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Another great trade & It's the interest rate differential Print
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Wednesday, 06 March 2019 19:21

Another great trade and a special deal for you below...

At the recent London Forex Show I talked about some of the key issues that impact and move the major currencies. Amongst these were, will US interest rates keep rising and will the US Dollar strengthen or weaken.

The talking heads have told us all about how the US$ is doomed. It's the trillions of US debt they say, and expectations of a US recession kicking off this year.

And then the big one is the global petro dollar decline. China and Russia can now by-pass the US$ strangle hold on world energy markets and trade in Renimbi, Roubles and Euro's.

And then there is the Donald. Whenever he has an audience he tells us that the "gentleman at the fed likes a strong dollar". Clearly, Trump wants it to weaken to make US exports cheaper than the competition and keep 'his' stock market boom going.

The USDJPY just ignored the dollar doomsters...

The Jappy has been building a sloping consolidation during February. It gave a couple of false break outs and then set up a classic, MPR 1-2-3, higher low wave pattern as shown. The chart is from TMEST and the Harmonic Wave Trader courses. We took the signal and jumped on board.

So why is US$ refusing to sell off?

In time the petro dollar, which ensures that worldwide energy products are sold in US$ and guarantees worldwide demand for dollars, will have an effect. But the oil trade is not going to switch out of dollars anytime soon.

Over the long term it's highly likely the oil trade will fragment to other currencies, but the time frame can be counted in decades or generations. The US has too much to lose if the oil trade slips away from its dollar. As Gaddafi found out, and Venezuela's Maduro is realising, they will do whatever it takes to keep the strangle hold.

Bullying, bribery, sanctions, economic warfare, internal destabilisation, guerrilla warfare or just drop sufficient bombs, then installation of a puppet administration is what awaits any country with oil reserves that attempts to step away from the dollar.

It's the interest rate differential

Right now, of the major countries in the western world, the US Federal Reserve has the highest spot interest rate. Compare the US at 2.5% with negative -0.10% in Japan and the appeal of the US$ over the JPY is obvious.

Markets are always looking ahead at any hint of future changes to these rates and so future currency exchange rate levels will reflect this. At his last statement, Fed Chair Powell appeared minded to put further US rate increases on hold and so the US$ dropped back.

However, as the clock ticks toward the next Fed meeting and press conference on 20th March, the US$ is creeping up again. Perhaps the Fed chair will hint that there could possibly be a couple more quarter point increases this year.

After all is said, the US must keep an attractive interest rate so the rest of the world keep buying US treasury bonds and continue financing their ever bigger deficits - until the rest of the world finds a better deal elsewhere!

---------------------------------------------

The Twenty Minute Extreme Swing Trader

Plus the Harmonic Wave Trader

Welcome to the world of letting the markets make money for you. Maybe you're a seasoned trader who is looking for a new approach or perhaps you are just starting out.

You can now buy both of these courses with the associated indicators as seen above.

Great for longer term swing trades, Breakfast moves and day trading, the choice is yours.

As ever, there is a deal to be done, buy both at a substantial discount and include my twice weekly video blog of charts and fundamental comment. Join us, take a trial and get started now.

If you already have one of the courses and would like to add the other? - no problem - for this coming weekend only add the second course for just £100!

Just reply to this email stating which course you have and we will send you a special payment link.

Kind regards

support @clickevents.co.uk

P.S. Read on, using this link, for full details of TMEST and the Harmonic Wave Trader that includes the twice weekly market view.

 

From the blog

How to be a professional trader

How to be a professional trader

The world we inhabit is dominated by the 80-20 principle.

Vilfredo Pareto changed the way we looked at many things, specifically micro-economics which he linked to social factors which went on to become popularised in recent years. Pareto observed the "law of the vital few". Approximately 80% of the effects come from 20% of the causes.

Nowhere is this more apparent than a glance at the small print at the bottom of every spreading betting website. They are now required to publish how many clients lose - you guessed it, around 80% of their customers lose money.

So, what of the remaining 20% or so?

There are is no shortage of horror stories from the 80%. Many have been there. This article describes the spiral into despair which results from marketing hype and personal hubris, the Superman effect, following modest successes. 

Reality? A recent research report from Psyquation indicated that fewer than 20% become profitable after two years and only 1.2% are successful enough to make trading their career. Sobering stuff for those new to the game, but is it gambling? Thanks go to long term investor Gary Scott for the article below:

Trading and Investing is gambling.

Until we admit this, we cannot invest like the pros. However, once we recognize that every investment is a bet, can we become a professional investor instead of a stock and bond gambler?
The fact is professional gamblers are not really gamblers. They are investing pros who cash in on the imbalances of gamblers. They invest in bets instead of stocks and bonds.

Read more...

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