Month: July 2013

By www.CentralBankNews.info

By MoneyMorning.com.au

Our technical trading expert, Murray Dawes, would say the Aussie index is back at the point of control.

That’s fancy technical analysis talk to say the index is halfway between the top and bottom of the recent high-low range.

That’s always a difficult time for investors. Do you follow the trend, hoping the share market will go higher? Or do you bet on this being the end of the trend and cash in your chips?

Well, if you believe the US market still leads the way on stocks there may only be one answer…

The Financial Times reports:

  ‘After a shortlived drop last month, US equities have rebounded smartly, propelling major benchmarks to record peaks this week.

‘The move has been accompanies by robust flows into US equities, with more than $2bn per day being pumped into exchange traded funds alone so far this month. Putting this into perspective, US equity ETFs in July are currently attracting nearly four times the inflows we saw during the first half of the year.’

There is always some correlation between the US and Australian markets.

Sometimes it breaks down for a short time, but the link soon resumes. Take the six weeks from mid-May. US stocks fell about 6%, while Australian stocks fell 10%.

And yet, since both markets bottomed out in late June, each has rebounded in lockstep — the US stock market has just hit a new record.

Put simply, whatever short-term hot topics burst on the scene, one thing is clear: as far as markets are concerned, the US still leads the way and the Aussie market follows…

  Will Aussie Investors Re-Price Stocks?

At the moment, the companies in the S&P/ASX 200 index are trading at a price to earnings (PE) ratio of 13-times. To put that in context, that’s around the 10-year market average.

Now, some folks will say that’s proof the market is about to fall. After all, if the market trades above the average then it must be over-priced. You wouldn’t believe the number of times we see that line trotted out…usually by people who clearly have no understanding of the concept of averages.

An average is always somewhere between the high and low point — that’s why it’s an average. That means if everything lines up as we hope, stocks could still go higher, especially if Aussie stocks perform better than the market expects.

But there’s also something else to consider, and that’s the likely further downward trend of Aussie interest rates.

When interest rates were higher, investors would have a set limit on the amount they’re willing to pay for a share — historically around 13-times earnings. They knew if they paid more it would impact their returns compared to other investments — say, bank deposits.

But now, interest rates are lower. That could cause investors to pay more for stocks. If so, it could push PE ratios higher…and therefore share prices too.

We understand it’s a risky argument. It’s fair to say most investors still haven’t got the hang of it because bank savings rates are still above 4%.

But if savings rates drop below this level, that could put a different spin on things.

Even without that, there’s reason to be optimistic about stocks. Remember, the stock market is always a forward-looking indicator. The big institutional investors are always thinking about where companies will be in the future, not where they’ve been in the past.

  Aussie Investors Down in the Dumps

That explains why Australian stocks are still 40% below the 2007 peak. Investors have built in a whole lot of (justified) negativity. And now they’re waiting for that negativity to pass.

Here’s the thing. Remember what we said, investors are looking ahead. They’re trying to figure out how good (or bad) the economy will be 12 months from now. Based on the recent performance of the market, most investors aren’t that optimistic.

If they were optimistic, stock prices would be much higher. The fact they aren’t tells us that most folks have already factored that into the market.

So when you start to see positive news return, you better be ready to be a part of it, because stock prices could take off in a flash. In fact, odds are stock prices will start rising before that as investors look for ‘green shoots of recovery’.

Look at the US market. No-one in their right mind would suggest the US economy is sitting pretty. Detroit has filed for bankruptcy, and the US Federal Reserve is still printing billions of dollars each month to buy government bonds.

And yet US stock prices are at a record high. Why is that? That’s right, investors are looking ahead. They’re looking ahead to low interest rates, more money printing or an economic recovery…or all three.

None of this is to say the Aussie and world economies are without problems. If you’ve read Money Morning for long enough you’ll know we disagree with all forms of intervention in the markets.

But we also know that whether we agree with it or not, and regardless of the long-term impact, intervention and artificially low interest rates do help stock prices in the short term.

So if your goal is to make money from investing (whose goal isn’t?), it’s important to understand this and exploit it. If the US market can hold near these highs into the end of the year it could be the spur that takes the Dow Jones Industrial Average towards 20,000 points.

And if the US market takes off, there’s no doubt in our mind the Australian share market will follow. The time to buy stocks is when few others are positive about the future…that’s now.

Cheers,
Kris+
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From the Port Phillip Publishing Library

Special Report: The Sixth Revolution

Daily Reckoning: The Dark Side of Technology

Money Morning: Money Weekend’s Technology FutureWatch 20 July 2013

Pursuit of Happiness: The Dark Side of Technology

By MoneyMorning.com.au

‘One ought never to turn one’s back on a threatened danger and try to run away from it. If you do that, you will double the danger. But if you meet it promptly and without flinching, you will reduce the danger by half. Never run away from anything. Never!‘ – Winston Churchill

It’s with the words of Winston Churchill in mind that we need to confront an issue that will exist as long as we continue to drive forward as a connected, technologically advanced world. The issue we face lurks in the shadows and underground movements of the technological world we live in.

It’s the dark side of technology…

There is ‘world ending’ potential that innately comes with great tech breakthroughs and innovation. It’s those that twist technology with the potential for good to be an instrument of evil and to take part in illegal, criminal activity that we must be aware of.

It’s the epitome of good vs. evil, Skywalker vs. Vader.

You only need to watch the daily news or head down to the local cinema to see how the world will end up when technology takes over. Rise of the Machines, Big Brother, HAL9000, The Matrix…all (fictional) examples of technology spreading evil and atrocity.

Typically we paint a rosy picture of the future. We think technology will bring revolutionary change to the world.  The benefits of technology will far outweigh the perils and dangers that are so often the focus of people’s mindset.

However, it would be remiss of us not to delve into some of the potential dangers of technology. And thus in understanding the good that comes from tech, it’s important to understand the darkness that also comes with breakthroughs and innovation.

To paraphrase Churchill, don’t run from it, confront these issues and you might have a part in making sure the future of our world sides with the good technology can bring, not the dark side.

The Dark Web, Your Online Shadow

One fact of life you need to get your head around is if you have a computer is this: according to the annual Norton Cyber Crime Report (NCCR) there’s a 66% chance you have already experienced cybercrime. That figure will grow over time. It’s rational to say if you use a computer you will experience cybercrime at some stage in your life.

That’s serious. You will experience cybercrime. Maybe they should change the famous saying to, ‘There are only three certainties in life, death, taxes and being hacked.’

The NCCR also estimates in 2011 cybercrime fleeced the world of over $110 billion. Let’s break that down a bit further.

Every second of the day 18 people fall victim to cybercrime, that’s 556 million people per year. If it takes you 10 minutes to read this essay, 10,800 people will have been victimised by some form of cybercrime.

And cybercrime comes in some innocuous forms. Most cybercrime operates silently, through malware, viruses and trojans. (These are all types of little bugs that silently sit in your computer and provide information to their creators, hackers.)

You might see it as an email from ‘Canadian Pharmacy‘ or possibly an email from a lawyer in Nigeria claiming you’re entitled to a multi-million dollar estate. At the other end of the spectrum, you might be a direct target. Your bank account defrauded, your identity stolen or your website hacked.

Scammers send over 75 million scam emails every day. And every day about 2,000 people fall into the trap.

But when it comes to your online security there’s actually a pretty easy solution to it all. Have strong passwords and some level of online security.

It’s that simple. Have a difficult password with both upper case and lower case letters and numbers. Do that and you greatly decrease your risk of becoming another cyber victim.

It will take a hacker over 438 times longer to crack a six digit password with upper case and lower case letters and numbers, than a password with just lowercase letters.

However as strong as your security might be, there’s a situation where no matter what you do, no matter how much security you have, if hackers want your information bad enough, they’ll get it.

And we’re not talking about some well-paid teenager in a warehouse full of computers in the backstreets of Moscow. (Most people think the US and China have the most active hackers. Russia actually has more hacks originate from it than any other country in the world.)

We’re talking about hackers that sit inside the walls of the civil service. We’re talking about government employed hackers, spooks, and spies. If they want information they’ll comfortably find a way to get it.

You might have heard of the US National Security Agency (NSA) and their PRISM program. Effectively PRISM is a monitoring project with the NSA taking information about everyone from the data servers of Google, Facebook, Yahoo, Microsoft and other major tech companies.

If it wasn’t for the now infamous whistle blower Ed Snowden we’d all still be none the wiser. And the NSA would continue on their merry way watching everything we do online. Note: There’s a pretty good chance they’re still doing it anyway.

But it’s not just American government agencies that are proficient in monitoring their citizens. Have you ever received a letter or email from the Australian Tax Office (ATO) saying you haven’t declared interest from one of your online savings accounts? We have, and so has Kris. It concerns us how the ATO knows we had $2.63 in interest in the 2011-12 financial year.

It’s the same deal when e-Tax asks if you want to pre-fill your tax return. Pre-fill? With what information? Oh, just our income, interest, purchases and sale of stocks, Medicare info, etc. The list of information the Australian government has about us is profound. And disturbing. If you think your information is private, you’re wrong.

With that in mind, when the government asks you to voluntarily part with your information for research or for maintenance, tell them to bugger off.

How to Treat Your Mobile and Tablet

One more point on online security and privacy. You need to treat your mobile phone and tablet as a portable computer. Meaning you need the same security measures to protect yourself on the go.

If you ever connect to a public Wi-Fi network make sure you’ve got high level security. When you use public Wi-Fi, you may as well be a Millwall fan walking into a West Ham pub…you will be attacked.

So be smart, have different passwords, make them difficult, and don’t open any emails from Nigerian Lawyers. Also be discreet with how much of your own information you hand over to government departments. It will go a long way to protecting you online.

But the dark side of technology isn’t just about cybercrime and the pitfalls and perils of living in an interconnected world.

And tomorrow we’ll highlight two more terrifying aspects of the Dark Side of Technology that you need to be concerned with. One word of caution until tomorrow’s part two; don’t think about anything illegal, or you might find you’re incarcerated before tomorrow. And just keep an eye on your neighbours…

Sam Volkering+
Technology Analyst, Revolutionary Tech Investor

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From the Archives…

Why Invest ‘Hard’ When You Can Invest ‘Easy’?
19-07-2013 – Kris Sayce

Read This Before You Buy Another Stock or Bond…
18-07-2013 – Murray Dawes

Could Uranium be the Best Investment in 2013?
17-07-2013 – Dr Alex Cowie

Asteroid Mining and the Commercialisation of Space
16-07-2013 – Sam Volkering

Why the Australian Share Market is Heading Even Higher
15-07-2013 – Kris Sayce

By Profit Confidential

Long-time readers of this column know of my affinity for railroad stocks. I like keeping things domestic; I like keeping things simple; and I like consistent growth—in revenues, earnings, and dividends.

Railroad stocks are benchmarks on the North American economy. What they report is real, definitely worthwhile noting, and a sort of canary in the coal mine for both the old economy and Main Street.

My top benchmarks and my two favorite railroad stocks are Union Pacific Corporation (UNP) and Canadian National Railway Company (CNI).

Another good one, CSX Corporation (CSX), which is based in Jacksonville, Florida, has 21,000 miles of track in 23 states, the District of Columbia, and two Canadian provinces. It reported solid earnings results that beat the Street.

It’s important to remember that a company like CSX is a mature business; you’re not going to get burgeoning biotech-like earnings growth from railroad stocks.

CSX reported a solid earnings of $535 million, or $0.52 per share, up about four percent nominally and six percent on an earnings-per-share basis from $512 million, or $0.49 a share, in the comparable quarter.

Revenues came in at $3.069 billion for a gain of about two percent from revenues of $3.012 billion in the second quarter of 2012.

The company’s cash position dropped approximately $360 million to $1.017 billion. Shareholders’ equity grew $660 million to $9.662 billion.

The company cited strength in chemical shipments and the continuing upward trend in railroad stocks. From the 2013 base, CSX expects to generate per-share earnings growth of between 10% and 15% through 2015—that’s a very solid expectation.

Railroad stocks started to soar just before the subprime mortgage-induced financial crisis took hold. But like everything else, they corrected significantly, and then they accelerated again into what can only be described as major Federal Reserve/Wall Street capital gain. While modest, there is real growth in mature railroad stocks.

Practically, it’s difficult to consider buying these stocks today after such significant capital gains from most positions within the group.

I always recommend thinking long-term and being cyclical when thinking about accumulating railroad stocks. (See “How Extraordinary Growth in Bakken Oil Is Revitalizing Railroads.”)

Comparatively, Union Pacific and Canadian National have been standouts in terms of their stock market performances within the group. Canadian National is one of Bill Gates’ largest holdings in his private investment firm and his charitable foundation.

I recognize that not everyone has an affinity for such old economy stocks. They definitely are a throwback to another era. But if anything, railroad stocks are worth following for the simple reason that they are the backbone of the economy and what these corporations say about their businesses is material to the stock market and your own outlook.

Article by profitconfidential.com

By Profit Confidential

I know many of you probably don’t even look at Chinese stocks anymore. I wouldn’t be surprised given the years of fraudulent reporting by numerous China-based companies that decided to come here and steal your money through deception.

The reality is that the flow of new Chinese initial public offerings (IPOs) to America is dead. Whether that flow will be revived is anyone’s guess, but I’m not betting on it, at least not until Chinese companies are subject to a similar audit process faced by U.S. companies. That’s in the works with the U.S. Securities and Exchange Commission (SEC).

For now, China is struggling to hold onto its gross domestic product (GDP) growth, which came in at 7.5% in the second quarter. But I wonder if we can trust that number as accurate or if it’s some fabrication by the Chinese government. Based on what we have seen, you never know.

But I still consider China to be the top growth area in the world and a place where you should have some capital invested, albeit carefully. (Read “China: The New Breeding Grounds for Capitalism.”)

What’s interesting is that China is undergoing an economic transformation under the leadership of its new government, which took control earlier in the year. The strategy is to focus on driving up domestic consumption and relying less on exports and foreign investment.

So far the shift to the new paradigm appears to be working, as domestic consumption has been rising, helping to decrease the dependence on foreign demand.

In June, retail sales surged 13.3% year-over-year, according to the National Bureau of Statistics. (Source: “National Bureau of Statistics of China: Total Retail Sales of Consumer Goods in June 2013,” 4-traders.com, July 16, 2013.)

The report indicated that retail sales in the urban markets jumped 13.0% in June and accounted for a whopping 86% of total sales. Sales in rural areas increased 15.1%.

Those readings show the importance of the urban markets; but they also suggest that consumer spending in the country is expanding at a faster clip, as the government puts in programs to increase the wealth of the rural regions.

If President Xi Jinping, who is widely known to be a reformer, can deliver on his vision of a much richer China for all of its citizens, then the economic opportunities in the country will only get better—not only for its citizens, but also for foreign companies and investors.

Article by profitconfidential.com

The question about which of these two metals to invest in has no simple answer, it is more a question about what kind of investor you are and what you believe in.

If you are a long term investor who is just looking to participate in gold online trading or seeking to preserve value against diminishing currencies, a mix of gold and silver might be something to consider. Gold has, as we know, been a preserver of wealth since before the Roman empire. Lately, however, gold has been under a lot of pressure. It is true that gold preserves value over the really long run, but in the short run it is often used as a tool for traders to bet against something else.

For example, the major bull run in gold price that we saw begin a few years ago, was not due to the fact that gold was all of a sudden seen as a better preserver of wealth than before but rather because of the fear that the FED was creating too many dollars and easy credit. The thought was that these actions would ultimately push up inflation.

So in this sense, the question to ask yourself when you buy gold is not so much if it will preserve its value over time, it will (No matter what happens, your grand-kids will likely be able to obtain as much merchandise with the same amount of gold in 100 years from now). The more pressing issue when buying gold is what you think of the world economy and whether central banks around the world will be printing more money than they should. If so, is it time to buy gold?

The reason we have seen gold drop in price during 2013 is not because gold all of a sudden gold became less a vehicle of preserving value but rather because investors started to believe that inflation would not tick up. It is important to understand that gold preserves value from the point that it is bought just like any other investment instrument. For example, an ounce of gold passed 2000 USD roughly a year ago not because gold was a better preserver of value but rather because of many factors at play in the global economy. If you bought at that point, the idea that the economy was going down the drain and likely to see more central bank money printing needs to come true in order to justify that price. This means that you cannot just buy gold at any price and expect the value to always increase, there is always the matter of timing involved just as the old saying goes, “buy low and sell high”.

Silver Trading

Silver investing and trading is a different kind of trade all together. Silver, like gold, has historically been quite good at preserving value. It has not had the slow and stable growth that gold has had, apart from the volatile journey gold has been on the last couple of years (it was over two decades ago that we saw the same kind of volatile movement in the gold market). On the other hand, silver has a tendency to swing more – making it a perfect metal to trade on a short term basis.

The reason that silver swings more than gold is actually a combination of a few things. First of all, the global market in silver is much smaller – making it more vulnerable to people trying to manipulate its price  – and throughout history there has been a lot of cases of silver price manipulation exposed. There is also almost no interest from central banks around the world to make the silver price stable, since most of their holdings have historically been in gold. More recently, since the mid 1970’s, central banks have been more likely to be buying foreign bonds and other securities to back their currencies with.

The second and last reason is macro economical, a lot of the silver that is mined is not mainly used for storage of value but rather a big chunk of it goes straight into production. Silver is used in everything from watches to computers and toasters. It is true that this goes for gold as well but since the silver market is smaller, the affect on the silver price is more substantial than the same affect on the gold market.

So what is best for the next coming years? Well there is no reason to think that we are going to have a major crash in equity’s again anytime soon. That should put a cap on how high gold can rise in the near-term. Although looking out into the future, if the global economy starts to get overheated and we start to get some serious inflation again, that would be an environment likely to favor gold prices rising again, since currencies will lose value against gold.

When it comes to silver, some of the market is definitely used to preserve value, just as the same thinking is applied to gold. The fact is that silver is also used heavily in production as well and if the global economy really takes off, we could start seeing silver prices rise without that being a signal of inflation or a new collapse in equity.

So to summarize, gold has historically been a more defensive investment play against central bank interventions and as an alternative store of value especially during inflationary economic periods. Silver, on the other hand, can be seen as a more balanced investment. It can be used as a possible store of value as well as an in-demand commodity for use in manufacturing production when we have an economy on the rise.

People have a great desire to make a good fortune on any investment they undertake. Some do not have the knowledge on where to make investments. A new technique of investment has cropped up. It is basically investing in stock and forex markets. Binary options trading is the new method that is hitting headlines globally.

Binary option simply means investing in the stock and forex markets on the basis of positive predictability. An investor hopes that transactions will yield returns. There are numerous reasons as to why it is becoming popular and the most preferred .It is a method that is very simple to execute. It does not involve bureaucratic procedures that an ordinary investor may not easily comprehend. All that they are required to do is go the stock market and state how much of their capital they are willing to invest. After this they take a back seat and only anticipate that there will be favorable yields. Binary Options are booming, everybody knows this.  Most Binary Options brokers already have some kind of affiliate programs to maximize their results.

In most cases when people are taking risks to invest, they hardly know how much loss they can suffer. They only hope that losses may not be catastrophic such that there is loss of investor capital. Often they peg their aspirations on high profits. But advantages of binary option override that of any known investment. This is because the probable loss that can be suffered at any time of transacting business is known and cannot go beyond that given limit. As a result it has prompted majority of people to channel huge amounts of funds towards this venture.

Nothing makes a lot of sense to an investor than reduced operational costs. When costs are reduced people are certain to make returns on their investment. This unique characteristic is only applicable in binary option trading. This is because; despite the presence of middlemen who undertake the transaction on behalf of investors, no amounts of service fee are advanced to them. Therefore, investors walk away with all the profits accruing to them.

It is very satisfying and encouraging when the investment does not take long periods before generating profits. This means more funds will be ploughed back into the business and enhance its growth. With binary options trading, returns are realized immediately before the close of business. This means that a person can go investing a given amount of capital and even predict an accurate amount of profits realizable. It indeed provides an avenue for rapid economic growth. Since immediate profits can be invested in other sectors that drive the economy.

Universally, there is hardly any known type of investment that comes with a warranty. Most businesses will continue trading into the oblivion regardless of whether profits are realized or not. But with binary options trading, the end of business transaction is well known. Due to this fact potential investors will be able to plan their investment plans and avert unpleasant results. In addition to this feature, it can easily be transacted through the internet with ease. This means that investors do not have to be physically present at the bourse.

History shows that the U.S. should pay attention to economies in Europe

By Elliott Wave International

The economy has been sluggish for five years. There’s no shortage of chatter about “why,” yet few observers mention deflation.

One exception is a hedge fund manager who spoke up at the recent Milken Institute Global Conference.

The presentation by Dan Arbess, a partner at Perella Weinberg and chief investment officer at PWP Xerion Funds, was startling because of how deeply it broke from the standard narrative.

We’ve been wrong to assume that the economic crisis is over, Arbess said. … The threat of deflation is once again rearing its head.

“The persistent risk in our economy is deflation not inflation,” Arbess said.

CNBC, May 2

Deflation appears to be more than a threat. Consider what’s already happening in the U.S. and in Europe.

Industrial production declined in April by the most in eight months, indicating American manufacturers will provide little support for an economy beset by weaker global markets and federal budget cuts.

Bloomberg, May 15

Europe is slipping further into recession.

The euro zone economy shrank more than expected in the first three months of 2013 … as France returned to recession for the first time since 2009 and Germany barely edged forward.

It marked the longest recession for the euro countries since the currency was introduced in 1999.

New York Times, May 15

Here’s a relevant fact: The Great Depression of 1929-1932 started in Europe before coming to America.

The economic wave may be much bigger this time.

Robert Prechter made this observation:

Total credit will contract, so bank deposits will contract, so the supply of money will contract, all with the same degree of leverage with which they were initially expanded.

Conquer the Crash, second edition, p. 111

EWI published this chart in March 2012.

The enormous credit expansion that started in the early 1980s is due to be leveled.

You can prosper during the next economic contraction. Many people did just that during the Great Depression. Robert Prechter’s New York Times bestseller, Conquer the Crash, can teach you what you need to know to protect your portfolio during these high-risk financial times.

For a limited time, you can get part of Conquer the Crash for free. See below for more details.

8 Chapters of Conquer the Crash — FREE This free, 42-page report can help you prepare for your financial future. You’ll get valuable lessons on what to do with your pension plan, what to do if you run a business, how to handle calling in loans and paying off debt and so much more.   Get Your FREE 8-Lesson “Conquer the Crash Collection” Now >>

What is Forex Scalping?

Scalping in forex trading may be defined as the process where forex traders open a trading position for a short time period. This period usually lasts a few seconds and may not exceed a minute. Traders who employ this trading strategy are commonly referred to as scalpers. Such traders often prefer this trading strategy as it minimizes their trading risk. The scalpers argue that subjecting their trading positions to longer time frames exposes them to the risk of making losses as the market may decide to go against their trade. When they scalp, they have the opportunity to close their trades before this happens. However, this type of trading also carries substantive risk as they often have to use high leverage, which is the only way they can make reasonable profits.

Scalping in Forex trading may eventually lead to better profits than conventional trading methods as the scalpers are able to compile their small profits into a large final tally over a shorter time period. The scalping process may either be conducted manually or through the use of automated software. The manual way involves the traders searching for viable signals, analyzing them and making conclusive decisions on what currency pair to buy or sell. The automated way involves the trader adjusting some technical settings on the automated software so that it may look for relevant signals and interpret them accurately.

Scalping with Charts & Binary Options

Scalping in forex trading requires the extensive use of forex charts, as this is one sure way of assessing market trends. While scalping may seem to be an attractive trading strategy, it is worth noting that extensive experience with such a strategy is the only way a trader may be able to profit from their trades. It is also important to note that the entire trading position may be wiped out within seconds due to the high leverage involved.

Binary trading is one of the latest tools being used by Forex traders. Forex binary options forecast how certain currencies will perform on the market in a certain period, giving you a chance to plan your trade. The purpose of scalping using binary options is that you can easily select Forex pairs that will bring you maximum profit at a very low risk. You can sample trade binary options with 24option, which offers you several binary option platforms to trade on and tutorials on how to effectively use them.

Purpose of Scalping

Scalping is becoming popular in Forex trading and The purpose of scalping is to earn profit within the shortest time. A scalping transaction lasts for only a few seconds and if it goes beyond a minute it is no longer considered as scalping but normal trading. The short trading period ensures no transaction is left open, therefore minimizing risks incurred in long trading processes.

There are usually small differences between the buying and selling price, the trader capitalizes on this difference so as to maximize profit. There is no limit to the number of scalping transactions you can carry out in a day. Currency is normally liquid and there is no paperwork involved. The process can either be manual or automated. However most Forex traders are opting for automated systems because it is easier to generate and interpret charts and read trade signals.

You can as well scalp through a broker by maximizing on the difference between the bidding price and the ask price. Always ensure that you choose the right Forex pair as the number one purpose of scalping is to ensure you gain from every transaction you make.

By www.CentralBankNews.info
    The global consequences of the U.S. Federal Reserve’s planned wind up of quantitative easing again dominated monetary policy this week, from testimony in Washington D.C. to talks in Moscow by the G20 finance leaders, as the only two central banks to meet maintained their policy rates.
    The decisions by the Bank of Canada (BOC) and the South African Reserve Bank (SARB) were largely expected so markets’ interest was mainly focused on any changes to the banks’ outlook, especially by the BOC’s new governor, Stephen Poloz.
    But any hopes of fireworks from Poloz were dashed, confirming expectations that he would bring continuity and a steady hand to the BOC. Though the wording of the bank’s forward guidance was tweaked, the message was the same: At some point rates will go up as the economy normalizes. The economic forecast was also updated and largely in line with expectations.
    Three of the five new governors that have taken office this year among the world’s major central banks have made substantial policy changes at their first opportunity.
     Haruhiko Kuroda at the Bank of Japan (BOJ) launched the new phase of monetary easing, Mark Carney at the Bank of England (BOE) took the first step toward using forward guidance while Agus Martowardojo at Bank Indonesia (BI) raised rates for the first time since February 2011 in a pre-emptive to reduce inflation expectations and stabilize the rupiah currency.
    Changes by the other two new governors of major central banks – Elvira Nabiullina of the Bank of Russia and Poloz at BOC – have so far been more subtle
    Worldwide, 12 banks have changed governors so far this year, including the Bank of Israel (BOI) whose designated head, former Governor Jacob Frenkel, is having to testify over what he describes as an “unfortunate misunderstanding” that appears to involve a bottle of perfume or cologne at a duty free shop in Hong Kong airport in 2006.
    In addition to Japan, Canada, the U.K., Russia, Indonesia and Israel, the central banks of Venezuela, Slovenia, Rwanda, Ukraine, El Salvador and the Democratic Republic of Congo have new governors or presidents this year.
    (Click here for a list of all central bank governors)

    In South Africa, Gill Marcus, the first female governor of SARB, found herself in the uncomfortable position of having to keep interest rates steady despite weakening economic growth, due to inflationary pressures from a decline in the rand currency.
    The rand has been caught up in the general downdraft from the expected withdrawal of asset purchases by the U.S. Federal Reserve later this year, down 14 percent against the U.S. dollar this year.
    But this pressure comes on top of a general depreciation of the rand since March last year as labour unrest in the country’s critical mining industry has undermined investors’ confidence. Since early March last year, the rand has lost almost one-quarter of its value against the U.S. dollar.
    So far, the impact on South Africa’s inflation rate from the rand’s drop and higher import prices has been contained by weak pricing power amid a sluggish economy. But Marcus is worried that any further drop in the rand would quickly fuel inflation.
    Just as finance ministers and central bank governors started arriving for their Group of 20 meeting in Moscow, the People’s Bank of China took another step toward freeing up its state-controlled financial system and moving toward a market-based system.
   The move, which was widely flagged, was described by the PBOC as aimed at “further promoting market oriented interest-rate reform” by “full liberalization of financial institutions lending control.”
    Like most central banks, China’s central banks targets interest rates to control inflation and since July 2012 the benchmark one-year lending rate has been 6.0 percent and the one-year deposit rate 3.0 percent.
    The PBOC also sets a maximum limit on the interest rates that banks can pay depositors and a minimum rate on banks’ loans, ensuring the banks are profitable so they can finance the planned investments in China’s economy.
    The minimum lending rate had been 70 percent of the 6.0 percent benchmark rate, i.e. 4.2 percent while the maximum deposit rate was 110 percent of the 3.0 percent deposit rate, i.e. 3.3 percent, giving banks a guaranteed margin of minimum 90 basis points.
    The central bank has now scrapped the minimum rate that banks can charge for loans, a move that should cut the cost to companies and allow the banks to compete with the shadow banking sector.
    For now, the PBOC retained the ceiling on what banks can pay depositors, but it is only a question of time before that restriction is lifted.

    Through the first 29 weeks of this year, central bank policy rates have been cut 68 times, or 24.6 percent of the 276 policy decisions taken by the 90 central banks followed by Central Bank News, marginally down from 24.8 percent last week and down from 25.4 percent the previous week.
    While the global trend towards lower policy rates paused this week, the number of rate rises has slowly rising. Policy rates have been raised 14 times this year, accounting for 5.1 percent of all decisions, steady from last week.

    LAST WEEK’S (WEEK 29) MONETARY POLICY DECISIONS:

   
    NEXT WEEK (week 30) eight central banks are scheduled to hold policy meetings, including Turkey, Nigeria, Hungary, Sri Lanka, the Philippines, New Zealand, Fiji and Trinidad & Tobago.

 
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