Will This Week’s ECB News Disappoint?

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Later this week, the European Central Bank (ECB) will meet, and it is widely expected to deliver more easing.

As the ECB previously said, it is ready to unveil more stimulus. The stimulus has to be really big. The consensus looks for a 500 billion EUR addition to the PEPP Quantitative Easing (QE) program and a 6-month extension until December 2021. Some analysts and economists forecast a 6-month extension of the QE program. 

All rates should be left unchanged, while the fresh economic and inflation projections are expected to be lower than at the central bank's latest meeting. 

However, since everything is already priced in and the EURUSD pair is rising anyway, the market could be headed toward a big disappointment. That happens when the central bank delivers only what is expected and does not surprise the markets with more dovishness.

Should that happen, the EURUSD pair could shoot toward the 1.25 level, which is a key resistance pivot. 

Additionally, everybody knows that a stronger euro is causing pain for German and other exporters, especially in times of a global crisis. The question then shifts to the following: what is the ECB going to do to stop the euro from appreciating further?

That is why the ECB should surprise the markets this week and either further enlarge the QE program, ease other monetary conditions, or basically start with the well-known helicopter money. 

Since the Federal Reserve (Fed) is forecast to announce more easing later in December, inflation is on the rise, and real yields are negative, the greenback has zero reasons to strengthen.

So far, the long-term trend for the EURUSD remains bullish, as long as it trades above 1,20/1.18 and the battle of central banks is only just beginning. We will see what central bank debases the currency more and wins this fight. 

The USD Drops to 30-Month Lows, What’s next?

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The US dollar has been dropping nonstop since the election in early November, and it has declined to 30-month lows this week, with the dollar index trading at around 91.40.

Moreover, the index dropped to new lows from a technical analysis perspective, which confirmed the bearish bias. That has pushed the EURUSD above the important 1.20 level for the first time since the summer 2018.

As the new Biden administration leans toward socialism and wants to erase student debt, unleashing massive fiscal spending, combined with an even more massive monetary stimulus, investors have been dumping the greenback.

The Federal Reserve (Fed) is expected to unveil more stimulus at its December meeting, which might be another hit for the USD. 

That bearish impetus is there to stay for many months; therefore, the USD might fall further. Moreover, judging from rising equities, sentiment in the markets remains positive. 

Additionally, US inflation will probably noticeably rise, which is already being reflected by falling US (real) yields. In this kind of environment, the USD should remain under pressure. 

Regarding the EURUSD pair, as long as it trades above 1.20, which is the crucial support now, the short and medium-term outlook seems bullish. 

The next target for the pair should be at 2018 highs near 1.25. However, judging by the recent spike, we might see some days of consolidation soon. 

Is CSR a Sign of a Broker’s Integrity and Work Ethic?

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The role of corporate social responsibility (CSR) is growing in global corporations, and has over the years become infused with their identity. Giving back is more than a small charitable act, but rather a reflection of a company’s overall ethos. 

While every business is – and has to be – focused on profits, perhaps well-performing companies who choose to only focus on profits may be unintentionally unveiling their lack of compassion towards the society and hence their clients. Whether this is the case or not, the public has become increasingly aware of more than just the products a company offers, but rather the brand it represents.

The financial industry is under even higher scrutiny considering the extent of a fintech company’s involvement in the overall economies of countries. But many brokers have risen to the challenge and proved people’s perception wrong, by being highly cautious of social responsibility and the positive effect they can have on their local societies and the world. 

CSR in the Fintech Industry

Brokers aren’t an episode of the Oprah Winfrey Show, hence why many may choose to hide behind the low expectations about their social responsibility. But over the last couple of years, brokers have become more actively involved in charities, donations and giving back.

In a recent poll, over 65% of brokers say their companies engage in CSR-related activities yearly, and over 30% of those respondents say they participate in at least one CSR event every quarter. 

From planting a tree for every new client to holding a weekly food drive to help the needy, brokers have held their own weight in the CSR scene. These small actions can make a significant change over time. 

Do a Broker’s CSR Practices Effect You?

Of course, licensing, trading conditions, support, platforms and many more technical details are the main concern for every trader choosing to trust a broker. But should you overlook their share of giving back?

While some brokers who don’t give back may still be ideal for trading, remember that the safety element every trader is looking for goes beyond funding methods, and compensation funds. You have to consider the type of people running the broker and how ethically-conscious they are. 

2020’s COVID-19 pandemic which led the world into an unprecedented global lockdown resulted in hundreds of thousands losing their jobs and falling below the poverty line. This gave us a glimpse into the ethical standards of brokers who chose to intervene and give back at a time when most businesses were struggling to stay afloat. 

The stability of the FX industry at a time when many industries are losing track, is a great opportunity for brokers to give back to their local communities, raise funds to help the needy, and straight up donate to relief efforts. 

What Do a Broker’s CSR Efforts Really Mean to You?

Simply put, ethical practices leak from CSR work into maintaining ethical guidelines and practices within the services offered to you, the trader. 

The truth is the financial markets are filled with conflicts of interest, and this has been the natural course of businesses since the early days of corporations. There are those who are just trying to lure in the most vulnerable traders and willing to blur the line of ethical practices and take advantage of those who are not well-versed in market conditions.

And there are those who offer a pure portal to the market, where traders can equally and fairly get their opportunity to participate in online trading. 

Spotting a broker’s CSR efforts, is spotting their leniency towards being an ethical corporation, and carrying a sense of responsibility alongside, naturally aiming to make profits. It simply reflects a general view that the business is more than just a profit-making machine. 

As a trader, you have the power to choose brokers who not only offer the best trading environment and resources to support your growth, but also those brokers who best align with practices you support. For traders, that means choosing brokers who benefit society through CSR programs and deliver their services ethically, with empathy and responsibility. 

Markets React to the US Election and Potential Monetary Stimulus

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It looks like Joe Biden will be the next US president, however it’s almost been a week since the election and the results haven’t been officially announced yet. The media has proclaimed Biden the winner, however, Biden’s opponent Donald Trump is suing many swing states for alleged vote fraud. Indeed, there are many suspicious occurrences such as dead people voting, more people voting than registered, kids voting and software glitches giving votes to Biden only. 

Whether you prefer Democrats or Republicans, the voting process must be clear and without any suspicious activity, so Trump has the right to investigate these suspicious occurrences. If the Supreme Court starts investigations in many states, it might take weeks before the official election results are announced. 

Nevertheless, one thing remains stable; we will get more fiscal and monetary stimulus, which effect the financial markets. It doesn't really matter who wins the Presidency, but how much free money will be thrown at the markets. 

Since the European Central Bank (ECB) seems ready to do more in December, the Federal Reserve (Fed) will most likely follow, and more Quantitative Easing (QE) will be announced. The Bank of England and the Reserve Bank of Australia already announced new QEs. The inflationary spiral will be needed to depreciate all the debt, and investors will be hedging by buying stocks. The more inflation there will be, the higher the stock market goes, despite lockdowns and bankruptcies. 

Thus, stocks' long-term bull market still seems valid, and any dips are expected to be bought. Until central banks change their monetary policies significantly, the best hedge against inflation and rising debts is stocks. 

The new administration in the US will make even more deficits and create more debts as much of its program is based on government funding schemes, which is, again, bullish for stocks. We can look forward to another interesting four years, that's for sure. 

4 Years of Trump VS the Markets. Who Wins After 4 Rounds?

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President Trump branded himself as something of a saviour for the financial markets during his tenure. 

He repeatedly stated, often vociferously, how the markets "love" him, and also publicly celebrated the strength of the world's largest economy, taking most of the credit for its positive performance in the process.  

His grandiose claims aren't unlike a boxer's public declarations before a fight, a commonly-used strategy to 'psych-out' opponents and promote the event they're taking part in. 

Trumps' continuous claims that the markets are stronger than ever, began when he first took office. He's credited the strength of the markets to his administration's pro-growth policies. 

In fact, he's tweeted about how great he is for the markets, at least 150 times since he's been in office, taking jabs at the Democrats' performance whenever he can. 

But has the market really come out on top after 4 years of Trump? Let’s take a closer look, separate fact from fiction and see which one of the two wins after the last 4 years of Trump as president.

Let's get ready to rumble! 

In one corner… 

U.S. President Trump, weighing in at 235 pounds (according to his doctor), and prone to punching below the belt. His strengths; insisting loudly that his presidency has been GREAT for the markets.

And in the other corner … 

The data, weighing in with a series of cold, hard-hitting facts (and also a few Trump knockouts under its belt). 

ROUND 1 

During his first year in office, the stock markets responded well to President Trump. It was a trend largely driven by an increase in tax cuts and the Fed's decision to lower interest rates. As a result, the market was not only stable but seeing consistent positive growth too. 

In the 3rd quarter, GDP (gross domestic product) reached 3.3%. The stock market saw great growth, even breaking the 90-year record of positive returns for all 12 months.  

The S&P 500 went up 19.42%, and its total return was 21.83%. This bullish market was the second-longest in modern history, beginning from March 9, 2009, and continuing 105 months through December 2017 without experiencing a decline of 20% (or more) from a closing high. 

A new tax bill approved in December of 2017 lowered the corporate tax rate from 35% to 21%. This contributed to some of that market growth. The lower tax rate improved profit margins. The oil market finished the year on high (yes, those were the days), rallying in the last months of 2017. 

Moreover, consumer spending and retail sales are also nurtured throughout the year. 

All the growth culminated in a first-round win for Trump. Many attributed this great market run as a legacy of Obama’s economic plans, but, not surprisingly Trump didn’t agree, and didn’t hesitate to take all the credit. 

ROUND 2

Trump's second year in the office started smoothly but was met with a sharp decline that resulted in zero net progress. 

2018 was a tenuous year for the markets in general, which hit record highs and severe reversals. This was the first time ever the S&P 500 saw a drop after rising in the first three quarters. 

In the last quarter, both S&P and Dow Jones plunged 13.97% and 11.8%, respectively. December was a frustrating month, as all indexes dropped 8.7%. Also, Dow and S&P 500 recorded the worst December performance since 1931. 

The main reason for this uncertainty was that investors were fearful of the Federal Reserve’s policies and concerns over the U.S-China trade deal. 

Besides this, there was a decline in the gold, oil, and bonds market. However, not all was wrong in 2018. First, three quarters saw a bullish trend, and the USD went up by 4.5%. 

So we’ll call this one as a win for Trump, even if it is tenuous. 

ROUND 3

Entering into the third year, we begin seeing a different story. Trump starts a trade war with China, and the stock market declines, mostly due to rising interest rates and the president's handling of the on-going Chinese trade negotiations and recreation of NAFTA (United States, Mexico, Canada Agreement). 

The trade war was a major headline for the markets throughout the year, but something happened, which nobody was expecting. After the inception of the bearish market, the year ended with the biggest gains from stocks since 2013. 

The S&P 500 went up 29%, and the Nasdaq went up 35%. With the Nasdaq upsurge, Microsoft and Apple enter into the trillion-dollar club. 

So, how did that happen? It was mainly due to a change in the Federal Reserve policy. With the falling interest rates, investors poured their money to get more yield. 

However, the growth rate was slower than in the previous two years. 

ROUND 4

2020 started with the bullish trend, and everything was going smooth, until…. you know what I am talking about; Covid-19, or as the president called it, the "China Virus." 

On March 18, 2020, the stock markets plunged to the same level it had been on the day of President Trump's inauguration. That means any progress under Trump's presidency was wiped out in a matter of two weeks. The real shocker was oil prices. The WTI plummeted 65% since January 2020. And it is not looking great ahead either. 

The market did recover from June as bulls started to overthrow bears. FAANG (Facebook, Amazon, Apple, Netflix, and Google) were apples of investors' eyes. Also, gold prices went way up, crossing the $2000 mark. 

This was a good sign for the Trump administration as this was a hard year, and it was also a good sign for traders and investors who were pulling their hair when the pandemic started. Republicans even announced a $2 Trillion coronavirus relief package to boost the economy. In addition, it provided jobs to more than half of those people who lost their jobs during the pandemic. 

But, the pandemic isn't over. With lockdowns already starting to take place in Europe, and the U.S. elections, the markets will remain uncertain, at least for a few weeks. One major concern is the declining USD. Many analysts predict that this uncertainty will decrease after the election results. We just have to wait and find out. 

The Winner Is…. 

With the 2020 elections result still coming in, Donald Trump did what he promised. After 4 years in the white house, Trump delivered for the markets, before experiencing a crushing defeat by ill-advised strategies and a global pandemic.  In the first year, the stock markets saw record-breaking highs. No one is to say what the data would have shown had COVID not occurred. All being said, the markets have been relatively stable under Trump, if you count out the uncertainty caused by the pandemic. However, the reality is the pandemic did happen and worsened what was already a troubled market.

What Now?

As election drama unfolds, we’re on the verge of finding out if a new game of boxing begins between Trump and the Markets. 

FBS Launches Free Educational Forex Course

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FBS starts a new educational free course called Forex Intensive. The company’s financial analysts have created this online course for European clients to guide novice traders through the market and boost the trading knowledge of experienced ones. 

Forex Intensive begins on October 1 and ends on October 31. During this month, those who subscribe to the course receive the exclusive analytical materials for traders of any level – articles, posts, and webinars – for free. Moreover, European traders may subscribe to the course all October long and have access to all the materials. 

The course is five weeks long. Every week subscribers get a new email with the Forex Intensive program according to their level of knowledge. It allows European traders to educate in real-time with fresh materials and use the opportunity to join the webinars where it is possible to ask any questions to FBS analysts. The online format of the course helps to gain the information anytime and anywhere it is convenient for traders. 

Within five weeks, traders learn the following topics:

  • Week 1: Forex essentials.
  • Week 2: Fundamental analysis.
  • Week 3: Technical analysis.
  • Week 4: Trading instruments.
  • Week 5: Management tips.

Despite the fact that Forex Intensive lasts the whole month of October, all the materials will be available for free anytime. 

FBS is an acknowledged, CySEC licensed international online Forex broker and the official trading partner of FC Barcelona. FBS is a broker with an international outlook that serves clients in Asia, Latin America, Europe, and the MENA. Its primary focus lies in offering financial products for currency, metals, and indexes trading for clients with different goals and backgrounds. The company features a low barrier to entry and top-ranking apps. Over 11 years in the field, the broker won 50 international awards, including Best International Forex Broker, Best Forex Brand, and Most Progressive Forex Broker Europe.

GO Markets obtained Mauritius Investment Dealer Licence

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GO Markets Review

GO Markets continues its strategic expansion into the Middle East, Africa and Asian region. GO Markets obtained an Investment Dealer Licence in Mauritius on 20 February 2020 from the Financial Services Commission (FSC). 

Mauritius has established itself as an International Financial Centre (IFC) of excellence and repute for Africa and Asia. The evolution of Mauritius as a robust financial hub is supported by a vibrant offshore corporate sector which comprises an asset under management of over 50 times the level of GDP.

The broker also mentioned that Mauritius enjoys a solid reputation and with a sound political and economic system, business-friendly environment, and the strength of its governance and regulatory institutions, Mauritius has been widely recognised in the World Bank’s Doing Business, 2019 Index of Economic Freedom, the Forbes Survey of Best Countries for Business 2019 among others for its ease of doing business. 

The FSC, lead regulator of the international financial centre strives to promote the ‘development, fairness, efficiency and transparency of financial institutions and capital markets’ in the country and has continuously demonstrated an approach that adapts to global changes. 

As one of the oldest and most established forex brokers, GO Markets is focused on building solid foundations in well-regulated jurisdictions. The landscape is changing and as a trusted and reliable FX and CFD provider, GO Markets is well-placed for the challenges ahead following our broader efforts to become a truly multi-jurisdictional provider. 

GO Markets, Mauritius – Director, Soyeb Rangwala: 

“It is another major milestone for our company. Since obtaining the licence, we have been busy establishing our presence in Mauritius despite the challenges we faced due to the COVID-19 restrictions.  We have chosen Mauritius because of its strategic location, the time difference with other jurisdictions, rigorous professional standards and adherence to international norms. At the crossroads between Africa and Asia, our presence in Mauritius allows us to provide an uninterrupted service, the same level of confidence and security to our clients in those regions. Mauritius is also home to a vibrant banking system and is a regional hub for payments and settlements.”

GO Markets, Mauritius – Director, Khim Khor: 

“We strive to be the first choice for trading CFDs for aspiring and experienced traders and to continuously provide the best trading experience to our clients through reliable customer service, transparent pricing, low-latency trade execution and platforms stability. We take pride in establishing a presence in other jurisdictions and working with financial experts and a top-tier bank to reflect our vision and mission to be a reliable and trusted broker for every trading interaction. Mauritius banking sector is well-capitalised and resilient and is a secure banking platform for those regions.”

Banks in Mauritius remained comfortably above the regulatory minimum under the Basel capital ratio requirements. GO Markets Mauritius maintains client trust accounts with the Mauritius Commercial Bank, a leading banking and financial services player in Mauritius.

GO Markets Mauritius aims to provide traders access to a wide range of quality products with competitive rates to service its new and existing clientele. 

Since its formation in 2006 GO Markets has specialised in providing online trading services in an ever-increasing number of financial assets, including Margin FX, Precious Metals, Commodities, Indices and Share CFDs.  GO Markets has been endorsed as a leading online broker by industry awards bodies across the globe - and most recently received awards for providing the Best Customer Service and Best Educational Material within Australia. 

Over the last 15 years, GO Markets Group has expanded their success globally. Regulated by multiple jurisdictions, the group now has operations in Australia, Cyprus, UAE and Mauritius.

GO Markets enters Europe, acquires Galactus Ltd

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GO Markets Review

Australian foreign exchange brokerage firm GO Markets revealed that it is acquiring Cyprus financial services provider Galactus Ltd to enter the European market and continue its global expansion. 

Galactus Ltd is an investment company authorized by the Cyprus Securities and Exchange Commission (CySEC). It holds license 322/17 and was established in 2016. 

It has been previously reported that Australia is about to implement foreign exchange and CFD regulatory measures similar to those previously implemented by European regulators. The local regulator, the Australian Securities and Investments Commission (ASIC), is expected to impose leverage restrictions and prohibit retail investors from trading binary options. 

ASIC proposes a single leverage of 20: 1 for all currency pairs, a leverage of 15: 1 for stock indexes, a leverage of 10: 1 for commodities other than gold, a leverage of 20: 1 for gold, and crypto Assets have a leverage ratio of 2: 1 and stocks have a leverage ratio of 5: 1. These restrictions have not yet been implemented. 

Because of these proposed restrictions, brokers need to expand their offerings and diversify their products to remain competitive. This is exactly what GO Markets has been doing in recent months. 

The acquisition is the latest major milestone for GO Markets, which had just expanded its operations to the Middle East. 

You can read our full GO Markets review here.

FCA has issued a warning about trading company HQBroker

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The British financial regulator FCA has issued a warning about trading company HQBroker.

This broker is not regulated, yet it has been providing financial services to UK residents.

According to the HQBroker's website (https://www.hqbroker.com), the company is registered in Hong Kong. However, if you check company's terms and conditions, it says that HQBroker is operated by Capzone Invest Ltd., registered on the Marshall Islands. The website itself doesn't have any information about company's regulation. Usually the companies that operate in the offshore areas (such as Marshall Islands) are not licensed nor regulated and considered to be frauds. It is dangerous and risky to deal with them.

HQBroker provides trading in forex currencies, metals, stocks, equity shares and CFDs. Also the company operates on the MetaTrader 4 trading platform, which is very popular among Forex brokers.

There are plenty of negative reviews can be found on the net about HQBroker. Starting from harassing phone calls and rude representatives that keep on trying to get people invest and finishing with failed attempts of the investors to withdraw their money back.

It is recommended to trade with authorised and regulated brokers. There are many trading companies that offer relatively good trading deals and conditions. These companies are regulated by such financial regulator like the ASIC, CySEC and FCA.