There are several ways to trade Forex, and each method has its own advantages and disadvantages.  

The most popular financial instruments used in Forex trading include retail Forex, spot FX, currency futures, currency options, currency exchange-traded funds (or ETFs), Forex CFDs, and Forex spread betting. 

Retail Forex is a way for individuals to participate in the Forex market through Forex trading providers or brokers. These brokers trade on behalf of the retail traders in the primary OTC market by finding the best prices and adding a markup before displaying them on their trading platforms. Retail Forex trading involves trading contracts to deliver underlying currency rather than the currency itself. 

Retail Forex trading is leveraged, meaning traders can control large amounts of currency with a small initial required margin. For example, with $2,000, traders can open a position valued at $100,000. However, this also means that traders can potentially lose more than their initial investment. 

To avoid the physical delivery of currency, retail Forex brokers automatically “roll” client positions by entering into an equal but opposite transaction. This rolling process is known as Tomorrow-Next or “Tom-Next” and results in either interest being paid or earned by the trader, known as a swap or rollover fee. 

Retail Forex trading is considered speculative, as traders are trying to profit from the movement of exchange rates without taking physical possession of the currencies they buy or sell. It is important for traders to understand the risks involved and to have a solid understanding of the market before participating in retail Forex trading. 

Spot FX is an OTC market where customers trade directly with a counterparty. Unlike centralised markets, spot FX contracts are private agreements between two parties, and most trading is done through electronic trading networks or by telephone. 

The primary market for FX is the interdealer market, which is dominated by banks and accessible only to institutions that trade in large quantities. 

In the spot FX market, traders buy or sell contracts to make or take delivery of a currency at the current exchange rate. The price of currencies in the spot market is determined by several factors, such as current interest rates, economic performance, geopolitical sentiment, and price speculation.  

The finalisation of a deal in the spot market is known as a spot deal, which is a bilateral transaction between two parties. A position in the spot market is settled in cash, but it takes two business days for the actual transaction to be settled. 

Although the spot FX market operates 24 hours a day, it is not where retail traders trade. 

Currency futures are contracts that allow traders to buy or sell a certain amount of currency at a set price and date in the future. 

They were introduced in 1972 by the Chicago Mercantile Exchange (CME) and are traded on centralised exchanges. 

The contracts have standard details, such as the amount of currency, the date when the trade will happen, and the smallest price change allowed. The exchange makes sure that both sides of the trade are settled. Traders can buy or sell currency futures based on a fixed size and date at commodities markets. 

The market is well-regulated, and you can easily get information about prices and trades. Currency futures are used by traders to protect against currency value changes or to predict future changes. 

Currency options are financial agreements that give the holder the right, but not the obligation, to buy or sell a specific amount of currency at a fixed exchange rate or before a future date. 

These options are available for trading on popular exchanges such as the Chicago Mercantile Exchange (CME), the International Securities Exchange (ISE), and the Philadelphia Stock Exchange (PHLX). 

In general, currency options are commonly used to protect against unfavourable changes in exchange rates by corporations, individuals, and financial institutions. At the same time, traders can use currency options to speculate on currency movements. 

Currency ETFs are managed investments in one or multiple currencies. They are created and managed by a financial institution and traded like a stock. 

Currency ETFs serve various purposes: speculation, diversification, and hedging. But they come with macroeconomic risks like geopolitical risks and interest rate hikes. 

Despite the limitations of trading, currency ETFs offer a convenient way to invest in the Forex market without the burden of managing investments. 

Forex CFDs, also known as Contracts for Difference, are financial instruments that allow traders to speculate on whether the price of an underlying asset, like a currency pair, will rise or fall. When a trader enters into a CFD contract, they agree with a provider to exchange the difference in the value of the asset between the opening and closing of the trade. 

Unlike traditional investments, CFD investors don’t actually own the underlying asset; instead, they receive revenue based on the price change of that asset. 

The advantages of trading Forex CFDs include access to the underlying asset at a lower cost than buying it outright, ease of execution, and the ability to take both long and short positions. 

Forex spread betting is a way to predict if a currency’s price will go up or down in the future without owning it. The price is based on the currency’s value in the FX market. 

Spread betting providers allow this type of trading and consider three factors: the trade direction, the bet size, and the spread of the instrument traded. 

One benefit of forex spread betting is that traders can use leverage to potentially make a larger profit from a smaller investment. However, if the market moves against you, you could lose more than your initial investment. 

Each of these trading methods has its advantages and disadvantages, and traders should choose the method that best suits their trading style and risk tolerance. 

Summary

To be short, the answer is “currencies”. 

When we want to talk about different types of currencies, we use three-letter symbols to represent them. The first two letters in the symbol tell us which country the currency comes from, and the third letter tells us the name of the currency. For example, USD stands for United States Dollar. These codes are called ISO 4217 Currency Codes. 

The most actively traded currencies are the US Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Australian Dollar (AUD), Swiss Franc (CHF), Canadian Dollar (CAD), and New Zealand Dollar (NZD). These currencies are often referred to as the “majors” and are traded in high volumes due to their liquidity and stability. 

The US Dollar plays a central role in the Forex market, with over 50% of the trades involving it. 

The US Dollar is crucial in the global economy for several reasons. Firstly, it has the largest economy and most liquid financial markets globally, making it a powerhouse for international trade. Secondly, it is the primary global reserve currency and is used in half of all international loans and bonds and in cross-border transactions, including petrodollars. Lastly, the US’s stable political system and sole military superpower status make it a safe haven for investors. 

It is important to understand that currencies are always traded in pairs. A currency pair is the exchange rate between two different currencies. For example, the EUR/USD currency pair represents the exchange rate between the Euro and the US Dollar. 

There are three main categories of currency pairs: the “majors”, the “crosses”, and the “exotics”. The popularity of currency pairs can vary depending on market conditions, so it’s important for traders to stay informed about which pairs are currently in demand. 

While there are eight major currencies, only seven major currency pairs exist. That is because US Dollar must always be present in the pair. This currency group involve EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD. The last three pairs are also called commodity currency pairs. The “majors” are usually the easiest for beginners to trade. 

The “crosses” are currency pairs that do not involve the US Dollar. Cross-currency pairs consist of two major currencies: the Euro and the Japanese Yen (EUR/JPY) or the British Pound and the Japanese Yen (GBP/JPY). Crosses are typically less liquid than the majors, but they can still provide opportunities for profitable trades. 

The “exotics” are currency pairs that involve a major currency paired with a currency from an emerging or developing country. Exotic currency pairs are considered more volatile and less liquid than the majors and crosses. Examples of exotic pairs include the USD/MXN (US Dollar/Mexican Peso) and the USD/ZAR (US Dollar/South African Rand). 

Understanding currency pairs is crucial for forex trading because buying one currency means simultaneously selling another. For example, if you buy the EUR/USD currency pair, you are essentially buying Euros and selling US Dollars. Trading currency pairs allows traders to speculate on the exchange rate between two currencies and potentially profit from the difference in price. 

Forex speculation is the practice of buying and selling currency pairs in order to profit from the fluctuations in their exchange rates. Speculators aim to buy currencies when they are undervalued and sell them when they are overvalued, making a profit on the difference in the exchange rate. 

Exchange rates are the values at which one currency can be exchanged for another. These rates are determined by the supply and demand of each currency in the market. When demand for a currency is high, its value increases, and when demand is low, its value decreases. Exchange rates are expressed as a ratio, such as 1.20 EUR/USD, which means that one euro is worth 1.20 US dollars. 

There are several factors that can affect exchange rates, including: 

Economic Factors: The state of a country’s economy can have a significant impact on its currency’s value. Factors such as inflation, interest rates, and economic growth can all affect exchange rates. 

Political Factors: Political stability and government policies can also affect exchange rates. For example, a country with a stable government and sound economic policies may have a stronger currency than a country with political turmoil and uncertain economic policies. 

Market Sentiment: The mood of the market can also influence exchange rates. If traders are optimistic about a currency’s prospects, its value may increase, while pessimistic sentiment can lead to a decline in value. 

Brexit is a prime example of how political events impact a nation’s currency exchange rate. The UK’s decision to leave the EU in 2016 resulted in uncertainty and instability, leading to a decline in the value of the British pound. Before the referendum, the pound traded at 1.50 USD, but after the decision, it fell to 1.30 USD. Prolonged negotiations between the UK and the EU added to the volatility, further weakening the pound against other currencies. 

Understanding these basics of Forex trading is essential for anyone looking to enter the market. VT Markets provides its clients with Daily market analysis to keep them up to date with the latest news and help make informed decisions about their investments. 

Summary: 

• _{^{Forex trading involves buying and selling currencies in pairs, with three main categories of currency pairs: majors, crosses, and exotics.}} 

• _{^{The most actively traded currencies are the US Dollar, Euro, Japanese Yen, British Pound, Australian Dollar, Swiss Franc, Canadian Dollar, and New Zealand Dollar.}} 
• _{^{Forex speculation means buying and selling currency pairs to profit from fluctuations in their exchange rates.}} 
• _{^{Exchange rates are determined by supply and demand, with factors such as economic and political stability and market sentiment affecting exchange rates.}} 

Forex is a short term for “foreign exchange,” which means changing one currency to another. 

Let’s say you’re travelling from France to the United States. You’ll need to change your euros to US dollars. When you go to the bank, you’ll see a big board with names of different currencies and numbers. This board shows exchange rates, which are the price of one currency compared to another. For instance, the exchange rate for €1 is $1.2. 

Suppose you exchange €1000 for $1200 before your trip. This means you participated in the Forex market. 

However, when you’re on vacation, you’ll notice that the exchange rate has changed, and now €1 is worth less in US dollars than when you exchanged your money. As a result, your €1000 is now worth only $1100 instead of $1200. This means your euros can buy fewer things in the United States than you initially thought. 

In the financial world, Forex traders aim to profit from the changes in exchange rates by buying and selling currencies at the right time. 

The Forex market is the world’s largest and most liquid financial market. It is estimated that the daily trading volume of the Forex market has reached $7.5 trillion USD. To put this into perspective, the stock market in the United States has a daily trading volume of around $400 billion USD, which is just a fraction of the Forex market’s volume. 

To help you visualise just how big the Forex market is, imagine the world’s largest shopping mall on Black Friday, with millions of people buying and selling goods all at once. Now, imagine that happening every single day, 24 hours a day, 5 days a week, all over the world. That’s how big the Forex market is. 

To facilitate trading around the clock, the Forex market has several financial centres located in different parts of the world, including New York, London, Tokyo, and Sydney. Each financial centre has its opening and closing hours, which overlap to create a continuous trading session. 

For example, when it’s morning in New York, and the Forex market opens, it’s already afternoon in London, where the market is already open. This overlap in market hours allows traders to trade in multiple markets simultaneously and take advantage of the increased liquidity and volatility. 

Forex plays a crucial role in facilitating international trade and investment by allowing businesses and individuals to exchange one currency for another. Without Forex trading, it would be difficult to conduct international transactions, as businesses and individuals would have to rely on their own country’s currency. 

The Forex market is decentralised, meaning that it does not have a central location like the New York Stock Exchange or the London Stock Exchange. Instead, it operates through a global network of big commercial banks, central banks, multinational corporations, investors, hedge funds, and individual traders who buy and sell currencies electronically. 

Commercial banks are the biggest players in the Forex market. They trade currencies for lots of different clients, such as other banks, big companies, and people who want to exchange money for their travels. When they trade currencies, they help to set the prices for all the other traders in the market. The big players that significantly influence the market are called market makers. 

The Forex market operates through two main channels: the interbank market and the over-the-counter (OTC) market. 

The interbank market is where banks and financial institutions trade currencies with each other, acting as both buyers and sellers. For example, if a bank needs to exchange US dollars for euros, it will turn to the interbank market to find another bank willing to sell euros and buy US dollars. 

On the other hand, the OTC market is where trades are conducted directly between two parties without using a centralized exchange or clearinghouse. For example, if you’re travelling to another country and need to exchange your currency for the local currency, you might go to a currency exchange booth at the airport. The currency exchange booth acts as an OTC market maker, buying your currency from you and selling you the local currency at a markup. 

Forex brokers like VT Markets play a crucial role in the Forex market by providing a platform for traders to buy and sell currency pairs. They act as intermediaries between traders and the market, executing trades on behalf of their clients. 

As a broker’s client, you have the opportunity to earn profits by speculating on the movement of currency pairs. Brokers also offer various tools and resources to help traders make informed decisions, such as market analysis, educational materials, and trading signals. 

Choosing a reputable and regulated broker is important, as the Forex market is known for its volatility and potential risks. However, with the right knowledge and strategy, trading Forex can be a lucrative opportunity for those willing to put in the effort to learn and practice. 

Summary:

• _{^{Forex means “foreign exchange” and involves changing one currency to another.}} 

• _{^{Exchange rates are the prices of one currency compared to another and fluctuate constantly in response to various economic and political factors.}} 

• _{^{Forex traders aim to profit from changes in exchange rates by buying and selling currencies at the right time.}} 

• _{^{The Forex market is the world’s largest and most liquid financial market, with a daily trading volume of $7.5 trillion USD.}} 

• _{^{The Forex market operates through a global network of big commercial banks, central banks, multinational corporations, investors, hedge funds, and individual traders who buy and sell currencies electronically.}} 

• _{^{The Forex market is decentralised and operates through two main channels: the interbank market and the over-the-counter (OTC) market.}} 

• _{^{Forex brokers play a crucial role in the Forex market by providing a platform for traders to buy and sell currency pairs.}} 

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected]

The Nasdaq Composite closed higher as investors turned to tech stocks following a relatively modest inflation report. The tech-heavy index gained 1.04% to reach a closing value of 12,306.44, while the S&P 500 added 0.45% to close at 4,137.64. In contrast, the Dow Jones Industrial Average dipped slightly by 0.09% to end at 33,531.33.

April’s consumer prices rose 4.9% compared to the previous year, falling short of economists’ expectations of a 5% increase. This news, along with the in-line month-over-month inflation rate of 0.4% in April, caused Treasury yields to decline. The 2-year Treasury yield fell by around 11 basis points to 3.91%, and the 10-year rate declined by 8 basis points to 3.44%.

While the market reacted positively to the tempered inflation report, cyclical stocks linked to the economy traded lower, with companies like Nike and Caterpillar ending the session in negative territory. Additionally, Airbnb and Twilio saw significant declines of 10.9% and 12.6%, respectively, following weak forecasts. Rivian, an electric vehicle maker, closed 1.8% higher after reporting a narrower-than-expected loss. The focus also turned to earnings reports from Disney and Robinhood.

Investors remained cautious about a potential full-fledged rally despite the more favorable inflation figures. Concerns over the U.S. debt ceiling also weighed on traders’ minds, as the possibility of an agreement being reached before June 1—when the U.S. Treasury Department says a default could occur—became uncertain. President Joe Biden met with congressional leaders, but limited progress was reported. Another meeting is scheduled for Friday to address the issue.

Data by Bloomberg

On Wednesday, the overall market showed a positive trend, with all sectors experiencing a 0.45% gain. The Communication Services sector had the highest increase of 1.69%, followed by Information Technology with a gain of 1.22%. Real Estate and Utilities also performed well, rising by 0.98% and 0.94% respectively.

Consumer Discretionary showed a modest increase of 0.63%, while Health Care and Materials had smaller gains of 0.27% and 0.05% respectively. On the other hand, Consumer Staples experienced a slight decline of -0.15%. Industrials and Financials sectors faced larger decreases of -0.32% and -0.58% respectively. The Energy sector experienced the most significant decline, dropping by -1.15%.

Major Pair Movement

The U.S. dollar initially weakened in response to the Consumer Price Index (CPI) data, which fell short of some expectations, indicating that it may not support the Federal Reserve’s position against rate cuts in the second half of the year. However, risk-off sentiment and book-squaring helped the dollar recover from its early losses, except against the safe-haven Japanese yen. The decline in Treasury yields, driven by the weaker-than-expected inflation data and renewed weakness in regional bank stocks, contributed to the dollar’s recovery.

The Japanese yen benefited the most from the stock market decline and falling yields, as Japanese Government Bond (JGB) yields are influenced by the Bank of Japan’s (BoJ) yield curve control and quantitative easing measures. Speculation is growing that the BoJ’s policy review, amid inflation levels surpassing its target, may lead to higher JGB yields. Additionally, a report highlighting Japanese life insurers’ inclination to reduce their Treasury holdings in favor of JGBs further fueled the exit of long positions in USD/JPY and yen shorts.

Meanwhile, the euro initially rebounded against the dollar following the CPI release but later experienced a modest 0.15% increase as risk-off flows supported demand for the safe-haven dollar. Similarly, sterling’s post-CPI rally to new one-year highs dissipated due to derisking and ahead of the Bank of England’s meeting on Thursday.

Technical Analysis

EUR/USD (4 Hours)

EUR/USD Lacks Direction as US Dollar Recovers Despite ECB Hawkish Comments

The US dollar initially weakened in response to US inflation data, causing the EUR/USD pair to briefly surpass 1.1000. However, the US dollar later regained its footing, pushing the pair back below that level. The EUR/USD pair is currently moving sideways without a clear direction, despite the European Central Bank (ECB) members’ hawkish comments.

ECB Governing Council member Mario Centeno stated that policy would remain tight for some time, but interest rates might start to decline in 2024. Bloomberg reported that some ECB members are considering a rate hike in September, assuming earlier hikes in June and July. Meanwhile, German inflation data confirmed a 7.2% annual increase in April.

In the US, the Consumer Price Index (CPI) showed a slight decrease to 4.9% in April from 5% in March, while the Core CPI dropped to 5.5% from 5.6% in March. Initially, the US dollar faced significant losses but eventually rebounded and turned positive. Market participants are pricing in a potential pause in rate hikes from the Federal Reserve in June. On Thursday, the US will release additional inflation data with the Producer Price Index (PPI).

Chart EURUSD by TradingView

According to technical analysis, the EUR/USD pair is currently trending lower after reached the middle band of the Bollinger band. It is expected that the EUR/USD will continue to move back lower to reach the lower band of the Bollinger band. The Relative Strength Index (RSI) is presently at 42, suggesting a neutral trend but lower in the EUR/USD market.

Resistance: 1.0990, 1.1032

Support: 1.0965, 1.0939

XAU/USD (4 Hours)

XAU/USD Retreats as US Inflation Data Spurs Speculation on Fed Rate Hike Chances

Following the announcement of US inflation data, spot gold initially reached a peak of $2,048.14 per troy ounce but has since declined and is currently trading around $2,025. The rise in the US Consumer Price Index (CPI), with a 4.9% year-on-year increase in April and a 0.4% month-on-month increase in line with expectations, led to a surge in XAU/USD. However, the inflation rate has been gradually easing from its previous record highs in mid-2022.

The release of the inflation figures prompted speculators to factor in reduced chances of a rate hike by the Federal Reserve (Fed) in July. This resulted in a rally in stock markets as investors hoped that the Fed would maintain its current stance, reducing the risk of an economic downturn. Consequently, the US dollar initially weakened across the foreign exchange (FX) market.

Although Wall Street opened on a positive note, sentiment quickly shifted, allowing the US dollar to recover its losses against major currencies. Similarly, US Treasury yields initially rose but subsequently fell back to their pre-announcement levels, remaining at the lower end of the daily range. Currently, stock markets are trading with mixed results, with the Dow Jones Industrial Average (DJIA) in negative territory, the S&P 500 struggling to stay afloat, and the Nasdaq Composite performing the best, showing a gain of 78 points.

Chart XAUUSD by TradingView

The technical analysis indicates that XAU/USD is moving higher on Wednesday. The price is currently just above the middle band of the Bollinger Band, indicating the potential for a consolidating movement with higher potential. Moreover, the Relative Strength Index (RSI) is currently at 54, indicating that XAU/USD is considered neutral but slightly bullish.

Resistance: $2,038, $2,052

Support: $2,015, $2,003

Economic Data

Dear Client,

New contracts will automatically be rolled over as follows:

Please note:
• The rollover will be automatic, and any existing open positions will remain open.

• Positions that are open on the expiration date will be adjusted via a rollover charge or credit to reflect the price difference between the expiring and new contracts.

• To avoid CFD rollovers, clients can choose to close any open CFD positions prior to the expiration date.

• Please ensure that all take-profit and stop-loss settings are adjusted before the rollover occurs.

• All internal transfers for accounts under the same name will be prohibited during the first and last 30 minutes of the trading hours on the rollover dates

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Stocks closed lower on Tuesday as investors prepared for upcoming inflation reports and monitored progress on the U.S. debt limit. The S&P 500 and the Nasdaq Composite experienced declines of 0.46% and 0.6% respectively, while the Dow Jones Industrial Average remained relatively flat with a 0.17% decline. President Joe Biden and House Speaker Kevin McCarthy held a meeting to discuss the debt limit, but no definitive progress was expected as the two remain divided on tying the debt ceiling increase to spending cuts. Treasury Secretary Janet Yellen warned of the economic catastrophe that could result from failing to raise the debt ceiling, and concerns over inflation and the banking sector also weighed on investor sentiment.

In the market, PacWest shares experienced volatility but closed up 2.4%, while the SPDR S&P Regional Banking ETF ended the day down slightly. Lucid, PayPal, and Skyworks saw declines following the release of their quarterly reports, while Palantir saw a significant jump of 23% after reporting strong earnings and positive guidance. Traders are now eagerly awaiting the consumer price index report for April and the producer price index report for the newest data on inflation. Economists anticipate a 0.4% month-over-month increase in inflation for April and a 5% year-over-year increase, with core prices expected to have risen by 0.4%, excluding food and energy components.

On Tuesday, the overall stock market experienced a decline of 0.46%. Among the sectors, there were mixed performances. Industrials showed a slight increase of 0.17%, while energy and consumer discretionary sectors saw minor gains of 0.03% and 0.02% respectively. Utilities and consumer staples sectors experienced modest declines of 0.20% and 0.30%. Financials, real estate, communication services, health care, information technology, and materials sectors all faced greater declines ranging from 0.37% to 0.93%.

Major Pair Movement

The dollar index saw a 0.2% increase as the euro weakened due to concerns over Chinese trade data. Despite tightening credit, New York Fed President John Williams expressed reluctance towards policy easing, suggesting that the worst phase of stress in the banking sector may be over. The eurozone and German data have taken a negative turn recently, causing the EUR/USD to fall by 0.3% and reach last week’s lows. The yield spreads between two-year bonds and Treasuries have become 21 basis points more damaging compared to April’s peak.

Although the market still anticipates 66 basis points of Federal Reserve rate cuts by the end of the year, 6-month Treasury yields increased by 5 basis points on Tuesday, reflecting the ongoing refunding and the risk associated with the unresolved debt ceiling issue. The recent reports from the Fed on lending standards and financial stability provided some relief as they indicated less tightening of lending standards than expected and lower loan demand despite recent regional bank failures. The April NFIB report revealed the weakest conditions in over a decade but attributed the restraint not to tighter credit but rather to a persistent shortage of workers. The performance of U.S. regional bank stock indexes and Wednesday’s inflation data will be influential in determining the direction of Treasury yields and the dollar.

The safe-haven yen remained steady against the euro and the Australian dollar, which was negatively impacted by declining Chinese imports and de-risking. Japan’s unexpected decrease in household spending and real wage decline had minimal impact, as the focus remained on the Bank of Japan’s policy review. The British pound recovered slightly after a brief setback from Monday’s one-year peak in anticipation of U.S. CPI data and the upcoming Bank of England meeting on Thursday.

Technical Analysis

EUR/USD (4 Hours)

EUR/USD Extends Decline as US Dollar Strengthens Ahead of Crucial Data

The EUR/USD currency pair continued to retreat on Tuesday, falling below 1.1000 and extending its decline from monthly highs. Despite hawkish comments from European Central Bank (ECB) members, the Euro underperformed, while the US Dollar gained strength supported by higher US Treasury yields in anticipation of important data releases. ECB members, including Martins Kazaks and Peter Kazimir, spoke about the possibility of further rate hikes, while Isabel Schnabel highlighted the need for more efforts to bring inflation back to target. Mario Centeno is also scheduled to speak on Wednesday. The Euro remained the weakest currency among the G10 currencies. The market focus now turns to the upcoming US April Consumer Price Index (CPI), which is expected to show an acceleration in headline inflation and could influence the Federal Reserve’s monetary policy expectations. The ongoing debt ceiling issue is also gaining attention, adding to market uncertainty.

According to technical analysis, the EUR/USD pair is currently trending lower, reaching the lower band of the Bollinger band. It is expected that the EUR/USD will continue to move back lower but need to move slightly higher to reach the middle band of the Bollinger band. The Relative Strength Index (RSI) is presently at 42, suggesting a neutral trend but lower in the EUR/USD market.

Resistance: 1.0990, 1.1032

Support: 1.0965, 1.0939

XAU/USD (4 Hours)

XAU/USD Consolidates as Risk-Aversion Persists, US Dollar Gains Ground

Gold (XAU/USD) remained consolidated around $2,030 per troy ounce as risk aversion persisted, driving demand for both gold and the US Dollar. The US Dollar gained strength against other currencies, supported by concerns about the banking system’s health and the release of the Federal Reserve’s Senior Loan Officer Opinion Survey, which showed tightened lending standards and weakened credit demand in the US. Wall Street closed in the red, reflecting the negative market sentiment. Traders are now focused on the upcoming release of the April Consumer Price Index (CPI), with expectations of a 5% annualized increase in inflation. A lower-than-expected CPI could fuel speculation of a potential rate cut by the Federal Reserve.

The technical analysis indicates that XAU/USD is moving higher on Monday. The price is currently just above the middle band of the Bollinger Band, indicating the potential for a consolidating movement with higher potential. Moreover, the Relative Strength Index (RSI) is currently at 56, meaning that XAU/USD is considered neutral but slightly bullish.

Resistance: $2,038, $2,052

Support: $2,015, $2,003

Economic Data

Dear Client,

To provide the best trading experience possible, VT Markets will modify the available leverage for US share CFDs on 15 May 2023:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

Friendly reminders:
All specifications for US shares stay the same except leverage.

As a result, the margin requirements for the trading products above will be lowered.

If you’d like more information, please don’t hesitate to contact [email protected]

What is NFP and Why is Important?

The Non-Farm Payroll (NFP) report is a monthly economic release that provides insight into the employment situation in the United States. It is a highly significant economic indicator and is widely used by investors, traders, and policymakers to evaluate the health of the U.S. economy.

Impact of Nonfarm Payroll on the Foreign Exchange Market

The NFP report can significantly impact the foreign exchange (Forex) market. If the report shows more jobs added than expected, it can indicate a strong economy, leading to an increase in the value of the U.S. dollar. Conversely, if the report indicates fewer jobs added than expected, it can signal a weak economy and lead to a decrease in the value of the U.S. dollar.

Non-Farm Payroll Report Employment Change

The NFP employment change measures the number of jobs added or lost in the U.S. economy, excluding the farming industry. It is issued on the first Friday of each month by the U.S. Bureau of Labor Statistics and is based on data collected in the previous month.

How to read the Non-Farm Payroll Report  

While the NFP report can be complex, it offers valuable insights to investors and traders. It includes critical data such as the unemployment rate, the number of jobs added or lost, and the average hourly earnings. Investors and traders analyze this information to assess the economy’s health and make investment decisions.

Where to find the Non-Farm Payroll Report

The NFP report, released on the first Friday of every month at 8:30 a.m. Eastern Time (ET), can cause significant volatility in financial markets.

It is available on the website of the U.S. Bureau of Labor Statistics, as well as various financial news outlets and online platforms. Monitoring the NFP, along with other economic indicators, allows investors, traders, and policymakers to gain insights into the health of the U.S. economy and make informed decisions. Thus, comprehending the Non-Farm Payroll report is crucial for making better investment decisions.

What is Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is a measure of the economic activity of a country. It is the total monetary value of all the goods and services produced within a country’s borders in a specific period, usually a year. GDP is often used as an indicator of a country’s economic health and overall standard of living. 

Understanding Gross Domestic Product (GDP) 

GDP is an important measure of a country’s economic activity. It provides a snapshot of a country’s economy at a specific point in time. It is important to understand that GDP is not a measure of a country’s wealth or standard of living, but rather a measure of its economic activity. It is calculated by adding up the total value of all goods and services produced within a country’s borders, including exports and imports. 

Types of Gross Domestic Product 

Nominal GDP 

Nominal GDP is the total value of all goods and services produced within a country’s borders at current market prices. Nominal GDP does not consider the effects of inflation or deflation on the economy. 

Real GDP 

Real GDP is the total value of all goods and services produced within a country’s borders adjusted for inflation or deflation. Real GDP is often used as a measure of a country’s economic growth, as it considers changes in the price level. 

GDP Per Capita 

GDP per capita is the total GDP of a country divided by its population. This measure is often used to compare the economic activity of different countries. 

GDP Growth Rate 

GDP growth rate is the percentage change in a country’s GDP from one period to another. It is often used to measure the health and growth of a country’s economy. 

GDP Purchasing Power Parity (PPP) 

GDP purchasing power parity (PPP) considers the differences in the cost of living between countries. It adjusts for differences in the prices of goods and services between countries to provide a more accurate measure of economic activity. 

GDP Formula 

The formula for calculating GDP is: 

GDP = C + I + G + (X-M) 

Where: 

C = Personal consumption expenditures 

I = Gross private domestic investment 

G = Government consumption expenditures and gross investment 

X = Exports of goods and services 

M = Imports of goods and services 

How to Use GDP Data and where to find them

GDP data is useful for analyzing a country’s economic activity and identifying trends in specific industries or sectors. It can be used to compare the economic activity of different countries and to determine if an economy is growing or contracting.

Policymakers, investors, and economists often use GDP data to make informed decisions and to gain insights into the health of the economy.

Gross Domestic Product data can be found in the National Accounts dataset portal, and in the Data Tables tab of the International Financial Statistics dataset portal.

Is a High GDP Good? 

A high Gross Domestic Product (GDP) generally indicates a strong and growing economy. It means that the country is producing more goods and services, creating more job opportunities, and generating higher incomes. A high GDP can also attract foreign investments, which can further boost economic growth. Additionally, a high GDP can provide the government with more resources to invest in public goods and services, such as infrastructure, education, and healthcare.

However, a high GDP alone does not necessarily equate to a better quality of life for all citizens, as income inequality and other social issues can persist. Therefore, while a high GDP can bring many benefits, it should not be the only measure of a country’s overall well-being.