By George Stylianou, Chief Marketing Officer, Forex Time
It does not take a leap of anyone’s imagination to understand why the exponential advancements in mobile internet technology over the past two decades have had a major effect on foreign exchange trading. Global currency markets are volatile, changing rapidly to the beat of geo-political, socio-economic and even natural events. Given that the forex markets are open 24 hours a day, five days a week this has historically left investors chained to their computer screens throughout the week, poised to take action in response to market changes.
But mobile internet technology has forever changed how we do business and how we make investments. Since the general adoption of wireless technology and increased international penetration of mobile internet services, there is almost endless access to the internet, and barrierless access to business, all without being chained to a desk anymore.
The forex industry is a reflection of this technological revolution; where once the flagship platform offered by most brokers was a desktop platform, now the innovations in internet accessibility are leading to more traders than ever favouring the flexibility offered by mobile trading apps and mobile enabled websites.
Within the financial sector, forex trading has historically suffered from a false perception that it is reserved only for the elite trader that has the extensive experience necessary to successfully navigate the markets. However, with the rise of the mobile era, this persona is changing.
The innovations that have been made in the last 10 to 15 years have led to more people than ever having access to trading platforms, information and insight from market experts and industry insiders, but also real-time mentoring in the form of copy trading that complements more traditional educational tools to breed a higher level of confidence to trade.
Freedom and mobility
The technology revolution has led to a higher level of freedom and mobility for investors who are now able to monitor pricing and pip changes from almost anywhere as long as they are connected to the internet. Even the once restricted space of air travel is now no longer a barrier to internet access and online trading.
Traders in developed economies, such as Europe and the US, where mobile internet penetration is at its highest, have been primarily benefiting from this mobility and flexibility until now. However, infrastructure investments across Asia and many parts of Africa are now revealing a huge rush to mobile internet which is opening up the forex trading market to traders and regions not previously considered a focus for brokers.
In many of these growing economies there is also an undercurrent of ambition in the population for individuals to take control of their personal wealth, which is helping to further grow popularity in online trading. In instances where individuals may have been historically priced out of the global investment market, forex trading – especially micro or cent accounts – now gives these traders a foot in the door.
Social media and the rush to copy trading
The explosion in social media in the past decade has subsequently led to the creation of entire online communities where like-minded investors can share up-to-the-second market insights. Whole communities of traders can get real-time insight from some of the most successful traders around the world literally at their fingertips and this access to shared knowledge and experience is providing additional confidence for investors.
Not only that, but traders also have the capacity to learn from one another, performing copy trading which significantly enhances their ability to build a successful trading portfolio at any economic level. Pairing social media with other technological innovations, such as mobile apps, creates one of the most powerful online teaching and communication tools available to a broker.
Spend just a few minutes on Twitter searching the term “forex” and you will quickly recognise that there is an enormous, almost immeasurable amount of information and educational materials online for any investor to learn from. This trend to publish and share information transparently is giving more people access to the markets and instilling more confidence in them. All of these elements combine to open up the world of forex, providing a higher sense of security to potential traders of any level that they too can take advantage of opportunities in the forex market.
What’s next for online trading innovations?
In many ways, the full potential of mobile internet technology has not been reached on a global scale yet. There are still many areas, particularly in developing nations, where communities don’t have consistent and reliable access to the internet; these communities will be the source of growth in years to come.
It will also be interesting to see whether a viable competitor to the dominant MT4 platform will emerge. While recent innovations have focused on access to trading, the next phase of game-changing innovations may well come in the usability of trading platforms and apps. Those trading platforms that have been converted to be accessible from mobile devices are generally similar to the desktop platform, but modified for usability improvements on a smaller device. But what if the innovation is looked at in reverse with a platform built specifically for online trading on mobile apps, rather than just a renovation to a desktop platform?
It seems the possibilities for online trading innovations are just as endless as the trading options in forex itself.
Global stocks slide on inflation fears, dollar gains
By Herbert Lash
NEW YORK (Reuters) – The Nasdaq recovered as the bond rout retreated on Friday, but most other equity markets swooned around the world as data showing a strong rebound in U.S. consumer spending kept fears of rising inflation alive.
Shares of Amazon.com Inc, Microsoft Corp and Alphabet Inc edged up after bearing the brunt of this week’s downdraft to help the Nasdaq shake off its worst day in almost four months on Thursday.
The Nasdaq Composite advanced 0.56% while the S&P 500 slipped 0.48% after a late-session surge failed to hold. The Dow Jones Industrial Average fell 1.51%.
U.S. consumer spending rose by the most in seven months in January as low-income households got more pandemic relief money and new COVID-19 infections dropped, setting up the U.S. economy for faster growth ahead.
The benchmark 10-year Treasury note on Thursday shot to a one-year high of 1.614%, a move that rocked world markets. The note’s yield is up more than 50 basis points this year and is now close to the dividend return of S&P 500 stocks.
Yields on the 10-year note fell steadily throughout the session to trade 11.7 basis points lower at 1.3981%.
The amount of money swirling through markets and U.S. stocks at close to all-time highs has caused investor angst, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“Many people are taking some profits and not necessarily reinvesting that money quite yet,” Kinahan said.
“The U.S. equity market is still the best game in terms of safety versus opportunity. But there is a shift going on.”
The scale of the recent Treasury sell-off prompted Australia’s central bank to launch a surprise bond-buying operation to try to stanch the bleeding.
MSCI’s benchmark for global equity markets slid 1.61% to 656.29 despite its large weighting to the U.S. tech heavyweights.
In Europe, the broad FTSEurofirst 300 index closed down 1.64% at 1,559.48. Technology stocks lost the most as they continued to retreat from 20-year highs.
The dollar rose against most major currencies as U.S. government bond yields held near one-year highs and riskier currencies such as the Aussie dollar weakened.
The dollar index rose 0.683%, with the euro down 0.9% to $1.2066. The Japanese yen weakened 0.31% versus the greenback at 106.55 per dollar.
Gold fell more than 2% to an eight-month low, as the stronger dollar and rising Treasury yields hammered bullion and helped it post its worst month since November 2016.
U.S. gold futures settled 2.6% lower at $1,728.80 an ounce.
Benchmark German government bond yields fell for the first time in three sessions but were still headed for their biggest monthly jump in three years after rising inflation expectations triggered a sell-off.
The 10-year German bund note fell 1.2 basis points to -0.271%.
European Central Bank executive board member Isabel Schnabel reiterated on Friday that changes in nominal interest rates had to be monitored closely.
Copper recoiled after touching successive multi-year peaks in six consecutive sessions, falling more than 3% as risk-off sentiment hit wider financial markets after a spike in bond yields.
Three-month copper on the London Metal Exchange (LME) slumped to $9,112 a tonne.
MSCI’s emerging markets equity index slumped 3.36%, its biggest daily drop since markets plunged in March.
The surge in Treasury yields caused ructions in emerging markets, which feared the better returns on offer in the United States might attract funds away.
Currencies favored for leveraged carry trades all suffered, including the Brazil real and Turkish lira, which slid for a fifth straight day, erasing all the year’s gains.
The heaviest selling earlier was in Asia, with MSCI’s broadest index of Asia-Pacific shares outside Japan sliding more than 3% to a one-month low, its steepest one-day percentage loss since the market rout in late March.
Oil fell. Brent crude futures settled down 75 cents at $66.13 a barrel. U.S. crude futures fell $2.03 to settle at $61.50 a barrel.
(Reporting by Herbert Lash in New York; Additional reporting by Tom Arnold in London, Wayne Cole and Swati Pandey in Sydney; Editing by Nick Zieminski and Matthew Lewis)
Dollar gains on higher yields, risky currencies weaken
By Karen Brettell
NEW YORK (Reuters) – The U.S. dollar gained on Friday as U.S. government bond yields held near one-year highs, while riskier currencies such as the Aussie dollar weakened.
Yields have surged as an acceleration in the pace of vaccinations globally and optimism over improving global growth bolster bets that inflation will rise. That has also led investors to price in earlier monetary tightening than the Federal Reserve and other central banks have signaled.
The dollar move is “a function of what’s happening on the yields side,” said Jeremy Stretch, head of G10 FX strategy at CIBC World Markets. The 10-year yield briefly climbed above the S&P 500 dividend yield on Thursday, he noted, indicating “uncertainty that is writ large.”
The dollar index rose 0.59% to 90.847, its highest level in a week.
It gained against the yen, touching 106.69 for the first time since September.
The benchmark 10-year Treasury yield surged above 1.6% on Thursday for the first time in a year after a weak seven-year note auction. It was last at 1.45%.
U.S. yield increases have accelerated this month as Fed officials refrain from expressing concern about the yield gains.
“The Fed has not really hinted that that’s making them uncomfortable, so the bond market’s going to push that,” said Edward Moya, senior market analyst at OANDA in New York. “That’s really dictating this move in the dollar.”
Riskier currencies retreated. The Aussie fell 1.99% to $0.7713, after topping $0.80 on Thursday for the first time since February of 2018.
Marshall Gittler, head of research at BDSwiss, said the Australian dollar was underperforming despite the market signaling higher growth, likely because the country’s central bank’s yield curve control policy would restrain its bond yields from moving much higher. That, in turn, could limit the attractiveness of the currency.
The greenback is likely to continue to benefit from safe- haven flows if risk appetite continues to worsen, and emerging market currencies may be among the biggest losers.
“There’s a big, big concern that this reflation risk is going to get out of hand and that’s going to really pummel the emerging market currencies, and I think you’re going to see that investors are going to need to reassess their dollar positions,” said Moya.
Data on Friday showed U.S. consumer spending increased by the most in seven months in January, while price pressures were muted.
U.S. jobs data for February released next Friday is the next major economic focus.
Investors are also waiting on details of the U.S. fiscal stimulus bill, which is expected to be passed in the coming weeks.
The Democratic-controlled House of Representatives on Friday was poised to push through President Joe Biden’s $1.9 trillion coronavirus aid package, although it looked unlikely to be able to use the bill to raise the minimum wage nationwide.
The euro dipped 0.79% to $1.2078 after touching a seven-week high of $1.2244 on Thursday.
Bitcoin fell 0.32% to $46,946. Ethereum dropped 0.7% to $1,468.
(Additional reporting by Ritvik Carvalho in London; Editing by Dan Grebler and Andrea Ricci)
Oil drops on dollar strength and OPEC+ supply expectations
By Jessica Resnick-Ault
NEW YORK (Reuters) – Oil prices fell on Friday as the U.S. dollar rose while forecasts called for crude supply to rise in response to prices climbing above pre-pandemic levels.
Brent crude futures for April, which expire on Friday, fell 74 cents, or 1.1%, to $66.14 a barrel by 12:45 EDT (17:45 GMT). The more actively traded May contract slipped by $1.08 to $65.03.
U.S. West Texas Intermediate (WTI) crude futures dropped $1.42, or 2.2%, to $62.11. The contract was still on track to be up 4.8% on the week.
The U.S. dollar rose as U.S. government bond yields held near one-year highs, making dollar-priced oil more expensive for holders of other currencies.
“It’s a dicey time – it doesn’t seem like a time to load up on a risk-asset position,” said Bob Yawger, director of Energy Futures at Mizuho in New York, wary of a potential output increase from OPEC and allies at next week’s meeting. Also, the U.S. stockpile report this week showed a surprise build in oil inventories.
Friday’s gains also reflect profit-taking after both Brent and WTI headed towards monthly gains of about 20% on supply disruptions in the United States and optimism over demand recovery on the back of COVID-19 vaccination programmes.
Investors are betting that next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies, a group known as OPEC+, will result in more supply returning to the market.
U.S. crude production fell in December, the latest month for which data is available, according to a monthly report from the Energy Information Administration.
Despite talk of tightening fundamentals, the demand side of the market is nowhere near warranting current oil price leves, they added.
U.S. crude prices also face pressure from slower refinery demand after several Gulf Coast facilities were shuttered during the winter storm last week.
Refining capacity of about 4 million barrels per day (bpd) remains shut and it could take until March 5 for all capacity to resume, though there is risk of delays, analysts at J.P. Morgan said in a note this week.
(Reporting by Shadia Nasralla, Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by David Goodman, Louise Heavens and David Gregorio)
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