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Futures

Eurostoxx futures down 0.8% in early European trading

2024-12-02

Foreign exchange trading presents a significant level of risk that may not be appropriate for all investors. Leverage amplifies this risk and exposes traders to potential losses. It is crucial to carefully assess one's investment goals, experience level, and risk tolerance before venturing into foreign exchange trading. There is a possibility of losing a portion or all of the initial investment, and one should never invest money that they cannot afford to lose. Educating oneself about the risks associated with foreign exchange trading is essential. Seeking advice from an independent financial or tax advisor is advisable if there are any uncertainties or questions.

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Risk Management in Foreign Exchange Trading

Effective risk management is crucial in foreign exchange trading. Traders need to understand the various risks involved, such as market volatility, currency fluctuations, and leverage-related risks. By implementing proper risk management strategies, such as setting stop-loss orders and diversifying their portfolios, traders can minimize potential losses and protect their capital. It is also important to regularly monitor and assess one's trading positions and adjust them as needed based on market conditions. Additionally, staying updated with the latest market news and trends can help traders make more informed decisions and manage risks more effectively.

The Importance of Independent Advice

Seeking independent financial or tax advice is highly recommended in foreign exchange trading. An independent advisor can provide objective and personalized advice based on an individual's financial situation and goals. They can help assess the suitability of foreign exchange trading for a particular investor and provide guidance on risk management and investment strategies. Independent advisors can also help navigate the complex regulatory environment and ensure compliance with relevant laws and regulations. By relying on independent advice, investors can make more informed decisions and reduce the potential for losses due to poor judgment or lack of knowledge.

Prime Minister Roman Golovchenko emphasizes the importance of the currency of main partner countries for the Belarusian economy. He states that the situation with the growth of the dollar against the Belarusian ruble doesn't cause much concern.

Unraveling the Impact of Currency on Belarusian Economy

Currency and Confidence in Belarus

Prime Minister Roman Golovchenko highlights that with their economic policy, confidence in the Belarusian ruble has been instilled in people. Steady growth of deposits in the banking system, both by individuals and legal entities, is evidence of this. At the same time, deposits in foreign currency are decreasing as people transfer them to the national currency. This shows the resilience and trust in the local currency.There is a sense of stability in the Belarusian economy due to these factors. The banking system is seeing growth, and the people have faith in their currency. This stability is crucial for the overall development of the country.

Dollar Jumps and Temporary Phenomenon

Golovchenko explains that the jumps in the value of the dollar are due to various internal and external factors. The announcement of the results of the presidential elections in the US and the associated slogans affect the international financial market. Currency futures already take these amendments into account, and they may win back later.As the exchange rate is floating and there is market pricing, the Belarusian ruble automatically devalued a little against the US dollar. But it's important to note that previously, the Belarusian ruble was strengthening against the US currency. This shows the dynamic nature of the currency market and how it affects the Belarusian economy.

Other Important Foreign Currencies

For the Belarusian economy, the Russian ruble and the Chinese yuan are of great significance. They are the currencies of the main trading partners and friendly countries that conduct transactions with Belarus in these currencies. This highlights the importance of these currencies in the economic landscape of Belarus.The trade with Russia and other friendly countries plays a vital role in maintaining the economic stability of Belarus. The use of these currencies facilitates trade and helps the country navigate through the challenges posed by external sanctions.Belarus has been facing tough Western sanctions since 2020. However, the country's economy has adapted to these negative consequences. By increasing trade with Russia and maintaining a stable currency, Belarus is showing its resilience in the face of adversity. The exchange rate fluctuations of foreign currencies against the Belarusian ruble in recent weeks are a testament to the challenges but also the adaptability of the economy.

The dollar witnessed a significant surge on Monday, with the potential for U.S. rate cuts emerging as a key focus during what is anticipated to be a crucial week. News.Az reports, citing Reuters, that the currency received verbal support from U.S. President-elect Donald Trump, who took the markets by surprise with a change in tone. On Saturday, Trump demanded that BRICS member countries refrain from creating a new currency or supporting an alternative that could replace the dollar, otherwise facing 100% tariffs. This marked a departure from his previous stance of advocating a weaker dollar to combat trade wars. As a result, the Chinese yuan quickly dropped to a three-month low at 7.2662 per dollar, and the Indian rupee hit record lows.

Political Uncertainty and the Euro

Political uncertainty in France added to the pressure on the euro, which slipped 0.4% to $1.0532. After bouncing 1.5% last week and moving away from a one-year trough of $1.0425, the euro faced further challenges. This saw the dollar index edge up to 106.170, having closed November with a 1.8% gain despite a setback last week.Economist's PerspectiveJonas Goltermann, deputy chief markets economist at Capital Economics, stated that given the ongoing resilience of the U.S. economy and a deteriorating outlook elsewhere, they do not believe this is the beginning of a more significant setback for the dollar. However, he added that the threshold for a further shift in expected interest rates in favor of the U.S. in the near term is quite high. In their view, a period of consolidation into year-end appears to be the most likely scenario, although the risks still lean in favor of the dollar over the course of 2025.November Payrolls Report and the FedKey to the outlook for rates is the November payrolls report due on Friday. Median forecasts suggest a rise of 195,000 following the weather and strike-hit October report. Given the low response rate for that survey, the report could also be revised. The jobless rate is expected to edge up to 4.2% from 4.1%, which should keep the Federal Reserve on track to cut rates by 25 basis points on December 18. Markets imply a 65% chance of such an easing, but they only have two more cuts priced in for all of 2025.Other Data and Fed OfficialsA host of Fed officials are scheduled to speak this week, including Fed Chair Jerome Powell on Wednesday. Other data releases include surveys of manufacturing and services. These will provide additional insights into the economic landscape and the potential direction of rates.