Interest Rates Forecast 2014

Interest Rates Forecast for 2014:

My forecast for interest rates in 2014 doesn’t include any drastic changes. These are my expectations from the major central banks:

Federal Reserve (U.S.A)- It is very unlikely that the unemployment rate will drop below 6.75% in 2014, so the interest rate should remain at 0-0.25%.

European Central Bank- The interest rate will be lowered to 0.25%.

Bank of England- The current inflation in England is above target and so the interest rate may be raised up to 1%.

Bank of Japan- My 2014 forecast is that the rate will remain at 0.1%.

Bank of Canada- The interest rate will remain at 1%.

Reserve Bank of Australia- In order to encourage growth the interest rate will be dropped to 1.75%.

Swiss National Bank- There is a small chance of negative interest rates but they will most likely remain at 0-0.25%.

That was my forecast for 2014 regarding Forex, gold, oil and interest rates. Regardless of whether you choose to follow my predictions or not, I wish you all a year of financial prosperity and successful trading.

Forex Forecast 2014

I would like to share with you my predictions for what 2014 will have in store for us in terms of Forex, oil, gold and interest rates. Although no one can predict with complete accuracy what the future will bring, my predictions for 2013 turned out to be mostly correct so I hope that my Forecast for 2014 will be accurate too. I must admit that in some cases the market went completely against my predictions so take that into consideration and decide for yourself whether to go with my forecast or not.

This is my 2014 FX forecast:

EUR/USD Forecast for 2014

In the case of EUR/USD there is a conflict between the fundamental analysis and the technical analysis. When we look at the long-term technical analysis it seems to favor the euro, whereas the fundamental analysis points to a rise in USD in 2014. In this case, I tend to favor the fundamental analysis so I expect the price to drop to at least 1.3000 and maybe even as low as 1.2600. The expected decisions on QE tapering may completely change my forecast and cause an opposite trend which could go up to as high as 1.4300 so keep that in mind.

GBP/USD Forecast for 2014

As the interest rates are expected to remain the same for the coming time, my forecast is that there will be no drastic changes in the price and that it will probably slowly drop back down to about 1.5000. For the price to go up there would have to be a combination of tapering delays in the United States and remarkably positive economical reports in the UK. In the case that both those things happen the price may rise up to about 1.7500.

EUR/CHF Forecast for 2014

My Forex forecast for EUR/CHF for 2014 is very little change. As the SNB is likely to continue the minimum rate policy, but not likely to increase the minimum rate, only the possibility of negative interest rates in Switzerland can have a big impact on the price in which case it could go up to as high as 1.3000.

USD/JPY Forecast for 2014

Analysis of both the fundamental and technical aspects point to a bullish trend in the coming year. My forecast for 2014 is that the price will reach at least 110 and 120 at maximum.

That is my Forex Forecast for 2014, now let’s move on to Oil, Gold and Interest Rates.

Oil Forecast for 2014

My forecast is that the price will remain between 96-104 dollars per barrel.  As the demand for oil constantly increases and with no big conflicts in the Middle East that might affect the price there is no reason for the price to deviate far from the current 100 dollars per barrel price.

Gold Forecast for 2014

My technical analysis of the price of Gold shows strong support levels at 1000$ per ounce and at 1200$ per ounce. If 1200$ is broken then I would expect a strong bearish trend to follow, taking the price down to about 1000$. Other than that I don’t expect the price to go above 1200$ or below 1000$.

Swap-free or Islamic Accounts

The swap-free accounts are usually called Islamic, because initially these accounts were established for the traders following the Islamic religion. According to the religion's principles, any business transactions, where one of the parties should pay or get an interest from the other one, are prohibited. Islamic or swap-free accounts allow traders to trade any currency pair, but despite the volume of a trade, which is carried over midnight, do not suppose any reward or withdrawal. 

The accounts, which do not have the swap influence, give its owners an opportunity to keep the positions opened during an indefinite long period and do not provide any negative or positive commission for the rollover. In this case, the result of trading depends only on currency rate's movement for that certain period. Thanks to its peculiarity, this type of accounts became popular not just in Islamic countries, but also in other countries all over the world. 

InstaForex, as well as many others Forex brokers, offers its clients the swap-free accounts for free.

Forex Trading News

One of the key aspects for understanding the currency pair fluctuations on Forex is working with news. Know-how to work with Forex news is equally crucial for both newbies and experienced traders willing to upgrade their skills. 

To elaborate one's own daily trading strategy, a trader needs to analyze the calendar of news for an upcoming trading period. Successful trade relying on Forex news requires: 

- Knowing an approximate time when major news are most expected to be published; 

- Understanding the principle of market functioning at news releases and realizing the way profit can be made on Forex; 

- Discerning the interrelation between news and technical analysis. 

You should also be aware of the fact that some data affect the market more than other. It is not difficult to understand. Trading strategies have been developed for many years which is suggestive of a series of economic factors influencing the way currency pairs fluctuate. Some of these factors are listed below: 

•  The interest rates set by banks; 
•  Inflation rate; 
•  GDP and industrial output; 
•  Business indices; 
•  Announcements of financial officials in a certain country who are the most influential ones being top-officials of the USA, Great Britain, EU countries, Japan, Switzerland and Canada. 

Most Forex data are quite expected: as a rule, the data have always been forecasted. The currency market anticipates a news and all its parties do their best to be prepared. Before a news is released the experts publish their forecasts regarding possible currency rates movements. 

The market may respond the news released in the following ways: 

•  If a news has met the expectations, the rate of a certain currency remains basically unchanged. 
•  If Forex analysts provide exact forecast, with no regard to consequences of the current market trend, the currency rates will not be changed as well, although their movement may accelerate. 

•  In case of wrong forecasts, the currency rate will take the opposite direction. 

When analyzing the way fundamental data influence the currency rates it is necessary to take into account the trend direction. If the published news contradicts the trend it implies short-term news influence: it will not be influential but for several hours. If the news coincides with the dominant trend, then the trend will gain speed.

One ought to bear in mind that fundamental analysis basics are of most use when applied with technical analysis data.

Forex Trade

Forex is an international bank-to-bank currency market. Forex trade assumes purchasing or selling the currencies. Due to ever-changing currency rate, buying a currency at lower price and selling it at higher one you can gain profit catching its further movement correctly (for example: correctly determine the news). 

Forex market partakers are: banks (central and commercial), pension funds, insurance companies, brokers, dealers and private investors. Because of a great participants number and similar trades volume a lot of transactions are executed in a few seconds. 

A huge capital is not required for trading on Forex, as broker gives a loan - leverage. Its size is equal to hundredfold amount of deposit, it means that a trader (participant playing on Forex) enters the market with a sum exceeding the amount for trades execution hundredfold. Trade execution on Forex consists of 2 parts. First: trader opens position with a certain currency pair. Second: he closes position with this pair. 

Trades on Forex are closed automatically during several seconds. However, even such a big trades quantity accomplished by traders cannot put a substantial effect on price. 

Position opening in Forex trading is a process of requesting one currency from a broker for a certain quantity of another. The cost of a base currency in the first pair is called quote displayed in the quoted currency unit. It has 2 figures: Bid - the cost of base currency sold for quoted one and Ask - the price at which it is bought. A difference between them is called spread (it is the main income source for a broker), and point is the minimal price movement which can be accepted. Currency rate information is always available for those who operate on Forex market. 

Forex trading is carried out in three ways. These methods involve several trading strategies. Traders with big trading experience on Forex develop their own strategies for several years, but there are some approved and really beneficial strategies: 

- Day trading (intraday short term trading) is opening of short term trades by a trader for 1 or 2 minute period up to a couple of hours. Such trades are usually closed in the same trading day and almost never carried over night.

 - News trading. Traders using this kind of trading can always have a stable profit, making the right analysis of published news. At the same time, wrong news analysis and position setup can result in serious losses. 

- Midterm trading. With this kind of trading, trader opens long period trades (from 1-2 days up to 1-2 months). Getting a huge profit following this strategy is possible in case a trade remains opened for a few days at least. A good capital is needed for backing up such trades. 

- Technical analysis in Forex trade implies an option to estimate and make right analysis of different chart types (bars, Japanese candlesticks, lines) with currency pairs and figures displayed on them that allows to forecast rate fluctuations of the currency pairs. 

- Carry trade is gain acquisition from difference betweeen the interest rates of currency pairs. 

Using this type of trade, trader's positions remain open for a long period of time (from 2-3 months to 1 year and more). Such trading requires a big capital. It is used for waiting when a trade becomes profitable not to bear losses until the price changes to the right direction. 

Also one of the advantages of Forex trade is that the work does not stop 24 hours 7 days a week (from Monday to Friday), therefore, regardless of difference between the time zones and location you can continue taking part in trading. Such opportunity of trading on Forex is provided by the world financial centers managed by the national banks together with international banks where different countries capital is kept. 

Major of them are located in: New York, London, Tokyo, Paris, Luxembourg, Singapore and Austria. They allow supporting the liquidity for trading on Forex during the whole day and night.

Forex Market

Forex market (FX market) is an interbank currency exchange market. The term Forex is used for a currency interchange only, not for denoting all types of currency operations. The currency market operations can be trading, speculative, hedging or regulatory. 

Thanks to fast development of a global net, Forex market offers real opportunities for every person of any age. Only Internet access and a trading platform are required. 

About Forex 

In August 1971 the President of the USA Richard Nixon refrained from free convertibility of the US dollar into gold, and in December 1971 the Smithsonian Agreement was signed in Washington, according to which a 1% currency rate fluctuation versus the US dollar was replaced with 4.5% (for 9% of currency pairs which do not comprise the US dollar). This put an end to the system of the fixed currency rates. These reforms were targeted to make the policy of gold prices more liberal. Before the changes the currency rates were stable due to the gold standard, however, after that the floating gold prices led to an inevitable wobble of currency rates. This event gave birth to a new activity - currency trade, when the exchange rate became dependent not on a gold equivalent of a currency, but on the market supply and demand in this currency. In January, 1976 during the meeting of the IMF countries ministers in Kingston a new agreement on the international currency system was signed in the form of amendments to the IMF Articles of Agreement. A number of countries refused from pegging the national currencies to the US dollar or to gold. Nonetheless, only in 1978 this was permitted officially by the International Monetary Fund. From that moment on, the floating currency rates have become a principle of the currency exchange. 

The new currency system was not based on determining a purchasing capacity of money on the ground of its gold equivalent value. The countries money - the treaty participants - stopped to have the official gold value. The exchanges started to be carried out in a free currency market at flexible prices. 

Establishment of a floating rates system had led to that central banks received a right to affect the currency rates and exert influence on economic situation in the country by applying certain measures. 

Importers, exporters and bank institutions supporting them became regular participants of the currency market as the liquidity of currency rates now can be reflected in financial results of their work either positively or negatively.

The Daily Turnover on Forex Market: 

There are no accurate figures, as this market is over-the-counter, and there is no compulsory registration and publication of operations data. In 2005-2006 the daily Forex market turnover was changing by different estimations within the range of 2-4 trillion US dollars. A part of this turnover is provided by a marginal trading which allows conducting contracts for the amounts exceeding the real monetary funds of parties. Regardless of the character and the targets of operations, a huge turnover guarantees high Forex market liquidity. 

Getting profit on Forex Market: 

There are plenty of adverts in the Internet about the ways to collect profit on Forex market, however, one should take into account that this work is not a full-time occupation and has no steady salary. Only you can determine your wage, depending on your loss or gain. This business is about starting capital and inevitable risks. 

Marginal trade on Forex has a number of peculiarities: there is no career ladder, no huge initial capital, the operations are similar and do not require constant education, potential yield rate or loss risk are high. These characteristic features make the marginal trade attractive for beginning the stock exchange activity with a small start-up budget. 

You can familiarize yourself with market trading on demo accounts. For that purpose you only need to choose a broker that interests you, download a trading platform and register a demo account. Every business can bring either yield or loss. To make profits exceed losses you have to study the FX market and the nuances of trade. As soon as you are able to observe the rules of currency market, you will become a successful trader.

What is Forex.?

About Forex

Forex is the international foreign exchange market. The name came from the portmanteau of FOReign Exchange – foreign exchange operations. The Forex market is one of the youngest financial markets (Forex has been functioning since the 70's). However, it is the largest in volumes and the most fast-growing market. The daily trading turnover on Forex amounts to about 4 trillion US dollars, which by 30 times exceeds the joined volume of all stock markets in the USA.