after which a price decline follows. In the past, many economists have studied the market cycles and have come to many conclusions regarding the time duration of those cycles. Also, they have stressed that during market upturns, investors are showing confidence and risk on mood while they don’t show the necessary tolerance for the occasional market and prices declines, when fear seems to dominate their behaviour.

Taking emotion out of the equation

According to the more experienced investors, education is one of the ways that can help in fighting back the effect of fear and anxiety. The solution to this problem is to prioritise which aspects of investing they would like to master and find the suitable educational courses. Then, the trader will be able to expand his knowledge on specific investment sectors that could help him increase the possibilities of making the right moves.

Many investing and trading firms offer comprehensive educational courses that can cover the needs of beginners, but also of the more experienced investors and traders. The educational courses are presented by people with years of experience in the industry which can help the inexperienced ones by giving them answers to their questions. 

Tune out the noise

Investors and traders get all the latest news updates from financial news media outlets and social media such as Twitter, Facebook. Smartphones, tablets and laptops made it easier for people to have access to all the latest financial information from across the world. While this can be an advantage for anyone wanting to build a robust and detailed strategy, it can also be a disadvantage if the volume of information overwhelms the investor.

Some economists suggest that the large volume of information can make investors believe that they are able to anticipate how the market will move. They note that this deception creates anxiety for investors and traders who tend to spend more time following the news updates. As a result, they may become more sensitive to market fluctuations and it’s likely that they will overreact taking the wrong decisions. Seasoned investors stress the need for calmness and advise the less experienced to resist the temptation of over-monitoring their portfolios. 

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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21 / 08 / 2018 | Market News

US and China resume trade talks

The tension between the United States (US) and China regarding their trade relations rages on, but, in the last few days, there seems to be an effort from both sides to reduce it. The trade talks between representatives of both sides scheduled for the end of August 2018 could be a starting point, according to global market analysts. 

Mid-level trade talks are expected to focus on the value of the Chinese Yuan (Renminbi) compared to the US Dollar. According to a CNBC report, published on Monday August 20th 2018, the US Dollar has gained a bit more than 6% against the Chinese Yuan in the first eight months of 2018. The CNBC report noted that much of the US Dollar’s appreciation occurred during July and August 2018. The last time that the US Dollar traded around 7.0 against the Chinese currency was in May 2008, more than 10 years ago. 

The Chinese Yuan began to lose value when the US President Donald Trump spoke against the Chinese government’s trade policies, stressing that it’s unfair towards the US and pledged to do whatever he could to reverse the situation. Listening to US threats of sanctions against China made global investors worried and sent the world’s major stock markets down as there was no guarantee that there won’t be an escalation. The US Federal Reserve’s (Fed) move to raise its benchmark interest rates to 2% drove the US Dollar’s value up, affecting its exchange rate with the Chinese currency. 

Some analysts suggest that the Chinese government allowed the country’s currency to depreciate as a countermeasure to the imposed US sanctions on Chinese products. However, they are not sure whether this policy helped the Chinese economy withstand the sanctions’ pressure or made the situation worse. The weakness of the Chinese Yuan makes imports of materials more expensive from the rest of Asia which raises the cost of Chinese produced goods, and the surging government debt denominated in  US Dollars increases the doubts of analysts about the Chinese policies. 

The CNBC report notes that, during the upcoming meeting between US and Chinese officials, it is likely that the US side will express its discomfort regarding the Chinese Yuan’s depreciation. A report by the political risk consultancy Eurasia Group, released on Friday August 17th 2018, noted that the Chinese side will likely respond by saying that “China is not seeking to weaken the currency but allowing the exchange rate to respond to the pressures of the trade war, a slowing domestic economy, and monetary easing.”

A Wall Street Journal (WSJ) article on Saturday August 18th 2018 said that “the US and Chinese negotiators are outlining a roadmap to end their trade impasse ahead of the meetings scheduled between the US President Trump and his Chinese counterpart Xi Jinping in November 2018.” The article mentioned that the two sides want to keep a deepening trade dispute from torpedoing the US-China relationship and further shaking the global financial markets. 

Nomura, which is one of the largest financial services groups with headquarters in Asia, published a report on Sunday August 19th 2018 in which its market analysts suggested that additional protectionist measures from the US administration should be anticipated. “We expect the Trump administration to move ahead with the 25% tariff on an additional $200bn in Chinese imports, whether in full or by installments, with an announcement sometime after the USTR finishes the review process on September 6th 2018. There is still a significant amount of uncertainty around trade as developments could fare better or worse than we expect,” was noted in the Nomura report.

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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17 / 08 / 2018 | Market News

Turkish economy hurt by US sanctions

The economic and political uncertainty in Turkey have shaken the Asian country’s economy and seemed to affect the global markets during this week. The country’s currency, the Turkish Lira lost much ground in the last few days against its competitors. However, the decision of the Turkish central bank to support the Lira and other moves made by the Turkish government made the currency regain some of the lost value. 

Turkish Finance Minister speaks about the economy

On Thursday August 16th 2018, the Turkish Finance Minister Berat Albayrak told major investors who are interested in the updates that “Turkey fully recognizes the economic challenges. Turkey will emerge from the current period of volatility stronger. Berat Albayrak noted that the government has no intention to impose capital controls which could restrict the movement of capital in and out of the country. 

Berat Albayrak’s call to investors was deemed important as the condition of the Turkish economy significantly deteriorated in the last weeks. The Turkish Finance Minister denied the rumour that his country is ready to ask for the assistance of the International Monetary Fund (IMF) which has helped in the past with economic aid and advice the Asian country. He stressed that Turkey remains committed to the free market, “despite the fact that we are experiencing unfavourable conditions which we will overcome.” 

Investors listened to Berat Albayrak saying that reducing inflation is one of the top priorities for the economic cabinet. Currently, the Turkish Consumer Price Index (CPI) inflation is running at 15% which is rather high for an economy that wants to be competitive by global standards. The economic cabinet has set as target the reduction of inflation in single digits as soon as possible. The Finance Minister of Turkey said that his country wants to boost its primary budget surplus, adding that he has asked from all ministries to contribute to an ambitious savings programme. He also stressed that “fiscal discipline is one of the anchors of the economy”, in an effort to convince investors that the cabinet will put a strain on spending. 

Regarding the banking sectors, Berat Albayrak repeated that it is strong and healthy and that the recent stress tests ran by the central bank of Turkey confirmed that. He also mentioned that volatility experienced in the economy is not triggered by fundamentals. Albayrak assured investors that the banking sector is capable of managing the situation and that there haven't been major deposit flows, stressing that support from the government will be provided if needed.

Turkish Lira volatility

The diplomatic spat with the United States (US) earlier in the week had sent the Turkish Lira to a downward spiral which made it hit a record low of 7.2 to the US Dollar. The Turkish currency has lost almost 20% of its value during the last month. Berat Albayrak’s call seemed to calm investors making the Turkish Lira gain 2.5% in value early morning on Thursday August 16th 2018. 

On Monday August 13th 2018, the Turkish central bank announced that it would help the country’s banks by reducing the Turkish Lira and the foreign currency reserve requirements. However, the central bank of Turkey didn’t proceed in hiking its benchmark interest rate in order to help curb the high CPI inflation as some analysts were anticipating. 

On Thursday August 16th 2018, the US Treasury Secretary Steven Mnuchin assured the US President Donald Trump at a cabinet meeting that sanctions were ready to be put in place if the US pastor Andrew Brunson is not released by the Turkish authorities. President Donald Trump wrote on Twitter that “Turkey has taken advantage of the United States for many years. They are now holding our wonderful Christian Pastor, who I must now ask to represent our Country as a great patriot hostage. We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!”

Trade with STO

STO clients can trade with more than 30 major, exotic and minor currency pairs on one of the advanced online trading platforms in the market. 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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15 / 08 / 2018 | Market News

UK CPI inflation and US retail sales in the spotlight

On Wednesday August 15th 2018 the Office for National Statistics (ONS) will publish a report regarding the United Kingdom’s Consumer Price Index (CPI) inflation in July 2018. Another ONS report will show how much UK retail prices changed during July 2018. In the United States (US), the US Census Bureau is expected to release data associated with the retail sales in July 2018. 

UK CPI inflation

The most important of the releases is the UK’s CPI inflation data. 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. Analysts are anticipating that the CPI inflation picked up coming in at 2.5%, on an annualised basis. In June 2018, the UK’s CPI inflation came in at 2.4% on annualised basis, unchanged from May 2018 and below the analysts’ expectations for a 2.6% figure. The 2.4% CPI inflation figure is the lowest reading since March 2017.

 The ONS will also release data regarding the UK’s core CPI inflation in July 2018. Core CPI inflation is inflation excluding the prices of seasonally volatile products such as food and energy. According to analysts’ forecasts, the UK’s core CPI inflation is expected to have increased from 1.9% recorded in June 2018 to 2.2% in July 2018 on a year-to-year basis.

 Market experts are expected to scrutinize another ONS report regarding the Retail Price Index in July 2018. The Retail Price Index (RPI) measures changes in the prices of goods and services bought for household consumption in the UK. The RPI takes a large sample of retail goods including food, tobacco, household goods and services, transport fares, motoring costs, clothing, and leisure goods and services. An increase in the index means that prices have increased on average (inflation) while a decrease means that prices on the whole have fallen (deflation). Economists forecast that the RPI increased by 3.6% on a yearly basis during July 2018 and by 0.4% on a month to month basis. 

US retail sales in July 2018

In the US, the most significant financial updates of the day will be linked with the retail sales. The retail sales data is awaited as they will give a first glance at the strength of consumer spending as the third financial quarter of the year starts. Economists forecast that the US retail sales surged by 0.1% on a monthly basis, a reduced pace of growth when comparing with the 0.5% figure recorded in June 2018. 

However, market analysts will take into consideration the so called “retail control” alternative measure of sales which is used by the US financial authorities to calculate the country’s GDP growth. They expect that this measure will show the retail sales rebounding by 0.4% on a month-to-month basis after being flat in June 2018. 

Trade the British Pound and the US Dollar on STO

STO clients can trade with more than 30 major, exotic and minor currency pairs on one of the advanced online trading platforms in the market. 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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13 / 08 / 2018 | Market News

Economists focus on Eurozone GDP and UK salaries data

On Tuesday August 14th 2018 the financial news updates will be dominated by reports coming from the Eurozone and the United Kingdom (UK). On that day, Eurostat which is the official statistical office of the European Union (EU) will publish preliminary data regarding the growth of the Eurozone’s Gross Domestic Product (GDP) during the second quarter (Q2) of 2018. 

In the UK financial analysts will be expecting the release of data associated with the average earnings, including and excluding bonuses, in June 2018 and the unemployment rate during the same month. The reports published by the Office for National Statistics (ONS) are considered important as they give a detailed view of the employment market to the economists. A less significant ONS data release in the UK will be linked with the number of people who claimed unemployment benefits during July 2018. 

Eurozone GDP Q2 2018

Eurostat will publish its 2nd estimate GDP growth data in a report that will be anticipated by the financial market experts. According to the economists’ forecasts, the Eurozone’s GDP growth during the second quarter of 2018 is expected to come in at 2.1% on a year to year basis. On a quarterly basis, the Euro-bloc’s GDP growth is expected by market analysts to hit 0.3%. 

On July 31st 2018, Eurostat published its first estimate for the Eurozone’s GDP which matches the expectations for the second estimate. A report released by Internationale Nederlanden Groep (ING) on July 31st said that “perhaps still temporary, but factors with a longer shelf life seem to have brought Eurozone GDP growth down to a lower cruising speed for the moment. The confidence impact of a trade row and weaker real household income growth seem to be spoiling the European market conditions for the moment. Trade uncertainty seems to have already had a significant effect on the Eurozone economy in the second quarter of 2018.”

UK average earnings and unemployment rate

Economists will be also expecting to scrutinize the ONS reports regarding the average earnings in the UK and the country’s unemployment rate during July 2018. The average weekly earnings excluding bonuses released by the ONS is a key short-term indicator of how levels of pay are changing within the UK economy. The unemployment rate released by the ONS represents the number of unemployed workers divided by the total civilian labour force. It is a leading indicator for the UK economy.

According to the economists' forecast, the average weekly earnings excluding bonuses in the UK will have likely risen by 2.6% in June 2018, a bit less than the reading recorded in May 2018. The average weekly earnings including bonuses are expected to have risen by 2.5% as it had been measured in May 2018. 

Economists suggest that during June 2018 the unemployment rate in the UK remained stable at 4.2%. According to the ONS, the 4.2% figure is the lowest recorded in the last 42 years. In May 2018, the unemployment rate 4.2% figure had come in line with market expectations.

Trade the Euro and the British Pound on STO platform

The Euro against the US Dollar, the US Dollar against the British Pound and the Euro 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. 

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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19 / 07 / 2018 | Market News

Canadian CPI inflation likely to have risen in June 2018

The financial news on Friday July 20th 2018 is going to be marked by the economic data releases in Canada. The economy of Canada is a highly developed mixed economy with the 10th largest Gross Domestic Product (GDP) by nominal and the 17th largest GDP by Purchasing Power Parity (PPP) in the world, according to the International Monetary Fund’s (IMF) quarterly World Economic Outlook, published on December 10th 2017.

On Friday July 20th 2018, Statistics Canada, which is the official statistical office of the country, will publish data regarding the Consumer Price Index (CPI) inflation during June 2018. 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.  The economists’ consensus is that the Canadian CPI inflation edged up, during June 2018, coming in at 2.5% on an annualised basis. If confirmed, it will constitute a 0.3% increase when compared with the May 2018 inflation figure. The annual CPI inflation rate in Canada stood at 2.2% in May 2018, the same as in April 2018, missing market expectations of 2.5%. Higher prices for shelter and transportation were offset by the slowing cost of food, household equipment, clothing & footwear.

 The Bank of Canada (BoC) aims at an inflation range of 1%-3%. In general, a high inflation reading is seen as anticipatory of an interest rate hike and is positive (or bullish) for the Canadian Dollar. On the contrary, a lower inflation figure than the one anticipated may have a negative effect on the Canadian Dollar’s exchange rates against its major competitors. 

The BoC is also expected to release data regarding the core CPI inflation during June 2018. According to a poll by Bloomberg published on Monday 16th July 2018, the majority of economists suggest that the Canadian core CPI inflation picked up reaching 1.4% in June 2018 on a year-to-year basis. In May 2018, the core CPI inflation, which excludes volatile items, had eased to 1.3% from 1.5% in April 2018, missing market expectations of 1.4%.

CPI inflation and interest rate hikes

On July 11th 2018 the BoC’s governing board hiked the Bank’s benchmark interest rate by 0.25%, bringing the overnight lending rate to 1.5%. This was the fourth time that the BoC has raised borrowing costs in the last 12 months. Market analysts had predicted the interest rate hike given firming CPI inflation and other signs of an economy close to capacity. 

A Wells Fargo report, published on July 11th 2018, noted that ‘core measures of inflation are near the middle of the BoC’s target range and headed higher. A weaker Canadian dollar, which has fallen in the wake of trade concerns, and new tariffs on U.S. imports will add upward pressure to inflation, along with growing capacity constraints.’ The analysts of the US bank commented on the Canadian GDP growth saying that ‘we expect Q1 to be the weakest quarter of the year, due to higher oil prices, stronger export growth and a stabilization in residential investment. Stronger monthly growth puts GDP on track to expand above 2.0 percent in Q2, at the upper end of Canada’s potential GDP growth range of 1.5-2.1 percent as calculated by the BoC. Growth faster than the long-term sustainable rate should further reduce space capacity in the economy.’

Trade the Canadian Dollar on the STO platform

The Canadian Dollar against the Euro and the US Dollar are just two of the 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. 

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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17 / 07 / 2018 | Market News

Economists focus on UK and Eurozone CPI inflation data

Economists are waiting for the release of important economic data coming from the United Kingdom (UK) and the Eurozone this week. On Wednesday July 18th 2018, the Office for National Statistics (ONS) will publish data regarding the UK’s Consumer Price Index (CPI) inflation and the Producer Price Index for June 2018. On the same day, Eurostat will publish the Eurozone’s CPI inflation report for June 2018. 

UK CPI inflation likely to have picked up in June 2018

The most important of the releases is the UK’s CPI inflation data. 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. Analysts are anticipating that the CPI inflation picked up coming in at 2.6%, on an annualised basis. The ONS will also release data regarding the UK’s core CPI inflation in June 2018. Core CPI inflation is inflation excluding the prices of seasonally volatile products such as food and energy. According to analysts’ forecasts, the UK’s core CPI inflation is expected to have increased from 2.1% recorded in May 2018 to 2.2% on a year-to-year basis. 

In May 2018, the UK’s CPI inflation had surprised economists by remaining unchanged at 2.4%, on a year-to-year basis, which constitutes a one-year low. The consensus among market experts was that the CPI inflation would increase to 2.5%. Core CPI inflation had also remained flat at 2.1%. The ONS report accompanying the data said that Transport inflation jumped on higher fuels and lubricants costs, while prices rose at a softer pace for recreation & culture, housing & utilities, restaurants & hotels, and food & non-alcoholic beverages.

The Bank of England’s (BoE) board and its Governor Mark Carney would like to see the UK’s CPI inflation rate hovering around 2%. Average earnings, including bonuses, are expected to have increased by 2.5% during May 2018 and, if the inflation forecast is confirmed, the recent pattern of wages rising faster than prices will be reversed. 

Eurozone CPI inflation

On July 18th 2018, Eurostat, which is the official statistical office of the European Union (EU), is expected to publish data regarding the Eurozone’s Consumer Price Index (CPI) inflation in June 2018. Economists polled by Bloomberg on July 11th 2018 suggest that the Euro-bloc’s headline inflation rose to 2.0%, on an annualised basis, during June 2018. If the figure is confirmed, it will be the highest since February 2017.

The inflation rate is expected to rise due to increased prices of fuel and food. A flash estimate report released by Eurostat on June 29th 2018 said that “looking at the main components of euro area inflation, energy is expected to have the highest annual rate in June 2018 (8.0%, compared with 6.1% in May 2018), followed by food, alcohol & tobacco (2.8%, compared with 2.5% in May), services (1.3%, compared with 1.6% in May) and non-energy industrial goods (0.4%, compared with 0.3% in May).”

Trade the British Pound and the Euro on the STO platform

The British Pound against the Euro, the Euro against the US Dollar 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. 

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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