22 / 02 / 2017 | Market News

Australia recession fears kicked into touch

It’s a relatively busy day for major economic releases with UK GDP, Eurozone inflation and FOMC meeting minutes all set for release. The latter could be the most influential on the basis that opinions are still divided as to whether a March rate hike makes sense. Any clarity here could provide fresh direction not only for the greenback, but also equities, too.
 

The STO Traders’ View

 
Our prop desk is showing enthusiasm for the pound ahead of that GDP release, with long GBP/AUD, long GBP/JPY and short EUR/GBP positions all in evidence.
 
Fundamentals – Australia recession fears kicked into touch
 
Last night’s comments by RBA Governor Phillip Lowe with talk of 3% GDP growth by 2019 served to push those recession fears yet further into the long grass. With no real prospect of a further rate cut in Australia, the Aussie dollar strengthened a little against the greenback, but perhaps most surprising is the fact that the quantum of the gain has - at least so far been relatively - limited. Further gains here would be of little surprise, especially towards 12 month highs around 0.7800.
 
We have the first revision to the UK Q4 GDP figure due for release at 9.30am GMT. Given the mixed bag of numbers we’ve seen over the last few weeks from London plus that very measured view on inflation from MPC member Andy Haldane, it’s perhaps surprising that cable managed to regain the 1.25 handle during the Asian session. Around these levels it’s difficult not to see the risk as being weighted on the downside, especially if we see any concern over the GDP print.
 
January’s Eurozone inflation print is slated for 10am GMT and the key risk here seems to be the potential for an overshoot. Mario Draghi remains committed to stimulus measures and the common currency remains very much on the back foot against the US dollar. Anything that calls into question the idea that the current inflationary pressures are temporary will pressure the ECB to take action. If this is seen, then a spike on EUR/USD - even if it’s short lived - would be no surprise.
 
The jury is still out as to whether the Federal Reserve will look to hike interest rates next month, so expect both the meeting minutes release at 7pm GMT and comments from FOMC member Jerome Powell an hour before this to be under scrutiny. Although a dovish slant here may knock the dollar, the more relevant point of discussion would be the impact on US equities. DOW futures are currently suggesting a slightly softer start to the day, but with the market still trending higher, any excuse to continue the buying spree could push the index out to fresh highs for the month.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
 
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22 / 02 / 2017 | Technical Analysis

USD/CAD poised to jump higher?

USD/CAD could be lining up a break beyond the 200 day moving average, opening the way for a return to last month’s highs around the 38.2% retracement of the sell-off from early last year. Look for support around 1.30
 

 
Cable continues to struggle with the 1.25 handle. A sustained break above here will open the way for a move up to February highs in the 1.2550-1.2570 range, then 1.2660. On the downside, look for support at recent lows around 1.2400.
 


This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
 
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22 / 02 / 2017 | General

Forex News and Today’s Economic Calendar

Forex is affected by a myriad of factors both tangible and intangible. One way that traders monitor or forecast what can happen in the coming days, is with an economic calendar. This helps them be updated on the latest forex news or forex market affecting updates.
Let’s take a look at what an economic calendar is, what it includes and how traders use them. This article will also point out the main events of today’s economic calendar.

What is an Economic Calendar?

An economic calendar is essentially a list or chart of events that affect the movement of markets. This can include, economic indicators, monetary policies, volatility levels, daily/weekly events. The break-down of each of these elements are:
  • Economic Indicators – economic data, usually released by governments. Consumer price index, unemployment and gross domestic product are all indicators of an economy’s health.
  • Monetary policies – these are the actions of a country’s central bank that effects their currency’s interest rate. This includes creating more currency or restricting issuing new currency.
  • Volatility Levels – simply put the higher the volatility the larger the risk. Economic calendars will generally display these with green, yellow and red, green being the least volatile and red being the most.
  • Importance – some economic calendars also include importance as in how important for the movement of prices the associated event is.

Forex Calendar

Usually economic calendars are forex calendars, as the events listed can influence the foreign exchange market quite significantly. Some economic calendars do mention the currency that the specific event will effect creating a more “targeted” calendar. ;Here are some of today’s events and if you’d like to see the weekly and monthly events you can visit our economic calendar:
  • Australia – Wage Price Index
  • Australia – Construction Work Done
  • China – House Price Index
  • Norway – Labour Force Survey
  • Slovakia – EU Norm Inflation
  • Hong Kong – Gross Domestic Product
  • Germany – IFO – Business Climate
  • Germany – IFO – Current Assessment
  • Germany – Expectations
  • Italy – Consumer Price Index
  • Switzerland – ZEW Survey – Expectations
  • Great Britain - Gross Domestic Product
  • Great Britain – Total Business Investment
  • Great Britain – Index of Services
  • Germany – 30-y Bond Auction
  • Austria – HICP
  • E.U. – Consumer Price Index
  • E.U. – Targeted LTRO
  • Great Britain – MPC Member Cunliffe Speech
  • Turkey – Manufacturing Confidence
  • Turkey – Capacity Utilization
  • U.S. – MBA Mortgage Applications
  • Brazil – Mid-month Inflation
  • Canada – Retail Sales ex Autos
  • Canada – Retail Sales
  • China – CB Leading Economic Index
  • Mexico – Gross Domestic Product
  • Germany – Leading Indicator
  • U.S. – Existing Home Sales
  • U.S. – Existing Home Sales Change
  • U.S. – API Weekly Crude Oil Stock
  • Japan – Corporate Service Price
  • Japan – Foreign Bond Investment
  • Japan – Foreign Investment in Japan stocks

How do Forex Traders Use Economic Calendars?

No matter what type of market you trade in, knowledge is one of the most invaluable assets a trader has to make informed transactions. This helps people choose to engage in high risk trades, that can be either costly or beneficial or opt for something that is less volatile.
No matter how you read and analyze this weeks’ economic calendar you will need a platform to trade from, like the industry preferred MT4, which you can use when you sign up for an STO account.
 
This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
  
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21 / 02 / 2017 | Market News

EUR/USD and the Eurozone

The economic agenda was somewhat subdued yesterday given the North American public holidays, but this is set to pick up in the near term with data from both the UK and the US likely to provide some fresh direction. As is increasingly becoming the case we’ve also got that curve ball potential from Donald Trump which could skew sentiment.
 

The Traders’ View

 
We are seeing some profitable short interest on the S&P 500, with the prop desk making gains from yesterday’s fall in futures prices. Also sentiment is weighted against the Euro on a range of crosses.
 

Fundamentals - EUR/USD and the Eurozone

 
The Eurogroup may be hailing progress over the Greek debt management situation which has once again reared its head, but currency markets have been rather unmoved by this latest ‘progress’. EUR/USD has in fact lost ground over the last 24 hours, with a hawkish tone from one FOMC member driving the change although that lacklustre consumer confidence print out of the Eurozone has done little to help, either. With progress over the Greek situation now set to overlap with elections in France and The Netherlands, the timing of any deal is going to be further complicated and it’s difficult not to think that this could leave the common currency vulnerable to further sell-offs in the months ahead.
 
BoE chief Mark Carney is due to address the Treasury Select committee from 10am GMT this morning. Inflation is the subject in question so those two recent data releases – last Friday’s retail sales figure and yesterday’s industrial trends orders – will both be front of mind. The big question now is just how high will inflation go, and can this be ridden out without central bank intervention. Any hints that a rate hike may be necessary will inevitably drive the pound higher against many major crosses, although as we have seen before sustaining gains remains a challenge for GBP.
 
US manufacturing and services PMI prints are due for release at 2.45pm GMT and the risk here is that the recent story of economic expansion could stumble. Both figures are expected to be comfortably above the break even 50 mark, but we could see the pace of growth slowing and if equities are looking for a reason not to continue the charge higher as Wall Street returns from the long weekend break, this could be it. DOW futures are currently off around 50 points from yesterday’s highs and although the anticipation of Trump’s tax reform plan may lend some support, there’s certainly plenty of profit to be booked.
 
After threatening a consolidation phase, EUR/AUD is poised to resume its path lower with bullish calls over the health of the Australian economy helping define sentiment here. Comments by the RBA Governor at 9.30pm GMT will be under scrutiny next as these could prove instrumental in driving the pair out to almost four year lows. 

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
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21 / 02 / 2017 | Technical Analysis

EUR/GBP eyes 200 day MA

EUR/GBP has rejected the 38.2% retracement of the post Brexit referendum rally and is now poised to cross below the 200 day moving average, currently around 0.8470. If this falls look for support at the 50% retracement just below 0.8400, followed by December lows around 0.8300.
 

           
USD/JPY is failing to post a break higher. Look for support at February lows around 111.75 then the 38.2% retracement level of 111.15. Resistance at or above the 23.6% retracement level around 114-114.50
 

 

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
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21 / 02 / 2017 | General

Trading with the 5 Most Popular Forex Chart Patterns

If you are an experienced trader, then you will undoubtedly be familiar with chart patterns. New traders though might find chart patterns a bit complex and overwhelming, hopefully this article will help you familiarize yourself with these systems and inform you about their function and utility when trading.
Also known as chart price patterns, these help traders recognize movements, trends and as the name indicates - patterns that emerge from the movement of the prices of currency pairs. This can help you metaphorically “ride the wave” of a currency pairs’ movements; enter a trade on a low and exit high. Here are some of the most popular forex chart patterns.

1. Candlestick Patterns

One of the most frequently referenced chart pattern is the so called Candlestick Chart Pattern or Japanese Candlestick Pattern because it is said to have originated in Japan in the 1700s. These are some of its variations:
Single Candlestick – this pattern is further separated into the hammer and the hanging man. The hammer is seen during a downward trend in a bullish reversal movement. Hammers usually a signal of the approaching bottom price and speculated rise in the price of the pair soon after. Inversely the hanging man shows the zenith or peak of a price gain, indicating that there is an increasing number of sellers of the pair against buyers potentially creating a downward movement. There are further types of single candlestick patterns such as the inverted hammer and shooting star. The inverted hammer happens on a downward trend, indicating that most of the sellers of the pair have exited the trade, thus buyers will start moving in on it. The shooting star occurs on an upward trend and indicates that although buyers have attempted to increase the price, sellers have exited the trade at a more rapid pace.
 


2. Triangle Patterns

The symmetrical triangle pattern emerges when a forex currency pairs price’s highs slope converges with the slope created by the price’s lows. The two slopes “draw” towards the point of a triangle. This indicates a sort of equilibrium between buyers and sellers, but the closer to the “apex” of the triangle pattern the slopes move, the greater the chance of a breakout.  Of course the breakout can be in either direction, so tread with caution. The ascending triangle pattern emerges when buyers manage to push up the price creating a higher lows slope, but still remain few than sellers creating a flatline of price highs. Much like its pattern homonym as the slopes converge so does the possibility of a breakout. There is also the inverse of the ascending triangle pattern, the descending triangle in which the lows stay on more or less a straight line, whereas the highs create a downwards trendline.

3.Head and Shoulders

Not only the name of a popular dandruff shampoo, head and shoulders and its inverse – the predictably named inverse head and shoulders chart pattern is an extremely popular and oft used pattern. The regular head and shoulders pattern predicts a downwards movement of the price, the inverse pattern forecasts an upwards movement. Usually the pattern involves two “minor” price highs (on the normal head and shoulders) on opposite sides of a higher price high and the inverse of the pattern: two “higher” lows on the opposite sides of a “lower” low.

4. Double Top/Double Bottom Pattern

Similar to the head and shoulders but without the “head” or “higher” high/”lower” low price, the double top pattern has two peaks, which indicates that buyer interest has waned and that there is the possibility of a downwards trend. The double bottom pattern on the other hand has two low price valleys which forecast a potential upwards moving trendline as buyer interest is now piqued.

5. Rising/Falling Wedge

Similar to the triangle with resistance and support trendlines that flank the price movements of a currency pair. The primary difference between the triangle and wedge is that the wedge pattern has two sloping trendlines that are almost parallel (with the resistance trendline having a more downward slope though) opposed to the converging trendlines of the triangle pattern. Another difference is the fact that generally an uptrend break won’t be observed as the both trendlines slope down. A further differentiation between the patterns is the fact that it is a longer term pattern as indicated by its shallower slopes – compared to the triangle. A rising wedge pattern works similarly to the falling wedge chart pattern forecasting a potential downward trend.
 

With knowledge about chart patterns and an STO account that gives you access to MT4, one of the industry’s leading forex trading platforms, you can trade today. Click on the link above for more information.
This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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20 / 02 / 2017 | Market News

JPY, EUR, NZD and the Greek Bailout

With US and Canadian markets closed for respective public holidays, the agenda is once again set to be rather subdued. As such, volumes could be thin and in turn, this may lead to some exaggerated volatility, especially off the back of the limited fundamental data releases we do have.
 

USD/JPY and the EUR

 
Our prop desk is looking relatively quiet with those market holidays in North America suppressing activity. We are seeing some interest in USD/JPY positions, whilst the Euro - EUR is also looking susceptible ahead of the seemingly inevitable impasse over Greece at today’s Eurogroup meeting.
 

Fundamentals - JPY, EUR, NZD and the Greek Bailout

 
New Zealand PPI data released shortly after the trading week got underway has limited impact on Kiwi dollar - NZD crosses although the rally against the Yen - JPY was worth nothing. However this seems to be as much about the position having been sold down heavily in the run up to the weekend break, rather than being driven by the numbers – although that PPI Output print for Q4 coming it at 1.5% versus 0.9% is perhaps something worth being mindful of – it doesn’t sit all that well with the RBNZ’s apparent long-term dovish stance.
 
German PPI numbers were released this morning at 7am GMT, coming in notably better than expected. This has lead to some support in terms of pairs like EUR/USD, but this print is certainly a mixed blessing. The problem here is that it drives even deeper divisions in terms of economic performance across the Eurozone and will heighten German calls for the ECB to put an end to its lax monetary policy. Usually such debates would sit very much on the side lines, but as with the Greek bailout dilemma, this is going to sit squarely on the agenda as the campaigning for German elections picks up. With populism having reared its head visibly twice in the last eight months – Brexit and the US Presidential elections – the potential toxicity of overshoots like this cannot be underestimated.
 
Data out of the UK in the coming hours is limited but in light of Friday’s disappointing retail sales print, expect the CBI trends total orders reading at 11am GMT to be under a degree of scrutiny. Economists are already forecasting a month-on-month decline and although this is a relatively low-priority number, a notable decline here could be sufficient to further rattle the pound, especially against the greenback.
 
Eurogroup finance ministers meet today and expectations had been that a deal would be ratified over the next bail-out payment that the Greek government needs to avoid the prospect of bankruptcy. The expectation now is that no agreement will be tabled and although Athens still has until July before it defaults on any payments, the problem is any delay pushes talk of a bail out into the European election season. This is something that is easier settled between technocrats rather than on the campaign trail, so anything that hints at progress – even if we’re short of a definitive agreement - should be positive for the common currency.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
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20 / 02 / 2017 | Technical Analysis

Gold eyeing break higher?

The precious metal has been in a consolidation phase for almost the last two weeks, finding support at the 38.2% retracement of the H2 2016 sell-off. The October 2016 lows around $1250 will act as likely resistance in the short term.
 
           
The long term downward trend on EUR/AUD remains in tact despite last week’s modest bounce. We are currently trading on the 23.8% retracement of the 2008-2012 sell-off, with a move lower likely to open up support at the April 2015 lows around 1.3700.
 


This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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20 / 02 / 2017 | General

Meet STO - Trading. Inspired.

STO’s philosophy is simple, it puts its clients at its center and offers them a multitude of ways to trade across multiple financial markets. Whether you are trading forex, oils, metals, bond or equities, STO can help you do it. But first allow us to introduce ourselves.

Regulated Financial Service Provider

STO is regulated by both the UK Financial Conduct Authority, FCA and the Cyprus Security Exchange Commission, CySec. Both regulatory bodies are tasked with protecting investors and the integrity of their markets.

Customer Support

Not only are we regulated, but we also offer our clients a suite of tools to help them trade. As a STO client you will have access to a large library of educational resources including daily fundamental and technical analysis, webinars delivered by professionals and a library of articles and guides. To further assist our traders, the educational sections are separated into beginners, intermediate and advanced areas to help you bolster your knowledge no matter what level of experience you have.

Access to Industry Leading Trading Platforms

Trading with STO allows you access to MT4 (Metatrader 4) one of the most popular trading tools in the industry that can be used on multiple platforms from desktop to mobile. STO also offers its own institutional trading platform AFX Fast, to accompany the already robust MT4 platform.

Multiple Accounts to Choose From

As expected from a company that puts the client first we offer multiple accounts, that catered to both beginner and experience traders and all levels in between. This allows the level of engagement that best fits your trading strategy:
  • STO Classic Account
  • STO Premium
  • Pro Account
  • AFX Fast Accounts – only trades in forex and metals
No matter what account you choose, you can trade in forex, metals and if you choose one of the accounts above AFX Fast Accounts you can also trade in shares, indices, bonds and commodities.

Accessibility

No matter what you use to trade it be your phone, tablet or desktop PC or where you choose to trade on the bus, train, subway, in an airport or in a taxi, STO offers you the ability to trade there. When trading on a market like Forex which is open 24 hours a day, five days a week  - accessibility is key.
No matter what type of trader you are a day-trader, professional or layman STO will help you trade in the way you like. Because it's in our motto: Trading. Inspired. 

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
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17 / 02 / 2017 | Market News

NZ data paves way for Kiwi rates to remain on hold.

Once again the economic calendar is relatively subdued for the day ahead although UK retail sales figures could give some meaningful support to the rate hawks at the Bank of England. 

The Traders’ View
 
Our prop desk is currently short Yen, Euro and equity index positions, with the S&P500 again attracting some notable interest. 

Fundamentals – NZ data paves way for Kiwi rates to remain on hold.
 
New Zealand retail sales figures fell short of expectations last night, providing some welcome relief for the country’s central bank, helping support the idea that rate hikes certainly aren’t imminent. This has helped push NZD/USD further away from those one-week highs around 0.7240 and assuming the hawkish messages continue to come out of the US, this could well have the potential serve as the tipping point for a longer term decline on the pair.
 
UK retail sales data is due for release at 9.30am GMT and a notable snap back from the previous month’s decline has been forecast. This may help offer some support to cable - which has been struggling to make a sustained break above the 1.2500 level since the start of the month – as it backs up the idea that the Bank of England might not be able to maintain its lax monetary policy approach for that much longer, either. 
 
We have the latest oil update metric due at 6pm GMT today in the shape of the Baker Hughes rig count, and this number has been edging higher with growth being posted for 14 of the last 15 weeks. Another build here will do little to provide any support for crude oil prices, with the US still actively filling the supply gap that has been left by other producer nations scaling back production in an attempt to bolster supply. News earlier this week suggested Opec could extend its production cuts, with conformation of this expected by May, but this acceleration of US production is certainly undermining the objective here and the risk seems to remain weighted on the downside with so much supply in the market.
 
The Euro could be looking vulnerable heading into the weekend break, with a deal over the Greek debt bailout scheduled for Monday. Yet again, Athens finds itself facing off against the German finance ministry, who have said that the only way Greece can cut its debts is by leaving the single currency. We’ve been here many times before and a compromise will more than likely be found, but tensions are going to be heightened in Germany with the elections looming and continued distributions to other parts of the Eurozone continuing to annoy the electorate – even if they have by all accounts done very well out of the imbalance in recent years. 

 
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