FX Fundamental Breakdown – 22 Mar 2021

USD
Failing to make a strong move in either direction, the dollar traded within a range in the last week. As expected, the Fed continued to hold rates at 0.25% last week. During their statement, they were surprisingly dovish. Stating that actual, current data was their main focus and not optimistic forecasts, which sparked some USD weakness. Economic data from the US last week wasn’t too great. Retail Sales (MoM) came in at -3% actual growth vs the -0.5% forecasted growth.

In the next week, events to watch out for include Fed Powell’s daily speeches from Monday (22/03) to Thursday (25/03) and the annualized GDP data on Thursday (25/03).

One week forecast for the USD is bearish.

EUR
It was pretty quiet for the EUR last week as it continued to move sideways, which it has been for the past few weeks. The economy continues to be severely affected by the Covid-19 pandemic, and most economic data from the EU has been negative over the past month.

Economic events to watch out for in the next week include the EU Council Meetings on Thursday (25/03) and Friday (26/03), and the Markit PMI Composite on Wednesday (24/03). The EUR will most likely be trading sideways into the next week as well.

One week forecast for the EUR is bullish.

AUD
The AUD continued to move sideways in the last week as economic data reported was quite mixed, creating a choppy AUD market. The Australian Employment Data reported early in the week was positive, with the actual value coming in at 88.7K vs the forecasted value of 30K, and the Unemployment rate dropped to 5.8% vs the forecasted 6.3%. There is a chance the RBA may reevaluate their policies earlier than expected if unemployment rates continue to improve as the ‘JobKeeper’ stimulus ceases, which is quite bullish for the AUD. Mixed data for the AUD included the Retail Sales data (MoM) which had negative results, coming in at -1.1% vs the expected forecast of 0.4% growth.

There are no major events to watch out for in the coming week for the AUD.

One week forecast for the AUD is bullish.

GBP
As expected, the BoE continued to hold rates at 0.1%, which saw the GBP moving sideways. The GBP is being supported by the BoE as they continue to ignore the idea of holding negative rates. During the last few weeks, the pound has been one of the strongest major currencies as it continually made significant gains across the board. A bullish factor for the GBP was the BoE’s purchase asset facility target remaining the same at 895B.

In the coming week, some high impact events to watch include the UK Employment Data and BoE Governor Bailey’s speech on Tuesday (23/03), the CPI and PMI Data on Wednesday (24/03), Governor Bailey’s speech on Thursday (25/03) and the GDP Data on Friday (26/03).

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.