Surprise Increase in US Retail Spending Leads to Weaker Dollar

us dollar

Despite being the world’s most robust economy, 2020 was a trying time for the US. With more than 787,000 more Americans filing for unemployment, it came as a big surprise for investors that the forecasted growth of consumer spending of 1.1% was eclipsed by the actual spend growth of 5.3%. 

Arthur Idiatulin, a Forex Trader and Financial Practitioner for Tickmill notes that “the retail sales reading tends to underestimate growth, since in early January, American households received stimulus checks from the government, the stimulating effect of which was difficult to calculate.”

This additional pandemic relief money from the government suggests a pick-up in economic activity after being restrained by another surge in Covid-19 infections last year. The largest gain in retail sales in seven months reported by the Commerce Department on Wednesday was across the board, and ended three straight monthly decreases. The acceleration in activity at the start of 2021 was evident in other data showing strong growth in production and prices at factories last month.

While strong growth in the retail sales is a clear signal that the world’s largest economy is growing well, it does mean that the theme of yield hunting remains valid, which has negative implications for the USD.

The US economy’s performance is at the heart of the decision to buy or sell dollars. A strong economy will attract investment from all over the world due to the perceived safety and the ability to achieve an acceptable rate of return on investment. Since investors always seek out the highest yield that is predictable or “safe,” an increase in investment, particularly from abroad, creates a strong capital account and a resulting high demand for dollars. However, the stimulus checks and resultant growth in the retail sector is somewhat of a false economy. 

Currently, stock index futures in the US are trading in moderately negative area, so all in all the demand or USD today gradually weakens. EURUSD is likely to consolidate in the 1.20-1.21 channel with a probable test of the 1.21 level. Lack of progress on vaccination pace in Europe is the main obstacle to appreciation of the European currency, but as soon as the situation in this direction starts to improve, the European currency should be able to resume strengthening against the USD.

While most economists see the year off to a slow start, they expect the pace to pick up later in the year as vaccination efforts spread and the grip of Covid-19 fades.

One of the main concerns for the recovery has become inflation, however, senior Federal Reserve officials have shrugged off concerns that further fiscal stimulus might generate an unhealthy jump in inflations this year.

Amazing Money Management Techniques in CFD Trading Business

money

Most participants in CFD trading are attracted to it because of the potential to earn money nature. It is true that you can earn money from this platform very quickly but making money in this industry is not so easy. You should do a lot of hard work and maintain some specific rules and methods for a better result for the career. In the very beginning of the career, traders face some difficulties for earning the desired profit.  They often lose their capital and make some wrong decisions, like leaving the profession. 

As a rookie trader in the Mena region, you should try to survive in this industry. Managing the currency or capital can be the right way to perform better in this sector. So today we will discuss techniques that can help you to manage your money in Forex trading. So, let us begin.

The main function of managing the money in Forex trading  

The main target of the traders for managing the money is to increase profitability.  They should focus on practicing with the methods, tools, and techniques, various rule sand tactics for a better outcome. It is also very important to enhance the performance of the investors to keep a good track in their performance. Management of asset is an essential part of a well-balanced trading plan. This management process can also include market approach, strategy, exit and entry triggers and different asset classes. 

As this is a vital issue for performing better in the competitive market of Forex, you should be careful about management techniques.  It should be clear and specific about what is essential to solve any kind of problem regarding the currency and asset.

Techniques for managing money in Forex trading

  1. Quantify the losses

 Whenever investors enter a deal, they should be aware of the amount that may be lost. This concept is generally called the risk per trade. It can denote the amount of risk that you are taking by the investors in a single deal. It can easily be expressed as the percentage of particular trading account. Suppose the risk per trade is two per cent of an account which contains $10,000. Then we can tell that the investor is going to risk $200 in a single deal. 

If a loss happens, they should make themselves ready to face that amount of loss. So, try to make such a risk in a single deal that can be easy to afford. Investors should follow the rule very carefully for managing money in this industry. Those who are struggling to deal with the losses, can get a demo account from Saxo. See it here and you will more than happy to see the advanced tools available in their demo trading platform. Take advantage of the practice account and rectify your mistakes.

  1. Avoid thinking about chasing the market.

Most of the investors do this mistake. They often try to chase the market after facing some losses in the recent trade setups. This one thing we cannot control in the stock market. The condition of the market is continuously changing, and it is amoral. Amoral means it is not immoral or moral. Try to control your fear and greed along with other emotions, and that will be so effective for a better outcome.

  1. Never forget to use the stop loss

Stop-loss orders play a crucial role in managing the capital. You can easily identify the losses and avoid the unusual condition which can make any destructive impact on the performance.  There are four types of stop losses, and they are volatility stops, chart stops, time stops, and equity stops. All these four are very important for managing the capital. Based on the traditional techniques, traders can be able to make the deals so easy and smooth.  

The above three methods are the standard techniques for managing money, and you can easily employ these techniques to create a better outcome in this sector. If you are able to handle your money, then you have already won half the battle.