Parity Bets Back In Force

 

A happy smiling young male sitting on a balance scale with a mon

Long time now we are hearing scenarios of the parity of exchange rate between euro and dollar. Since the introduction of QE back in 2014 and the Greek default in the same year, the introduction of austerity measures upon many European countries, the refinancing of their problematic banking system, today’s central bank’s divergence in their monetary policy path and the European political instability. All those factors are pushing the Euro into parity with the US Dollar. For 2 years now the pair manage to recover every time it was hitting the trading bottom of 1.05, a bottom that is formed the last 2 years of trading (1.05 – 1.14).

Euro is facing 2 new threats before the end of 2016. The FED’s rate hike in December and the Italian referendum on December 4th.

Although a Fed rate hike is already priced in, the pair might need to face some front winds upon the fed’s statement which most probably we give a future path of rates normalization for 2017.

With the victory of President-elect Donald Trump rejuvenating the so-called divergence trade, calls for the euro to sink to parity versus the U.S. dollar are swelling. While the strength of the greenback fueled by hopes of fiscal stimulus spurring faster growth and a swifter path higher for interest rates has been the main story in foreign exchange markets since the election, “it is the threat of political tail risk and splintering of Europe” that could push the euro to reach parity against the dollar for the first time since 2002.

Posted in forex, investment

Italian Referendum

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A defeat for Renzi, who proposed the vote and initially pledged to resign if the result didn’t go his way, could lead to early elections and a rise in support for the populist Five Star Movement. This party has pledged to carry out a referendum on whether Italy should stay in the euro area. Some investors are already predicting the end of the European Union, let alone the single currency. The Eurosceptic party has been actively campaigning for a referendum on exiting the single currency. Five Star’s Luigi Di Maio, vice-president of the lower house, said that if the party achieves power, it would push for an advisory referendum on euro membership. Di Maio hasn’t been clear about what he would want to replace it, saying in an interview with Repubblica that he favors “a euro at two speeds or a national currency.”

In my point of view I do not believe this will happen. Politics influence the markets up to a certain point. We’ve seen this before 2 years when it was the elections in Greece, as soon as Mr. Tsipras was elected euro dropped to 1.045 and then recover back to 1.10 within the next 20 days. U.K referendum markets react instantly with a drop of 10% and recover back within 2 days. US elections markets react instantly with a drop of 5% and recover back within few hours. As for the December 4th referendum markets will react the same, euro will react the same way, if voting will be against Mr. Renzi.

Posted in financial markets, forex

HOW THE NEW ZEALAND DOLLAR BECOME THE WORLD’S 10TH MOST TRADED CURRENCY

qiwi

 

The New Zealand dollar (NZD, $) is the official currency of New Zealand which includes New Zealand, the territories of Niue, Ross Dependency, Tokelau and Cook Islands, as well as the British Overseas Territory, Pitcairn Islands. Using NZ$ to distinguish this currency from other dollar denominated currencies is quite common, as is referring to it as the ‘Kiwi’.

The New Zealand dollar was the 10th most traded currency by value in the world in April 2013, accounting for around two percent of the global exchange market turnover at that time. The contribution of this currency to the international foreign exchange market remains considerably more than its relative share of GDP or population.

There has been no link between the New Zealand dollar and gold or a precious metal backed currency for long, so its value essentially depends on the amount in circulation. Besides, this has contributed to the country’s large and long term rates of inflation.

The establishment of the Reserve Bank of New Zealand to function as the country’s central bank took place in August 1934. Until this time, setting of New Zealand’s monetary policy happened in the UK, and private banks issued the New Zealand pound. In July 1967, the New Zealand dollar replaced the New Zealand pound, at a rate of two dollars to the pound. The country printed around 27 million new banknotes, and minted around 165 million new coins.

The New Zealand dollar initially pegged to the US dollar, when one New Zealand dollar valued at USD1.43. In November 1967, after the British pound’s devaluation, one New Zealand dollar traded at USD1.12. In 1971, the US decided to devalue its currency in relation to gold, and by December of that year the New Zealand dollar pegged at USD1.216, with a fluctuation range of 4.5%.

In between July 1973 to March 1985, a trade-weighted basket of currencies called the trade weighted index (TWI) determined the value of the New Zealand dollar. In September 1974, Australia decided to peg its currency against the TWI to try and minimize fluctuations that arose because of its peg to the US dollar. In November 1976, the peg to the TWI changed to a moving peg, which led to periodical adjustments in the peg’s actual value.

In March 1985, the New Zealand dollar switched to the floating exchange rate system, and one New Zealand dollar initially traded at USD0.444. Financial markets, since then, have determined this currency’s value, and its value against the US dollar has fluctuated in between around USD0.40 to USD0.88. Towards the end of the 1990s, the US dollar started to lose its overall influence over the value of the New Zealand dollar and the Australian dollar against other currencies.

In November 2000, the New Zealand dollar’s post-float minimum average daily value stood USD0.3922, and it increased to USD0.8666 by July 2011. Interest rate differences could well be the main reason behind this medium-term variation in exchange rates.

Currency trading tends to affect the value of the New Zealand dollar significantly. In June 2007, the Reserve Bank of New Zealand ended up selling an undisclosed amount of New Zealand dollars for nine billion US dollars with the aim of decreasing the New Zealand dollar’s value. This was the first time the bank intervened in the exchange markets since it joined the floating system.

After joining the float regime, the New Zealand dollar got to its record high in early 2008. The global economic downturn then got its value to plummet through much of 2008’s second half as well as the first few months of 2009. In March 2009, the New Zealand dollar bottomed out, trading at USD0.50.

It witnessed a revival of sorts soon after, and by November 2009 it got to the USD0.75 mark. Towards the latter part of 2012, the New Zealand dollar valued at over USD0.80, even getting to USD0.85 at times.

 

 

Posted in Uncategorized

Where To Invest $1 Million?

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Unless you are a daily Forex trader or a daily stock trader who makes 30% per year, then you may need to invest this amount into a more safe and stable market. Our studies identified  the  2 most attractive investments opportunities for 2017.

As you have noticed the dollar appreciated a lot against EURO and GB pound in the last 2 years. The reasons of its appreciation is obvious the divergence between the central banks, FED want to increase interest rates on the other hand ECB reduce interest rates in U.K. the shock of Brexit is done and the depreciation of GBP is over.

Taking into consideration the exchange rate by changing now your $1.000.000 into EURO or GBP the return over the next few years will be at least 15% without doubts, but this is not enough to secure your profits from there you need to move forward and buy a house in the U.K.  or North Amsterdam.

A pronounced housing shortage in the UK is expected to keep house prices rising despite the uncertainty created by Brexit and economic headwinds that could result from a Trump presidency.

Housing minister Gavin Barwell told Sky News the government “is set to fail to meet its target to build one million homes by 2020”.

Even that target, which was set last year and equates to 200,000 new homes a year, is below the 250,000 to 300,000 new starts each year that most analysts reckon the UK needs to keep up with demand.

Royal Institute of Chartered Surveyors said house prices rose at the fastest rate in seven months in October and would continue to rise over the next three months as a result of a “dire” shortage of homes for sale.

According to its report, transaction volumes are down as buyer demand is far outstripping the number of new sales instructions, which is currently at an all-time low.

Barwell said the government is currently building about 170,000 homes every year, which he claimed represented an improvement on the rates it inherited in 2010, which were “their lowest since the 1920s,” he said, before adding: “We clearly need to do better.”

Housing market is booming and it will not stop and apart from that the monthly rent in U.K. is one of the highest.

Supposing that you change your $1.000.000 dollar today in GBP you will have 800.000GBP to invest in 2 new built houses giving you a rent of 1500 per month.

The predicted return for a 2 year period will be as follow:

Rent receivable: 72000GBP

house appreciation on a year basis is 7% : 112000GBP

predicted exchange rate of USD/GBP after 2 years 1.45

In 2 years changing back your U.K. investment into USD will be $1.426.000

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Why North Amsterdam? This is the question everybody is asking.

In a market where almost half of properties are owned by non-profit corporations, mainly for social housing, there’s just not enough coming on to the market to satisfy buyers. After falling about 14 percent in five years, prices have rebounded recently and are now above pre-crisis levels.

The supply shortage is a hangover from the financial crisis, which restrained new building and led to more families choosing to remain in the city, as it was harder to sell properties at a profit. In the first quarter of 2016, all houses that came on the market were sold, nearly half for more than the asking price. The asking price for an average house rose 5 percent from a month ago in May while it was up 26 percent from a year earlier, the Dutch bureau of statistics said.

Another reason prices continue to skyrocket is that the Netherlands is relatively unique in still allowing buyers to borrow more than the value of the house — no down payment necessary. That means as prices rise, buyers have less of a barrier to entry than in other markets, like London, where the size of a cash down payment is increasingly pushing first-time buyers out of the market.

Add in historically low interest rates, and the convergence of those factors makes Amsterdam not just the hottest market in the Netherlands, but also one of the fastest-growing ones in Europe.

The last 20 years North Amsterdam was less developed that the south Amsterdam. Where almost all businesses, great companies, big banks, clubs and tourist are located. But this is not the real reason of the slowest developing in North Amsterdam than the south. The tow parts of the city are separated by a huge River  “AMSTEL” a very well known name for beer lovers.

Because of Amstel river there was no metro to connect north with south, so the people living on the north had to cross the river through a boat traveling back and forward every 15 minutes. This was somehow isolated the people living there and many preferred to buy house on the south than the north. Amsterdam major decide to start building metro connecting north with south and this is why is better to invest now, buying a house in north Amsterdam. Is predicted that the next 2-3 years prices in north Amsterdam will be increase by 30% compare to the 20% increase on the south of the city.

Supposing that you change today $1.000.000 into EURO you will have 926.000 to invest into 2 apartments.

Predicted profit for your north Amsterdam  investment in 3 years will be as follow:

rent receivable 144.000euro

appreciation of housing market 278.000

predicted exchange rate of EUR/USD in 3 years 1.20

in 3 years changing back your north Amsterdam investment will be $1.617.000

Posted in investment

Is Trump the U.S. Savior?

trumpWe heard lots of rumors before the elections, many analyzers forecasts and ideas, we’ve heard before that if Donald trump will be elected markets will collapse and U.S. Dollar will devalue. It’s all mistake and over presentation of the mass media, it’s all about panic.

Many times before we faced such a situation (political situation) any reaction in the markets is temporary. Recently we have seen this in the British referendum markets drop 10% and recover back and erasing all losses within a day. We have seen this yesterday market dropped by 5% and recover back and erased all losses within 2 hours.

Even though many economist believe that politics can affect markets in my point of view is that they cannot politics are affecting markets indirect and psychological but by the end of the day is the economy on it’s own that drives markets and not the politics.

Many times we’ve seen protesters outside wall street protesting against the politics staying away from markets.

The reason behind the yesterday roller coaster was the preposition of the big traders like banks and hedge funds and many other retail traders that follow the big owns. They were all position for a Clinton victory. As the result came out they closed their initial positions and turn into trump victory. A few hours later after the speech of Trump markets digest the negative sentiment they had about Trump and turn back to positive.

Stocks focused on the positives of Donald Trump’s policies but ignored its fears that he could ignite a global trade war. The dollar jumped, and the Mexican peso continued under pressure, losing another 8 percent to record lows.

For the first time, U.S. have the possibility of fiscal policy being implemented in such a way that it has the possibility of changing the deflation. Near-term impacts on the economy from any potential market turbulence will likely be mitigated by a more accommodative Fed.

Trump has also proposed a lower corporate tax rate and a one-time tax holiday that would mean U.S. companies could bring back the billions they have stashed overseas.

Banks benefit from higher inflation and higher interest rates and the bond market Wednesday was in a steep sell-off, which sent yields higher.

Trump’s fiscal policy is a combination of reforming the corporate tax code and government spending on big projects that will pump money into the economy and create new jobs. With Republicans now in control of the White House and both houses of Congress, the years-long standoff may be broken.

But, we must not forget that Trump cannot act by his own, there are decisions need to be pass for voting by congress and decisions need to be approved by high court.

For now, we can only wish him good luck and we need to focus on our trading based on economic events and not on politics.

Posted in financial markets

Donkey

donkey

What you see above is not a donkey… is the reflection in the mirror of the people who vote Hillary Clinton. The other think nobody observe is that this Donkey does not have even balls between his legs. A woman that wanted to become president of the U.S.A. and become a leader of planet earth could not stand in front of her fans and face the loss and say few words to the people who support her all the way here. How those people are feeling that their leader let them down by sending her campaign manager and ask them to go home to sleep.

Imagine if by accident she was elected president of the U.S. and needed to face a huge geopolitical situation? Whom she will send out there? Her husband.

Drop in the global markets should be recovered by know when people understand that they actual voted the right person.

Posted in financial markets

Three reasons why peer-to-peer Binary Contracts trading is the next big thing

Today, all binary option trading is done through a broker (broker-client). It doesn’t matter what you think of your broker, it makes no difference if you switch platforms – there’s no getting away from the fact that you need a broker to trade. And the brokers arn’t  necessarily working in your best interests either.

When you win, your broker pays you from the losing accounts. So when you lose, you’re paying for someone else’s wins – plus a cut taken by the broker too. So why not skip the middleman? If we could trade binary options directly with each other, so called peer-to-peer trading in binary contracts (a contract between two clients) – we not only get to keep all of our profits, we also avoid any conflict of interest with the broker.

Here’s why direct binary contracts trading is the next logical step.

Reason 1: The sharing economy is here to stay

In March 2015 the accommodation website Airbnb was valued at $24 billion with annual revenues that are a relatively low $0.9 billion. Compare this to the Marriott chain of hotels that has annual revenues of $13.8 billion, but a recent valuation of only $21 billion. Can you think of a reason for this gap?

Airbnb is just one of a number of start-ups that are changing the way people think about buying and selling products and services. In today’s social media world, it’s all about working with our community – we’re finding ever more ways to skip the brokers in our lives to save, profit and experience more.

Reason 2: With the traditional binary option brokers the odds are against you

It’s simple really – on traditional binary options platforms, you’ll usually make an 80% profit on successful trades. But when you lose, that’s the whole 100% gone. So even if you’re great at what you do, or you’re on a really amazing streak, the odds are stacked against you. If there’s a broker involved, you will never be able to make a profit in the long run.

Reason 3: How much do you trust your broker?

Binary options brokers do this for a living – they’ll always have the inside scoop on the markets, and the technology to back them up. Even if you’re top of your game, it’s an uneven playing field, you are simply no match for the broker, so you need to have a solid trust in your broker and unfortunately most of them cannot be trusted.

In summary

The best way to get a fair trading experience, with the greatest profit potential, is to trade without a broker. And there’s currently only one platform out there that offers true peer-to-peer binary contracts trading. Daweda Exchange lets you buy and sell binary contracts directly from other clients, with no hidden fees. Check for yourself.

Posted in binany options, forex