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
EUR/USD clings to recovery gains near 1.0850 ahead of Fedspeak
EUR/USD trades in positive territory near 1.0850 on Friday following a four-day slide. China's stimulus optimism and a broad US Dollar correction help the pair retrace the dovish ECB decision-induced decline. All eyes remain on the Fedspeak.
GBP/USD pares UK data-led gains at around 1.3050
GBP/USD is trading at around 1.3050 in the second half of the day on Friday, supported by upbeat UK Retail Sales data and a pullback seen in the US Dollar. Later in the day, comments from Federal Reserve officials will be scrutinized by market participants.
Gold at new record peaks above $2,700 on increased prospects of global easing
Gold (XAU/USD) establishes a foothold above the $2,700 psychological level on Friday after piercing through above this level on the previous day, setting yet another fresh all-time high. Growing prospects of a globally low interest rate environment boost the yellow metal.
Crypto ETF adoption should pick up pace despite slow start, analysts say
Big institutional investors are still wary of allocating funds in Bitcoin spot ETFs, delaying adoption by traditional investors. Demand is expected to increase in the mid-term once institutions open the gates to the crypto asset class.
Canada debates whether to supersize rate cuts
A fourth consecutive Bank of Canada rate cut is expected, but the market senses it will accelerate the move towards neutral policy rates with a 50bp step change. Inflation is finally below target and unemployment is trending higher, but the economy is still growing.
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