Forex Sector Presentation

8/8/2019 Forex Sector Presentation

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Forex Sector Presentation

By Stefan Mihailescu

And

Hu Yi23rd of November 2010


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Agenda

1. Currency trading example

2. Market news and developments

3. Current Positions :a) Forex dealing form

b)Adjustments and outcomes


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Currency trading example

Example: EUR/USD buy 1.4232 sell 1.4230

Amount Value

10.000 units 1Pip = 1$

100.000 units 1Pip=10$

Margin 1:50; 1:100

Trade Value/50; (10.000* 1.4232or30)/50 = ~284

Trade Value/100 (10.000* 1.4232or30)/100 = ~142

The margin is the amount of (equity), 272 while the rest (multiplier of 50 or

100) is the leverage.


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Currency trading example

Most Trading accounts will compound interest daily.

-if you borrow the lower yielding currency and you lend the higher yieldingcurrency then you receive the interest difference.

-if you borrow the higher yielding currency and you lend the lower yielding

currency then you are deducted the interest difference

Example: interest rates US 1% and GBP 1.5%

You borrow US$ (lower) and then lend GBP (higher)= receive difference

Because the account is in $ and you have borrowed < i% you then lend (buy)GBP and will receive the difference

Note :

Accounts are calculated at Libor or Roll Rates which change daily and aredifferent from normal bank interest rates.


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2.Market News and Developments

12 Nov (View of The Day)Geoffrey Yu, Foreign Exchange Strategist at UBS

-With the Feds second round of QE now priced in the currency markets, it is

possible that investors may begin to look at the dollar as a growth play.

-Recent improvements in US economic data may result in the dollar becoming

a proxy for going long US growth on an absolute basis.

-Mr. Yu acknowledges that the key trend seen this year: US investors pullingout of domestic markets and sending funds overseas in response to QE

expectations has not shown definite signs of turning.


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-He believes that stronger domestic data will affect FED policy, and if FED can

be convinced that the US economy is returning to health through less

stimulus policy, investors will worry less about dollar debasement and be

more willing to keep money onshore

-Things might continue to go sour in the eurozone

-We will closely monitoring currency flows and any potential signal of a shift

in fundamental sentiment on the US economy


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16 Nov

-Vice-Chair and President New York Fed

Dismissed concerns that quantitative easing was aimed at weakening the dollar or

that it could ignite inflation

19 Nov

Mr Bernanke said: The US runs the risk of seeing millions of workers unemployedor underemployed for many years. As a society, we should find that outcomeunacceptable.

The Feds case was boosted by weak US inflation data. Core consumer priceinflation, excluding volatile food and energy prices, rose by only 0.6 per cent onthe previous year in October the lowest since records began in 1957


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2.Market News and Developments-Mr Trichet said failure to solve global imbalances would pave the way for

future major difficulties. Dominique Strauss-Kahn, managing director of the

International Monetary Fund, said it was understood that the bigger you

become, the more responsibility you get and you cannot go on being a free

rider in what seemed a clear reference to China.

-But Mr Trichet also said: We strongly share the view that a solid, strong

dollar vis--vis the other major floating currency ... is very important.

-Currency undervaluation by surplus countries is inhibiting needed

international adjustment and creating spillover effects that would not exist ifexchange rates better reflected market fundamentals, said Mr Bernanke

-The conference marked a return to civility after attacks on Fed policy by

politicians from Germany to Brazil, who dislike the dollar weakening caused

by the Feds efforts to stimulate the US economy.


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In the weeks to come :

30 Nov :

- Japan Unemployment rate- Euro Unemployment rate

- Fed Beige Book

3 Dec:-US unemployment rate


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Forex Dealing Form


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1. Current Positions: Adjustments and

outcomes


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outcomes


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outcomes

Forex Sector Presentation

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