Latest Videos

Forex Education Articles


Kangaroo bonds for currency exposure and foreign currency needs

Understanding kangaroo bonds What is a kangaroo bond? Kangaroo bonds, which are also known as Matilda bonds, are issued in Australia by firms that do not come from Australia then use an Australian currency as a denomination. These bonds follow the rules and regulations of securities in Australia. Foreign companies issue bonds from other countries for exposure and generating foreign cash. They widen their foreign investor base different than their jurisdiction. Did you know? Why is the bond called as such? Australia's national animal emblem is the Macropus Rufus or the red kangaroo, hence the name kangaroo bond. These marsupials keep their babies in their belly pouches. The only time the mother red kangaroo puts the baby outside is when it is strong and grown enough to tend for itself.  What does a kangaroo bond do? As previously mentioned, kangaroo bonds are foreign bonds issued in Australian denominations by non-Australian entities. These entities may include corporations, financial institutions like banks, and governments. Through kangaroo bonds, foreign entities can broaden their capital market outside their jurisdictions. Foreign entities are also able to expand their currency exposure and raise their funds in an Australian currency. When are they issued? Usually, this happens when the Australian interest rates are lower than that of the foreign country's domestic rates. So, kangaroo bonds lower their interest and borrowing expenses. Are Kangaroo bonds important? If a company is confident that they will gain enticing market interest rates or have a foreign currency need, they will dive into a foreign market. When they do so, they issue foreign bonds with the denomination of that specific country's currency. Albeit issued by foreign entities, kangaroo bonds strictly follow Australian securities regulations. These foreign entities aim to attract foreign markets and to have more currency exposure. Investors do this when they are not exposed to currency risks since the denomination is in Australian dollars. Also, this will give portfolio diversity for the investors and then, later on, generate a higher yield. In short, kangaroo bonds offer foreign investors investment opportunities without worrying if the currency exchange rates go up and down. Cross-currency swaps Bond issuers do not precisely need an Australian denomination in kangaroo bonds because, after the bond's sale, the returns will go back to the bond issuer's required currency. This process is possible through cross-currency swaps. Cross-currency swaps limit foreign exchange risks along with the bond issuer's responsibility to repay the principal in the Australian currency.  Let's say, in the bank bill swap rate, kangaroo bond issuers can lend Australian dollars, pay fed funds rate, and margins for US dollars. This scenario is possible through cross-currency swaps. A Kangaroo bond scenario With a headquarters in America, the Eagle Company wants to open a training center for the Sydney opera house artists. Eagle Company intends to build the training center in Sydney for the easy access and convenience of artists and potential artists. They sold $8 million bonds to make it possible because they believe that Australian investors would support this business. After all, the Sydney Opera House is one of Sydney's main tourist attractions. Invest in yourself. See our forex education hub.


Keep and pay gives mutual benefits to both creditor and debtor

An overview of keep and pay What is keep and pay? Keep and pay is a bankruptcy exemption where a debtor can keep assets such as houses, structures, or cars as long as there is continuous payment. From bankruptcy to keep and pay When entities go bankrupt, there will be a legal proceeding because they can no longer pay their outstanding debts. The debtor initiates the bankruptcy petition. Later on, there will be asset evaluation to repay some of the outstanding debts. However, in a keep and pay agreement, there is an exemption. It is a strategy used by debtors to keep assets even after declaring or filing bankruptcy. However, the debtors should follow a set of bankruptcy resolutions where they agreed to pay right on schedule and disclose their intentions in the form of court documents. Keep and pay rules are different from one state to another state. Exempt assets vs. non-exempt assets After a debtor files for bankruptcy, there are several assets that he can keep if he follows scheduled payments and specific rules. We call these exempt assets. On the other hand, we call the assets liquidated and repossessed to pay off the outstanding debt, the non-exempt assets. If a debtor wishes to avoid this, he can keep and pay. However, there are instances when there is a need to go to the bankruptcy court to file an official statement about his asset plans then get the creditor's approval. It is written in Chapter 7 bankruptcy that an individual who files for bankruptcy discloses what the plans for each asset are. An individual can choose whether he will surrender, retain and redeem, or keep and pay the specific items. If the individual wants to keep certain assets, there is no assurance, but several courts allow the debtor to keep the assets if the purpose is reasonable, while some courts have guidelines. The guidelines depend on the asset type, asset value, and the outstanding debt. After assessing these, guidelines help in identifying what to do next with the assets. They can state whether an asset is liquid or not - meaning if the bank or the creditor can sell them immediately. They can also address if the asset is essential for the debtor's income source, like a car to get to and from a workplace. It may be less hassle to do a keep and pay. There are generally two options for creditors on their next action after a debtor filed for bankruptcy: Keep and pay agreement option. A creditor can let a debtor do a keep and pay agreement provided that there is a confidence that the debtor can pay the full amount in the future. It may mutually benefit both parties and may also be a lesser hassle than the next option. Liquidation and repossession. After liquidation, the bank will have to resell assets to repay a portion of the remaining debt. Let's say the debtor still has a massive outstanding balance left to pay for a mortgage; the bank will try to sell this home. Of course, before selling this home, there would be many processes, efforts, and costs, making a keep and pay option more beneficial. Invest in yourself. See our forex education hub.


Diversify your trading experience with 92 additional trading instruments at HonorFX

Experience an array of trading instruments with HonorFX Enjoy access to a wide range of trading instruments. From currency trading to speculating on the price movements of your favorite stocks, HonorFX have it all! As we know HonorFX is known to provide the best and multi award winning state-of-the-art online trading platform (MetaTrader 5) to its clients and partners. Company believes in developing a sustainable workforce through with their years-long experience, in-depth knowledge of the financial market and the association of long-term and trusted partners. HonorFX have set an example of transparent trading environment that has made the company a reliable broker for services like currency trading, equity indices, energies, precious metals and CFDs. HonorFX is delighted to introduce 92 new trading instruments along-with 165+ trading instruments which were previously available for trading. Whereas each trading instrument has its own average spread, margin requirements and swap size. Registered users at HonorFX can now diversify their portfolio in the market with 270+ trading instruments and try the newly added instruments as per their trading appetite. These trading instruments have further been divided into 5 simple asset classes to make the selection easier for users. These classifications are as under: Forex (45)Futures (14)Stocks (193)Indices (14)Cryptocurrencies (8) The instruments are available for trading on 3 different account types: Standard Account, Islamic Account and ECN Account. The minimum volume size is 0.01 lot, and the minimum deposit is $100. Company is also making its name for super-fast dedicated customer support and claim to resolve most of the client issues in minimum possible time. However, during working hours instant support is being provided to the registered users for any account or trading related queries. Company's aim is to provide its clients with the best possible and client friendly customer support, so clients enjoy each and every interaction they have with the company. Experience the global markets with HonorFX and benefit from reliable order execution and competitive spreads with 270+ trading instruments! About HonorFX: HonorFX is a brand name of Honor Capital Markets Limited Group of companies. The Company is regulated by the Financial Services Commission of the Republic of Mauritius with an Investment Dealer license. License number GB200225826. The company is famous for instant withdrawals, dedicated support services, variety of payment methods and raw spreads. Invest in yourself. See our forex education hub.


Why does an invisible supply, a.k.a. future supply, affect pricing?

Getting to know invisible supply What is invisible supply? Invisible supply is the total number of physical commodity stocks that are still unknown and unquantifiable because they are still in process or preparation. They are commodities that will soon be available on the date of the futures contract for settlement purposes. Invisible supply already exists; it's just that we cannot gather, store and set them aside in a tangible facility yet. It is the contrast of visible stocks because these commodities are the ones that we can already count, store, and deliver. So, any commodity that we cannot consider and connected with futures contracts is an invisible supply. They are still unknown, hence the name, invisible supply. Futures contracts in line with invisible supply A futures contract is a buyer and a seller's legal agreement to trade commodities and assets at an agreed price and time in the future. The quantity and quality are standardized in futures exchange facilitation. Buyers are obliged to take the asset at the expiration date, and sellers must provide and deliver assets on the expiration date. Invisible supply and the way they operate for buyers and sellers As earlier mentioned, visible supplies are commodities that can be accounted for, stored, recorded, and delivered. Other supplies that are not visible, regardless of where their locations are, are considered invisible supplies. It may be on the ground, storage tanks, silos, delivery trucks and trains, shipping vessels, storage facilities, warehouses, and the like. Commodities can be available for delivery to short traders if they decide to have a futures contract in a long position rather than rolling forward or offsetting the contracts long before they expire. Short traders sell a security and then plans to repurchase or cover it in the future for a lower price. An example of a trader with a long position is a buyer. Most of the time, the commodities' physical delivery does not connect with a futures contract. But if the selling company or business decides to deliver, it must make the invisible supplies into visible supplies. Of course, the seller must disclose proof that they made the invisible supplies visible by creating a receipt or certificate at a real or physical place. Later on, a commodities exchange or an SRO (self-regulatory organization) should approve this physical place. Who will now pay the trading firm and acquire the visible supplies? It is the side with a long position. The law of supply and demand and the invisible supply It is a known fact that the law of supply and demand somehow determines market pricing. The supply affects the demand and vice versa. We also understand that this future or invisible supply affects this pricing, but the visible supply does not. Why? People buy commodities through futures contracts, options, forward contracts, and the like even before the commodities' deliveries. Visible supply in contrast with invisible supplies While an invisible supply refers to the unquantifiable and unknown amount of commodities due to current preparation and processing, visible supply, on the other hand, are the ones that are already in storage or are already available for transportation to buy and sell . Invest in yourself. See our forex education hub.


EUR/USD to chase a break higher?

ING believes EUR/USD will break higher, and you? What is moving the markets these days? What are the main drivers of currency pairs? First, the vaccination pace. The second, the recovery speed. And finally, investors are concerned about how soon the central banks will tighten the policy (increase rates or/and cut asset purchases). Let's analyze the most traded pair - EUR/USD. At the first sight, the US is doing better than the Euro Area. The percentage of vaccinated people is much higher in the US than in the EU. Elsewhere, after problems with AtraZeneca's vaccine, Johnson & Johnson stopped sending its vaccine to the EU as well because of the possible negative side effects. While the US does not depend on J&J, Europe may suffer a delay of 3-4 months to obtain its goal to vaccinate 70% of the population. As a result, it may significantly worsen the situation in Eurozone and press the euro down. However, EU Retail sales came out much better than expected this Monday: 3.0% vs the forecast of 1.3%. It's just the beginning of further growth - more to come in the months ahead! Elsewhere, according to Barclays, European people acquired savings at 600 billion euros ($714 billion) during long lockdowns. But when they feel free to go out without any restrictions, they will tend to spend them more. So, consumer spending will grow and help the economy to recover. Forecasts ING foresees the tentative recovery for Europe. The bank points that the USD has started losing its steam and the breakout of EUR/USD above 1.2000 is very likely! According to ING's model, EUR/USD is undervalued by almost 2%. Indeed, if you look at the chart below, you'll notice that the RSI indicator is well below 70.00 level, so it's not overbought. Tech analysis EUR/USD has failed to cross the resistance of 1.1990-1.2000 so far. However, if it does, the way up to the 100-day moving average of 1.2050 will be open. On the flip side, if it breaks below the 50-day moving average of 1.1960, the way down to the 200-day moving average of 1.1890 will be clear. Invest in yourself. See our forex education hub.


2021 the year of pharma: A look at Moderna and Pfizer stocks

An overview of Moderna and Pfizer stocks 2020 was all about COVID-19, the brand-new pandemic which took the world by storm, sweeping through continents and debilitating countries. 21st-century medicine came to the rescue, developing vaccines to fight the virus. Fast forward to 2021, the hot topic is the COVID-19 vaccine, or rather vaccines. The infamous vaccine is not just 'one' vaccine, a number of pharmaceutical companies have developed different vaccines which are being rolled out in different countries. In fact, vaccines are a gigantic business at the moment highly affecting the status of the companies producing and selling them. Pfizer and Moderna became household names, celebrities one might say as anxious consumers hoped to see light at the end of the COVID-tunnel. Where there's business there's money, and where there's money there are opportunists. Investors spent their first lockdown studying every possible scenario for companies such as Pfizer and Moderna, foreseeing a major spike in their stocks, provided they indeed become saviors of the world. Let's take a look at how these companies have performed in light of releasing the vaccines and how their stocks have been affected. Moderna: COVID-19 (mRNA-1273) vaccine Stock price (at the time of writing): 147.47 USD per shareStock price before vaccine release: Under 35 USD per share Up until late 2019, Moderna's price was under 25 USD per share. When the company announced that its COVID-19 vaccine was 94.1% effective in phase 3 tests in December 2020, the stocks shot up. On February 8 2021 Moderna shares hit a record high. In 2020 Moderna shares shot up by more than 434%, despite announcing losses for the company. Now with the vaccine in active use, a bullish outcome is expected. The plans at the moment are for 1.4 billion doses to be made in 2021. Moderna's been a winner for shareholders. Its stock has skyrocketed more than 570% over the past 12 months. The company's CEO Stéphane Bancel assures investors that revenue from the vaccine will fund more research and development. Another positive analysts point to is Moderna's pipeline of recurring revenue streams. The COVID-19 vaccine, booster shots, and other successor vaccines will continue to produce more growth for the biotech company. Pfizer, Inc. and BioNTech (BNT162b2) vaccine Stock price (at the time of writing): 36.40 USD per shareStock price before vaccine release: 40.74USD per share It's been a very different story for Pfizer stock which underperformed during the pandemic relative to other covid stocks.  PFE was trading below 35 USD in mid-November and as it entered into December was just pennies shy of 40 USD. By December 9th, it had peaked at 43.09 USD. In early December Pfizer announced it would scale back its manufacturing capacity from 100 million to 50 million doses.  That wasn't good news for wall street, and stocks in Pfizer began a downside move shortly after to close out the year at around 37 USD per share. Pfizer's underperformance was unexpected. Especially considering it was the first company to receive regulatory approval for its vaccine. Approval alone didn't lift stock prices very high and Pfizer's stock performance continued to be dampened with details regarding the vaccine's distribution and administration. For example, the Pfizer/BioNTech vaccine needs to be kept at a temperature of -70C. Once it's been delivered, jabs need to be used within 10 days. These steps add logistical layers that governments prefer to avoid. And avoid they can, with other vaccine options available, and ones that are not as complex to distribute and deliver. Earlier this year, Pfizer announced that it expected to achieve $15bn of vaccine sales - that's $2bn more than was initially expected.  That announcement resulted in the company's earnings guidance rising by about 10 cents per share. Pfizer's Chief Financial Officer Frank D'Amelio stressed that achieving the double-digit operational revenue growth they want to see by Q4 2021 depended on a wide range of products that extended beyond the coronavirus vaccine. Pfizer shares have only gained 5.55% as of April 2021. Trading at 36.28 USD it has moved -0.06% from the previous trading session.  Traders have been hoping that PFE gains some ground as it approaches its next earnings release on May 4, 2021. Future outlook There is a strong possibility that new versions of the vaccine will need to be released every year to deal with possible Covid-19 mutations. If vaccinated patients will also require booster shots as immunity subsides over time, both Pfizer and Moderna could stand to blow past revenue expectations. Demand for Moderna's Covid-19 shot is still strong, and analysts still say Pfizer stock is a solid choice for longer-term portfolios. Invest in yourself. See our forex education hub.


Is this the beginning of the end of the pandemic?

Are the markets returning to normal? The Covid-19 outbreak hit the markets hard last year, posing significant economic problems, including a short but severe recession. For a while, it didn't seem like anything will go back to how it had been before the pandemic. For the latter quarter of 2020, the public's focus had shifted from having a vaccine to delivering it efficiently to everyone who needed it most. Fighting the virus has been a journey of many steps, and after over a year, there now seems to be a light at the end of the tunnel The economy is beginning to bounce back based on optimism that the vaccines will help economies and businesses return to normal. Is the optimism warranted, and will the markets continue to react positively to our eventual return to normal? The outlook, normal Although the economy has regained much of its lost ground over the past year, its performance has been lackluster overall. On March 26, the S&P 500 hit a record peak for the week, the Dow soared 450 points, the NASDAQ gained 1.2 percent, and the other indices rose sharply following reports predicting low inflation ahead. At the close of markets last week, real estate, oil, electronics, and materials had the highest returns. Indices surged on news of the stimulus plan, Powell's pledge of low inflation, and lower bond yields, which are helping investors feel more confident. Nonetheless, household spending dropped $149.0 billion, or 1% in February, while personal income fell $1,516.6 billion, or by 7.1 percent. According to UBS, the U.S. economy will expand 7.9 percent from the fourth quarter of 2020 to 2021. This is mostly attributed to Biden's proposed stimulus funds. Vaccine distribution The astonishingly fast production and acceptance of Pfizer-BioNTech and Moderna vaccines continued to favorably affect market sentiment in the final months of 2020 and this continues to be viewed as a promising sign for the economy's long-term wellbeing. With Pfizer-BioNTech and Moderna vaccines now in large-scale development, the question now is how quickly and widely will the vaccines be distributed over the coming months. This will in essence determine when the economy will fully recover. Analysts are forecasting that by the end of 2021, the vaccines would have drastically stopped the spread of COVID-19. For now, governments are fast-tracking vaccine deliveries which are expected to be universally administered by the end of the second quarter or early in the third quarter of 2021. Lifting travel bans The U.K. recently announced that it will lift the lockdowns in June. Many European countries have hinted that they'll also be lifting lockdowns soon. Travel controls, including strict social distancing laws imposed in reaction to the COVID-19, will be gradually lifted. Airline travel that was negatively affected by the pandemic over the past year will begin to pick up again. In the most recent quarter, several airlines have started to see changes. However, the travel industry is not expected to recover quickly. Some countries will recover faster than others, and different countries will be imposing different regulations on the industry as a whole. Broader market outlook Small businesses are projected to recover, although painfully, thanks to stimulus funds. As vaccines become more widespread, sales in travel, hotels, professional services, and other industries will rise. The S&P 500, NASDAQ, Russell 2000, and Dow Jones Industrial Average all look steady across the coming year. With stimulus being introduced and a promising employment report published last Thursday, it doesn't look like anything can happen to break the trend. According to Goldman Sachs, GDP will rise at a 5.3 percent annual rate in 2021, with an unemployment rate of 5.3 percent. They expect the S&P 500 to climb 17% to 4,300 points, led by a 30% increase in corporate earnings. Medical and health care (biotech) customer discretionary (travel, entertainment, retail) technology (cloud computing companies, and technical service industry companies), Power stocks (oil, renewable energy, power, etc.) are some of the best industries to watch in 2021. However, most analysts say the key to making a more accurate 12-month prediction this year, is waiting until the bulk of the 40+ population is vaccinated. That's when the future of the markets will begin to get clearer.  Key currencies USD The U.S. Bureau of National Statistics announced earlier this month a higher-than-expected US GDP. Findings indicated that the economy had expanded faster in the fourth quarter, hitting 4.3 percent, 0.2 percent more than anticipated. The US job market is beginning to show signs of accelerating growth, which has encouraged outlooks for an early economic rebound. The jobless reports in the United States have fallen to their lowest amount in a year, as more Americans get vaccinated, and business laws in many states relax. GBP Over in the United Kingdom, there's been a change in expectations about the Bank of England's policy. While the bank's reduced its short-term estimates due to coronavirus constraints, it still expects the economy to rebound strongly later this year. Overall, however, UK fundamentals remain highly volatile, limiting the potential for independent currency gains. Trends in the global economy and the dollar will also boost Sterling's movements, with more space for the pound to grow if the global economy recovers strongly. EUR The recent rise in bond yields, including those issued by Eurozone governments, indicates that there's no significant tightening in monetary policy. While data reflected optimism over a post-pandemic economic recovery. An interest rate reduction is probably unavoidable however a decision to raise bond purchases is likely and that'll be negative for the EUR/USD. This can have an effect on the pair's success for the rest of the year, and we could see a bearish run. JPY The Bank of Japan (BOJ) is in a difficult situation and it's been there for a while with inflation and development running slow and getting worse since the coronavirus outbreak. As a result, the Bank of Japan's governor Haruhiko Kuroda announced a decision to keep monetary policy on hold for another six months in order to fulfill the bank's 2% inflation target. The Yen gained against the greenback last week, marking its second consecutive weekly advance. Still, we may see a USD/JPY moving higher in the long term because of a stronger dollar. CHF The SNB supports its forecast for GDP growth of 2.5 percent to 3 percent in 2021. This activity is projected to rebound to pre-crisis levels in the second half of the year. In the current scenario, both the inflation outlook and the growth projections for Switzerland and the rest of the world are filled with confusion. As a result, the USD/CHF will most likely stay over 1.000 by the end of 2021. What's Next? The hope is that, at some point in 2021, the global economy will eventually restart a "steady state" situation, shifting to something more similar to what was considered natural prior to the pandemic. Several markets could be positioned to prosper indefinitely from improvements brought on by the pandemic's emergence. Cloud computing and video streaming are two services that analysts are predicting will continue to evolve in 2021. However, as the "steady condition" returns, it may take some time to truly distinguish the real market winners and losers. When the time comes headline events will take a back seat, and traditional market fundamentals like corporate earnings are more likely to forecast investment success. So, analysts advise maintaining a long-term , well-diversified investing and trading policy that fits with your risk exposure appetite. Invest in yourself. See our forex education hub.


Non-trend transitions to trend. How you can sniff out a trend move.

A look at the AUDUSD price action this week and how it showed the way to a trend move.... Traders tend to get mesmerized by non-trending markets. They tend not to see a way out of the ups and downs and because of it, often miss out on a trend move where the price move is fast, directional and tends to go farther than most think.   In this video, I outline how to prepare for a trending market by looking at a recent non-trend market in the AUDUSD, and how it prepared me for a break and trend-like run.   Invest in yourself. See our forex education hub.


Creditors, borrowers, and their involvement with forbearance grants

Understanding forbearance What is forbearance? Forbearance allows borrowers to postpone their mortgage payments or other loans such as student loans. Lenders give borrowers this time instead of foreclosure and paying for its process. Both the lender and the borrower should come up with a mutual agreement in terms of forbearance. The borrower must disclose the reason for delayed payment, and it should be a reasonable excuse such as a significant illness or a job loss. This issue is very timely, mostly due to the global effects of the pandemic. It's a mutual benefit. How can forbearance give mutual benefit to a borrower and a creditor? It is evident for the borrower since forbearance gives them a chance to postpone their payments considering their challenging situation. But how does it benefit a creditor? Sometimes, yes, it helps a loan owner because if they do not grant forbearance, they need to do foreclosure and pay a hefty amount throughout the process. However, some creditors who do not necessarily own the loan will not grant borrower forbearance since they are not subject to financial risk. Foreclosure in line with forbearance When we say foreclosure, we talk about the legal process where creditors take the ownership of a mortgaged property because the borrower cannot continue the payments required anymore. Later on, the creditor sells this property for repossession. How do creditors assess if they will grant forbearance to a borrower? Let's say Mr. Dane, a borrower, called his creditor today and asks for forbearance. He explained that he lost his job because their company laid-off a massive amount of employees due to the pandemic. He is also their family's breadwinner, so he needs to pay for their daily necessities, albeit losing his job. He has no income at the moment. The creditor will go on and look at his records. He will check if Mr. Dane has been responsible for his payments. Did he miss a payment? Did Mr. Dane always have a stable job? Is he likely to be employed soon? Creditors will most likely understand the situation and grant Mr. Dane forbearance if he's been responsible enough. However, this is not for borrowers who have missed payments and previous unstable jobs even if they got laid-off recently. Terms if creditors grant forbearance Borrowers think that forbearance grants depend on the creditor. From another point of view, it depends on the borrowers and their history. It depends whether they have the potential to regularly pay again as soon as the temporary situation and forbearance lifts. The creditor can decide to give the borrower either a partial reduction or a full reduction depending on how critical the borrower's situation is and how much confidence the creditor has for the borrower to pay or catch up on the payments. Other instances include: Full moratorium. The lender grants this to the borrower on the mortgage payments during the forbearance period. Interest payments. The borrower pays interest payments but not a lessened principal. Partial interest payments. The borrower pays this and the unpaid portion that leads to negative amortization. Lesser interest rates. The lender may grant this momentarily. Invest in yourself. See our forex education hub.

More Headlines

By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose