Accommodative monetary policy
This term is used by central banks – and those who report to them – to describe an easing monetary policy often designed to stimulate the economy. This can include low interest rates and injecting money into the economy – often referred to as quantitative easing.Asset Purchase Program (APP)
Although making asset purchases is a widespread practice used by central banks to stimulate the economy – witness ongoing quantitative easing in the US – APP specifically refers to an initiative that the Bank of Japan introduced in 2010, where it buys government-issued bonds as well as corporate debt, stock funds and real estate funds.Bank for International Settlements (BIS)
This is an international organization that essentially acts as a bank for central banks. It often participates directly in the forex market, making trades on behalf of said central banks so that they do not have to reveal their identity – this minimizes adverse market reaction to central banks intervening in the forex market.BOx
There are a number of acronyms of this form that refer to central banks, including BOC for the Bank of Canada, BOE for Bank of England, and BOJ for Bank of Japan. However, it’s worthwhile noting that the German central bank is not the BOG – this is called the Bundesbank, and is often referred to by the nickname of Buba.Cable
Back in the days before modern telecommunications, currency transactions between the United States and Great Britain were often carried out using transatlantic cables. This has led to cable being used as a nickname for the GBP/USD currency pair.Candlestick
This is a way of displaying price information on a currency chart. The candlestick consists of a main body rectangle, with the upper and lower bounds corresponding to the open and close for the trading interval. Lines extend above and below the main body, representing the highs and lows for the trading interval.Eurodollar
Some people think that this simply means euros – but it doesn’t. Instead, it refers to US dollars that are deposited in banks outside of the US. Referring to euros as eurodollars will mark novice traders as rank amateurs.
Forward guidance
This is when a central bank indicates what it may do with its monetary policy in future, depending on economic conditions. Examples of this include whether the bank is likely to raise interest rates in the future – for instance, when unemployment drops to a particular level – or whether it is likely to continue quantitative easing.Hawkish and dovish
If a central bank makes a hawkish monetary policy statement, this indicates that they are planning to tighten monetary policy. On the other hand, a dovish statement indicates that they plan to loosen or ease their monetary policy.IMM
IMM stands for International Monetary Market, and is part of the Chicago Mercantile Exchange. This is a central exchange where currency futures are traded – unlike the forex spot market, which is a geographically-distributed OTC market that does not have a centralized exchange.
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
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