31.10.2012 Post in World Economy

The IMF warns of so-called “dangerous new phase” which reflects instability of global economy and impossibility of long-term planning. Such circumstances as cut of Italy’s credit rating, crisis of 2008, European economy woes, and search for money for French fragile banks make investments unsound way of money use. Investors give up believing in the abilities of major international institutions in their attempts to save the situation during perilous times as they have started to apply non-traditional measures which consequences are hard to predict. The governments are struggling to restore confidence in the budget to save world economy from collapse. Meanwhile, investors lack healthy playing field and they have to look for the signs which will guide them throughout world economy turmoil and help to guess its further direction moves. We will touch upon 5 most important aspects which signify about changes in the world of finance.

1. Rate of Growth for the Third Quarter

Second quarter was a subject to mounting concerns for investors as it could trigger new recession. However, stability in the third quarter is a reason for optimism as it is connected with the peculiarities of May-June data. Automotive industry is bottoming out; price for oil is going down. Thus, we can expect some improvements in global economy. Nevertheless, new crisis began in the third quarter on financial markets; Eurozone debt crisis has hit Great Britain as well and resulted in mass riots. In such a way, encouraging data for the third quarter could initiate economic stabilization but nobody can give a hundred per cent guarantee.

2. Eurozone Debt Crisis

Eurozone debt crisis has started in Greece, which is why the further scenario depends on Greece. Eurozone economy could be forced back into recession. Central bank can cut its interest rate in the short term. In October the ECB will be ruled by a new chairman which will definitely lead to new changes.

3. Central Banks

Currently, central banks do not have that power over economic situation on the whole as they used to have. Central banks of developed countries take a passive approach using their scant tools instead of helping the global economy which is significant of new economical woes.

4. Markets

The markets also reflect the high probability of recession indicating the burning issues. Investors are hesitating putting up the capital.

5. The U.S. policy

It is quite true that the USA has a great power. But even such powerful economic state cannot find the right solution for this teetering situation in the country and worldwide. Barack Obama suggests a new $447 bn plan. In general, it is aimed to trigger some relief and reduce taxes for companies. Nevertheless, the U.S. politics is actively trying to solve global economic problems.

Almost all products, before landing into our very own hands, goes through a lot of process. Along those processes, are changes in its price. The basic framework goes like this: semi-products are first gathered and transported to manufacture or producer, after which it will be assembled or putted on together by the laborers to come up with a finished product. The finished product will be displayed and sold on the market afterward.

PPI takes into account all of this through its weighted index of prices. It is done through a wholesale level and consists of three major sub-categories: initial, intermediate, and final.

PPI Commodity Index (Initial) – changes on the average price of commodities( for the previous month are displayed in here.

PPI Stage of Processing (intermediate) – the current prices of the goods that had gone through certain level of processing which will be passed on to the producer for the final output are reflected in here.

PPI Industry Index (final) – this is the source of the core PPI and reflects the price for the finished products.

The first two sub categories are followed due to its capability to reflect inflationary or deflationary pressures. Meanwhile, most investors follow the third because it reflects the prices of the goods which will be for sale to the consumers. But the apple of the eye for the investors are the core PPI which is published along with the main index. Core PPI is a byproduct of the finished goods index minus the energy and food components.

Though the monthly PPI cannot affect the market reaction, its annual data are under the watchful eyes of the analysts mainly because PPI gives a sneak-peek of the CPI (Consumer Price Index). It will later on validated after the latter is released. As we all know, CPI is the inflation indicator which is very important in fundamental analysis.

Stephen Stevenson

24.10.2012 Post in World Economy

Being the country’s largest bank, Central bank regulates the national economy climate and creates conditions for its successful development. Central banks of different countries can be called state, national, reserve or issuing.

Since Central banks deal with global movement of cash between different financial institutions, their activity greatly affects the currency rates fluctuations. Financial market by virtue of its dynamic reflects whatsoever is happening in the form of exchange rate variations.

Thus, Central bank is an active market participant: it intervenes in the foreign exchange market in order to set the reserve requirement, stabilize the benchmark interest rate and maintain the current fiscal policy.

The major banks having impact on global economy are considered to be:

-The Federal Reserve System, the Fed. It was established on December 23, 1913 as independent financial body which fulfills the functions of central bank and exerts control over the US commercial banking system. The FED activity is carried out by presidentially appointed Board of Governors. The Federal Reserve is comprised of 12 Reserve banks, the major of which, Bank of New York, is responsible for foreign financial relations.

– The European Central Bank, the ECB. This organization was created on June 1, 1998. Its main office is located in Frankfurt am Main, Germany and consists of representatives of all Euro area countries. The ECB was founded with the purpose of providing price stability within European monetary union by means of HICP growth by 2% annually (but not more than that). The ECB is discussing economic conditions, fiscal policy, and set the interest rates on its meetings.

-Bank of England (Old Lady of Threadneedle Street). Was established in 1694. In 1946 the BoE was nationalized and became an independent public organization in 1997. Its primary function is to develop financial system of Great Britain and ensure its stability.

-Swiss National Bank, SNB. Despite other banks, SNB does not apply refinance rate in order to regulate the rate of national currency. It controls fiscal policy in Switzerland and has a high level of independence.

-Japan Ministry of Finance and its Central bank is the most important political and fiscal organization in the country which can influence the market. It is even more powerful than the U.S., Great Britain, and Germany Treasury Departments. The decisions made by Japan Ministry of Finance affect the global economy and predetermine USD/JPY rate.

After a devastating seven-quarter beating which took place on the year of the dragon and rabbit, it seems that China is back in the ball game. Earlier this year, the Chinese economy is monitored by the world’s watchful eyes because of its economic slow down. The second largest economy, whose leadership transition will take next month, is slowly recuperating from its weakened economy.

Signs of recovery has materialized on its GDP as it expanded 7.4 in the third quarter compared to the previous year. “China’s economy is performing better than expected, and the bottoming will be clear in the fourth quarter,” a statement given by a chief China economist for JPMorgran Chase & Co. to Bloomberg last October 17. several monthly data also backed up the mustered strength as the industrial production in September leaped more than its expected increase and retail sales also took a step up at 14.2 percent which is the most significant positive movement since March. The fixed-asset investment, rural household not included, increased 20.5 percent for the first nine months.

But amidst the signs of recovery, several important factors are still in the deep. One of which is the foreign direct investments. As relayed by the Ministry of Commerce in Beijing, spending fell 6.8 percent as compared to the previous year. Furthermore, One of the probable reason given on a news report was inclined to the fact that foreign investors are concerned over the evident slowdown of the country’s economy.

Aside from its economic slowdown, China is also being putted on the spotlight because of its sovereignty talks about the disputed islands along the south china sea. Several countries are already been infuriated and diplomatic relationships are slowly disintegrating as the Chinese government still showing an aggressive stance on its claim.

Stephen Stevenson

16.10.2012 Post in Events, Interview

InstaForex always provides you with the latest updates on international market events as well as company’s news. Today we would like to tell you about an exceptional situation. Despite its originality, it demonstrates the unique opportunities you can get on exchange market. Recently, one of our clients Akhmad Arief made the daydream of millions of traders real. After two weeks of active trading, he managed to increase his start-up capital up to $1,000,000!

This story began when Akhmad opened his $1,000 trading account with InstaForex in the beginning of July. During two weeks he was trading such currency pairs as GBP/USD and EUR/USD. Nobody expected that he could become a millionaire by the middle of the month using risk strategy!

«We have never seen such trading before and will hardly see soon. Even in conversion to the working days the yield was 100% per day during 10 days in a row. The profit volume is astonishing as well as the length of such win-win and risk strategy as the client used all the money on his account for the next deal. But every time lady luck was on his side,”- Aleksey Badjyanov says, representative of the Dealing Department.

Chart

The chart shows the balance of #2065757 live trading account. Within the first two weeks of July, the account holder earned over one million US dollars with the initial deposit slightly more than one thousand US dollars. Eventually, the account balance was running $1162092.42. The second half of July appeared to be far less successful for the customer: he lost all his profit.

Having earned $1,000,000, Akhmad decided not to stop. However, Forex market is known to be very unsteady due to frequent oscillations and change of trend directions. Successful deals were followed by deals opened against the trend direction which led to profit loss.

Of course, foregone million disappointed the trader. However, Akhmad is not in despair and is already planning to win again. For him, as for many other traders, this situation was indicative of endless possibilities on exchange market which proved that one can make up a fortune out of modest capital! Nevertheless, it is important to benefit from the achieved results and also not to be affected by the astounding success.

2065757Interview with Mr. Ahmad Ariff:

IFX: How long have you been working on Forex?
AA: About 5 years, starting from 2007 until now. Before, I used another platform with another trading system (different from MT4) that limited me to less money I could earn. Then my friend recommended me InstaForex that used MT4, so I can trade higher trading volumes.

IFX: It’s a dream of every trader. How did you manage to make fortune from such a small initial deposit?
AA:
Depends on the graf (high-recommended to sell, low-recommended to buy), besides, I used Forex trading signal, RSI, PPO, stochastic, technical analysis, and future fundamental analysis.

IFX: What currency pairs have you traded?
AA: My favorite are EURUSD, GBPUSD and AUDUSD.

IFX: Why have you chosen them in particular?
AA: For me, fundamental points of these currencies are easier to read and forecast..

IFX: What leverage have you chosen for trade?
AA: I start with 1:200. And I will change this parameter if I need in the Client Cabinet. This is a very attractive feature of InstaForex.

IFX: Did you plan to earn such a huge amount when started trading?
AA: Of course, yes.

IFX: You made a dream of a million traders come true, what do you feel after losing it?
AA: Really really frustrated… I was not in front of my PC when it happened. I was engaged in outside work during that time… so I couldn’t close my open position.

IFX: Do you plan to repeat it and get a million back?
AA: Yes!

IFX: If you succeed to make a million again, what will you spend it for?
AA: Clear all my loan, buy a new house, new car, do other investment and some charity’s work.

IFX: What in your opinion helps traders earn on Forex: their skills or good luck?
AA: Skills are very important, as a trader, a lot of new traders, should learn some basics, such as indicators, patterns, technical analysis, and fundamental analysis, but good of luck not all traders get it.

IFX: Do you think your profit was a result of your hard work or just an accident?
AA: I’ve 5 years experience as a trader. It is hard to become rich with small initial deposit, but if you’ve a lot of money, let’s say USD100,000 and more, you can rapidly earn money in short term..believe it!

IFX: What will you advise the beginning traders?
AA: For new trader, please learn some basics, follow your leader, ask them why, why and why and most important is gain experience in trading.

Competent active trading and compliance with you trading strategy make it possible for every InstaForex trader to reach the most cherished objective and add a new name to the list of the most successful traders.

Good luck in trading with InstaForex!

The material is prepared by InstaForex PR Department with the consent of the owner of the trading account № 2065757 Akhmad Arief. In October, in the terms of ShowFx Asia in Singapore there will be a video interview with the trader which will be published on GC InstaForex resources.