News & Analysis

News & Analysis

Welcome to the TradeFred news and analysis section. Here you will find the latest market commentary, company news, plus a whole host of information about Forex and the world of trading.

You can also gain an insight into different strategies and analysis techniques to bolster your existing trading approach. This is just part of TradeFred’s commitment to providing an in-depth and inclusive service to make the most of your investments.

My Blogs

Stormy conditions for Sterling as May faces no confidence vote

The British Pound is moving wildly as embattled Prime Minister Theresa May faces a leadership challenge from her own party. Despite reportedly coming close on a few prior occasions, Conservative rebels have finally breached the threshold needed to force a confidence vote.

Members of her party will now take part in a secret ballot scheduled for 18:00 GMT, with the result expected at 21:00 GMT at the earliest. She needs 158 of them to support her in order to win – which will grant her immunity from another formal challenge for a year.

Failure to get the required number of votes will see her forced to serve as caretaker Prime Minister until a successor is identified, a process that could take several weeks and will likely result in Britain’s departure from the EU being delayed. Because the Conservatives are the largest party in Parliament, the new party leader would also be expected to be Prime Minister.

Mrs May was characteristically defiant after the confidence vote was announced, vowing to contest it with everything she’s got. In a speech at Downing Street she said: “A change of leadership in the Conservative Party now will put our country’s future at risk and create uncertainty when we can least afford it. The new leader wouldn’t have time to renegotiate a withdrawal agreement and get the legislation through parliament by the 29th March – so one of their first acts would have to be extending, or rescinding, Article 50, delaying or even stopping Brexit”.

Her speech will be seen as a threat to the hardline Brexiteers in her party that ousting her will do more harm than if she is allowed to carry on with her deal. She is clearly hoping this will be enough to persuade them that they are better off with her than a potential worst-case scenario where opposition leader Jeremy Corbyn would be in power.

Wednesday’s development came after Mrs May on Monday ditched a vote in Parliament in which MPs were going to accept or reject her unpopular Brexit deal. The ballot, which was supposed to take place on Tuesday, was scrapped because she had calculated she was going to lose heavily.

As a result, she spent most of Tuesday on a whistle-stop tour of several European capitals trying to seek reassurances over the most controversial element of her deal – the so-called Irish backstop. However, the EU leaders she visited repeatedly stated there would be no new negotiations – which is potentially what pushed Conservative rebels over the edge.  

The Pound sank below the psychologically-important 1.25 mark against the US Dollar when the news broke, but recovered to be up 0.40% at 1.2538 as of 09:54 GMT. Investors appeared to take heart in the fact that Article 50 would need to be delayed if a new leader is elected, however some analysts believe Sterling would drop around 3% if Mrs May is ousted.

Meanwhile, Sterling was also higher on the day versus the Euro and Japanese Yen. GBP was up 0.27% at 1.1061 against the single currency and by 0.46% at 142.23 when compared to JPY.

TradeFred's weekend roundup: Top 5 stories

Welcome to this week’s edition of TradeFred’s weekend roundup. Today’s instalment covers the top 5 news stories that took place while the markets were closed – including the aftermath of the “yellow vest” protests in France, another rise in Oil prices and the build-up towards tomorrow’s crucial Brexit vote.

  1. Macron to address nation after more “yellow vest” protests

French President Emmanuel Macron will speak to the country on Monday following another weekend of violence on the streets of Paris. The so-called “yellow vest” protests have now run for the last four weekends, forcing the closure of the city’s main tourist attractions to close.

Named after the fluorescent yellow safety vests that French motorists must carry, the movement was set up in protest of Macron’s economic agenda, which ordinary citizens believe is more favourable towards the wealthy. They are demanding the President changes course and introduce a raft of new policies, including a rise in the minimum wage.

The government has warned that the protests will already have a significant impact on the economy, with Finance Minister Bruno Le Maire saying the country “must expect a new slowdown of economic growth at year-end”. All eyes will now be on President Macron to see what his reaction will be – though sources have already ruled out a minimum wage increase.

  1. OPEC production discussion “a defeat for US meddling”

America’s attempt to interfere in the business of OPEC was defeated by Friday’s decision to cut output. That is the opinion of Iranian President Hassan Rouhani, who was quoted by the country’s state news agency.

Oil prices ended Friday’s trading session more than 2% higher as OPEC and other oil-producing nations agreed to cut production by more than the markets expected. This is despite pressure from US President Donald Trump to reduce the cost of Crude.

After a mammoth negotiating session, the producers agreed to slash output by a combined 1.2 million barrels per day (bpd). Brent Crude rose by 2.7% by the end of Friday’s trade, with US Crude up by 2.2%.

  1. May urged to renegotiate ahead of potential Commons defeat

Embattled UK Prime Minister Theresa May faced fresh calls to delay Tuesday’s crucial Parliamentary vote on her Brexit deal, with defeat looking increasingly likely. Key figures from the Leave campaign have been pressing the beleaguered leader to go back to the EU and remove the controversial “Irish backstop” insurance policy from her agreement with Brussels.

Meanwhile, three former Brexiteer Ministers – including ex-Foreign Secretary Boris Johnson – refused to rule themselves out of a leadership bid if Mrs May does not renegotiate and then goes on to lose Tuesday’s vote.

EU Council President Donald Tusk tweeted that he had a phone call with Mrs May on Sunday evening, but gave no detail about what was said. He said this week would be extremely important for the UK’s plans to leave the economic bloc.

  1. More fuel for trade war as China-US surplus widens

Investors’ relief over a potential thaw in US-Sino trade relations was dealt another blow over the weekend, as new figures revealed that China’s trade surplus rose again last month. America’s deficit has long-been a sore point for President Donald Trump and is one of the central causes of the long-running trade war.

Chinese customs data released on Saturday showed that China’s surplus widened from $31.78 billion in October to $35.55 billion in November. Figures from January-November showed the surplus was $293.52 billion, compared to $251.26 billion in the same period in 2017.

Market volatility was initially soothed following the G20 meeting in Buenos Aires, at which the Chinese and American Presidents agreed to suspend further tariffs for 90 days while they try to negotiate a truce. Optimism was short-lived, however, following the arrest of Chinese tech giant Huawei’s CFO.

  1. Australian voters shun government as political turmoil takes toll

Voters in Australia could inflict a landslide election defeat upon Prime Minister Scott Morrison, a new survey has revealed. With the scheduled vote less than six months away, just 35% of the electorate are in support of the government, while the administration was set to lose 21 seats in the 150-seat lower house of Parliament.

Analysts believe the unrest is down to the latest bout of political backstabbing, which saw Mr Morrison turf out former leader Malcolm Turnbull. With an election looming in May, the current Prime Minister does not have much time left to try and win over voters.

Last month, he announced he would bring forward the country’s annual budget and hold it about a month earlier than usual – crucially before the election. It is expected to include Australia’s first budget surplus since 2007/2008.

Sterling skyrockets on new Brexit ruling

The British Pound has surged against most major currencies, as a top EU official said the UK could unilaterally decide to revoke Article 30 and stay in the bloc.

Advocate General Manuel Campos Sanchez-Bordona made the announcement in response to a case brought by Scottish MPs and other politicians. Although the decision is not legally-binding, the European Court of Justice (ECJ) usually follows his stance when it makes its final rulings. The ECJ will deliver its final ruling at a later date.

Sterling jumped against the Greenback by 0.76% as of 09:53 GMT, to reach 1.282 as the news broke. It was also 0.21% higher than the Euro and 0.02% up on the Japanese Yen.

The decision has galvanized both sides of the UK parliament’s Brexit divide, with so-called Remainers hoping that it gives the country another way out if Prime Minister Theresa May’s polarising deal gets rejected by MPs. Her supporters, on the other hand, say it makes getting behind the agreement even more important – otherwise Brexit might not even happen at all.

Unsurprisingly, the British government fought against the court case, arguing that it was “purely hypothetical” since ministers had no intention of remaining in the EU. Lord Keen, acting on behalf of the government, said the potential to revoke Article 30 was akin to opening Pandora’s Box.

The European Council was also against the motion. It claimed that allowing a nation to decide it was going to leave the bloc and then unilaterally changing its mind could create “endless uncertainty”. In addition, it pointed out that countries could simply announce their withdrawal in an attempt to secure better membership terms, before cancelling their decision.

Stephen Doughty, a MP from the opposition Labour Party, said: “Brexit is not and has never been legally inevitable. All options [are now] on [the] table. Parliament should take back control and put the decision back to the people.”

Conservative MP Simon Hoare, a supporter of Mrs May’s, said: “This is a huge announcement. Those who believe in democracy take note: behaviour leading to a general election may see Brexit slip away. Is that seriously what people want?”

The decision comes as Mrs May faces a five-day battle to win over MPs and get them to back her deal. Parliament is set to vote on the agreement next Tuesday – with the Labour Party vowing to launch a vote of no confidence in her leadership if she is defeated.

Weekend roundup: top 4 stories

Welcome to the new-look weekend roundup. We will be covering the top 5 market and news stories that took place while the markets were closed. This week’s edition will focus mainly on the G20 summit in Argentina, plus new developments in Brexit and Italy’s budget.

  1. Trade war cools as Trump & Xi halt tariffs

Perhaps the biggest story to emanate from Buenos Aires was the agreement between Presidents Donald Trump and Xi Jinping to call a halt to the escalating trade war. Both sides declared they would suspend the implementation of additional tariffs that were due to take effect in the new year.

The two leaders agreed to halt the rate hike for a period of 90 days while they try to thrash out their differences. If no agreement is made after this time, tariffs on certain products would be increased from their current level of 10% up to 25%. As part of this weekend’s deal, China agreed to purchase an unspecified, but “very substantial”, amount of agricultural, industrial and energy products from the US.

Chinese State Councillor, Wang Yi, claimed the negotiations took place in a “friendly and candid atmosphere”. He said: “The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States’ legitimate concerns can be progressively resolved,” adding that both countries would continue their discussions and work towards the total elimination of tariffs.

  1. G20 leaders unanimously agree to WTO reforms

Members of the G20 have voted in favour of reforming the way the World Trade Organisation (WTO) carries out its operations. In a joint-communique, the leaders acknowledged that the current system was “falling short of its objectives” and recognised there was “room for improvement”.

The agreement, which was far from a foregone conclusion when the summit began, was formed amid intense wrangling by diplomats over the mention of protectionism and the role of the International Monetary Fund (IMF) as a global safety net. The omission of these terms was seen as a victory for the US, though French President Emmanuel Macron claimed that “European Unity on basic principles had helped save the summit”.

Leaders praised the contribution a multilateral trading system had made to international investment, which was cited as an “important engine of growth, productivity, innovation, job creation and development.” However, they said they would support all necessary reform to improve how the WTO works and committed to reviewing progress in the next summit.

  1. May faces new Brexit headache over legal advice

Even an important global summit like the G20 could not save British Prime Minister Theresa May from a fresh round of Brexit hurdles. The embattled leader is now facing the prospect of having contempt proceedings launched against her government if it fails to publish the full legal advice she received on her much-maligned deal with the EU.

The opposition Labour party is accusing Mrs May of trying to renege on a promise made to Parliament that the full legal implications of the deal would be published. Its Brexit spokesman, Keir Starmer, said contempt proceedings would begin on Monday if the government did not back down. The move already appears to have won the backing of Northern Ireland’s Democratic Unionist Party (DUP), which is propping up May’s minority government, plus former Foreign Secretary Boris Johnson.

Meanwhile, Labour also claimed it would start a motion of no confidence against the Prime Minister if her deal fails to be approved by Parliament. The odds of securing an agreement look stacked against her, especially following the resignation of yet another MP on Friday.

  1. Italy upbeat on budget deal with EU

Italian Prime Minister Giuseppe Conte said he was optimistic that his country could agree a deal with the European Union over its controversial budget plans. He claimed both sides were “making more progress at every meeting we have” and said they were “looking at points that could be the basis for a possible solution.”

The government caused market tensions a few months ago by releasing a budget that forecasts a rise in deficits to 2.4% of GDP in 2019. It claimed this action was necessary to prevent the country from sliding into another recession.

Brussels rejected the move, saying it would go against European rules to lower budget debt. The EU subsequently called on Italy to revise its proposals or face disciplinary proceedings that could lead to fines.

TradeFred’s weekend roundup

Welcome to the latest edition of TradeFred’s weekend roundup, our look at the major news events that took place while the markets were closed. This week’s instalment covers the implementation of the USA’s oil sanctions, the latest on Brexit negotiations and much more besides.

US roundup

The United States confirmed it would temporarily allow eight countries to continue importing Iranian Oil after its sanctions come into effect on Monday. The decision was announced by Secretary of State Mike Pompeo, who declined to name the jurisdictions involved.

US President Donald Trump announced earlier this year that he was pulling out of the 2015 nuclear deal and re-imposing sanctions on Tehran. The move was likely designed to curb Iran’s nuclear ambitions and halt its support for militia in Syria, Yemen and other parts of the Middle East.

Turkey’s Energy Minister revealed his country was one of the jurisdictions to be granted a temporary reprieve, while Iraqi officials confirmed the same applied for their nation – as long as it does not pay Iran in US Dollars. An unnamed source said India and South Korea were also on the list.

Mr Pompeo said the waivers had been granted because the jurisdictions had “demonstrated significant reductions in their crude oil and cooperation on many other fronts.” He added that the ultimate goal was to stop exports from Iran completely.

In response, Iran’s Supreme Leader claimed the world was united against the US President’s policies. Supreme Leader Ayatollah Ali Khamenei. He said: “America’s goal has been to re-establish the domination it had (before 1979) but it has failed. America has been defeated by the Islamic Republic over the past 40 years.”

Meanwhile, both Democrats and Republicans continued to campaign heavily as the US midterm elections edge closer. Former President Barack Obama warned against the use of rhetoric that inspired fear, while Donald Trump spoke heavily on immigration.

Finally, electric carmaker Tesla confirmed that the US Securities and Exchange Commission (SEC) has issued it with a subpoena over forecasts the company made about production of its Model 3 car last year. The regulator is examining whether investors had been misled over the targets, which were not hit on time.

Both SEC and the US Department of Justice are said to be investigating whether Tesla gave misleading information to the markets. The company wrote: “To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred.”

EU roundup

The Brexit negotiations were back in the spotlight over the weekend, with a newspaper article claiming that an all-UK customs agreement had been made that would finally alleviate the problematic issue of the British-Irish border. The report said that Theresa May’s cabinet would be discussing the plans on Tuesday and it was hoped enough progress would be made for the EU to announce a special summit on Friday.

However, Mrs May’s office has dismissed the plans as “speculation”, claiming she had been “clear” that good progress was being made. A spokesman confirmed her stance that “95% of the withdrawal agreement is now settled and negotiations are ongoing.”

The Sunday Times newspaper has claimed that more than 70 leading names in business have joined the call for a public vote on the final divorce terms. Companies are said to be extremely worried the UK will either crash out of the economic bloc without securing an agreement, or a deal would be struck that limits their access to the continent’s markets.

According to the newspaper, the business leaders said in a letter the country was “now facing either a blindfold or a destructive hard Brexit,” claiming either scenario would “further depress investment”. It continued: “They will be bad for business and bad for working people. Given that neither was on the ballot in 2016, we believe the ultimate choice should be handed back to the public with a People’s Vote.”

The Brexit department claimed it was confident a deal would be reached that worked for businesses and reaffirmed the government’s opposition to a second vote.

Meanwhile, German Chancellor Angela Merkel faced more difficulty over the weekend, as her Christian Democrats (CDU) party argued over what to do when she steps down as chair. The discussions involved whether to take up a more conservative agenda after years of moving more to the centre of politics.

Health Minister Jens Spahn, who is one of the candidates to replace Mrs Merkel, said the party had “watered down” its profile over the last few years. Its Deputy Chair Armin Laschet warned against the move, saying it should stick to its current course.

Both members of Mrs Merkel’s grand coalition were due to meet to discuss their future, with support for the Social Democrats (SPD) hitting a record low.

In other news, Italy’s Deputy Prime Minister said that the agreement made between his 5 Star Movement and the League must be adhered to. Luigi Di Maio made the statement after a government official raised doubts about one the document’s key pledges.

The leader of the League Matteo Salvini denied there was a disagreement between the two parties, claiming he was “very happy” with the legislation that had already been created and what was still to come.

Rest of world roundup

Iran has again called on the EU to support the country in the face of Monday’s oil sanctions. The country’s state news agency said Tehran’s Foreign Minister spoke with his counterparts from Germany, Sweden and Denmark, plus the European Union’s foreign policy chief to come up with measures to limit the effect of the sanctions.

The officials were said to have “highlighted the importance of the finance ministers’ commitment to Europe’s financial mechanism to save the Iran nuclear deal and said the mechanism will be operational in the coming days.”

India has said it and other oil buyers will benefit from the waiver granted by the US that temporarily allows them to buy Iranian oil after the sanctions hit. Oil Minister Dharmendra Pradhan praised the work of Prime Minister Narendra Modi in highlighting the impact a complete ban would have on the economy.

Meanwhile, China has confirmed it would provide economic aid to Pakistan after a meeting over the weekend. Last month, Pakistan received $6 billion from Saudi Arabia and still plans to ask for a bailout from the International Monetary Fund (IMF) to try and avert a balance of payments crisis.

The country’s foreign reserves have plummeted by 42% since the start of the year, down to $8 billion – less than two months of import cover. Pakistan’s new leader Imran Khan told Chinese President Xi Jinping he had inherited “a very difficult economic situation”.

China’s Vice Foreign Minister Kong Xuanyou said: “During the visit the two sides have made it clear in principle that the Chinese government will provide necessary support and assistance to Pakistan in tiding over the current economic difficulties. As for specific measures to be taken, the relevant authorities of the two sides will have detailed discussions.”

Finally, Australia’s Trade Minister travelled to China to try and ease political tensions between the two countries. Simon Birmingham was there to attend the China International Import Expo (CIIE), which is said to be an attempt by Beijing to alleviate foreign concern about the country’s trade practices.

The relationship between the two nations had soured over Australia accusing China of trying to meddle in its media, universities and policies. It also banned Huawei Technologies Co Ltd from suppling equipment for a 5G mobile network. This is despite Beijing still being the country’s top goods and services trading partner.

How to trade Forex with a small account balance

There was once a time when Forex trading was reserved solely for large multinational corporations and the super-rich. This all changed with the creation of online exchanges, which enabled retail traders to join the elite and experience the world of investment for themselves.

Most online brokers, such as TradeFred, will let you open an account with a small initial deposit so you can start your investment journey without risking too much capital. It also gives you a good opportunity to learn the basics and develop your strategy.

A common issue for most traders is how to turn that small investment into a larger sum of money and keep growing their balance from there. With this in mind, we have come up with a few points to consider. While of course we cannot guarantee success, following these rules should give you a better chance of making more informed decisions.

Why start small?

The first point for discussion is why you should bother with a small balance in the first place. As the saying goes, you have to speculate to accumulate – so do you not have to spend big to win big?

A simple answer to that is no. Starting with a small account balance will force you to practice discipline and money management – skills that will not only help you maximise any profits you make, but also minimise your losses.

By using these techniques alongside your own knowledge and skill, you should slowly be able to build up your account balance to become a lot more healthy than your initial investment. Of course, you will need a lot of patience to achieve this, but it is important to recognise that successful Forex trading is not about making lots of money fast. Instead you need to be prudent with your funds and know when and how to make your move.

Another reason to start small is the fact that you are limiting the amount of capital you are putting at risk. While you should have already devised your trading strategy with a free demo account beforehand, nothing can truly recreate the pressures associated with putting your own money on the line. Having a small balance will therefore alleviate some of the stress and allow you to focus on the basics.

Choose your moves

Starting with a small account balance means you will have to be very selective with your trades. Rather than spread your money far and wide, it is better to wait for the right opportunity to come along and use your skill to get in and out of the trade at the perfect moment.

Most beginner traders will end up losing their money because they feel they need to constantly be involved in the markets and try to “force” profits. By failing to understand the necessity for patience and discipline, they will instead believe that constant investment is the right way to be in control – not realising that the more you try to control Forex, the more it will actually control you.

In contrast, the more you practice patience and money management, the more your confidence will grow as you see your account balance increase. When this happens, you will realise that your discipline has paid off and will be more likely to continue this approach in the future.

Money is no motivator

This may seem like a strange point at first, seeing as though the majority of people get into Forex trading in the hope of making money. If you are investing with a small account balance, however, profits and earnings cannot be your initial goals.

Instead, you will need to be motivated by honing your skills and adopting proper trading processes such as the aforementioned patience and discipline, but also following your investment strategy to the letter. By focusing on your method of trading, you can learn the key attributes for success that are important for all investors – no matter the size of their account balance.

You should also remember that not all of your trades will be profitable, which is where risk reduction comes into play. If you do end up losing money, it is important not to have the mindset of recovering your losses at all costs – as this will only lead to you making poor decisions and putting even more of your capital in danger. You should instead look at the reasons why you made a loss and see what you can learn from your trade to try and prevent a similar thing happening again.

A little progress is still progress

Sometimes Forex trading will feel a lot like you are taking one step forward and two steps back, perhaps making you a little impatient. If you are investing with a small account balance, this could be even more frustrating as you believe you will never end up building your account.

It is therefore important to recognise whatever progress you make, no matter how small. Even if you come out with a $50 profit each month, you are still making money. All the while, you will be picking up the necessary discipline and experience to in time open bigger positions and perhaps achieve higher profits – but only when you feel the time is right.

Consistently making a profit, even a small one, will also build up your confidence and keep you on the path to becoming a good trader. This is extremely important, as you should always be 100% sure of yourself with every investment you make.

Think like a professional

Most new Forex traders will start their investment journey with the mindset of wanting to make a lot of money. Instead, however, they should focus on how they are going to achieve it. By doing this, you will be more inclined to learn how to trade properly and develop a successful strategy.

Rather than trade as though you need to make money, think like the professionals would do and pretend you already have a large account balance. Then the focus will shift from constantly having to turn a profit, to protecting the funds you have and building your account over time.

By changing your mindset from the money to processes, you will learn all the necessary skills adopted by professional traders. As we said before, profits should not be the main motivator – as you should instead focus on the things that will keep you trading for as long as possible.

If you are constantly chasing profits, you will become more likely to make rash decisions, which will ultimately cause you to crash out of the markets completely. You should instead think and act like a pro, as these qualities will ensure that even if you do end up making a loss, you will still be able to live to fight another day.

Successful Forex trading is all about learning how to invest. Without this knowledge, you will never be able to consistently make a profit – so all the money in the world will be no help to you whatsoever. Start small, understand the basics, and you will give you the best possible chance of achieving your goals.

Sterling shines as UK closes in on Brexit financial services deal

The British Pound jumped higher against other major currencies on Thursday on reports that embattled Prime Minister Theresa May has secured her first major Brexit deal. This follows months of uncertainty that has sent Sterling on a rollercoaster ride – making it extremely volatile for investors.

According to the Times newspaper, UK and EU negotiators have agreed that British financial services companies will continue to have access to European markets after Brexit. Government sources claimed that an accord had been reached on all aspects of a future partnership, including the exchange of data.

The news will be a welcome boost to Mrs May, who is still facing a potential rebellion from hard-line Eurosceptics within her Conservative party. She could also struggle getting her Brexit plans through Parliament, assuming a deal is completed with the EU in the first place. Currently, there is still no guarantee on that, with ‘no-deal’ preparations said to be continuing.

Sterling was currently 0.97% higher against the USD as of 09:30 GMT at 1.2889. It was also performing better than the Euro and Japanese Yen, increasing by 0.39% and 1.01% respectively.

Investors’ attention will now turn to the Bank of England’s (BoE) monetary policy statement later on Thursday. Britain’s central bank is widely expected to hold steady on interest rates, while leaving plans to raise borrowing costs in “suspended animation.”

Analysts do not expect any activity from the bank until at least May, after the UK has left the economic bloc. Of course, it may have to intervene earlier if Britain crashes out without a deal. Traders have been warned that they cannot expect the BoE to rescue the Pound at the moment, as it has been clear the outlook for the British economy is intrinsically linked to a successful Brexit.

Meanwhile, a poll by Reuters expects Sterling to jump by 5.5% versus the Greenback if a divorce deal is reached. Economists believed the Pound would rise to $1.35 if negotiations prove fruitful, with three-quarters of those polled predicting an agreement will be made.

It was not all good news, however, as the same poll predicted Sterling would slide by more than 6% if the UK crashes out without a deal. In this scenario, the Pound is expected to tumble down to around $1.20.

Cryptocurrencies shrug off FCA ban threat

Cryptocurrency prices are on the up, despite reports that the UK’s finance regulator is considering whether to clamp down on the sale of derivatives. According to the Financial Times newspaper, the Financial Conduct Authority (FCA) will launch a consultation next year to decide if the assets should be banned.

Unlike spot-market trading on cryptocurrencies, the sale of assets such as options, CFDs and futures currently falls within the FCA’s remit and requires its official authorisation. The regulator is also reportedly planning a parallel consultation on whether to extend its reach further into cryptos themselves, as well as infrastructure providers such as exchanges and wallet services.

The FCA released a statement, making clear that “in its view, cryptoassets have no intrinsic value and investors should therefore be prepared to lose all the value they have put in.” It added that the assets as a whole could pose “potential future threats to stability”.

The news comes as a new report published by the Cryptoassets Taskforce – a body that includes representatives from the FCA, the UK Treasury and the Bank of England – warned that leveraged crypto-based derivatives carried more risk that spot market trading. It said they could “cause losses that go beyond the initial investment” and impose additional fees.

Some commentators offered muted praise that the UK’s regulator was taking a proactive stance on the subject of cryptocurrencies. However, the Chairman of CryptoUK, Iqbal Gandham, stressed that “it is important that new rules are proportionate and do not put up excessive barriers, including for retail investors.”

Despite the potential legal hurdles, major cryptocurrency prices were largely higher on Tuesday. Bitcoin was darting between positive and negative territory, currently up slightly by 0.045% as of 12:03 GMT. The most popular digital token was priced at $6,316.96 a rise of $3.04.

Ethereum looked more steady at $196.26, a rise of $0.57 or 0.291%. Meanwhile, Ripple and Litecoin were also higher at $0.45 and $49.19 respectively.  

Gold sparkles as trade fears send investors scurrying for safety

Safe haven assets received a boost on Tuesday, as simmering trade tensions threatened to boil over once more. US President Donald Trump has stoked fears by claiming he has billions of dollars’ worth of new tariffs ready if no deal is agreed between his administration and China.

Mr Trump said: “I think that we will make a great deal with China and it has to be great, because they've drained our country. And I have $267 billion [in tariffs] waiting to go if we can't make a deal.”

The news caused Gold future prices to inch up to $1,229.30 per troy ounce by 04:30 GMT on the New York Mercantile Exchange, a rise of 0.1%. The precious metal is widely considered to be a beacon of safety in times of market turmoil.

In contrast, more volatile assets such as stocks struggled, with Wall Street closing in the red. The Dow Jones Industrial Average plunged more than 200 points, wiping out a 350-point gain earlier in the trading session. Meanwhile, the S&P 500 fell by 0.6%.

The Chinese Yuan also suffered in early trade on Tuesday, sinking to a near two-year low. It inched closer to the key level of 7.000 CNY per US Dollar, while the USD/CNY pair moved higher to 6.9699 by 03:30 GMT, a rise of 0.2%.

CNY has been under continuing pressure in recent months and has dropped by 9% since April. Chinese media said this week that its currency is unlikely to weaken beyond the 7.000 USD mark.

Both the US and Chinese presidents are expected to be in attendance at next month’s G20 summit in Buenos Aires where they could arrange to meet. Mr Trump claimed he was ready to make a deal now, but that China was not. He did not elaborate further.

For their part, the Chinese government has said that communications have been ongoing at all levels to try and find a solution. Its Foreign Ministry spokesman, Lu Kang, said: “If the United States is not willing to promote win-win cooperation with China then China is fully confident in being able to continue with its reforms and develop itself.”

President Trump has long-threatened to slap additional levies on all remaining Chinese imports into the US, if Beijing does not meet his demands for reform. He has insisted that China makes sweeping changes to its trade practices, technology transfer and industrial subsidy policies.

TradeFred’s weekend roundup

Welcome to the latest instalment of TradeFred’s weekend roundup, our look back at the most important news stories that took place while the markets were closed. This week’s edition covers the latest on America’s threat to quite the INF treaty, more troubles for Angela Merkel and much more.

US roundup

US Defence Secretary Jim Mattis has tried to calm the fears of America’s European allies by continuing dialogue over an important arms treaty. Earlier this month, President Donald Trump threatened to withdraw from the Intermediate-Range Nuclear Forces (INF) agreement with Russia, claiming Moscow had repeatedly broken the pact.

The treaty has been in place since 1987, when it was signed by the last leader of the Soviet Union Mikhail Gorbachev and then-US President Ronald Reagan. Some European leaders are worried that a breakdown in the pact could mean a return to “Cold War times”.

Speaking to reporters, Mr Mattis said: “We are in consultations with our European counterparts, I was speaking about it the day before with the German defence minister, and so as I said the consultations continue.” He added that he expected there to be some sort of “culminating point” In December, when several NATO ministers are due to meet in Brussels.

Meanwhile, Russian Foreign Minister Sergei Lavrov said his country was cooperating with a list of questions and concerns the Americans had over the treaty. He added that the queries had been passed to the relevant departments and answers were being prepared.

In other news, Mr Mattis confirmed that his Chinese counterpart would be arriving in the US next week to discuss military relations – despite the fact the two nations are currently embroiled in a bitter trade dispute. He said: “Strategic competition does not imply hostility. I have met with my counterpart in Beijing a month ago, I met with him again in Singapore a week ago, he is coming to Washington next week to continue our discussion.”

Finally, Tesla’s maverick CEO Elon Musk has been at it again, saying the tweet about taking the company private was “worth it”. He announced that funding had been secured for the deal and valued the business at $420 a share – a move that drew the ire of investors and the US Securities and Exchange Commission (SEC).

After an investigation, SEC fined Musk and Tesla $20 million each and told the entrepreneur he must step down as chairman. However, he is still able to remain as the company’s CEO.

EU roundup

German Chancellor Angela Merkel’s leadership woes showed no sign of abating over the weekend, as her governing coalition suffered heavy defeats in a local election. Her CDU party and her partners the SPD each polled 10% on the previous ballot in the Hesse state.

The result caused the SDP’s leader to call the current government “unacceptable” and urge the CDU to agree to a “clear, binding roadmap” ahead of the scheduled coalition review next year. Andrea Nahles said she would then use this meeting to “check whether this government is still the right place for us”.

Some commentators believe the coalition could break up sooner rather than later, effectively bringing down Mrs Merkel. The SPD has been in freefall in recent votes, with many within the party blaming their alliance for their current woes.

Meanwhile, French Finance Minister Bruno Le Maire warned that the Eurozone is not yet prepared to deal with another economic crisis. He made the comments while discussing the potential fallout from Italy’s controversial budget, which was rejected by the European Commission last week.

Mr Le Maire claimed there would be no risk of contagion from Rome’s budget crisis, despite some officials worrying the standoff would delay badly-needed EU reforms. Other leaders do not appear to be overly worried of the situation, with Austrian Finance Minister Hartwig Loeger saying he was confident that the current problem would not spark the sort of sovereign debt crisis that engulfed Greece.

Rome’s Economy Minister also waded into the situation, claiming the spread between 10-year Italian and German sovereign bonds was “damaging”, but said his country’s banks would be fine. Giovanni Tria admitted the spread has more than doubled since March, but was due to political uncertainties and not the controversial budget plans.

Finally, the British Chancellor said he would be able to steady the economy in the event of a no-deal Brexit. He claimed he had the fiscal reserves that would let him intervene if talks between the EU and UK broke down.

Rest of world roundup

China’s industrial firms suffered a slowdown in profit growth for the fourth consecutive month in September. Figures showed that profits rose by 4.1% year-on-year last month, up to 545.5 billion Yuan. This was less than half the pace in August and the slowest since March.

Earnings have been under pressure thanks to a slowdown in production and sales, declining price growth and limited credit sources. The escalating US-Chinese trade war is also adding to the pressure.

Meanwhile, Iran has shuffled its economic team ahead of looming US sanctions. The restrictions were caused by President Donald Trump’s decision to pull out of a multinational nuclear deal – a move that could seriously harm Tehran’s oil exports.

Iranian President Hassan Rouhani claimed America was isolating itself amongst its allies, saying: “It does not happen often that the US makes a decision and its traditional allies abandon it.” European countries had criticised Mr Trump from pulling out of the accord and have been planning extra economic measures to offset the impact of the sanctions on the country’s economy.

Finally, right-wing Congressman Jair Bolsonaro has claimed victory in Brazil’s presidential election. The former army captain secured 55.2% of the vote, against his rival’s 44.8%. His supporters claimed he would bring much-needed change to the country, while critics pointed to his praise of Brazil’s former dictatorship and comments on race and women.

Snap spooked as tech shares take a tumble

Online photo-sharing app Snapchat is still struggling to hold on to users after its deeply unpopular redesign. Latest figures show that the platform lost five million customers over the last six months, dropping from 191 million earlier in the year, down to 186 million in September.

This marked the second successive quarterly drop for the company, which faces stiff competition from the likes of Facebook and Instagram. The news caused its Snap’s share price to slip 11% in extended trade, making an overall drop of more than 60% since its IPO.

Chief Executive Evan Spiegel told investors: “We are focusing our time and resources to expand our community, increase engagement, and improve monetisation. We have a significant opportunity to grow and broaden our global community over the long term.”

It was not all doom and gloom for the beleaguered app, however, with Thursday’s earnings result showing better-than-expected revenue figures that hit $298 million. Losses had also been reduced by around 30%.

Snap’s struggles were mirrored by other top tech firms, with Google’s parent company Alphabet losing 4.7%. The internet giant’s third-quarter revenue figures missed market expectations, although it did post higher profits that were higher than predicted.

Amazon also fell, this time by 85%, as it announced that its quarterly net sales fell short of the expected $57.1 billion. The online retail giant managed to bring in $56.58 billion, up from the $43.74 billion achieved a year earlier.

The contagion soon spread to other tech giants, with Netflix losing 3% after a hours and Facebook losing 2.3%. The social network is due to issue its own earnings figures on October 30th. Meanwhile, Apple dropped by 1.6%.

Even healthy revenue and profits figures was not enough to shield some companies from the downturn, with Twitter losing 2.5% after trading finished. The firm had earlier surged by 15%, its biggest one-day gain for year, after releasing data that comfortably beat Wall Street’s expectations.

Common Forex myths debunked

Online Forex and CFD trading is a global phenomenon that is worth trillions of dollars a day. Its popularity has grown substantially with the rise of retail traders, everyday people who take up investing as a way to garner additional income.

This rise to prominence has helped perpetuate a number of misconceptions that could prove damaging to new investors. In this blog, we will explore some of the more common myths and help you understand the facts and not the fiction.

Forex trading is simple

Of all the misconceptions about online investment, this one is by far the most harmful. Many people will take up Forex trading thinking it is a ‘get rich quick’ scheme and they will easily be able to make a profit. The reality, however, is much different.

To succeed in Forex trading takes knowledge, skill and determination. If you do not put the effort and time into educating yourself and understanding how the markets work, the likelihood of success will be very slim.

Be sure to start your investment journey with a demo account, so you can take the time to thoroughly understand the basics and plan your trading strategy. Only when you feel confident in your abilities should you consider risking your capital.

You need a lot of money to start

Forex trading used to be reserved solely for corporations and international banks. However, the rise of electronic trading and online brokerages, such as TradeFred, has made investment possible to smaller-scale traders.

It is now possible to trade with just a small minimum deposit and hone your skills, without risking too much of your capital. While investing with smaller amounts will perhaps not result in as much profit as larger figures, it is the perfect place to start as it will teach you essential skills such as money management that will help you later down the line.

When you have proved your ability to make a profit from your investment, you could then perhaps go on to invest more money. However, you should only do this if you are financially comfortable and are totally confident in your skills. You should never trade with more than you can afford to lose.

You must win more times than you lose

Successful trading is much more than a simple numbers game. While of course it would be beneficial to make a profit more times than you lose, it is by no means an essential part of online investment.

Instead, you should focus on maximising your profits while simultaneously minimising your losses. By doing this, you can reduce the impact an unsuccessful trade and reap the benefits when the market goes the same way as you predicted.

Let us say that you made 50 trades and profited from just 20 of them. However, you were shrewd enough to make sure that you lost $200 from your unsuccessful positions but managed to make $1,000 from your successful trades. This would mean you would still end up with an overall profit of $800.

Proper money management is one of the keys to Forex success and should be observed from the moment you start trading. By knowing when to be aggressive and when to be conservative with the market, you can ensure that you are maximising your profit potential, while minimising the risk to your capital.

Forex trading is like gambling

Many people believe that online investment is exactly the same as going into a casino or placing bets with a bookmaker. While it is undeniable that Forex trading is speculative in nature, since your capital would be at risk – there is also a large amount of skill and understanding that is required for success.

It is entirely possible to make a blind gamble on the Forex markets, with no thought or knowledge whatsoever. However, doing this would be a sure-fire way of losing your investment and cutting short your trading career.

Unlike conventional gambling, you can greatly enhance your chances of success in the Forex market by investing in your education and taking the time to learn how to trade. By making more informed investment decisions and knowing when to maximise profits and cut losses, you can put the odds firmly in your favour.

More leverage means more profits

The final myth on this list is not actually untrue at all. While increasing your leverage amount can indeed yield higher profits if the market goes the way you predicted, that is by no means the end to the story.

Leverage is widely described as a double-edged sword for traders, as it can have dramatic effects whether you are successful or unsuccessful with your positions. Although it has the power to enhance your profits, it will also exacerbate your losses if the markets turn against you.

As with most things, you only really learn about the positives of leverage, while the negative aspect is usually ignored. It is for this reason why we have classified the point as a myth. If used unwisely, leverage can have a seriously detrimental impact on your capital, so it must be utilised with extreme caution.