EarnForex.com Monthly Newsletter
| | | | Hello traders! Welcome to the latest issue of EarnForex.com newsletter — September 2020. In this issue of EarnForex.com newsletter, I will remind you about the most important Forex-related events of the last month and will also show you the list of the site's latest updates. | | EDITORIAL: Making Sense of PMI Reports 🤯 | | If you use Forex calendars to plan your trades around important economic news, you probably encountered PMI reports for all currencies. PMI stands for Purchasing Managers' Index and is calculated based on a survey of private companies' purchasing managers. Managers are asked whether business conditions improved, worsened, or remained unchanged during the past month. The percentage of answers reporting improvement is given the weight of 1, the percentage of answers reporting no change is given the weight of 0.5, and the percentage of answers reporting worsening conditions is given zero weight. This results in that a PMI is at its peak at 100% (when all managers report improving conditions), is in a neutral state at 50% (when there was no change in business conditions on average), and is at its minimum at 0% (when all managers report worsening conditions). PMI reports are closely watched by savvy Forex traders because they offer a bit of near real-time information on how the economy is doing. GDP reports have huge delays; other economic indicators also offer information lagging by up to a month or two. PMI reports are considered to be very fast trackers. You can incorporate PMI values as strong fundamental indicators of how the country's economy is faring. There are multiple types of PMI reports available to traders. In the USA, there is a single Chicago PMI (combines both manufacturing and services activity in Illinois, Indiana, and Michigan), two ISM PMI's (services and manufacturing), and two Markit PMI's (also, services and manufacturing). Markit PMI's are also available for all major economies in the world. PMI's for UK, Germany, France, and China are among the most followed ones. Markit PMI's are reported in two versions: preliminary (also called flash) - during the first days of the month, and final - about a week later. The preliminary ones are usually more important that the revised final ones, and the latter rarely differ much from the former. So, to recap: - PMI's provide a timely indicator of economic strength.
- PMI's come in many flavors and all are considered quite important.
- With Markit reports, make sure you are reacting to a preliminary report.
- Final PMI reports must differ greatly from their preliminary values to be impactful.
- When using an economic calendar, check whether it lists preliminary value in the previous column. Otherwise, the actual value might look overly surprising when compared to last month's value, while in fact, it may just be repeating the already known flash estimate.
| | Overview of the major currency pairs' performance in August | | EUR/USD — was in a moderate but steady uptrend, with deep corrections, but also with each new bullish wave brining in new highs. It was at the maximum at 1.1966 on August 31, at its minimum at 1.1695 on August 3, finishing the month at 1.1936. GBP/USD — after the initial sideways period, GBP/USD strengthened significantly. The highest monthly rate was at 1.3395 on August 31, while the lowest — at 1.2980 on August 4. GBP/USD finished August trading at 1.3367. USD/JPY — formed an M-pattern via its August trading. The pair rose to as high as 107.05 on August 13, reaching a bottom at 105.10 on August 19 and closing the month with the 105.90 rate. AUD/USD — went up similarly to EUR/USD, but the uptrend was even more pronounced. The monthly high was at 0.7403 on August 31, the monthly low — at 0.7076 on August 3. Trading ended at 0.7374 for this currency pair. USD/CAD — fell precipitously last month. The maximum level for this pair was 1.3450 on August 3, while the minimum — 1.3019 on August 31. The month's trading ended at 1.3046 for USD/CAD. | | Fundamental background of the past month | | The US dollar was the weakest major currency in August. While the most likely reason for such a bad performance seems to be the COVID-19 pandemic and its tremendous negative impact on the US economy, sometimes the greenback was able to benefit from bad news and the grim outlook thanks to its role as a safe-haven currency. The month actually started well for the US currency as it got support from good non-farm payrolls but it later reversed its trend, falling on good employment data and rising on bad reports. By the end of the month, the dollar got hit from the Federal Reserve, which announced a new approach to its inflation targeting. The euro also did not perform well in August but it managed to gain on the greenback thanks to decent domestic macroeconomic indicators, which brought hope that the eurozone is on the path of recovery from the damage caused by the pandemic. The Great Britain pound showed a decent performance over the month thanks to good macro indicators, including inflation. The positive outlook demonstrated by the Bank of England helped the currency as well. The sterling had its own hurdles, though, like a sharp decline of Britain's economy and lack of progress in Brexit talks between the United Kingdom and the European Union. The Japanese yen was one of the weakest currencies in August as the optimism caused by the signs of economic recovery across most of the world made the yen unpopular in its role as a safe haven. The major event in Japan was a surprise resignation of Prime Minister Shinzo Abe, who was the longest-serving prime minister in Japan's history, due to health-related issues. Commodity currencies were the clear winners in August due to risk appetite, and the Canadian dollar was among them. Strong crude oil prices were also helping the currency. The loonie got hurt by the end of the month, though, by a sharp deterioration of the Canadian economy. The Australian dollar was the strongest currency on the Forex market in August thanks to the positive market sentiment. There were negative factors affecting the Aussie, though, like the US-China tensions, which are likely to escalate after US President Donald Trump made a move to ban in the United States TikTok and WeChat, apps owned by Chinese companies. The market sentiment propelled the New Zealand dollar higher as well. The currency also got support from positive domestic employment data, while paying little attention to negative reports. Gold was swinging between gains and losses in August, rising above $2,000 but crashing sharply afterward. Ultimately, the metal ended the month flat. | | Interest rate changes in August | | Brazil | 2.25% | -0.25% | 2.00% | | Mexico | 5.00% | -0.50% | 4.50% | | Romania | 2.00% | -0.50% | 1.50% | You can see the current interest rates by the world's central banks in our interest rates table. | | MetaTrader expert advisors | | One new MetaTrader expert advisor has been added to EarnForex.com since the last issue of the newsletter: - AutoTrading Scheduler — a handy tool to automatically disable or enable AutoTrading button in MetaTrader according to a weekly schedule.
You can always view the previously uploaded Forex expert advisors. | | One new Forex guide has been published on EarnForex.com since the last issue of the newsletter: You can always browse the previously uploaded guides. | | Six new Forex brokers have been added to EarnForex.com since the last issue of the newsletter: - Anzo Capital — a broker with dual registration (Australia and offshore) with $100 minimum account size, MT4 platform, and up to 1:1000 leverage for currency pairs.
- Axes — a purely offshore company with three trading platforms: MT4, MT5, and cTrader. Their minimum account size is $500 and they offer up to 1:500 leverage on Forex instruments.
- NAGA — a CySEC-regulated company with MetaTrader 4 & 5 and $250 required to start trading. They also have an offshore division to offer leverage higher than 1:30.
- Streams — an offshore (St. Vincent and the Grenadines) broker with several account types and MetaTrader 4 platforms. You can start with a Classic account from $100 and with an ECN account for $1,000. Their leverage is maxed at 1:500 for currency pairs.
- LonghornFX — an unregulated offshore broker with low fixed spreads combined with some commission for trading. They provide traders with an MT4 platform and a maximum of 1:500 leverage. They also have a lot of trading instruments to work with.
- EuropeFX — a CySEC-regulated company with MetaTrader 4 and EuroTrader 2.0 platforms. They offer a tiered account system with the minimum of $1,000. However, due to them being a regulated European broker, the leverage is capped at 1:30.
You can always view our full list of Forex brokers. | | Top five Forex brokers of the last month | | There was the following important Forex industry news since the last issue of the newsletter: - Rodeler Ltd, the parent company of 24option Forex broker, has reached a settlement with its former regulator CySEC for €280,000 due to numerous breaches in compliance.
- Interactive Brokers settled charges with CFTC, agreeing to pay $12 million for anti-money laundering and supervision violations.
- CFTC ordered OANDA to pay $500,000 for violating certain capital, reporting, and supervision rules back in 2019.
- CFTC also added Coinexx, EagleFX и Turnkey Forex among other foreign companies into its RED list for soliciting US traders without being properly registered with CFTC and NFA.
| | Until the next newsletter issue! | | That is all for the September issue of the EarnForex.com newsletter. If you have questions, comments or just want to see something else in the next monthly issue, please let us know. | | |
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