US early rate hike is good

isn’t April’s Fool: Early rate hike is good for the US economy!

Why does the Fed want to raise interest rate quickly?

Well, to understand this we have to zoom-out of the details of each economy for a while to see how world countries manage their local economies?

If we take 3 samples from the world economy and let’s pick: Japan, Eurozone and United states

In Japan, Bank of Japan offers (0.10%) interest rate and it maintained a plan to expand the monetary base at an annual pace of 80 trillion yen ($666 billion) from April, 2013

While in Euro Zone, European Central Bank offers (0.05%) interest rate and it announced an expanded stimulus program amounting to €60 billion ($69 billion) a month in asset purchases in an effort to revive the eurozone’s struggling economy till September, 2016

On the other hand, in United states. The Fed. tapered its (QE) stimulus program on October, 2014 and started to prepare the market for first-rate hike after keeping interest rate closer to 0% for years.

Let’s mix all the elements together and keep it very simple ..

Let’s say that these local economies are intersecting in international trade zone. Every economy is boosted by offering new money, low-interest rate and doing its best to keep inflation up to its targets.

In Japan, the inflation started to pick up however, it is not that strong to meet BOJ target till now. The reason behind this is low oil prices which might push BOJ to lower its inflation forecasts or give extra time for its inflation target to be achieved.

While in Europe, ECB just launched its QE program to encourage Eurozone members to revive their economies and between the lines to help Greece to get out its debts without suffering for long time (Read Quote#1). Eurozone still have at least 1 year till we can talk about inflation risk or even discuss whether economy started to pick up or not.

Quote#1: Weakened Euro

Weakened Euro is good for Greece because it implicitly means that Greece’s products and services are much cheaper for the foreigners and for the world. This help Greece to get out its financial problems by boosting up its economic activities. In addition, Liquidation for any foreign assets owned by Greece will get more Euros to Greece (~for example: US dollar saving account, foreign properties and foreign financial instruments owned by Greece worth more Euros than 6 months ago, from EUR/USD: 1.398 to EUR/USD: 1.0480 so, if you’ve 100$ in your pocket, they worth 71.5€ in the past and now they worth 95€)

On the other hand, the US economy is performing better as viewed by the Fed, Employment and home sales are moving forward and thats why they tapered the quantitative easing program. If we look to the US through non-risk taker(s) eyes, they would love to move funds, investments and capital to united states. (Read Quote#2)

Quote#2: Why does Investment move?

Funds, capitals and investments always search for better returns so, the money flows love to go to the higher return zone. In our article, US economy will be attractive economy for the capitals and investments. You’ve higher return on your capital, fund and investments. If you are not a risk taker, your returns in the US might be much higher than any other country.

.. & Early rate hike is good for the US economy

In the american case, the need for a rate hike seems to be so clear in yellen’s words and even in the fed minutes. However, the fed is still not-so-sure about how strong is the US economy and will it survive in a world of slow growth?

Based on the previously mentioned points, we are able to say that early rate hike is really good for the american economy and for the global economy too.

The only concern that we must concentrate on is how good the US economy performance is?

Solid employment, stable home sales and consumer spending backed with reliable data from industrial activities should be enough for the fed to press the hike button. This does not mean that US economy is moving backward. On contrary, Stronger dollar is rational power for the american economy and it opens the gate for cheaper imports and gives american investors better chances in foreign investments.

In addition, US market is not that weak and recent economic data showed that it is performing on a solid base to maintain economic growth for local industries and businesses.

Last thing, Experts are expecting that once US hits its inflation target, this will gradually export inflation to the other countries and thus, help the world to get out its deflationary period

Remember to keep sharing the useful knowledge

What is Inflation?

Videos: Get to know Inflation

Inflation is one of the most important and critical economics terms that everyone must watch closely, its importance comes from its effect on the international economy and how central banks highlight and consider it in all its monetary actions. We are here to help you with these easy videos posted by Bank of England (UK) – YouTube Channel (Full credits reserved to BOE with thanks for sharing such useful videos)

Inflation Definition

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money.

Let’s go through the following videos to know more about inflation ..

Video #1: What is Inflation?

Video #2: Why does inflation matter?

Video #3: How does the Bank manage inflation?

Video #4: History of inflation

Remember to keep sharing the useful knowledge

join forexa team

Introducing Forexa Polls, searching for volunteers and working on StreamZ!

From day #1, our target is to reach all forex beginners and interested forex readers too and we’ve successfully built a decent level of attention to Forexa.me in a very short time.

However, Forexa.me can not survive without your shares, likes and your efforts to spread our work.

I am working hard to introduce more useful tools, reviews and information to boost up your profitability and make your forex trading easier. However, I believe that to give a reliable service I must test it well for long time and thats why I am delaying the release of FOREXA signals for a while and for now. Let’s have a look on

Forexa Polls

Forexa poll is a 30 days poll, where I will direct a quick question to my visitors and I will be waiting for your choices.

What is your favorite trading platform?

This is the question of April, my aim is to provide a reliable social opinion based on your preferences. Every vote will help forexa visitors to know what is the most popular trading platform between the traders/investors. Voting is easy, go to forexa.me home page and from the choices pick one and confirm your choice by vote button.

Volunteers are welcome

Currently, I am providing analyses for the following pairs: EUR/USD, USD/JPY, GBP/USD, EUR/JPY, Gold (XAU/USD) and Silver (XAG/USD).

I am trying to add to my analyses new pairs however due to my limited time. I am unable to do that at the moment so, if you are qualified enough and have what it takes to share with us your own analysis. I will be really happy to have you in Forexa team as volunteer. I will give your full credits for your work, link to your profile and if your work is shining and reliable, you might be lucky to be hired or get a profit share in Forexa.

Forexa.me wants to grow and you can be a part of that ..

Contact me – I am waiting your work!

New Forexa.me, coming soon?

The answer is YES. I am working on a fresh look for Forexa.me, I named it StreamZ

Forexa.me released its first version on October 2014. Usually, the websites change their look every year. However, I am in hurry to move forward to a better theme quickly to fix all the current bugs and enhance how the website looks for everyone. Once I am ready to release it. I will do

Expect it during June 2015

GBP/USD Forecast: Inflation might pushes BOE to delay interest rate hike

GBP/USD 9th April, 2015

GBP/USD (currently at: 1.4785) is still giving a clear downtrend signal. However, the bulls are stronger than I expected and they have enough control till the moment to stay above the near support at: 1.4635. Personally, I can not recommend buying this pair at this level again even with these like-paparazzi attempts to touch the strong resistance around 1.5167 at any price.

We will wait today’s interest rate announcement from the BOE before trading this pair. I am still expecting no serious action from the BOE during April 2015 driven by the (0%) inflation rate in UK during March, 2015. This data is not encouraging to raise the interest rate so, we will have to wait till we see any real change in BOE plan. In addition, Fed. minutes are still mixed and are not giving any clear hint whether the rate hike will be in june, september or even in 2016. Fed. wants to evaluate the economic data every meeting and this will give every future meeting extra importance.

My technical overview is the same and I can not see any reason to buy GBP/USD at this level without falling to 1.4334 level. I recommend buying this pair around this level (1.4334) only and it is recommended to use good stop-loss because it might fall a little bit harder before going up to test any resistance again. Put in mind that if BOE surprised the market and pushed the raise button, we can buy GBP/USD on the break of 1.5167 safely, or wait till we see the market reaction on the surprise

The GBP/USD has the following major resistance and support levels:

  • RESISTANCE: 1.5167
  • SUPPORT: 1.4334

Breaking these levels in any direction will take us higher or lower.

My Daily BUY/SELL advice (30 pips stop-loss applied):

  • Sell: at 1.4900 – Take profit 1.4800 (100 pips profits)
  • Sell: at 1.5140 – Take profit 1.5040 (100 pips profits)
  • Sell: at 1.4800 – Take profit 1.4700 (100 pips profits)
  • Buy: at 1.4340 – Take profit 1.4400 (60 pips profits)

This review is valid during trading week: 9th-15th April, 2015

Silver Forecast

Silver Forecast: Limited downtrend on the way

Silver 8th April, 2015

Silver, the Gold’s little brother had a long downtrend from (49.85 to 14.20) just like the gold from the second half of year 2011, lasted years: 2012, 2013. Year 2014 was a supportive year for the silver too with few dips to stay above the 14.20 level during the first quarter of 2015.

Currently, the bullish momentum is very weak and I can not see any real reason for the silver to go up. Metals tend to be cheaper in front of a strong dollar so, sell silver with confidence that it will test at least the 15 level since it is the closest support in this range. Notice that, I can see that even this support (around 15 level) is weak enough to be broken. We will need to wait until we reach this point before being able to say whether there will be a reversal or a continuity for the previous downtrend

Sell silver in any place around 16.80-16.50 and hold on till it hits 15 level again, I am expecting this to be slowly move

The Silver (XAG/USD) has the following major resistance and support levels:

  • RESISTANCE: 18.60
  • SUPPORT: 15

Breaking these levels in any direction will take us higher or lower.

My Daily BUY/SELL advice (30 pips stop loss applied):

  • Sell: at 16.75 – Take profit 16 (75 pips profits)
  • Sell: at 16 – Take profit 15.5 (50 pips profits)

This review is valid during trading week(s): 8th-14th April, 2015