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Tradedeficit

AUDCAD: Bearish Divergence at Last Week's HighThis is a pair I'v been looking to short again for awhile now due to the trend and now i'v got some Bearish Divergence to justify entering and the nice extra bonus from the news of the US Trade Deficit Increasing. I think this will stir up more demand for the CAD against alot of other Currencies but more particularly against the AUD. This may also put downwards pressure on the price of US Oil but thats for an entirely different trade.
Short
by RizeSenpai
1
PETER SCHIFF VS JEFF SNIDER!THIS POST WILL HELP YOU UNDERSTAND THE COMPETING VIEW POINTS ON THE FUTURE PERFORMANCE OF THE U.S. DOLLAR RELATIVE TO OTHER CURRENCIES! JEFF SNIDER'S POSITION ON THE DOLLAR: THE U.S. DOLLAR IS STRONG BECAUSE OF A SHORTAGE OF DOLLARS WORLDWIDE TO CONDUCT GLOBAL TRADE IN, DUE TO TO FED'S INABILITY TO TRULY SATISFY DEMAND FOR U$Ds, AND WILL CONTINUE TO STRENGTHEN AS LONG AS FOREIGN CURRENCIES ARE SOLD TO BUY U$Ds. PETER SCHIFF'S POSITION ON THE DOLLAR: THE U.S. DOLLAR IS STRONG BECAUSE OF AN IRRATIONAL FAITH IN THE U.S. ECONOMY BY FOREIGNERS AND THE WILLINGNESS OF PRODUCTIVE ECONOMIES WORLDWIDE TO USE AND ACCEPT PRINTED U.S. DOLLARS IN GLOBAL TRADE, SUBSIDIZING THE CONSUMPTION AND TRADE DEFICIT OF THE U.S. JEFF SNIDER'S POSITION ON U.S. TREASURIES: THE U.S. GOVERNMENT BOND MARKET HAS BEEN BID HIGHER FOR DECADES AS U.S. TREASURIES PROVIDE THE SAFEST SOURCE OF U$Ds AND ARE THE MOST ACCEPTED FORM OF COLLATERAL FOR U$D LEVERAGE. IF U$D LIQUIDITY BECOMES CONSTRAINED ENOUGH WORLDWIDE, A SELL-OFF IN THE GLOBAL U.S. TREASURY MARKET CAN OCCUR AS AS THEY ARE SOLD FOR THE IMMEDIATELY NEEDED U$Ds, RAISING INTEREST RATES THROUGHOUT THE FINANCIAL SYSTEM AND THE ECONOMY. PETER SCHFF'S POSITION ON U.S. TREASURIES: THE FEDERAL RESERVE'S ARTIFICIAL SUPPRESSION OF INTEREST RATES SINCE THE 1990's THROUGH QE, COUPLED WITH THE USE OF U$Ds IN GLOBAL TRADE AND THE IRRATIONAL FAITH BY FOREIGNERS THAT THE FEDERAL RESERVE COULD SHRINK ITS BALANCE SHEET AND NORMALIZE INTEREST RATES HAS LED TO FOREIGN CAPITAL BIDDING UP THE PRICE OF U.S. GOVERNMENT BONDS. ONCE THAT FAITH IN THE DOLLAR'S SCARCITY IS DIMINISHED AND PRODUCTIVE ECONOMIES WORLDWIDE REFUSE TO HOLD/ACCEPT U$Ds AND SUBSIDIZE AMERICAN CONSUMPTION, U.S. TREASURIES WILL BE SOLD-OFF, RAISING INTEREST RATES THROUGHOUT THE FINANCIAL SYSTEM AND THE ECONOMY. JEFF SNIDER'S VIEW ON THE FUTURE OF THE DOLLAR: AS LONG AS THE FEDERAL RESERVE FAILS TO ADDRESS THE COMPLEX NEED FOR U$Ds AND AS LONG AS THE U$D REMAINS THE WORLD RESERVE CURRENCY, DEMAND WILL OUTPACE SUPPLY, AND THE U$D WILL CONTINUE TO STRENGTHEN AGAINST OTHER CURRENCIES UNTIL A CULMINATION OF DEFAULTS AND RESTRUCTURING RAVAGES THE COUNTRIES WITH THE MOST SEVERE LACK OF U$Ds, SENDING THE U$D SKY HIGH, LEADING TO AN ABANDONMENT OF THE U$D AS WORLD RESERVE CURRENCY. PETER SCHIFF'S VIEW ON THE FUTURE OF THE DOLLAR: ONCE PRODUCTIVE COUNTRIES WORLDWIDE BECOME DISILLUSIONED WITH THE AMOUNT OF EASILY CREATED U$Ds CHASING PRICES, THE APPETITE TO ACCEPT THOSE U$Ds IN EXCHANGE FOR GOODS/SERVICES AT CURRENT PRICES WILL DIMINISH, ALONG WITH THE DESIRE TO HOLD U$Ds, U.S. ASSETS AND U.S. TREASURIES. ONCE U$Ds AND U$Ds OBTAINED THROUGH THE SALE OF U.S. ASSETS AND U.S. TREASURIES ARE SOLD FOR OTHER CURRENCIES, THE U$D WILL WEAKEN SIGNIFICANTLY, FURTHER INCREASING THE PRICES OF IMPORTED GOODS/SERVICES, SENDING THE U$D INTO AN INFLATIONARY SPIRAL, MARKING ITS END AS THE WORLD RESERVE CURRENCY. IN THIS CASE, IF THE FEDERAL RESERVE MONETIZED THE SOLD U.S. TREASURIES TO PREVENT INTEREST RATES FROM RISING, THIS COULD EASILY LEAD TO HYPERINFLATION. -IT IS IMPORTANT TO NOTE THAT THE 0% YIELD ON U.S. 10 YEAR GOVERNMENT BOND IS A DANGER ZONE IN EITHER CASE, AS FOREIGN ENTITIES WILL NO LONGER HAVE AN INCENTIVE TO HOLD U.S. TREASURIES, PREFERRING CASH, GOLD OR OTHER ASSETS OVER A NEGATIVE YIELDING BOND. -THE NOTES ON THE CHART OFFER CONTRIBUTING FACTORS AS TO WHY YIELDS BOTTOMED OR PEAKED AT VARIOUS POINTS DURING THIS BOND BULL MARKET.
TVC:US10YEducation
by UnknownUnicorn4195243
A perennial problem of the dollar and profit-taking tradingThe US dollar continues to demonstrate the resistance. It does not decrease after the Fed cuts, it ignores macroeconomic statistics, it grows amid a political scandal and a possible impeachment of Trump. The US dollar as the main asset-refuge, the growth of the dollar is a consequence of the weakness of other currencies, etc.). But why? Obviously, with time the stock of negativity will accumulate. That is why we continue to recommend the dollar sale in the foreign exchange market. We are sure that all this is compensated by a large movement, which ultimately cannot be avoided. As for yesterday, we note that our expectations regarding the data on US GDP for the second quarter were fully fulfilled (they came out within the forecast of 2%). The bears failed to seize the initiative. We also note yesterday's US trade balance data, which showed a deficit of $ 72.8 billion. This is a lot. Yes, while the markets are trying not to see that, but once again we note that sooner or later the US debt will be remembered both by the giant US debt (soon it will be $ 23 trillion), and the constant budget deficit (already exceeded a trillion) and the trade deficit (year on year) striving for a trillion) and so on. In the meantime, the main attention of the markets is focused on what is happening in the repo market. The Fed continues to flood the market with money. Injection volumes have already reached $ 100 billion per day (before that it was about $ 75 billion). Against this background, the growth of the dollar seems even more abnormal. Friday in terms of macroeconomic statistics will be relatively calm. Considering that several assets showed good growth over the week, Friday could well be a day of profit-taking, because it will be the end of the month. In this light, our recommendations for today are as follows: buy gold, sell the dollar, buy the pound and the euro, also, today you can try to buy oil. Do not forget to put hard stops in open positions.
Long
by Trade24Fx
Is a Trade Deficit Good or Bad?One of the ongoing debates in the US economy, still looming over the election date, is whether a trade deficit is bad or good. Donald Trump suggests that the trade deficit is bad as it means that the US is producing less than it could and hence people are left without jobs. Most economists, on the other hand (here are examples A, B, and C) do not agree with this point, their arguments being that trade is beneficial to all countries, regardless of whether a particular country registers a surplus or a deficit. To begin with, it is easy to see the validity of the economists’ arguments: how many countries would have access to technological goods they had not developed themselves if no trade existed? You would probably not have been able to read this post on your PC or your smartphone and I would have no way to communicate these views if it wasn’t for imported technology. Then comes what economists have dubbed as comparative advantage, i.e. someone’s ability to do something much more efficiently than ourselves. This can be due to a number of reasons: not all countries can cultivate coffee beans, while not all countries can become financial or shipping hubs or have huge factories all over their territories. Consequently, geographical restrictions and benefits, as well as weather and country size can play an important role as to what goods and services a country can offer. This was well understood centuries ago (90 millenia according to this guy), as Egyptians travelled to India to obtain spices. In recent years, this was just rephrased to mean outsourcing: instead of purchasing goods and services from abroad to transform them into different products in our own country (e.g. silicon to create computer chips), businesses have found that it is more profitable to actually construct most of the products they need abroad and then assemble them back home. This makes the whole production more efficient and thus allows firms to be more competitive across the world. Naturally, business tactics are not the only reason for a trade deficit. Another, more important role for a trade deficit is because a country is rich and can afford to consume more than it produces. I guess the same would hold for the ancient Kingdom of Egypt and for the US: they consume because they like to and, most importantly, because they can. In fact, trade also has some interesting geopolitical implications: if country X is importing heavily from country Y then the latter is dependent on the former, thus giving country X more power. Moving from trade to trade deficits, a usual argument in favour of trade deficits is the following: if someone is willing to give you goods in exchange for pieces of paper (which is what money really is) then wouldn’t you be very happy in that scenario? It costs nothing to print pieces of paper and, so long you are prudent in printing, the pieces will more or less maintain their value. In this case, it should not matter if your deficit is 2% or 15% of GDP. In real life though, it does. A higher trade deficit would usually mean a depreciation of the currency, while, at the same time, it would mean an improvement in domestic consumption. The question which matters is how this trade deficit is supported. Despite the apparent complexity in the economy, there are really not many reasons on why this could happen: government spending, bank lending, central banks issuing money and less savings. Usually, the first three are the “culprits” for the increase in spending, all of which can lead to unsustainable trade deficits. For example, rapid credit expansion, uncontrollable increases in government deficit and debt, as well as excessive money printing, can all be blamed for trade deficits going bad. Still, this is not absolute: a large trade deficit can also be indicative of a growing economy, as consumption and investment are increasing. A stable, but not excessive, credit expansion, a government deficit which is not in greater than GDP growth, and money printing in regular quantities can be viewed as contributors to higher growth than warning signals. What’s the conclusion: a trade balance is not bad on its own, unless it is associated with credit booms, unsustainable government policies, or reductions in the savings rate. While in developed countries these events are less frequent than in developing ones, they can still occur. Still, it’s far more often the case that a banking or a sovereign debt crisis will erupt rather than to experience trade balance problems. Nektarios Michail, Ph.D Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
INDEX:DXYEducation
by HotForex