What is the U.S. Retail Sales Report?

U.S. Retail Sales is a leading economic indicator used to measure the percentage change in the total value of sales at the retail level during the previous month. It is a leading indicator of economic health because the report reflects a wide variety of consumer spending, such as restaurants, consumer goods, and automobiles. Consumer sentiment can also be derived from this survey in order to gauge the outlook on the U.S. economy. This report is the earliest indicator of consumer spending released by the U.S. Census Bureau. An additional report released at the same time is the Core Retail Sales report, which does not include sales of automobiles. When used together, the reports paint a picture of the state of the U.S. consumer. This survey predominantly helps to analyze market trends and to determine the direction of the U.S. economy.

If the Survey Comes Inline with Market Forecasts

Expectations for this month are suggesting that the U.S. Retail Sales will fall by 0.5% in February. The U.S. economy is currently facing both an economic crisis and a financial crisis, triggered by a downturn in the housing market, a lack of credit, and the reluctance of banks to lend. Consumers may have delayed large purchases on account of the deteriorating economy and a lack of credit could adversely affect this report. The sale of new autos accounts for roughly 20% of the report’s total and are largely financed by bank loans. The recent drop in equity markets may also add to a negative outlook for the American consumer which could reduce their spending on non-essential items. A decreasing figure will most likely be interpreted by investors that the American people are scaling back their purchases in a time of financial uncertainty. Such a scenario will probably move the greenback down and the EUR/USD might rise to test the 1.2900 level.

If the Survey Will Surprise With Bullishness

When the actual figure is higher than forecasted, traders are likely to see the USD appreciate against its currency pairs and crosses. The volatile two trading weeks we have just experienced concluded with significant strength for the USD. Investors are now following the opportunity to make profits out of their open positions on the USD, and a better-than-expected figure on the Retail Sales survey, such as 0% or higher, will possibly provide them that exact opportunity. Such a figure is good because it will ease some concerns regarding a contracting U.S economy. If U.S. citizens are increasing their purchases, this may reduce pressure in a tough market and push the USD higher. With a decrease in gas prices that are down 47% from their highs, consumers may see an increase in disposable income, reflecting in additional purchases. In this turn of events, the EUR/USD might correct itself down to reach as low as the 1.2500 level.

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What are the European Interest Rate Figures?

Expected to be released tomorrow are the target interest rates of the Bank of England (BoE) and European Central Bank (ECB). These are called the Official Bank Rate and Minimum Bid Rate, respectively.

These figures are each released monthly, usually during the first week of the month. They are important because short-term interest rates are the leading factor in determining the value of a currency. In fact, most other economic indicators are used by traders to speculate about the future movement of these interest rates.

The British Official Bank Rate is decided on by the Monetary Policy Committee (MPC) of the BoE. The Euro-Zone Minimum Bid Rate is decided on by the 6 members of the ECB as well as the central bank governors from each of the 16 nations in the European Monetary Union. According to the needs of each respective economy, the banks will elect to increase, decrease, or leave the rate unchanged. Traders pay close attention to these figures as they have a strong correlation with the value of the GBP and EUR.

If Interest Rates are Changed In-Line with Market Expectations

Economic analysts are forecasting that Britain will lower its Official Bank Rate by 50 basis points from 1.00% to 0.50%. The Euro-Zone is also expected to cut its Minimum Bid Rate by 50 basis points from 2.00% to 1.50%.

If interest rates are indeed reduced by both central banks, traders may expect depreciation in the value of the GBP and EUR. A cut to interest rates devalues a currency as it increases the amount of that currency available in the market. However, in these times of financial crisis and global economic slow-down, an interest rate cut in an exceedingly weakened European economy is seen as an action which is intended to boost consumer confidence and increase spending, which may in fact help strengthen the currencies of the region after initially weakening them through monetary easing.

In this situation, traders may see the GBP gaining strength to test the 1.4300 level against the USD, while the EUR may regain lost ground and trade near the 1.2600 level.

If Central Banks will Surprise the Market with the Opposite

As of now, analysts are predicting a rate cut throughout the Euro-Zone, including Britain. If, however, these rate cuts are not as deep, or if they are not taken at all, the likely result will be a continuation of the current trends for the European currencies. This may indicate that the central banks of the Euro-Zone, as well as the Bank of England (BoE), are either afraid of, or uncertain about the effects of the expected rate cuts. This will indicate a deep fear in the economy and prevent many investors and consumers from regaining confidence in the market.

With this result, the GBP will continue on its downward path and likely test the 1.3800 price level versus the USD. Likewise, the EUR will continue depreciating against the Dollar with the price level of 1.2200 potentially being reached by beginning of the following week.

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What is the “U.S. Core CPI “?

The Core Consumer Price Index (CPI) is an economic indicator that measures the change in the price of goods and services purchased by consumers, excluding food and energy. The indicator is released on a monthly basis and is seasonally adjusted.

There are many versions of the CPI released by the Bureau of Labor Statistics, but Core CPI is the most widely used by forex traders. Food and energy prices make up a large portion of CPI, but they tend to be very volatile and distort the underlying trend. Therefore they are excluded.

Traders follow this survey very closely because consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices can force a central bank to raise interest rates to tame inflationary pressures.

If the Survey Comes Inline with Market Forecasts

Expectations for this quarter reveal that the U.S. Core CPI figures will probably rise from 0.0% to 0.1%.

Previous surveys have shown that publications that go inline with market forecasts tend to support the Dollar. They have also shown that in cases where publications have beaten analysts’ forecasts, the market was greatly impacted, and the USD had instantly risen, usually in a dramatic trend.

Because of the perceived economic weakness in the U.S. economy, any measure near the forecasted value may act as another positive to sustain the USD’s recent bullish run against the EUR. We may see a EUR/USD rate of 1.2550 by the weeks end.

If the Survey Will Surprise With Bearishness

When the actual figure is higher than forecasted, investors are likely to see the USD depreciating against its currency pairs and crosses.

In the face of the global recession, previous indicators relating to inflation have shown consistent declining numbers. If inflationary pressures are present in the market, this could put added pressure on the Federal Reserve. The Fed’s ability to reduce inflation is severely restrained with U.S. interest rates close to 0%. This leads us to believe if Core CPI fails to meet expectations, the USD could move lower against the EUR, possibly to the 1.2750 level.

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I am going to write something about Fx trading tournaments. Have you ever heard of it? Well, unlikely, as it is probably a new idea. I am inclined to say that it is indeed an innovative approach to forex training. Carry on further with a short FAQ on Fx Trading Tournaments.

What does it mean?

Fx trading tournament has nothing to do with any of your favorite sports. Fx trading tournament or alternatively Fx championship is an innovative opportunity offered by few forex brokers to forex investors to test their trading skills. Essenially, it is an event where large numbers of forex traders participate in online foreign currency trading at one common forex platform.

How does it work?

I would advise that you must thoroughly go through the rules and regulations of the concerned forex broker although I am narrating few common rules imposed by most of the forex brokers.

• Participation is available only to those who have registered on the website of the forex broker. Few brokers ask you to open a real account. Some brokers may ask you to just register on their website to take part in the fx trading tournament.
• You will be allotted an initial deposit (virtual money) of about $10,000. Initial deposit cannot be topped up under any circumstances.
• Fx trading tournament is held during a specified period that may last from 2 to 4 days.
• No participant is allowed more than one fx trading tournament account.
• Fx trading tournaments are conducted on demo servers of the concerned forex brokers.
• Participants are allowed to make use of all the available tools on the forex platform. They can also employ various types of forex trading strategies.
• Participants with largest balance as on the close of the fx trading tournaments are declared winner based on various criteria. Final decision of the jury is binding upon all the participants.

What are the benefits?

• Most of the forex trading brokers offer demo forex accounts to provide hands-on experience on online forex trading. After having gained sufficient exposure to real-time forex trading on the demo account the next obvious step is to get started with real money. Well, if you are not yet sure to plunge into forex trading then fx trading tournament is an excellent opportunity to further your trading skills.
• Fx trading tournament is like a final examination for those who have just completed their forex education and forex demo accounts.
• As the number of participants is large, it is a real assessment of your trading skills and strategies.
• You don’t lose anything as there are no fees for participating in the fx trading tournaments. All the participants compulsorily trade with a virtual money.
• If you make it to the list of prize-winners, you would earn money by means of cash prize.

Summing Up:

One point of caution – You are not allowed to withdraw your cash prize; the prize amount gets credited to your real forex trading account if you have one or you would be asked to open an account where the prize would be credited as your initial deposit. I would say that although the concept of fx trading tournament looks like a marketing trick but at the same time, there is nothing to lose for the participants.

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Forex brokers or forex brokerage firms act as an intermediary that facilitates order routing between the buyers and sellers. With rapid development of forex markets, brokers have transformed into full service agencies. Forex brokers offer vast number of innovative features and services instead of just acting as the dealers. Forex brokers fall under two categories – small and medium brokers and large and heavyweights like financial institutions or banks.

If you are a potential investor in the forex currency trading then your first step in the right direction is to choose a reliable forex broker. There are many important factors that need proper due-diligence in order to select professional forex broker. It is indeed a daunting task for the beginners. This article intends to provide a comparison between forex brokers operating in and around UK. Comparison is centered on UK because UK plays a very vital role in the entire global forex markets and due to its dominance in the global forex markets, majority of the forex brokers provide their services in UK.

Table given below shows a comparison of forex brokers based on the most important parameters viz. leverage ratio, pip spread, and minimum deposit. We have selected about a dozen plus leading names from small/medium/large forex brokers who are registered under NFA (National Futures Association, USA) or CFTC (Commodities Futures Trading Commission, USA) or FSA (Financial Services Authority, UK) or any other global regulatory authority.

• Functionality and features of forex trading platform
• Types of orders
• Charting, technical analysis and other analytical tools
• Access to fundamental and technical research
• Live global news
• Customer support
• Special features, promotions, cash back, bonus
• Overall reputation, reliability, resources, R&D and geographical reach
• All in one or multi-segment trading – choice of products such as Forex, CFDs, Commodities, Options, Spread-bets etc.

NOTE: It is likely that the information given in the above table might have changed and hence we do not guarantee the correctness or accuracy about this information.

Summing Up:
Despite the control and regulation of regulatory authorities such as NFA and CFTC in USA and FSA in UK, forex scams frequently appear in the international media. Regulatory authorities constantly introduce stricter compliances like increased net worth, capital, trading infrastructure, NDD (no dealing desks), STP (Straight through processing) for safeguarding the interests of retails investors. Forex investors must pay careful attention to various aspects before entrusting their hard-earned money to any forex broker.

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Disclaimer: We do not recommend any specific forex brokers. We do not get any commissions from any of the forex brokers. Depending upon the investor profile, risk taking capacities and proficiency in forex trading, readers are advised to gather all the necessary information. Readers should take an unbiased and well-informed decision before signing up with any of the forex brokers mentioned elsewhere in this article. Investment in forex is a high-risk investment that has a potential to generate huge losses.

What is the U.S. Trade Balance?

The U.S. Trade Balance is the difference between the amount of goods and services exported versus the amount imported into and out of the United States. A positive number in this report indicates that there is a trade surplus, meaning the U.S. has exported more than it has imported. A negative number is the opposite: a trade deficit, also called a trade gap. A trade deficit results from importing more than the country exports.

This report is issued monthly, usually 40 days after the end of the month. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers. As such, if export demand grows, even marginally, it will indicate that the USD will gain some small momentum to its recent bullish strength. If, however, the trade deficit continues to worsen, the USD could potentially see a reversal.

If the Report Comes In-Line with Market Forecasts

Currently the U.S. Trade Balance, while a negative number historically, is forecast to increase from -56.5B to -53.5B. If this report is indeed released in-line with market forecasts, then it will signify that demand for U.S. exports has increased slightly. Since U.S. goods and services must be bought with USD, the value of the Dollar will have inherently increased as well as a result of this indicator. Likewise, if this indicator is in fact released as an even higher number than forecast, the bullish run in the USD may continue to gain momentum. With a release of this nature, traders may witness the USD resume its previous bullish run and probably test the 1.2500 price level against the EUR once more.

If the Report Surprises with a Contradiction to Market Forecasts

As of now, the U.S. Trade Balance is predicted to indicate that demand for U.S. goods and services has increased and the deficit has shrunk slightly. If, however, this report indicates that this demand has in fact increased less than forecasted, or even decreased, the result will likely convince investors that the U.S. economy is not in as good a shape as previously thought. As the USD has been flat in recent days, a release of this kind may actually force the Dollar into a deeper bearish correction, testing the 1.3200 level against the EUR in the short-term.

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What are the European Interest Rate Figures?

Expected to be released tomorrow are the target Interest Rates of the Bank of England (BoE) and European Central Bank (ECB). These are called the Official Bank Rate and Minimum Bid Rate, respectively.

These figures are each released monthly, usually during the first week of the month. They are important because short-term Interest Rates are the leading factor in determining the value of a currency. In fact, most other economic indicators are used by traders to speculate about the future movement of these Interest Rates.

The British Official Bank Rate is decided on by the Monetary Policy Committee of the BoE. The Euro-Zone Minimum Bid Rate is decided on by the 6 members of the ECB as well as the central bank governors from each of the 15 nations in the European Monetary Union. According to the needs of each respective economy, the banks will elect to increase, decrease, or leave the rate unchanged. Traders pay close attention to these figures as they have a strong correlation with the value of the GBP and EUR.

If Interest Rates are Changed In-Line with Market Expectations

Economic analysts are forecasting that Britain will lower its Official Bank Rate by 100 basis points from 3.00% to 2.00%. The Euro-Zone is also expected to cut its Minimum Bid Rate by 50 basis points from 3.25% to 2.75%.

If Interest Rates are indeed reduced by both central banks, traders may actually expect an appreciation in the GBP and EUR. Typically, a cut to Interest Rates devalues a currency as it increases the amount of that currency available in the market. However, in these times of financial crisis and global economic slow-down, an Interest Rate cut in an exceedingly weakened European economy is seen as an action which is intended to boost consumer confidence and increase spending, which may in fact help strengthen the currencies of the region instead of weaken them.

In this situation, traders may see the GBP gaining strength to test the 1.5500 level against the USD, while the EUR may regain lost ground and trade near the 1.3000 level.

If Central Banks will Surprise the Market with the Opposite

As of now, analysts are predicting a rate cut throughout the Euro-Zone, including Britain. If, however, these rate cuts are not as deep, or if they are not taken at all, the likely result will be a continuation of the current trends for the European currencies. This may indicate that the central banks of the Euro-Zone, as well as the Bank of England (BoE), are either afraid of, or uncertain about the effects of the expected rate cuts. This will indicate a deep fear in the economy and prevent many investors and consumers from regaining confidence in the market.

With this result, the GBP will continue on its downward path and likely test the 1.4600 price level versus the USD. Likewise, the EUR will continue depreciating against the Dollar with the price level of 1.2400 potentially being reached by beginning of the following week.

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What is the U.S. Retail Sales Indicator?

U.S. Retail Sales is a leading economic indicator used to measure the percentage change in the total value of sales at the retail level during the previous month. It is a leading indicator of economic health because the report reflects a wide variety of consumer spending, such as restaurants, consumer goods, and autos. Consumer sentiment can also be derived from this survey in order to gauge the outlook on the U.S. economy. This report is the earliest indicator of consumer spending released by the U.S. Census Bureau. An additional report released at the same time is Core Retail Sales which does not include sales of automobiles. When used together, the reports paint a picture of the state of the U.S. Consumer. This survey predominantly helps to analyze market trends and to determine the direction of the U.S. economy.

If the Survey Comes Inline with Market Forecasts

Expectations for this month are suggesting that the U.S. Retail Sales will fall by -2.0% in September, reflecting a -0.8% decrease from October. Such a result could demonstrate a shrinking economy and a lower consumer sentiment in the U.S. The U.S. economy is currently facing a financial crisis, triggered by a downturn in the housing market, a lack of credit, and reluctance by banks to lend. This may adversely affect the report because the sale of new automobiles account for roughly 20% of the report’s total. U.S. auto sales are predominantly financed by bank loans. The recent drop in equity markets may add to a negative outlook for the American consumer which could reduce their spending on non-essential items. A decreasing figure will most likely be interpreted by investors that the American people are reducing their purchases in a time of financial uncertainty. Such a scenario will probably move the greenback and the EUR/USD might rise to test the 1.2900 level.

If the Survey Will Surprise With Bullishness

When the actual figure is higher than forecasted, traders are likely to see the USD appreciate against its currency pairs and crosses. The volatile two trading weeks we have just experienced concluded with significant strength for the USD. Investors are now following the opportunity to make profits out of their open positions on the USD, and a better-than-expected figure on the Retail Sales survey, such as -0.4% instead of -2.0% will possibly provide them that exact opportunity. Such a figure is good because it will ease some concerns regarding a contracting U.S. economy. If U.S. citizens are increasing their purchases, this may reduce pressure in a tough market and push the USD higher. With the recent decrease in gas prices, consumers may see an increase in disposable income, reflecting in additional purchases. In this turn of events, the EUR/USD might correct itself down to reach as low as the 1.2000 level.

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What is the Non-Farm Employment Change?

The U.S. Non-Farm Employment Change, also known as “Non-Farm Payrolls” (NFP) and the “Employment Report,” is a monthly economic indicator used to measure the change in the number of employed people, excluding the farming industry.

Each month the Current Employment Statistics Program surveys about 150,000 businesses, representing approximately 390,000 worksites, in order to provide detailed industry data on employment, work-hours, and earnings of workers on non-farm payrolls for all 50 U.S. states. The survey is then published on the first Friday of each month.

The NFP is an important leading indicator that also affects consumer spending, which accounts for a majority of overall economic activity. Traders value the indicator with the highest importance as its early monthly release can set the tone for the rest of the month’s market movement. Investors should also note Wednesday’s 13:15 (GMT) release of Automatic Data Processing Inc.’s (ADP’s) estimate of Non-Farm Employment Change. In the past, ADP has provided an accurate assessment of what was to come from the actual NFP release two days later. With the volatility of world economies in recent months, however, ADP has not been able to correctly estimate the Non-Farm Payroll outcome, only strengthening the real power behind Friday’s news release.

If the Survey Comes Inline With Market Forecasts

Expectations for this month reveal that the Non-Farm Employment Change figures are forecasted to drop to -200K from last month’s -159K. Such a decrease, or the possibility that this figure will drop further than this mark, will be a continuation of the devastating decline in employment numbers that the U.S. economy has experienced since April of this year. The recent economic struggle, which is being fought vehemently by the U.S. government, has created doubt in the market for the USD, which is driving its value lower. Considering that this survey has delivered negative figures for several consecutive months now, another sharp drop could signal a reversal to the USD’s bullishness. This would mean the USD could be facing a very unfortunate weekend, causing the EUR/USD pair to rise beyond the 1.3000 level once again.

If the Survey Will Surprise With Bullishness

If the actual figure is higher than forecasted, traders are likely to see a continuation of the recent bullish movements. Currently, investors are setting their positions on the USD based on the assumption that by the end of the week, the USD should face a bearish reversal. However, in case the survey delivers better figures than expected, such as a figure of -150K instead of the forecasted -200K, investors might be compelled to reevaluate their strategies and go long on the USD. In this turn of events, the USD may receive an extra boost that will help extend its bullishness, and the EUR/USD could head toward a price near 1.2400.

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What is the Advanced Gross Domestic Product (GDP) ?

The Advanced Gross Domestic Product (GDP) is a survey that is being used to measure the annualized change in the value of all goods and services produced by the relevant economy. It is defined as the total market value of all goods and services produced within the U.S. economy in one quarter, in this case the 3rd quarter. The survey is released on a quarterly basis and it measures the differences compared to the same quarter in the previous year. There are 3 versions of the GDP, released one month apart – “Advanced”, “Preliminary” and “Final”. The “Advanced” estimates are based on source data that is incomplete or subject to further revision by the source agency, while the adjusted figures are delivered through the ‘Preliminary’ version.

Traders follow this survey very closely because it is considered to be the broadest measurement of economic activity and a primary gauge of an economy’s health.

If the Survey Comes Inline with Market Forecasts

Expectations for this quarter reveal that the Advanced U.S. GDP figures will probably fall from 2.8% on the ‘Final’ publication to -0.5% on the ‘Advanced’.

Previous surveys have shown that GDP publications that go inline with market forecasts tend to leave the Dollar unchanged. They have also shown that in cases where publications have beaten analysts’ forecasts, the market was greatly impacted, and the USD had instantly rose, usually in a dramatic trend.

Because of the perceived economic weakness in the U.S. economy, any measure above the forecasted value may act as a positive that could return the USD’s previous bullish run against the EUR. We may see a EUR/USD rate of 1.2700 continue through the week’s end.

If the Survey Will Surprise With Bearishness

When the actual figure is lower than forecasted, investors are likely to see the USD depreciating against its currency pairs and crosses.

Previous indicators relating to consumer spending, sentiment, and retail sales all came in below their expected values. Also the failure of Lehman Brothers in September caused major turbulence in the financial markets during the third quarter. American citizens may have been spooked by this event and kept their spending tight in the previous quarter. GDP numbers may be negatively affected as private consumption contributes a large percentage of the calculation. This leads us to believe that Advanced GDP may fail to meet expectations and send the USD lower against the EUR, possibly to the 1.3000 level.

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