Global Forex Market

The US dollar depreciated during the reporting period due to the following factors:

(1) Improve risk appetite after heightened optimism about President Joe Biden’s administration about US Congress pushing through a nearly $ 2 trillion stimulus package to support economic recovery; and

(2) better than expected economic data, including:

(i) Housing construction in December grew by 5.8% (m-o-m) compared to the previous month, compared to 3.1% m-o-m in November.

(ii) initial unemployment claims, which have decreased from 926,000 the previous week to 900,000 as of January 16 (consensus: 910,000); and

(iii) The Philadelphia Fed Manufacturing Index accelerates to 26.5 from 9.1 in December (consensus: 12.0).

President Joe Biden was sworn in as the 46th U.S. president on Wednesday and is expected to take action to curb the country’s oil industry, including resuming the Paris Climate Agreement, lifting a permit for the Keystone XL crude oil pipeline and halting drilling in the Arctic.

At the end of the week, the US dollar closed 0.71% against the week (w-o-w) to reach 90.13. Crude oil saw gains, with Brent climbing 1.81% year over year to $ 56.10 a barrel and still at its highest level since February 2020. The gains were increased by:

(1) Optimism about US government incentives that should boost global economic growth;

(2) the positive mood in demand in China, the world’s largest crude oil importer; and

(3) Expectations that the Biden government will incur massive stimulus spending that will stimulate fuel demand and take measures to tighten crude oil supply.

The euro gained 0.68% to 1.216 – the strongest level in 10 days when the European Central Bank (ECB) surprised the market with a slightly positive note.

The ECB found that the downside risks to the economic outlook are less severe. Also, the ECB has recognized that it may not need to spend the entire pandemic emergency purchase program (which it added EUR 500 billion last month). Even so, the ECB kept its deposit facility at -0.50%.

Regardless, European countries struggled to contain coronavirus contagion as they feared a new variant could lead to tighter lockdowns and more economic pain.

The pound was up 1.05% to 1.373, also its strongest in over a week. The gains were mainly aided by the weaker US dollar and a healthy global risk appetite.

However, gains have been limited due to mounting concerns about slower vaccine adoption in the UK, which could hinder economic recovery.

The key data release for the week includes December inflation, which was higher than expected at 0.6% y / y compared to 0.3% y / y in November (consensus: 0.5% y / y).

The safe haven yen rose 0.34% to 103.5 after the Bank of Japan (BoJ) left its main policy unchanged at -0.10%. The BoJ also left its rate control program and quantitative easing program intact.

While the BoJ looked at the current economic climate as record cases of Covid-19 maintained the state of emergency, it concluded that growth was weaker towards the end of the current fiscal year and last month announced a government stimulus package starting in April lead to a stronger recovery.

The majority of Asian currencies excluding Japan rose during the week, led by the Singapore dollar, rising 0.52% to 1.323, followed by the Thai baht, which rose 0.46% to 29.93. In the local scene, the ringgit closed by 0.20% to 4.029:

(1) Prime Minister Tan Sri Muhyiddin Yassin announced the RM15 billion Permai aid package, adding that the government will realign some of the existing funds to fund this package while practicing prudent spending. and

(2) the first meeting of the Negara Monetary Policy Committee (MPC) this year, at which the central bank left the overnight rate (OPR) unchanged at 1.75%; At the same time, the flexibility of the statutory minimum reserve requirement (SRR) from 2%, which was supposed to end on May 31, 2021, was extended to December 31, 2222.

In a short work week, the Treasury Department’s curve steepened and cheered President Biden’s inauguration. The UST curve fell 0.5-1.4 basis points (bps) at the front end of the curve, but rose 2.2-3.6 bps at the back end of the curve.

Treasury Secretary-designate Janet Yellen was reported to be considering financing longer-term issuance debt and fueling the need for Biden’s $ 1.9 trillion stimulus plan.

The closely monitored 10-year UST gained 2.2 basis points to 1.11% in the reporting week. As of midday yesterday, the UST benchmark returns for 2, 5, 10 and 30 years were 0.13%, 0.45%, 1.11% and 1.88%, respectively.

The local bond market had a busy week with the market focused on:

(1) Muhyiddin announces the Permai’s additional aid package worth RM15bil; and

(2) Bank Negara’s first MPC meeting of the year, with OPR unchanged at 1.75%; while the 2% SRR flexibility is extended to December 31, 2022.

By the end of the week, the Malaysian Government Securities (MGS) curve was 1.5 to 14 basis points steeper from the front to the rear of the curve, with the exception of the 20-year tenure which fell 3.5 basis points to 3.540% after closed down. The market shifted its focus to reopening the 10-year MGS ‘04 / 31, which achieved a strong bid-to-cover (BTC) of 1.992 due to an overall size of RM4bil with no private placement.

The auction ended with highs / lows of 2.730% and 2.684%, while the average was 2.714%. Yesterday at noon, the 3, 5, 7, 10, 15, 20, and 30 year MGS benchmark returns were 1.85%, 2.06%, 2.46%, 2.71% , 3.32%, 3.55% and 3.94%.

The activities of the Govvies segment rose compared to the previous year’s value of 19 billion RM by 34% compared to the previous year to 25.6 billion RM. The MGS segment accelerated from 11.3 billion RM in the previous week by 34% to 15.2 billion RM. The Government Investment Issue (GII) rose by 40% from RM7bil to RM 9.8 billion. In the meantime, trade in short-term invoices (MTB / MITB) fell by 31% from RM 640 million to RM 441 million.

The secondary trade volume decreased by around 13% from RM 1.6 billion to RM 1.4 billion. The credit spread narrowed across the curve by an average of 20.1 basis points. The shorter end rose 19.9 basis points on average, while both the belly and longer end of the curve fell an average of 17.9 basis points and 40.5 basis points, respectively.

Ringgit Interest Rate Swap (IRS) market

The IRS rose 2.1 to 6.5 basis points from the front to the back of the curve. The 3-month Klibor was 1.94%. In other countries, the 5-year CDS rose by 3.5% year-on-year to 40.35 basis points.

During the week (January 15-21, 2021) the FBM KLCI gave up 40.91 points (points) or 2.50% to 1,594.80 points and bucked the upward trend in both the MSCI Emerging Markets Index (+ 2.58 %) and in the Dow Jones Industrial Average (+ 2.58%) + 0.60%).

Globally, investors saw unexpectedly strong China GDP growth of 6.5% in the fourth quarter of 2020 (up from consensus forecast of 6.1%), a technical rally ahead of Apple’s quarterly earnings report, an accident-free inauguration of President Biden and notes from more budget spending from Treasury Secretary-designate Janet Yellen.

On site, the risk of an expanded Movement Control Ordinance (MCO) for economic recovery overshadowed the stimulus package RM15bil Permai. Bank Negara also kept its OPR at 1.75%.

During the week, foreign investors unloaded Malaysian shares worth 194.8 million RM and increased the cumulative net outflow since the beginning of the year to 209.5 million RM.

Local institutional investors and private investors continued to dominate the market with participation rates of 45.2% and 38.6% respectively in January 2021 (comparable to 44.8% and 40.5% in December 2020). Foreign investors remained passive with a stake of 16.2% in January 2021 (compared to 14.7% in December 2020).

Meanwhile, foreign investors piling up at MGS for an eighth consecutive month with a net inflow of RM 2.4 billion in December 2020 (versus RM 1.8 billion in November). Foreign investors were net buyers of MGS with a total inflow of RM 13.4 billion in 2020.

Stock trading activity was maintained with an Average Daily Trade Value (ADVT) of RM5bil in January 2021, unchanged from December 2020. The rate of sales also remained relatively unchanged at 68.9% in January 2021 (compared to 68.1% in December 2020).

During the week, three of 13 sectors in Bursa Malaysia ended in positive territory. The best performing sector was technology (+ 4.2%) due to continued interest in home gaming following the announcement of the MCO expansion. The worst performing sector was energy (-3.7%) as investors took profits after the recent rally.

Over the coming week, investors will be watching closely:

& gt; US Federal Reserve rate decision on January 27;

& gt; Malaysia PPI (December 2020) on January 27;

& gt; Malaysia trade statistics (December 2020) as of January 29;

& gt; China Manufacturing PMI (January) on January 30th.

For inquiries, contact ambank-fx-research@ambankgroup.com or bond-research@ambankgroup.com

Can You Get Rich Trading Forex?

Can You Get Rich Trading Forex?

Forex trading can make you rich if you are a hedge fund with deep pockets or an unusually skilled forex trader. But for the average retailer, forex trading cannot be an easy path to riches, but rather a rocky path to enormous losses and potential misery.

How do I trade Forex for $ 100?

Forex brokers have been offering a so-called micro account for years. The advantage for the beginning trader is that you can open an account and trade for $ 100 or less. Some brokers even decided that Micro wasn’t small enough, so they started offering « nano » accounts.

Can Forex Be a Career?

A career as a forex trader can be lucrative, flexible, and very engaging. There is a steep learning curve and forex traders are exposed to high levels of risk, leverage, and volatility.

Which is the largest forex market in the world?

The largest market in the world and the most liquid market is the foreign exchange or foreign exchange market with daily trading of $ 6.6 trillion. London, the capital of the United Kingdom, is the largest foreign exchange market in the world. According to the latest statistics, 37% of all foreign exchange market turnover is generated in London.

How Much Do Forex Traders Make Per Day?

Even so, a dedicated forex day trader with a decent strategy at a decent win rate and risk / reward ratio can earn anywhere from 5% to 15% per month thanks to leverage. Also, remember that you don’t need a lot of capital to get started. $ 500 to $ 1,000 is usually enough.

Can Forex be manipulated?

As soon as the supply hits the market, the price will reverse and start falling rapidly while all the small retailers that have been chasing the outbreak will now be stopped on the downside. This is what we call forex manipulation and it happens weekly in the forex market.

Do banks trade forex?

Banks facilitate foreign exchange transactions for customers and conduct speculative business from their own trading counters. When banks act as dealers for customers, the bid-ask spread represents the bank’s profits. Speculative foreign exchange transactions are carried out in order to benefit from currency fluctuations.

Who Controls the Forex Market?

Who Controls the Forex Market?

The forex market is operated by a global network of banks spread across four major forex trading centers in different time zones: London, New York, Sydney and Tokyo. Since there is no central location, you can trade Forex 24/7.

Is Forex a Pyramid Scheme?

The forex market is not a pyramid scheme. It’s a zero-sum game where seasoned traders and institutional market participants make a constant profit while the average day trader blows their accounts up. When we factor in the cost of trading, the forex market is a negative zero sum game.

What happens when the forex market closes?

A number of trading positions are closed at the close of the market, which can lead to volatility in the currency markets and erratic price movements. The same can be the case when markets open. At this point, traders open positions, perhaps because they don’t want to hold them over the weekend.

Which country has the most forex traders?

rank country Approx. Number of online retailers
1 Great Britain 280000
2 Germany 150000
3 Italy 150000
4th France 130000

Is the Forex Market Illegal?

Forex trading is legal, but not all forex brokers obey the law. According to the central bank’s triennial 2019 survey, around $ 6.5 trillion is traded in the foreign exchange markets every day. While forex trading is legal, the industry has a lot of scams and bad actors.

Who is the richest Forex trader in the world?

George Soros. George Soros is the richest forex trader in the world and is at the top of that list. In fact, you may have spotted some spoilers in previous mentions. Schwartz György, born in Hungary in 1930, emigrated to Great Britain in 1947.

Is Forex Just Playing?

Forex trading is not a game of chance.

Why is Forex a Bad Idea?

Because the market can be volatile, there is always a risk of losing money when trading a currency pair. In addition to the risk associated with trading, forex trading involves adding margin trading and leverage which means you can trade large amounts with little starting capital.

Global Forex Market
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