8/8/2019 Forex Sector Presentation
1/14
Forex Sector Presentation
By Stefan Mihailescu
And
Hu Yi23rd of November 2010
8/8/2019 Forex Sector Presentation
2/14
Agenda
1. Currency trading example
2. Market news and developments
3. Current Positions :a) Forex dealing form
b)Adjustments and outcomes
8/8/2019 Forex Sector Presentation
3/14
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.
8/8/2019 Forex Sector Presentation
4/14
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.
8/8/2019 Forex Sector Presentation
5/14
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.
8/8/2019 Forex Sector Presentation
6/14
2.Market News and Developments
-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
8/8/2019 Forex Sector Presentation
7/14
2.Market News and Developments
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
8/8/2019 Forex Sector Presentation
8/14
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.
8/8/2019 Forex Sector Presentation
9/14
8/8/2019 Forex Sector Presentation
10/14
2.Market News and Developments
In the weeks to come :
30 Nov :
- Japan Unemployment rate- Euro Unemployment rate
- Fed Beige Book
3 Dec:-US unemployment rate
8/8/2019 Forex Sector Presentation
11/14
Forex Dealing Form
8/8/2019 Forex Sector Presentation
12/14
1. Current Positions: Adjustments and
outcomes
8/8/2019 Forex Sector Presentation
13/14
1. Current Positions: Adjustments and
outcomes
8/8/2019 Forex Sector Presentation
14/14
1. Current Positions: Adjustments and
outcomes