FX Fundamental Breakdown – 08 Mar 2021

March 8, 2021

USD
The dollar was bought up in the last week as traders wanted to price in NFP before Friday’s results. The Nonfarm Payrolls data was very positive, coming in at 379K vs the 182K that was forecasted, which marks the growth in jobs at almost double the expected rate. The ISM Manufacturing PMI was also positive with a reading of 60.8 vs the consensus reading of 58.8. However, both the ADP Employment data and ISM Services PMI fell below consensus. A bullish USD is expected this week following the positive NFP data.

In the coming week, look out for the Consumer Price Index data on Wednesday (10/3).

One week forecast for the USD is bullish.

EUR
The EUR was sold off in the last week as negative economic data was reported from the EU, affecting the currency. Both the CPI and Retail Sales data were below consensus, with Retail Sales reported significantly lower than forecasted value of -1.1%, down to -5.9%. The EU is still hopeful that the vaccine rollout will support economic recovery. There has also been some speculation surrounding Italy having a second wave of the virus, as their numbers in new cases continue to rise.

In the coming week, watch out for the Gross Domestic Product Data on Tuesday (09/03), and the ECB Rate Decision on Thursday (11/03).

One week forecast for the EUR is bearish.

AUD
The AUD fell in the last week as the RBA’s rate decision to hold rates was mostly priced on AUD markets. Economic data from the last week was quite mixed. While the Retail Sales data undelivered, the Trade balance was much higher than the expected forecast, and the GDP data was also better than expected, 3.1% vs the 2.5% forecast.

In the coming week, watch for the RBA Governor Lowe’s speech on Wednesday (10/03).

One week forecast for the AUD is bullish.

GBP
As the pound made gains across most non-USD pairs, the GBP was definitely one of the stronger currencies in the last week. While there was no high impact economic data from the UK in the past week, the continued rollout of the vaccine and the calm of the Brexit deal continues to support the GBP.

In the coming week, watch out for BoE Governor Bailey’s speech on Monday (08/03).

One week forecast for the GBP is bullish.

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Leverage

In terms of trading, leverage is borrowed capital that allows you to increase your potential profits or losses. In Forex a common leverage amount offered is 100:1, meaning that for every $1 you have you can control $100 in equity.

Margin

Margin is the collateral you must keep in your account to maintain a leveraged position.

Open A Forex Trading Account

Opening a trading account with an Australian Forex Broker is an easy process that can typically be completed within a matter of minutes. To open an account with a forex broker there are three main steps:

  1. Fill out personal information
  2. Verify account with documents
  3. Client Qualification questionnaire

To open an account, you will need to provide your full name, nationality, email and phone number. Once you’ve completed these and set up a password you will typically be asked to choose the type of account and the trading platform, as well as your base currency. You will also be asked for your country of tax residence and tax details (TFN for Australians). Typically, providing specific tax information such as TFN is not compulsory. Brokers will also ask if you are a politically exposed person. The final personal information you must provide is your contact information, including your full address and how you would prefer to be contacted

The next section is financial information. Here you must provide your employment status information, annual income bracket and liquid net worth. Once you are through this section, the broker will ask your about your trading experience (Years) on securities, options, commodities, futures, CFD’s and OTC Forex Exchange, and if you understand the risk of margined transactions.

The client questionnaire assesses whether your knowledge of CFD’s is suitable for opening an account.

Margin Call

A margin call is a demand from the broker for the client to deposit funds to meet margin requirements for open/closed positions.

Short Position

A short sell is a position where the trader anticipates the price of an instrument to decrease, and sells a borrowed asset to buy it back in the future.

Long Position

A long position is a buy position, where the trader anticipates the price of an instrument to increase.

Test2

This is a test, all systems go!

Indicator

An indicator is something that assists traders finding where to enter and exit trades. An indicator could be calculated like a moving average or RSI or a drawn support/resistance level.