2014 IN REVIEW

Finally it's 2015! Below are my best reviews in 2014. Hope we get much better in 2015.

Latvia, became the first nation who join EUROZONE in 2014.

EBOLA outbreak begins in West Africa.

image source: nbcnews.com

Viktor Yanukovych, former Ukraine President, removed, amidst heavy riots protest. This protest lead to annexation of Crimea.

Malaysia Airlines flight MH370 missed around the Gulf of Siam. But, lately, in the end of March, Malaysia Airlines announced that MH370 crashed in the southern Indian Ocean.

image source: en.wikipedia.org

The South Korean ferry, MV Sewol, capsized and killed more than 200 people. This accident made the Prime Minister Jung Hong Won resigned.
Hongkong protest following the decision of Standing Committee of the National People's Congress on electoral reform regarding future Hongkong Chief Executive and Legislative Council election.

Windows XP update program was ended this year. XP officially died on April 8th.

Thailand's coup after Royal Thai Army overthrew the caretaker of Thai government.

Islamic State in Iraq and Syiria (ISIS) founded. ISIS' getting stronger this year.

image source: nbcnews.com

Another Malaysia Airlines, MH 17 crashed near Ukraine-Russia border. All the passengers and the crews were died. The Ukrainian government didn't shoot the plane neither did the separatist rebels. As the result, Ukraine closed all the routes in the Eastern Ukraine airspace.

Fuad Masum was elected President of Iraq

Jokowi was elected as President of Indonesia.

image source: msn.com

El-Sisi was elected as Egypt's president.

Ariel Sharon, former Prime Minister of Israel died after being in a coma for the past eight years.

One World Trade Centre opened in September 11th ground zero.

Janet Yellen succeded Ben Bernanke as a new chairman of FEDERAL RESERVE (The Fed).

It's a 25th anniversary of Berlin wall and Tiananmen Square massacre.

source: msn.com

Such a grimp year for aviation. Indonesia Air Asia flight disappeared en route to Singapore from Surabaya. It crashed around Karimata Strait.

IMAGE SOURCE: thehackenews.com

SPORT

2014 Winter Olympic was held in Sochi, Russia.

image source: blogs.wsj.com

Luis Aragones, former SPAIN national team coach, died on the first day of February. He won the UEFA EURO 2008 Cup with the team. That moment became the beginning of Spain's success recently.

Alfredo Di Stefano, Real Madrid's legend, died at the age of 88 due to cardiac arrest.

Zanetti and Veron announced their retirement this year.

Eusebio, a Protuguese legend, died in the age of 71.

Real Madrid won Copa Del Rey Barcelona 2-1. Real Madrid finally made their 'La Decima' dream come true. They beat Atletico Madrid in UEFA Champions League final.

image source: article.wn.com

Atletico Madrid, Bayern Munich, Ajax Amsterdam, Manchester City, PSG, Juventus won the league.

Amazing FIFA World Cup 2014! Germany was the best in this tournament; devastating Brazil 7-1 and becoming the champion for the fourth time.

image source: blog.wsj.com

All England 2014 result gave a great memory for Indonesia; Tontowi and Liliyana made their hattrick (3 years in a row) while Ahsan and Hendrawan was successful in destroying Japanese couple.

David Stern, former of commissioner of NBA, resigned on February 1. He'd been making name for NBA.

Wimbledon Championship's titles were won by Novak Djokovic in men's single and Petra Kvitova in women's.

image source: sportsworldnews.com

San Antonio Spurs defeated Miami Heat in 2014 NBA Finals with 4 wins.

ASIAN GAMES 2014 Incheon with China as the champion collected 151 gold medal.

Marc Marquez won Moto GP twice in a row.

Lewis Hamilton became the champion of F1 this season. Been a great year for Marcedes, too.

image source: blogs.wsj.com

Read More

RUPIAH AFTER ELECTION

July 22th has gone. The official anouncement said that Jokowi was elected President of my beloved country, Indonesia. As we know, the survey before showed that the society had high expectation for Jokowi to be President. And today, we'll just wait for Jokowi's inaugural speech.

Economists forecasted that Rupiah would get stronger after the election. We still remember when Jokowi was nominated as the future president, the Indonesia Composite Index (IHSG) moved up. But now, as Jokowi's named as the President-elect, Rupiah gives no sign of any "raise". Rupiah is still in USD/IDR 11,500 - 11,700.

What can possibly affect Rupiah?

We have many explanations. First, US Economic grows faster this year; 4% (until Q2) based on fxstreet.com while US GDP 2014 (until Q2) grows 2.8% based on statista.com the highest growth since 2008 global crisis. This makes USD moves stronger against its pair. GBP/USD, NZD/USD, and EUR/USD even get weaker (1.6876, 0.8493, and 1.3387 consecutive). This condition will surely affect Rupiah, too.

Second, the inflation rate is still higher than Bank Indonesia targeted (inflation target for 2014 is 4.5% while June inflation is 6.7% (see http://www.bi.go.id/en/moneter/inflasi/data/Default.aspx). BI rate (7.5%) and Net Domestic Assets position could affect rupiah, too.

Last, though the presidential election had declared that Jokowi was the winner, his opponent, Prabowo, is disputing the outcome. This case is now brought to Constitutional Court. I assume Rupiah won't make a good movement till the Constitutional Court's fixed result on the 6th of August. Well, let's wait another days and see what will happen to Rupiah.
By the way, you can shift your focus to US NFP data release. Have a nice trading.

Read More

CORRELATION BETWEEN INFLATION RATE AND UNEMPLOYMENT RATE

William Phillips (1958) stated that there is negative correlation between inflation rate and the rates of unemployment. It's such a trade-off, when the level of unemployment decreases, the inflation rate goes higher. I myself was curious to prove the truth of the statement. I took the Indonesia's unemployment rate and inflation rate data since 1998-2013 and the result says so. 

Based on the picture below, the correlation is -0.3087 which means between unemployment rate and inflation rate have an inverse relationship.

You can also chceck out the scatter diagram below:

But, Phillip's study was just in short run. The question is, why can this happen ? Here is the explanation. As the unemployment level decreases will correlate with higher change of money wage. When the rate of unemployment rises, there will be less money supply. Since the economists say with the less money supply, the less inflation rate; that's true!

On the other hand, the increasing unemployment reduces the purchasing power. Yes, it's a trade-off. The only way to control the inflation is to change the mindset of the labor, to invest their money that it will be quite productive. In the next post, I'd like to discuss how to control the inflation.

Read More

CORRELATION STUDY: NFP and EUR/USD

Howdy, traders.....

In this post (and maybe later) I'd like to explain something statistical; correlation study. I myself choose the correlation between NFP data release and EUR/USD. Correlation measures the strength and direction of a linear relationship between two variables, in this case, NFP and EUR/USD. The result will be completed with a scatterplot/ scatter diagram.

How do we interpret a correlation (r) value? It's simply like this, The value of r is always between 1 and -1.

If you get a positive value, it indicates that the correlation has an uphill (positive) trend. On the contrary, if the value is negative, the relationship has a negative trend. If it's zero, it means there's no linear relationship.

I took the NFP data from fxstreet.com and EUR/USD from AGEA with a range between May 2013 until April this year. You can look at the pictures that the r value was 0.0477 which means it hasn't any strong relationship. As a result, The Scatterplot's dots were totally scattered. Since they're scattered, means no pattern of the trend. Once again, they're actually have a weak linear relationship. Despite having a weak relationship, NFP is quite influential in moving the price of USD. That's why I suggest you to make  better combination of data to gain a good result.

FYI, today is the end of April, prepare yourself for the next NFP data release on the first Friday of May.

Read More

GBP/USD HISTORICAL DATA

Alright guys, we're back! It's true when our teacher said "don't forget the history." Last month, we'd learned the EUR/USD historical data. Now, we go to GBP/USD. GBP/USD is widely known as one of the biggest currency pair in the world that it requires your complete attention.

We know that currently GBP/USD is moving higher from day to day due to bad weather in USD. It's a good chance for you to open a buy position. It's all started before the storm struck US in the end of 2013. GBP/USD was at 1.6009 in October last year. Now, we can see there's a significant improvement; GBP/USD is 1.6685 now. You can imagine how many pips you can gain.

History is still history. Some traders believe in price cycle, so do I. We do have to be aware of this. Besides the economic calendar (the schedule of a periodic economic data release), war, natural disaster, election, expectation, etc. surely affect the movement of a pair. We can't just rely on technical analysis. There are greater conditions out there, such as fundamental condition of a country, that can change the position of the pair; anytime and anywhere.

So, what is your prediction for GBP/USD closing price in the end of this year?

Read More

LEARNING EUR/USD HISTORICAL DATA

Beware of the The FED Tapering, they said. Yes, in this beginning of 2014 our attention is distracted by this policy; no more "quantitative easing". We can say that this tapering is able to affect the investment climate including the forex  trading. To me, such policy will change the trendline when it has big impact. That's why we must keep in touch with latest news. I myself pay a great attention especially to an economic policies issued by US government.

But, don't forget about the history of the trendline itself. Learning historical data of a pair is also necessary.

Look at the EUR/USDVchart below:

You can see that EUR/USD has various exits change within one year only. Started from 1.24 and ended with 1.35. Imagine how many pips you can gain. I congratulate you if you bought your EUR/USD. Now, the price is still touching such a high price, between 1.34-1.37.

Let's get back to several years ago. Hmmm, I'd like to go to first quarter of 2010 when the price touched 1.19, how low! And then, look at 2011. The price almost touched 1.5. So, between 2010-2011, EUR/USD made more than 3000 pips. Some professional traders said by imagining the currency at a price before, will be much easier to imagine that happening again. Well, I'm not patient to see what will happen in the end of this year.

Read More