The wonderful world of futures contracts has finally caught up with the exciting new world of cryptocurrencies. If you pardon the pun, for Bitcoin, the futures is now. Futures contracts have been in use since the late 19th century. A futures contract is an agreement for the delivery of goods at a specified date in the future. The price is set at the beginning of the contract, and when the product is delivered, the original agreed price is paid.
Last week ended with the publication of disappointing NFP jobs numbers from the USA; coming in at 148k, versus expectations of circa 190k. A peculiar number suggesting that retailers, working on ever tightening margins, laid off employees earlier than expected during the Xmas season. The unemployment rate remained unchanged at 4.1%, whilst the underemployment rate, which some analysts cite as the more relevant and true reflection of the USA unemployment situation, crept up to 8.1%. Another metric which rose, which appears to be dismissed as irrelevant despite it being classed as “hard data”, was the balance of trade deficit; coming in at -$50.5 per month for November, projecting a circa -$600b yearly deficit.
Jobs data published on Thursday for the USA painted an optimistic backdrop to the encouraging manufacturing figures published on Wednesday, weekly jobless claims were down, as are continuous claims. The ADP numbers, the precursor to the NFP number, came in above the forecast of 190k, at 250k. Challenger job cuts came in at a stunning level, at -3.6% and circa 36k for December, it’s the lowest print since 1990. Traders (and the machines) also had time to analyse the latest minutes from the FOMC/Fed monetary policy meeting held in December.
Exchange-traded options first started trading back in 1973. But over the past decade, the popularity of options has grown in leaps and bounds. According to data compiled by the Options Industry Council, the total volume of options contracts traded on U.S. exchanges in 1999 was about 507 million. By 2007, that number had grown to an all-time record of more than 3 billion.
The ISM manufacturing index for the USA came in at 59.7 for December, construction spending rose by 0.8% in November to a record annual high, whilst new orders recorded a 69.4 reading for December. This positive news extended beyond impacting equity values, the news also caused the U.S. dollar to rise versus its three main peers; yen, euro and sterling. On Wednesday evening The Fed released the minutes from their December FOMC rate setting meeting and the release contained few surprises. The committee voiced their concerns on inflation being below the 2% target, whilst suggesting that the tax cuts, which will cut the corporate tax rate from 35% to 21%, may have a healthy trickle down effect on consumers’ spending ability, thereby increasing inflation.
FX markets burst into life on Tuesday morning, as Tokyo and Sydney opened. Once the London market opened currency movements accelerated dramatically, with several currency pairs whipsawing violently, in a wide range throughout the day. These conditions offered up some excellent trading opportunities for scalpers and day traders, whilst exposing swing and position traders to difficult trading decisions. FX markets appeared to undergo a rebalancing exercise, after the extended and fractured holiday period, a common occurrence on the first full trading day of the year.
Traders began to quietly re-engage with the FX markets, as Tokyo and Sydney opened on Monday evening/Tuesday morning. After a fractured ten day holiday period, over the Xmas and New Year period, London’s open will be closely monitored. Last week’s trading ended the year with gold (XAU/USD) finally breaking the critical 1,300 handle after slumping to 1,236 in early December. U.S. equity markets reached record highs during last week’s trading sessions, but with the Trump tax reduction programme now signed into law, analysts and traders may calculate that the tax breaks are now fully priced in.
Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades.‘Forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange, trading around $4 trillion every day, and it is open to major institutions and individual investors alike.