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EU to lose USD 10.8B exports due to US-China trade deal, Germany hardest hit

    By
    ActionForex.com
    -

    The Kiel Institute for World Economy warned that US-China trade agreement is “significantly damaging” to the EU. Germany is “particularly affected”, and among the sectors, especially “aircraft and vehicle manufacturing.”  Gabriel Felbermayr, Kiel President, said, “the additional imports of US goods promised by China will divert imports from other countries.”

    As calculated by Felbermayr and trade expert Sonali Chowdhry, EU exports to China will probably be USD 10.8B lower in 2021 compared with a scenario in which the agreement and the tariff war between China and the USA would not have existed. The EU would then have to bear about a sixth of the overall trade diversion caused by the agreement.

    In absolute terms, the biggest losers in the EU are the manufacturers of aircraft (USD -3.7B), vehicles (USD -2.4B), and industrial machinery (USD – 1.4B). In terms of relative changes, the largest relative losses would again be in the aircraft sector (-28%), vehicles (-7%), and pharmaceutical products (-5%). “The affected industries are mainly located in Germany, but France has also been hit considerably”, says Felbermayr.

    Full release here.

    German ZEW jumped to 26.7, highest since July 2015

      By
      ActionForex.com
      -

      German ZEW Economic Sentiment rose sharply to 26.7 in January, up from 10.7, beat expectation of 15.2. That’s also the highest reading since July 2015. Current Situation Index rose to -9.5, up from -19.9, beat expectation of -12.4. Eurozone ZEW Economic Sentiment rose to 25.6, up from 11.2, beat expectation of 16.3. Current Situation Index rose 4.8 pts to -9.9.

      “The continued strong increase of the ZEW Indicator of Economic Sentiment is mainly due to the recent settlement of the trade dispute between the USA and China. This gives rise to the hope that the trade dispute’s negative effects on the German economy will be less pronounced than previously thought. In addition, the German economy developed slightly better than expected in the previous year. Although the outlook has improved, growth is still expected to remain below average.,” comments ZEW President Achim Wambach.

      Full release here.

      UK unemployment rate unchanged at 3.8%, employment rate hit record high

        By
        ActionForex.com
        -

        UK unemployment rate was unchanged at 3.8% in the three months to November, matched expectations. An estimated 1.31m people were unemployed. Employment rate increased jumped 0.5% on the quarter to 76.3%, a record high. Average earnings excluding bonus slowed to 3.4% 3moy, matched expectations. Average earnings including bonus was unchanged at 3.2% 3moy, missed expectations.

        Full release here.

        BoJ Kuroda: Benefits of our policy still exceed the costs

          By
          ActionForex.com
          -

          In the regular post-meeting press conference, BoJ Governor Haruhiko Kuroda said for now “the benefits of our policy still exceed the costs”. And the central bank will “continue to pursue powerful monetary easing to achieve 2% inflation.” Though, he added, “BOJ must be mindful of the impact prolonged ultra-low rates could have on financial intermediation.”

          Kuroda also noted that “progress in US-China trade talks and Brexit have led to an improvement in risk sentiment”. But “uncertainty remains on the “fate” of the US-China trade talks”. Plus, “there are also geopolitical risks in the Middle East”.

          “If the economy accelerates dramatically, there could be some debate. But for now, it’s appropriate to maintain our current policy stance. Various overseas risks remain, so the current monetary policy with an easy bias will be sustained for some time,” he said.

          BoJ stands pat, raises growth forecasts, lower inflation projections

            By
            ActionForex.com
            -

            BoJ left monetary policy unchanged as widely expected. Under the yield curve control framework, short-term policy interest rate is held at -0.1%. Annual pace of monetary base expansion is held at around JPY 80T, to keep 10-year JGB yields at around zero percent. Harada Yutaka and Kataoka Goushi dissented again in 7-2 vote.

            In the new economic projections, fiscal 2020 growth forecast was raised from 0.7% to 0.9%. CPI core forecast (ex-sales tax hike) was lowered from 1.0% to 0.9%. For fiscal 2021, growth forecast was raised from 1.0% to 1.1%. CPI core forecast was lowered form 1.5% to 1.4%. BoJ added that risks to economic activity and prices are both “skewed to the downside”. Momentum toward achieving 2% inflation target is “maintained by is not yet sufficiently firm”.

            BoJ statement, outlook for economic activity and prices.

            Moody’s downgrades Hong Kong to Aa3 on weak government

              By
              ActionForex.com
              -

              Moody’s cut Hong Kong’s credit rating by one notch to Aa3 yesterday. The ratings agency also changed the outlook to “stable” from “negative.” In a statement, Moody’s said “the absence of tangible plans to address either the political or economic and social concerns of the Hong Kong population that have come to the fore in the past nine months may reflect weaker inherent institutional capacity than Moody’s had previously assessed.”

              Protests in Hong Kong has now lasted for more than seven months. The first demand was met with the China extradition bill withdrawn after months of protests. Yet, there was no clear measures to address the rest of the “five demands” of the protesters. In particular, the government continuously refused to set up a commission of enquiry on policy brutality and corruption. In the meantime, there is increasing call for an independent and international inquiry into the Hong Kong police.

              In response to Moody’s downgrade, the HKSAR government said: “Although Hong Kong has faced the most severe social unrest since its return to the Motherland in the past seven months or so, the HKSAR Government, with the staunch support of the Central Government, has firmly upheld the ‘one country, two systems’ principle and handled the situation in accordance with the law to curb violence on its own to restore social order as soon as possible”.

              Asian stocks tumble on concern of coronavirus outbreak in China

                By
                ActionForex.com
                -

                Asian stocks tumble broadly today on concern of an outbreak of a coronavirus in China, as well as other countries in the region. China’s National Health Commission already confirmed that the virus which causes a type of pneumonia, can pass from person-to-person. That couldn’t come at the worst time as massive number of people are expected to travel within China before Lunar New Year.

                According to a report by London Imperial College’s MRC Centre for Global Infectious Disease Analysis, it’s estimated that there were already over 1700 cases in Wuhan city by January 12. Such estimate was not commented by the Chinese authorities yet. But there were already cases reported by Thailand, Japan and South Korea, involving people from from Wuhan or who recently visited the city.

                The virus is believed to be in the same family of Severe Acute Respiratory Syndrome (SARS), which killed nearly 800 people during an outbreak in 2003, starting in China and spread to Hong Kong. The World Health Organization (WHO) said yesterday that the primary source of the outbreak appeared to be an animal and some “limited human-to-human transmission” occurred between close contacts. WHO also called for an emergence committee on Wednesday to assess the situation.

                Hong Kong HSI is gaps lower today and is currently down more than -2%. Technically, a short term top is formed at 29174.92 and deeper pull back could be seen. Initial support is expected at around 55 day EMA (now at 27708). Rebound from 24899.93 could still extend higher. However, sustained break of the EMA would turn outlook bearish and HSI could head back towards 24899.93 support in that case.

                IMF downgrade growth forecast, sentiments boosted not yet visible in data

                  By
                  ActionForex.com
                  -

                  In the update to World Economic Outlook, IMF lowered 2020 global growth forecast by -0.l% to 3.3%, and 2021 by -0.2% to 3.4%. Still, they represent pickup form 2019’s 2.9% growth. IMF also noted that the downward revision “primarily reflects negative surprises to economic activity in a few emerging market economies, notably India”.

                  Meanwhile, market sentiment has been “boosted by “tentative signs that manufacturing activity and global trade are bottoming out, a broad-based shift toward accommodative monetary policy, intermittent favorable news on US-China trade negotiations, and diminished fears of a no-deal Brexit”. However, “few signs of turning points are yet visible in global macroeconomic data.”

                  Here are some highlights:

                  • World output: 2020 at 3.3% (revised down by -0.1%), 2021 at 3.4% (revised down by -0.2%).
                  • Advanced economies: 2020 at 1.6% (-0.1%), 2021 at 1.6% (unchanged).
                  • US: 2020 at 2.0% (-0.1%), 2021 at 1.7% (unchanged).
                  • Eurozone: 2020 at 1.3% (-0.1%), 2021 at 1.4% (unchanged).
                  • Germany: 2020 at 1.1% (-0.1%), 2021 at 1.4% (unchanged).
                  • Japan: 2020 at 0.7% (+0.2%), 2021 at 0.5% (unchanged).
                  • UK: 2020 at 1.4% (unchanged), 2021 at 1.5% (unchanged).
                  • Canada: 2020 at 1.8% (unchanged), 2021 at 1.8% (unchanged).
                  • China: 2020 at 6.0% (+0.2%), 2021 at 5.8% (-0.1%).
                  • India: 2020 at 5.8% (-1.2%), 2021 at 6.5% (-0.9%).

                  Full report here.

                  Bundesbank: Increasing evidence of stabilization in manufacturing sector

                    By
                    ActionForex.com
                    -

                    In the monthly report, Bundesbank said domestic economy was strong even though the overall economy probably stagnated in Q4. There is still no sign of an end to the boom in construction, which benefited from positive income prospects and favorable financing conditions.

                    Downward movement in the export-oriented industry continued. But there was increasing evidence of stabilization in the manufacturing sector. Industrial orders have not deteriorated further in the past few months. Goods export also increased significantly. Short-term export expectations recovered and returned to positive territory for the first time in six months.

                    Full report here.

                    France Le Maire: Strike has very limited impact on GDP

                      By
                      ActionForex.com
                      -

                      France Economy Minister Bruno Le Maire said the economic impact of strike, which is in its 46th day, will be limited. But still, it could cut Q3 GDP growth by -0.1%.

                      He told LCI television: “There will be an impact but it will be, I think, limited. Today estimates available show that the impact would be of a 0.1 points on growth on a quarter. On the whole year, it is a very limited impact.”

                      What to look for in a good Forex broker?

                        By
                        EagleFX
                        -

                        The internet is a wonderful tool. However, it can be a difficult beast to tame as it throws so many options at us daily.

                        If you wish to buy groceries and have them delivered, you will be faced with a choice of dozens of supermarkets that will deliver right to your door. You may be looking for antivirus software online. You will quickly realize that there are so many on the market, offering slightly different packages for slightly different prices, and the sheer amount of choice can quickly give us a headache.

                        Netflix. How many of us load up Netflix and spend so much time searching for something to watch, that when we finally pick something, we have gotten on our own nerves so much, we do not even feel like watching anything!?

                        Choice can be a blessing and a curse.

                        This article will explore different Forex broker features and what you as a trader, should look for when identifying a quality broker that you can not only trust but get the most satisfaction from.

                        Trading conditions

                        There are a few conditions that one should look for in a broker. These include:

                        • Spread
                        • Execution speeds
                        • Leverage

                        Spread

                        The spread is the difference between the bid and the ask price. Look for a broker that offers tight spreads. The tighter the better.

                        New STP broker, Eagle FX offers highly competitive spreads on all assets within their platform. The site uses an advanced pricing system to ensure all spreads closely follow the major global markets ensuring clients receive the best possible trading conditions.

                        A great feature within the Eagle FX, is that you can review the Live Spreads of FX Majors and Crypto pairs directly through their site without being required to set up an account.

                        Execution speed

                        This is how fast your order will be confirmed. Look for a broker that offers Straight Through Processing (STP) This means that your order will not go through a dealing desk and be filled right away. If a broker offers lightning-fast execution speeds, it is well worth taking a closer look at the other product features the broker offers. The quicker the execution, the less time waiting and running the risk of missing out on a crucial market movement.

                        Leverage

                        High leverage is an efficient and effective way to trade higher positions with less initial investment. Experienced traders like to benefit from high leverage, particularly in Forex trading as it allows making higher gains with less capital. Leverage is, in essence, a loan within a trading account.

                        One of the many attractive features of high leverage is that it frees up additional capital enabling a trader to get involved in more trades, simultaneously. This is particularly useful when there is a busy schedule showing on the global economic calendar.

                        To give an insight on the maths behind leverage: a leverage setting of 1:100 allows a trader the opportunity to trade with $5,000 from a $50 investment. Trading with high leverage can boost your earning potential without having to invest larger amounts of capital whilst enabling greater control of trades one may be involved in.

                        Be wary, trading with higher leverage can maximize your earning potential but it can also magnify losses.

                        Account Types

                        If you are new to trading and especially new to trading with high leverage, it is worth developing a strategy before entering the market. This can be done in a variety of ways including doing your research, reading, watching seminars, etc but the most useful way to develop a strategy would be to make use of a demo account.

                        Many brokers offer a free to use demo account within their site. This is especially useful if you are trading a volatile asset such as Cryptocurrency, practicing trading with leverage or getting to grips with a platform that you have never used before, whether that be MT4, MT5 or another unfamiliar platform to you. MT4 contains a vast amount of functions and features so it would be well worth having some practice on tools like this before depositing real money.

                        Eagle FX is happy to keep things straight forward and offer one type of account. There are no set parameters or terms when setting up an account. The deposit minimum is $10.00 with no hidden clauses. Keeping one account type enables less experienced traders to share the same pristine trading conditions as ‘more experienced’ traders.

                        Additionally, the site offers an affiliate program giving traders a chance to increase their earning potential and it’s completely free! All one has to do is refer a friend and start earning commission based on trades placed by the friend. Every trade carries a commission of $4 for every completed trade made by the person you referred. A great scheme and way to boost your earnings especially if you already have your online following.

                        Deposits and Withdrawals

                        This is massively important as this will determine how lucid your funds are. Moreover, how quickly can you get funds IN and OUT of a broker?

                        A good place to start with this is to review what payment methods a broker offers. The more variety then, great! However, ensure the site offers Cryptocurrency as a deposit/withdrawal method. This will ensure rapid deposits and not having to wait days to wait for a deposit to land in your account using outdated wire transfers. Crypto trading is volatile so you may miss a market movement when waiting for a wire deposit to land and then not want to enter the market.

                        Withdrawing via Bitcoin also ensures you will have the funds back in your wallet within an hour of being processed. Using Bitcoin ensures that you as a trader can have rapid access to trading your favorite digital assets.

                        Account Security

                        What can a broker do to ensure the safety of your funds? If you are trading Crypto and using Bitcoin as a deposit method you may feel uneasy that this ‘online money’ may be vulnerable to hackers… With the use of cold storage, this is not the case. If a broker does use cold storage then fantastic. It ensures that funds are kept completely offline away from potential online threats. It also shows that the broker cares about safety.

                        Furthermore, look for a broker that keeps broker funds completely separate to client funds which will ensure that you will receive a requested withdrawal amount in full.

                        Customer support

                        Even the most seasoned traders and IT professionals all need a little support sometimes so look for a broker which will have a dedicated team of professionals available around the clock. A broker with a LiveChat feature is perfect to ask little questions whenever you need it. It certainly adds comfort knowing that there is support there should you need it.

                        Conclusion

                        If you are in the market for a new Forex broker or indeed searching for your first broker, do not feel that you have to sign up to the first broker you come across. Take your time, shop around and find the right broker that best suits your needs.

                        Find a broker that will be available for you when you need assistance and ensure the broker offers straight-through processing. If a broker has additional features such as educational sections and economic calendars then even better. This will help you build on your existing knowledge and make you aware of the latest events around the globe which will affect the markets – giving you an added edge!

                        Eagle FX offers its clients over 200 tradable assets including generous leverage on Forex and Cryptocurrencies. Sign up is free. Start trading your favorite digital assets today!

                        Keep calm and choose the right broker for you!

                        WTI oil jumps on double-whammy production distruptions, but upside limited

                          By
                          ActionForex.com
                          -

                          Oil prices jumped notably today double-whammy of disruptions in two key producers, in Libya and Iraq. WTI hits as high as 59.56 but fails to extend gains so far. Also, despite the recovery, near term bearish outlook is unchanged with 60.24 minor resistance intact. That is, current decline from 65.38 is seen as a leg inside medium term sideway pattern that started back at 66.49. Deeper fall would be seen and break of 57.35 temporary low will target 50.86 key support zone. However, firm break of 60.24 will dampen this bearish view and turn focus back to 65.38 high instead.

                          Japan PM Abe said South Korea is the most important neighbor sharing basic values and strategic interests

                            By
                            ActionForex.com
                            -

                            Japanese Prime Minister Shinzo Abe offered some warm words to South Korea today, suggesting both sides are moving towards normalization of relationship. He upgraded description of South Korea from an “important neighbor” to “the most important neighbor” who “shares basic values and strategic interests.”

                            Abe told the parliament that “under an increasingly severe security environment in Northeast Asia, diplomacy with neighboring countries is extremely important”. And, “essentially, South Korea is the most important neighbor with which Japan shares basic values and strategic interests.”

                            Abe also urged to leave the issues of wartime labor behind. And, “I sincerely hope South Korea honors the commitments between the two counties and works toward building future-oriented relations.”

                            US farmers’ approval of Trump hits record after China trade deal

                              By
                              ActionForex.com
                              -

                              American farmers’ support for President Donald Trump hit records after completion of US-China trade deal phase one. According to the Farm Journal Pulse poll, 64% of 1286 respondents said they strongly approve of Trump. 19% said they somewhat approve. Only 13% said they disapprove of the president’s performance.

                              Trump said he would seriously enforce the trade agreement with China and he believed “it’s going to work out. He added that “China is going all out to prove that the agreement that we signed is a good agreement.” According to the deal, China will buy USD 36B of US agriculture products this year, and more than USD 43B in 2021.

                              China: Pressure on stabilizing industrial growth is still big

                                By
                                ActionForex.com
                                -

                                China’s Minister of Industry and Information Technology spokesperson Miao Wei said the government will continue with tax and fee reductions in 2020 to support growth. Focus will be on manufacturing sector, with increase in research and development investments.

                                Miao said “looking forward to 2020, industrial development faces many difficulties and risks,” and “pressure on stabilizing industrial growth is still big.” But the government will be able to “ensure the smooth operation of the industrial economy” with the above efforts.

                                On 5G technology, Miao said more than 130,000 base stations were built by the end of last year. 35 mobile phone terminals received network access licenses. More than 13.77m 5G phones were made. These phones are expected to cost less than CNY 1500 in Q4.

                                US housing starts has strongest gain since 2016, industrial production dropped -0.3%

                                  By
                                  ActionForex.com
                                  -

                                  US housing starts jumped 16.9% mom to 1.61m annualized rate in December, well above expectation of 1.38m. That’s the largest percentage gain since October 2016. Building permits dropped -3.9% mom to 1.42m, below expectation of 1.47m.

                                  Industrial production dropped -0.3% mom in December, below expectation of 0.0% mom. Capacity utilization dropped to 77.0%, below expectation of 77.2%.

                                  Fed Bullard could wait and see through 2020 on interest rates

                                    By
                                    ActionForex.com
                                    -

                                    St. Louis Fed President James Bullard indicated he’s comfortable to wait for the impacts of the three rate cuts last year before deciding the next month on interest rates. He told Reuters, “we eased substantially in 2019” and, “we will see how much impact we have in the first half of 2020 and probably all the way through 2020, and then we will see where we are.”

                                    He also noted that 2019 was “a year where we really came to grips with the idea that we were not going to go to 1990s or 2000 level interest rates in the United States.” “Not only did we quit trying…but we turned around and went the other way.”

                                    For 2020, Bullard believes there could be positive surprise. If trade uncertainty lifts, US “might grow faster than 2019, and it is that kind of dynamic that would lead us back to a better expected inflation environment”.

                                    Eurozone CPI finalized at 1.3% in Dec, services inflation led

                                      By
                                      ActionForex.com
                                      -

                                      Eurozone CPI was finalized at 1.3% yoy in December, up from November’s 1.0% yoy. the highest contribution to the annual euro area inflation rate came from services (+0.80%), followed by food, alcohol & tobacco (+0.38%), non-energy industrial goods (+0.12%) and energy (+0.02%).

                                      EU inflation was at 1.6%, up from 1.3% yoy a month ago. The lowest annual rates were registered in Portugal (0.4%), Italy (0.5%) and Cyprus (0.7%). The highest annual rates were recorded in Hungary (4.1%), Romania (4.0%), Czechia and Slovakia (both 3.2%). Compared with November, annual inflation fell in two Member States, remained stable in three and rose in twenty-three.

                                      Full release here.

                                      UK retail sales dropped -0.8%, ex-fuel sales dropped -0.6%

                                        By
                                        ActionForex.com
                                        -

                                        UK retail sales contracted sharply in December. Headline sales dropped -0.8% mom versus expectation of 0.8% rise. Ex-fuel sales dropped -0.6% mom versus expectation of 0.5% rise. “Anecdotal evidence from a number of stores stated that goods did not sell as well as expected,” the ONS said.

                                        In the three months to December, both the amount spent and quantity bought decline, by -0.9% and -1.0% respectively. More importantly, from three-month to three-month respectively, sales hasn’t grown since October.

                                        Full release here.

                                        EU Chapuis: Managed trade, quantitative targets, bilateral deals are not what a global world needs

                                          By
                                          ActionForex.com
                                          -

                                          Nicolas Chapuis, EU ambassador to China, said “the fact that trade tensions may be reduced, thanks to the U.S.-China deal is good news”. China’s promises on intellectual property issues will benefit other trading partner as well.

                                          However, he warned that “managed trade, quantitative targets, bilateral deals” are “not what a global world needs.” “We do not like bilateral arrangements in globalization. Of course, the U.S. is entitled to any deal it wishes with China. But if it is not WTO compatible, then we have an issue”, he added.

                                          Also, EU is taking a “different approach” than the US with China. Chapuis said “we think that policy of engagement, clarity, the possibility to strike smart deals, to take stock of China’s innovation policies and formidable economy of this country is of interest to us and engagement rather confrontation is the right path.”

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