<p>In the <a target=“_blank“ href=“https://greendax.com/“ target=“_blank“ rel=“follow“>financial
industry</a>, a haircut is a value reduction made to an asset to determine
the capital required, margin, and level of collateral. The difference between a
loan’s principal and the asset’s market value will serve as collateral. This amount
is given as a percentage. The lender must consider the shifting market price
over time, which results in the disparity.</p><p>The
distinction between the purchase and sale price of a stock, bond, derivative
contract, or any other financial instrument is sometimes referred to as a
haircut. The phrase „haircut“ refers to the market maker’s spread in
this context.</p><p>How to
Interpret a Haircut</p><p>When a <a target=“_blank“ href=“https://greendax.com/Registration“ target=“_blank“ rel=“follow“>financial
institution</a> or lender assigns a value to a collateral asset less than
the requested loan amount, this is known as a haircut. The lender chooses the
haircut amount, which varies depending on the institution and situation and is
typically expressed as a percentage difference. The amount of haircut is
determined by weighing the hazards. For example, if the borrower defaults, the
lender must take into account the level of risk they would run if they could
not sell the asset or collateral for a high enough price.</p><p>Compressed
haircuts result from high price predictability and lesser associated risks
because the lender is confident that the collateral can satisfy the loan amount
upon liquidation. As an illustration, government securities dealers frequently
employ treasury bills in overnight borrowing transactions, also known as
repurchase agreements (repos). Due to the high level of assurance regarding the
value, liquidity, and credit rating of the securities used as collateral in
such instances, the haircut is minimal.</p><p>Example</p><p>For
instance, if a borrower seeks out a loan for $15000 from a financial
institution and uses their stock portfolio worth $15000 as security, the
financial institution will very likely recognize the $15000 portfolio as only
worth $7500 as collateral. The haircut is the value of the stock portfolio
provided as collateral reduced by 50%, or $7500.</p><p>There is no
one-size-fits-all percentage for haircuts because each asset must be handled
uniquely. For example, an asset may have a value of $10000, but if it receives
a 10% haircut, it will only be valued at $9000. In a similar light, another
item might be worth $10000 but given a haircut of 30%, meaning it is regarded
as though its value were $7000.</p><p>Important
Takeaways and Final Overview</p><p>· A haircut is
a difference between the price at which a stock is bought and sold, or the
spread market makers may establish.</p><p>· The
discrepancy between the loan amount and the market value of collateralized
assets is known as a haircut in the finance industry.</p><p>· The safer the
asset, the lower the haircut, and the riskier the asset, the greater the
haircut.</p><p>To sum this
up, Lenders take a haircut, or a percentage reduction in the value of the asset
used as collateral for the loan, to shield themselves from price volatility and
associated risks. When a borrower defaults on their obligations, financial
institutions calculate the value of the collateral asset and assign that value
to the asset. </p><p>Lenders must
evaluate the collateral as an independent case to assess the associated risks,
including volatility, price predictability, and liquidity. Different assets are
addressed in different ways.</p>

This article was written by ForexLive at www.forexlive.com.

<p>In terms of technical analysis, the Dow Jones and the broader market had a lot to digest after the latest fed announcement. Fed has <a target=“_blank“ href=“https://www.forexlive.com/centralbank/federal-reserve-hike-rates-by-25-bps-vs-25-bps-expected-20230201/“ target=“_blank“ rel=“follow“>hiked
by 25 bps as expected</a> and signaled “ongoing increases” as they want to
reach their terminal rate in the 5% area before pausing. </p><p>Everything that came out of this
event was expected by the market, even a hawkish press conference. In fact, the market rallied
even if the <a target=“_blank“ href=“https://www.forexlive.com/centralbank/powell-qa-it-is-important-that-financial-conditions-reflect-policy-restraint-in-place-20230201/“ target=“_blank“ rel=“follow“>Fed
Chair Powell signalled “a couple more hikes”</a> coming at the next meetings. The
market is now more focused on economic data rather than the Fed because we are
at the end of their tightening cycle.</p><p>So, what’s next then? Looking
ahead there are two big risk events on Friday: the NFP report and the ISM
Services PMI. Since the resilience in the labour market is what is giving
the market confidence in a “soft landing”, we can expect that a beat or as
expected data should give the bulls confidence to reach higher highs. </p><p>A miss may be bad news though as
it will be the first one in a long time and given that the risks of a “hard
landing” are not yet out of the equation, the market may go into risk off. For
the ISM Services PMI the same playbook should apply. </p><p>DOW JONES Technical Analysis</p><p>In the daily chart above, we can
see that the market is basically ranging. Bulls and Bears have their reasons
and both sides may be right as we are navigating really unique times. </p><p>You can feel the uncertainty on
both sides. For now though, the bulls have the upper hand and the next target
should be the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> in the 35200 price area. </p><p>In the 4 hour chart above, we can
see that there’s a clear <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at 33500 and the price keeps
on trading around it like a magnet. The near term resistance is at 34477,
which is what the bulls need to break to maintain a bullish bias towards the
35200 resistance area. For now, the price action may just range.</p><p>Zooming in to the 1 hour chart, we
can see the levels that should define the next moves. Stay above the 34477
level and the bulls will have control. Stay below the 33538 level and the bears
will regain control.</p>

This article was written by ForexLive at www.forexlive.com.

<p>US MBA Mortgage Applications || -9% (Previous 7.0%)</p>

This article was written by Ryan Paisey at www.forexlive.com.

<p><a target=“_blank“ href=“https://newsquawk.com/daily/article/?id=2840-us-market-open-relatively-contained-trade-ahead-of-key-data-earnings-fomc&utm_source=newsquawk&utm_medium=email&utm_campaign=newsletter&utm_content=us-open“ target=“_blank“ rel=“nofollow“>US Market Open: Relatively contained trade ahead of key data, earnings & FOMC</a></p><p>Key Points: </p><p>European bourses are little changed overall but with a modest positive bias, Euro Stoxx 50 +0.2%, ahead of data points and the FOMC.</p><p>Stateside, futures are a touch softer after yesterday’s strength, ES -0.4%, with an after-market update from Snap weighing on peersThe DXY is subdued and holding modestly below the 102.00 mark with slightly softer US yields vs global peers exerting pressure</p><p>EGBs are firmer but well off initial best levels, with Bunds below 137.00 after more than paring a knee-jerk spike on the EZ Flash CPI release, where once again the headline cooled but core remains hot.</p><p>Crude benchmarks have seen some modest two-way action throughout the morning, though the benchmarks are in relatively narrow ranges and near the unchanged mark overall.</p><p>Looking ahead, highlights include US Final Manufacturing PMI, US ADP, ISM Manufacturing, JOLTS, Construction Spending, FOMC Policy Announcement & Press Conference, OPEC+ JMMC, US Quarterly Refunding Announcement, Earnings from McKesson, AmerisourceBergen, Meta, T-Mobile, Thermo Fisher, & Altria.</p>

This article was written by Ryan Paisey at www.forexlive.com.

<p>The year 2022 remains in the rear-view mirror. There
was no shortage of buzz in the market last year: rising interest rates, an
ongoing inflation shock, and, as a result, falling stock markets and a
strengthening dollar. Just imagine, at the end of the year the S&P500 was
headed down 18%. </p><p>If we speak about the stock market, we should not be
critical, as the decrease in the value of assets was mixed and there are even
positive moments:</p><p>●
The Energy sector is a striking example; it
added 52% for the year and is, in fact, the only sector in the green zone. </p><p>●
Utilities and Consumer Staples have proven to be defensive equities (and
practically unchanged). </p><p>●
Healthcare fell less than the entire
market (8% drop in total).</p><p>●
Other cyclical sectors (Basic
Materials, Industrials, Financials) have recovered over the past two
months, resulting in a decline of about 10%.</p><p>●
The Telecommunications,
Technology, Real Estate and Consumer Discretionary sectors, which are
sensitive to rising interest rates, remain deep in the negative zone.</p><p>We have taken all these trends into review and
provided you with the most probable scenario of the situation. The following
research aims to let our clients know the 2023 trends in the assets they trade
(currency pairs and stocks). </p><p>We’ve highlighted two sets of information. In the
first part we look at trends in the macroeconomics of countries and forecast
the value of the U.S. dollar, and in the second part we share a vision about
key industries that we think will perform in 2023.</p><p>As we said, this outlook will be of primary interest
to our clients, because they can use all the asset types and market situations
discussed to execute trades on their accounts. </p><p>United States
& US Dollar</p><p>We expect the U.S. recession to continue in the first
half of 2023, then recover and rebound, gaining strength by the end of
2023: </p><p>●
The business cycle will outpace the economic
cycle. Market players will be more optimistic, setting the stage for public
equities valuation growth. Nevertheless, the full-year targets for U.S.
economic growth and inflation may reflect a mostly recessionary outlook—we
forecast that the inflation shock of the last 18 months has stopped—core
inflation will slow from 5% now to 3% at the end of 2023. The unemployment rate
will rise from 3.5% to 4.0% by year-end.</p><p>●
We believe that in order to contain inflation (on the background of
stronger real income growth), the U.S.
Fed will raise the rate three more times in 25 bps increments to a peak of
5–5.25%. We also do not expect a rate cut in 2023. </p><p>●
Based on the above, the US dollar’s rise may slow and possibly reverse
due to a slowdown in inflation and monetary policy easing by the US Federal
Reserve starting in the second quarter (March–April) of 2023.</p><p>Global economies</p><p>US economic resilience is contrasted with a European
recession and a boomy reopening in China. The energy supply shock resulting
from the Russia-Ukraine war will contribute to weaker growth in the Eurozone.
The situation in Asia-Pacific (APAC) mirrors that of China’s reopening and
their rejection of zero tolerance Covid in China</p><p>Commodity still
looks attractive </p><p>●
All commodities had a strong two-year run, and we expect this rally to
continue, including Energy. The bullish super cycle that began in March 2020
continues. The lack of supply, which contributed to positive commodity returns
in 2021 and 2022, will continue into 2023.</p><p>●
OPEC+ has taken key strategic steps to minimise supply while maximising
the price. U.S. preferences are increasingly shifting toward renewable energy,
while Russian oil is subject to restraining sanctions. The implication is that
falling global oil production will contribute to higher prices over the next
few years. Thus, the International Energy Association (EIA) forecasts
production growth of 1% in 2023, which with the average assumed growth of
global GDP of 1.8%, creates these prerequisites (see fig.). </p><p>●
However, in 2023, commodity prices may reverse as we expect a recession
in the first half of the year. Once recession fears subside in the second half
and demand starts to pick up, we expect commodity prices to start rising. Our
year-end forecast is $95 for Brent and $91 for WTI.</p><p>two sectors that, for different reasons, have growth
potential and could be attractive in 2023, but at the same time do not rule out
separate market stories with other stocks:</p><p>Big Techs have
big trends</p><p>After the technology crash of 2022, some companies are
still struggling to recover, and investors may think that the best days of
technology companies have passed. </p><p>Ambitious plans can definitely be pushed aside. For
the technology sector, 2023 is a year of uncertainty and skills shortages. This
puts a strain on all activities in 2023. </p><p>Companies are focused on optimising business processes
and reducing budgets, which, in our opinion, will have a negative impact on
growth stocks.</p><p>However, we see the negative market sentiment as a
great opportunity for the “Big Techs” (Apple,
Microsoft, Nvidia, Visa, etc.), as their businesses have become
well-established.</p><p>We believe that rising interest rates and
macroeconomic and geopolitical concerns have simply distracted investors from
long-term trends that create growth opportunities for companies in Semiconductors, Cloud technologies and 5G. (Our clients can trade 22 shares in
this sector)</p><p>Healthcare—good
fundamentals creating upside opportunity</p><p>In the first half of 2022, we saw a massive selloff
across the entire spectrum of the market, and the Healthcare sector is no exception. But with so much negative
sentiment already factored into stock prices, the fundamentals become quite
interesting and speak to the undervaluation of this category of stocks. If
confirmed by investors‘ willingness to buy, the healthcare sector could rise in
2023.</p><p>Another tailwind is worth highlighting: The US
Inflation Reduction Act, which was signed into law in August 2022, included a
3-year extension of enhanced subsidies for consumers who purchase health
coverage on the Affordable Care Act marketplaces. This is a benefit to health
insurers offering Medicare and/or Medicaid plans.</p><p>Regardless of where the U.S. markets go next, the Healthcare sector may offer a
combination of protective and growth characteristics that could be attractive
in a variety of scenarios. (Our clients can trade 22 shares in this sector).</p><p>The Bottom Line</p><p>Due to the fact that business cycles outpace economic
cycles, we believe that cyclical stocks have growth potential first and
foremost.</p><p>We believe that the themes described in this review
are the key ones that will drive the world economy. </p><p>We deliberately divided the forecasts into America and
non-America, understanding that the U.S. dollar is the main measure of the
state of the world economy. And within 2023, the U.S. dollar tends to decline,
which is a leading positive signal for the global economy and all categories of
public equities.</p>

This article was written by ForexLive at www.forexlive.com.

<p>Eurozone CPI </p><p>Headline – </p><p>MoM Flash || -0.4% (Forecast 0.1%, Previous -0.4%)</p><p>YoY Flash || 8.5% (Forecast 8.9%, Previous 9.2%)</p><p>Core: </p><p>YoY Flash || 5.2% (Forecast 5.1%, Previous 5.2%)</p><p><a target=“_blank“ href=“https://ec.europa.eu/eurostat/documents/2995521/15893627/2-01022023-AP-EN.pdf/eda196ce-0a4c-618e-4155-ef2f464fcc4e“ target=“_blank“ rel=“nofollow“>RELEASE</a></p><p><a target=“_blank“ href=“https://PiQSuite.com/Suite/reuters/2023:newsml_KBN2UB2YS“ target=“_blank“ rel=“nofollow“>Reuters</a></p><p>The headline inflation drop is unlikely to expunge concerns among conservative policymakers that rapid price growth is getting entrenched, a worry reinforced by poor underlying inflation data on Wednesday.</p><p>Conservative policymakers are likely to argue that a milder-than-expected economic downturn will mean a smaller increase in unemployment, so wages will remain under upward pressure and force the ECB to raise rates even more.</p>

This article was written by Ryan Paisey at www.forexlive.com.

<p>The market is still trading based
on the “soft landing” narrative as inflation moderates and the labour market
remains tight for the Nasdaq Composite. Yesterday, the market once again cheered on the release of the <a target=“_blank“ href=“https://www.forexlive.com/news/us-employment-cost-index-for-q4-10-vs-11-estimate-20230131/“ target=“_blank“ rel=“follow“>Employment
Cost Index (ECI) for Q4</a>, which missed expectations and pushed back
further on the fears of a wage price spiral. </p><p>In fact, we’ve been seeing
moderation in wage growth for months and this should be a welcome news for
the Fed as that’s one of the biggest worries they had. Today there’s the <a target=“_blank“ href=“https://www.forexlive.com/centralbank/the-newsquawk-fomc-preview-20230201/“ target=“_blank“ rel=“follow“>FOMC
Policy Announcement</a> where the Fed is expected to hike by 25 bps
followed by Fed Chair Powell Press Conference where he’s expected to sound
hawkish. </p><p>Given that the market has already
priced in such outcomes, it’s unlikely to see very big moves and we should get back to trading
economic data on Friday when the NFP report gets released. </p><p>Nasdaq Composite Technical Analysis</p><p>On the daily chart above, we can
see that the price managed to reach the top of the range. This <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> hasn’t been broken since
September 2022 and the bulls will need a good catalyst to target new highs. In
case the bullish sentiment continues, the next targets are the resistance at
the 12274 and the resistance at 13191. </p><p>On the other hand, if the price
fails to keep the bullish momentum going, the bears may regain control and
target the bottom of the range at 10200.</p><p>On the 1 hour chart above, we can
see that the price is trading in a rising channel with the near term <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at 11399, which has also the
bottom of the channel as further confluence. If the bears manage to break
below that zone, they should have the upper hand and target the support at
10200. </p><p>Drilling down to the 15 minutes
chart above, we can see that the price is now right within the resistance area
at 11500 and 11600. The price action may be choppy today as we head into the
FOMC Policy Announcement. </p><p>Before that we have other
important economic reports with the ISM Manufacturing PMI and US JOLTs at the
top of the list. The levels are defined though: stay above 11689 and the
bulls are in control, on the other hand, get below 11399 and the bears will
regain control. </p>

This article was written by ForexLive at www.forexlive.com.

<p><a target=“_blank“ href=“https://newsquawk.com/daily/article/?id=2838-us-market-open-sentiment-soured-despite-a-french-inflation-induced-move-higher-us-eci-due&utm_source=newsquawk&utm_medium=email&utm_campaign=newsletter&utm_content=us-open“ target=“_blank“ rel=“nofollow“>The Newsquawk US Market Open: Sentiment soured despite a French inflation induced move higher, US ECI due</a></p><p>Key Points:</p><p>European bourses are lower across the board, Euro Stoxx 50 -0.6%, as the upside after France’s CPI fizzled out and reverted back to softer APAC performance.</p><p>Stateside, futures are similarly pressured and have been in-fitting with European peers throughout the session ahead of key Employment Cost data, ES -0.5%.</p><p>USD is on the front foot amid the downturn in risk sentiment, EUR pressured post-French CPI while Antipodeans lag despite strong Chinese PMIs</p><p>EGBs are currently mixed/flat, despite pronounced action throughout the session in the wake of French and EZ data points, Bunds are currently towards the lower-end of 136.54-137.30 parameters.</p><p>Crude benchmarks have been moving lower throughout the session as sentiment sours somewhat as we move closer to the week’s key risk events</p><p>Looking ahead, highlights include US Employment Costs, Consumer Confidence. Earnings from Exxon Mobil, Marathon Petroleum, General Motors, Phillips 66, UPS, Pfizer, SYSCO, Caterpillar, AMD, Electronic Arts & Snap.</p>

This article was written by Ryan Paisey at www.forexlive.com.

<p><a target=“_blank“ href=“https://PiQSuite.com/Suite/reuters/2023:newsml_KBN2UA0V7 “ target=“_blank“ rel=“nofollow“>Reuters Note</a></p><p>Analysts and traders have significantly raised their predictions for gold prices but expect high interest rates to keep a lid on rallies, a Reuters poll showed on Tuesday.</p><p>The poll of 38 analysts and traders returned median forecasts for gold to average $1,825 an ounce in the first quarter of this year, $1,840 in the second, $1,852.50 in the full year and $1,890 in 2024.</p><p>Three months ago, a Reuters poll predicted prices would average $1,712.50 in 2023. In 2022, gold averaged $1,801.93.</p>

This article was written by Ryan Paisey at www.forexlive.com.

<p>In
this overview, we will discuss the specifics of Islamic accounts on Forex: what
they are necessary for and what advantages and drawbacks they have.</p><p>Specifics of swap trading on Forex</p><p><a target=“_blank“ href=“https://blog.roboforex.com/blog/2020/04/07/swaps-on-forex-examples-of-use/?utm_source=forexlive.com&utm_medium=pr&utm_campaign=rf_en_external_article&utm_content=article&utm_term=islamic%20account&a=ohrb“ target=“_blank“ rel=“follow“>A
swap</a> is an exchange (buy-sell) operation for various assets, where a direct
exchange deal is accompanies by a reverse deal that implies returning the same
assets after some set time on agreed conditions. A currency swap (overnight) is
two deals in the opposite directions for the same currency but with different
value setting dates.</p><p>In
the <a target=“_blank“ href=“https://blog.roboforex.com/blog/2019/03/05/what-is-forex/?utm_source=forexlive.com&utm_medium=pr&utm_campaign=rf_en_external_article&utm_content=article&utm_term=islamic%20account&a=ohrb“ target=“_blank“ rel=“follow“>Forex
market</a>, brokers normally charge/deposit a certain fee for transferring the
position for the next day. A swap (rollover) on Forex implies
depositing/withdrawing money (interest) for transferring an open position for
the next day. </p><p>After the position gets transferred overnight, the rollover
emerges from the difference in interest rates of different national currencies.
The bigger this difference is inside the <a target=“_blank“ href=“https://blog.roboforex.com/blog/2020/06/19/how-to-choose-a-currency-pair-for-trading-in-forex/?utm_source=forexlive.com&utm_medium=pr&utm_campaign=rf_en_external_article&utm_content=article&utm_term=islamic%20account&a=ohrb“ target=“_blank“ rel=“follow“>currency
pair you choose</a>, the bigger swaps are. Swaps can be either positive or
negative.</p><p>What are Islamic Forex accounts</p><p>In
Islam, usury, i.e. crediting on interest, is strictly forbidden as a grave sin.
Hence, broker companies providing access to the currency market offer to their
Muslim clients the so-called <a target=“_blank“ href=“https://roboforex.com/forex-trading/trading/swap-free/?utm_source=forexlive.com&utm_medium=pr&utm_campaign=rf_en_external_article&utm_content=article&utm_term=islamic%20account&a=ohrb“ target=“_blank“ rel=“follow“>Islamic
accounts on Forex</a>.</p><p>In
essence, those are swap-free accounts with no interests on them. As a rule,
they latter ones are replaced by a fixed commission charged for transferring
deals for the next day.</p><p>How Islamic accounts work on Forex</p><p>Instead
of swaps for transferring positions for the next day, clients pay a fixed
commission that only depends on certain currency pairs and open lots but not on
the interest rates of issuing banks. The more days the trade remains open, the
more money the trader will pay as the commission. The calculation formula for
calculating the commission fee for transferring open positions for the next day
looks as follows:</p><p>Commission
= (Commission per lot) * (Number of lots)</p><p>The
commission charged for transferring an open position for the next day differs
from currency pair to pair. To see how much it will be, check the list of
commission fees for rollovers on swap-free Islamic accounts offered by your
broker.</p><p>Advantages and drawbacks of Islamic accounts</p><p>Advantages:</p><ul>
<li>Respectful
attitude to religious clients and terms & conditions adapted for their
needs;</li>
<li>Possibly economic
in the long run: the commission for transferring position overnight might
be smaller than the negative swap.</li>
</ul><p>Drawbacks:</p><ul>
<li>As a rule, not all
account types and instruments offered by the broker are available for
swap-free trading;</li>
<li>There is no
replacement for a positive swap, which makes it impossible to make money
on transferring an open position for the next day.</li>
</ul><p>Summary</p><p>Islamic
accounts on Forex are a step towards Muslim clients that stick strictly to
their religious beliefs. Thanks to replacing the unacceptable swaps by fixed
commission fees, a lot of Muslim traders worldwide have the chance to trade on
Forex violating no religious rules.</p>

This article was written by ForexLive at www.forexlive.com.