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Tuesday, June 5, 2018

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EarnForex.com Monthly Newsletter
June 5th, 2018

Welcome to the latest issue of EarnForex.com newsletter — June 2018.

In this issue of EarnForex.com newsletter, I will remind you about the most important Forex-related events of the last month and will also show you the list of the site's latest updates.

EDITORIAL: Which Currency Pairs to Trade? ❓

When first approaching a trading platform, it is easy to get intimidated by the number of currency pairs available — some brokers offer hundreds of them. Should a trader analyze them all and seek as many entry signals as possible? Should a trader focus on just one or two pairs? Which pairs should get prime attention? There are four methods to choose the right currency pairs for trading:

  • The fool-proof approach is to choose only one and the most liquid pair — EUR/USD — getting very low spreads, decent daily volatility, and nearly perfect execution. Coincidently, EUR/USD appears to be the most traded currency pair among EarnForex.com visitors.
  • Another method is to find a compromise between spread, volatility, and execution — USD/CAD, NZD/USD, and USD/CHF are good examples of the pairs that get quite a few trading opportunities and do not cost a lot in terms of spreads.
  • The third method is to focus on those currency pairs that demonstrate the most liquidity during your active trading hours. For example, if you can only trade during early hours of New Zealand trading session, then it would be a good idea to trade NZD/USD and NZD/JPY.
  • Crazy, but seemingly profitable (especially for a newbie), method is to concentrate on some exotic currency, which you know a lot about. For example, if you are based in Brazil, you might be very knowledgeable about Brazilian real valuation (or just believe that you are); this could give you some interesting trading ideas which an 'outside trader' would not have. Sometimes, this path is viable despite the outrageous spreads and poor liquidity in such currency pairs.

As a new trader, you might be tempted to try out all the four proposed methods of currency pair selection. And this also would be a good idea! The only caveat is that you should spend enough time to understand the strength and weakness of each method relative to your preferred trading style before jumping to any conclusion.

Overview of the major currency pairs' performance in May

EUR/USD — continued a nearly straight decline in May. It was at the maximum at 1.2084 on May 1, at its minimum at 1.1509 on May 29, finishing the month at 1.1690.

GBP/USD — was in a rapid downtrend too. The highest monthly rate was at 1.3772 on May 1, while the lowest — at 1.3204 on May 29. GBP/USD finished May trading at 1.3295.

USD/JPY — rose for the first two thirds of the month but then fell significantly later. The pair rose to as high as 111.39 on May 21, reaching a bottom at 108.11 on May 29 and closing the month with the 108.80 rate.

EUR/JPY — had a bouncier descent than EUR/USD but, nevertheless, fell considerably in May. The monthly high was at 132.13 on May 1, the monthly low — at 124.61 on May 29. Trading ended at 127.20 for this currency pair.

GBP/JPY — went down in a classic trending movement with minor corrections. The maximum level for this pair was 150.62 on May 1, while the minimum — 143.18 on May 29. The month's trading ended at 144.64 for GBP/JPY.

Fundamental background of the past month

Despite poor nonfarm payrolls released at the start of May, the US dollar reached a record high for this year just few days later, boosted by the outlook for monetary tightening from the Federal Reserve. The currency was hurt a bit by a poor inflation print, but the real downer for the greenback was the threat of trade wars.

May kicked off with a string of poor macroeconomic reports in the eurozone, which dragged the euro down. Even the release of positive reports later did not prevent the shared 19-nation currency from falling to the lowest level in 2018. By the end of the month, the currency was also plagued by political turmoil in the Europe, Italy in particular.

The Great Britain pound was extremely weak in May due to some soft macroeconomic data, waning chances for an interest rate hike by the Bank of England in the near future, and Brexit worries.

With all the geopolitical risks and uncertainties, it is not surprising to see that the Japanese yen turned out to be one of the strongest currencies in May, despite dipping in the first half of the month as it looked like China and the United States could reach a consensus in trade negotiations. Closer to the end of the month, risk aversion was in full force, though by the very end of May the market sentiment improved a bit again.

The Canadian dollar started May strong thanks to the better-than-expected GDP reading. But the rally petered out quickly due to various other economic indicators that came out weak, including employment and inflation. Even another GDP print released by the end of the month was mixed. On top of that, the rally of crude oil stalled, adding to the factors that are negative to the currency. As for positive factors, the Bank of Canada made a surprisingly hawkish statement after keeping interest rates unchanged.

The Reserve Bank of Australia kept monetary policy without changes at the start of the month and signaled in the Statement of Monetary Policy that it is not going to make policy adjustments this year. By the end of the month, the Aussie, as well as other commodity currencies, was mostly reacting to shifts in the market sentiment, rising when the threat of trade wars was waning and falling when it was intensifying.

The New Zealand dollar also suffered from the signs that the central bank is not going to start raising borrowing costs in the near future.

Gold fell for the second consecutive month in May, failing to profit from risk aversion and soft US dollar.

Interest rate changes in May
Romania 2.25% +0.25% 2.50%

You can see the current interest rates by the world's central banks in our interest rate table.

MetaTrader indicators

No new MetaTrader indicators have been added to EarnForex.com since the last issue of the newsletter, but three indicators received major updates:

You can always view the previously uploaded Forex indicators.

Forex brokers

Two new Forex brokers have been added to EarnForex.com since the last issue of the newsletter:

  • Capital Street FX — an offshore Forex company registered with FSC of Mauritius. The broker uses ActTrader platform for demo and live trading. The minimum account size is $100 and the leverage of up to 1:2500 is available.
  • ETO Markets — an ASIC-regulated Australian Forex company aimed on regional and Chinese traders. The broker features 1:400 leverage and MetaTrader 4 platform; the minimum account size is A$200.

You can always view our full list of Forex brokers.

Top five Forex brokers of the last month

The top five Forex brokers, as reviewed by the visitors of EarnForex.com are the following:

  1. Weltrade — 10
  2. Bolmax Management — 9.3
  3. GAINSY — 9.2
  4. FXOpen — 9.1
  5. FreshForex — 9.1

To qualify for a placement in this list, a Forex broker should have at least three valid reviews. Do not forget to review your favorite broker if you have not done so already.

Forex poll

One new poll has been posted in the EarnForex blog:

You can also browse the full list of Forex polls from EarnForex.com.


Top five hot topics on EarnForex Forum in May:

  1. Why did I lose in this trade?
  2. Position Size Calculator
  3. Colour of the candles
  4. Please HELP, Need to fix this grate EA
  5. Head and Shoulder pattern
Forex industry news

There was the following important Forex industry news since the last issue of the newsletter:

Until the next newsletter issue!

That is all for the June issue of the EarnForex.com newsletter. If you have questions, comments or just want to see something else in the next monthly issue, please let us know.

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