London-based MFP Trading’s latest algorithmic-based product allows clients to trade without paying the spread. By leveraging high-end technology, Minerva turns hedging from a cost centre to a profit engine. MFP will be showcasing their latest tool, ideal for Retail FX and CFD brokers, at the upcoming iFX EXPO which will take place in Limassol, Cyprus, from 7-9 June 2022. What is Minerva? The issue of how Retail FX and CFD brokers can offload mismatched risk in their trading books without giving up all their spread (or at least a good portion of it) has long been debated within the trading industry.  MFP Trading’s new product, Minerva, acts on these concerns in a bid to deliver the easiest and most profitable strategies possible. Hedging methods are constantly questioned. After all, seeing tight spreads means money is being left on the table. If LPs are keen to see your flow, it means they can monetize it easily.  After looking at the attrition curves of hedge trades with the MFP quant team, you can decide which flow you should be managing, like a top-tier bank market maker using Minerva passive mid spread matching, and which flow you should externalise quickly on an Agency “A Book” typical model.  From there, thanks to its powerful order management system, Minerva FX makes it possible to monetise this information by placing orders at the right level automatically instead of paying the spread. Go beyond A & B book and use Minerva to create an intermediate book. How Does Minerva Function? Minerva is a key cog in a well-oiled machine, with the system allowing you to enter your hedging rules into its core. It then automatically inputs orders at the mid-market into MFP Trading institutional ECN (eg,10.5 in a 10/11 market).  MFP will then display this order to its institutional customer base making sure that the order is at the top of each institutional customer aggregator, so they will deal with Minerva’s order in priority. This process maximises trade matches and, more importantly, maximises revenues generated on the trades.  In the end, Minerva’s client will trade at a better price for his hedges and MFP will share the brokerage it captured from institutional clients to Minerva’s user. Minerva’s users will then see both price improvements on their trades and will get a monthly brokerage check from MFP. Why Choose Minerva Technology? Minerva technology is extremely advanced, with very few technology firms offering a solution of the same calibre. Minerva was also built under the supervision of a quant who used to work in both top-tier banks and high-frequency trading firms. As a result, the trading algos have been tested many times to ensure they’re reliable and robust. What’s finally great about Minerva is that it’s a huge part of MFP’s ECN institutional trading infrastructure and is therefore offered for free to MFP users. As a result, this simple, one-stop setup makes it easy for Minerva users to immediately monetise the product, without breaking budget. iFX EXPO Limassol Presence Those interested in the MFP’s advanced Minerva product should attend the FX company’s workshop at the upcoming iFX EXPO in Limassol Cyprus this June.  Hosted by Ultimate Fintech, this is the largest financial B2B expo and is set to attract thousands of like-minded contributors and attendees including brokers looking for advanced tech products.  You can also register for a Minerva demo via the MFP Trading website for a more detailed glimpse into how this technology could streamline your processes. Don’t pay the spread, earn it and maximise revenues per client.

A recap of the headlines from today:Russia’s gas ‚blackmail‘ one to watch in the days aheadRussia’s Gazprom: Gas supplies to Poland, Bulgaria halted until payment in rubles is madeFour European gas buyers said to have already paid for supplies in rublesDo take note that transit supplies (since Poland and Bulgaria are considered ‚transit states‘) will continue as they are but in the event that there is any „stealing“, then Gazprom will reduce said supplies by the amount taken away.

Prior 9UK retail sales is seen slumping in April with the first fall in volumes being reported in more than a year. That just reaffirms the likelihood that we are seeing a change in consumption activity/pattern as the cost-of-living crisis intensifies. CBI notes that:“Retail sales were below seasonal norms in April as consumer spending continued to shift back towards services and rising prices impacted households‘ spending power.“

Headlines:USD/JPY surge meets a pause so far on the weekNo reprieve for the euro as 2020 low eyedCable plummets further, falls below 1.2700 to fresh lows since September 2020US futures dribble lower to start the sessionOil and gold face near similar technical configurationsJapan PM Kishida: Rapid FX moves are undesirableBOJ to purchase unlimited amounts of 10-year JGBs at 0.25% on 27-28 AprilECB’s Kazaks says prefers first rate hike to come in JulyMarkets:JPY leads, GBP lags on the dayEuropean equities higher; S&P 500 futures down 0.4%US 10-year yields down 4.9 bps to 2.775%Gold up 0.3% to $1,903.62WTI up 0.6% to $99.12Bitcoin up 0.7% to $40,475It is a bit of a mixed session as we see bond yields retreat after a bit of a rise earlier in the day. The drop in yields comes alongside a fall in US futures as well, in which we saw S&P 500 futures erase gains of 0.3% to be down by 0.4% now. Safety flows perhaps or maybe some month-end moves for the bond market after the relentless selling in April?European stocks are mostly higher but that owes to a catch up play to the sharp bounce in US equities yesterday, so it isn’t really a strong indicator of risk sentiment at the moment.In FX, things are looking more mixed with the yen firming across the board while the dollar is trading in the middle of the pack. The euro and the pound are the weakest currencies with EUR/USD dribbling below 1.0700 from around 1.0720 at the start of the session. The pair is trading at the lows now close to 1.0670, eyeing the 2020 low of 1.0635.GBP/USD is also seeing another down day, falling 0.4% to 1.2685 as sellers continue to keep the pressure towards the September 2020 low of 1.2675.Meanwhile, USD/JPY is seen easing lower from 128.00 to 127.50-60 levels as buyers and sellers continue to duke it out in between the key hourly moving averages here.The aussie and the kiwi are among the better performers with AUD/USD up 0.3% to 0.7200 and NZD/USD up 0.2% to 0.6630 but the gains aren’t amounting to much as compared to the drop in recent days.

Well, in terms of sentiment, not much has changed since my post last week here.I outlined why cable is struggling and the same mood is persisting as we get into the new week. The drop below the 50.0 retracement level @ 1.2830 sees sellers open up the next leg lower and that is towards the 1.2700 level now. The September 2020 low @ 1.2675 is also a key one to watch as a break below this region sets out the next push towards 1.2500 with the 61.8 retracement level sitting @ 1.2495.Month-end flows might make it a bit more tricky but given that the usual suspects will still be at play until the Fed next week, I continue to maintain the view that sterling might not see much reprieve in the meantime.

The Relative
Strength Index (RSI) is a technical indicator that tries to gauge the strength
or weakness of a particular instrument based on a formula that tracks past
prices during a custom period. This makes the RSI a momentum indicator because
it measures the speed of price movements compared to previous periods to
forecast possible inflection points.

 

The RSI is
measured on a scale from 0 to 100 and a default period of 14 most recent
closing prices. The RSI is also said to be in overbought or oversold territory
whether it crosses the 70 or 30 levels respectively on the scale. The idea
behind it is that the price can’t sustain the momentum at such extreme levels
and, even if it doesn’t mean a change in trend, the price may be bound to a
correction so a trader may want to wait before entering at such extreme levels or
even take a counter-trend trade.

 

 

The problem
with this idea is that the RSI can stay in overbought or oversold territory for
a long time and even if pullbacks may occur, they may be really shallow, and
the real correction may take a long time. Below you can see how the RSI stayed
in overbought territory for four months (!) before giving a real correction.

 

 

That’s why
you shouldn’t use the RSI on its own but complement it with other technical
concepts and tools to better structure your trades. For example, in the
previous image of the RSI staying in overbought territory for four months, if
you wanted to take a short you could wait for the price to first break an
upward trendline or for moving averages to cross to the downside to “confirm”
your trading idea. On the other hand, if you wanted to take long positions,
then you could wait for price pullbacks to the moving averages before entering
for a continuation to the upside.

This way you
increase the probabilities in your favour and can avoid being too early or too
late to price movements. Moreover, you should be aware of the fundamental
picture and see if it confirms the technical picture. Once you get a meaningful
catalyst that catches the market attention, you can see the price moving up fast
or down like in the previous chart.

 

This article
was written by Giuseppe Dellamotta.

A momentary breather for the pair? Likely so. The pause comes after some intervention talk last week among Japanese officials, and that kept buyers more guarded in pushing for a move towards 130.00.Since then, the pair has stalled somewhat although the move does reflect action in the bond market as well. 10-year Treasury yields are down 3.8 bps to 2.789% today and that is seeing USD/JPY down 0.3% to 127.75 at the moment.Looking at the near-term chart above, it is also evident that the upside momentum has met a bit of a pause. Price action has fell back below the 100-hour moving average (red line) but is staying somewhat supported above the 200-hour moving average (blue line). That hints at a more neutral near-term bias currently.It’s all about the next move and month-end flows will also factor into trading over the next few days. Equities had looked sluggish mostly but pulled off a bit of a turnaround yesterday, though it isn’t much when you weigh that against the moves throughout the month. The bond market remains key in my view but perhaps there might be more push and pull there from hereon until we get to the Fed next week.As such, that could keep USD/JPY well rested between the 125 and 130 range in the bigger picture. But in the context of price action now, there is minor support around 127.34-45 with the 200-hour moving average a key one to watch as well. As for upside levels, the 100-hour moving average is the first notable level before getting to 129.00 and then the recent highs around 129.40.

Hopes BOJ continues to strive towards achieving 2% inflation targetThe jawboning continues and these remarks aren’t anything that we haven’t heard of before. Japanese officials can at least take heart that the yen slide is at least meeting a bit of a pause in the last few days after a quick push in USD/JPY headed towards 130.00. Talks of intervention have seemingly helped but it may prove to be just a speed bump if the fundamentals don’t change.

PBOC cuts forex RRR by 1 percentage point.China’s Central Bank: Starting From May 15, The Foreign Exchange Deposit Reserve Ratio Of Financial Institutions Will Be Lowered By 1 Percentage Point, That Is, The Foreign Exchange Deposit Reserve Ratio Will Be Lowered From The Current 9% To 8%

US Market Open: European cash markets kicked off the week lower across the boardFull noteEuropean cash markets kicked off the week lower across the board with a relatively broad-based performance seen across the majorsTwitter is reportedly re-examining Elon Musk’s bid in which a potential deal could be made as early as this week, WSJ sourcesStateside futures are lower in tandem with the broader market sentiment, whilst the NQ is slightly more cushioned by the earlier decline in yields.DXY set a new 2022 peak at 101.750 amid safety flight and a sharp slide in crude alongside other commoditiesFrench President Macron won the second round of the Presidential Election with 58.6% of the vote vs Le Pen at 41.4%.Looking ahead, highlights include a Speech from ECB’s Panetta, Earnings from Activision Blizzard, Coca-ColaEUROPEAN TRADE EQUITIES European cash markets kicked off the week lower across the board with a relatively broad-based performance seen across the majors.Sectors are lower across the board with a clear defensive tilt: Energy and Basic Resources sit at the bottom of the bunch amid hefty downside in underlying commoditiesStateside futures are lower in tandem with the broader market sentiment, whilst the NQ is slightly more cushioned by the earlier decline in yields.Twitter is reportedly re-examining Elon Musk’s bid and be more receptive to a deal with the sides meeting on Sunday to discuss the proposal. It was separately reported that Twitter is facing increasing shareholder pressure to negotiate with Elon Musk in his takeover bid and that the Co. is in talks with Elon Musk in which a potential deal could be made as early as this week, according to WSJ.Twitter (+0.7% pre-market) is reportedly re-examining Elon Musk’s bid, via WSJ.FX DXY sets new 2022 peak at 101.750 amid safety flight and sharp slide in crude alongside other commodities.Yen back in favour as risk sentiment sours irrespective of denials about joint Japanese and US intervention discussion – Usd/Jpy towards base of 128.87-127.89 range.Aussie underperforms on Anzac Day due to steep decline in copper and iron ore – Aud/Usd tests 0.7150 and Aud/Nzd cross under 1.0850 vs 1.0940 at one stage overnight.Yuan extends depreciation as Covid spreads to a district in Beijing and PBoC continues to lower Cny midpoint reference rate – Usd/Cnh just shy of 6.6000, Usd/Cny eyeing 6.5650.Euro averts 1.0700 test, narrowly, and pares more losses after surprisingly upbeat Ifo survey, on the surface – Eur/Usd rebounds to circa 1.0750, but still well below Macron victory high.Pound loses Fib support on the way through 1.2800 and sub-8400 vs Dollar and Euro respectively.FIXED INCOME Debt futures firm as risk appetite wanes, but bonds fade beyond 154.50 in Bunds, 119.00 in Gilts and 119-25 in the 10 year T-note.Core EZ bonds lose momentum after German Ifo survey beats and irrespective of less encouraging accompanying statements.French OATs off peak within 147.38-146.28 range posted on confirmation of Macron defeating Le Pen to retain Presidency.European Commission sells EUR 2.499bln (exp. EUR 2.500bln) 0.4% 2037 NGEU; b/c 2.05x (prev. 1.49x), average yield 1.626% (prev. 0.375%).COMMODITIES WTI and Brent June contacts have continued to decline since the resumption of futures trading.Spot gold has been caged to a near-USD 5/oz range since the European open as the impact of a firming Buck negated the effects of lower yields at the time.Base metals are in a sea of red as China’s lockdown woes hit the demand side of the equation – with LME aluminium and zinc the laggards at the time of writing.NOTABLE HEADLINES French President Macron won the second round of the Presidential Election with 58.6% of the vote vs Le Pen at 41.4%, while Le Pen conceded defeat after the initial projections, according to Reuters and Sky News.ECB President Lagarde commented that interest rate hikes will not lower energy prices, according to Barron’s.ECB policymakers are said to be keen to finish bond purchases as soon as possible and possibly hike rates in July but no later than August, while they are leaning towards two rate moves this year with three also a possibility, according to Reuters sources. However, an ECB spokesperson declined to comment on the timing of ending bond purchases and potential interest rate increases.The EU is said to prepare the creation of a new trade and tech council with India, according to FT sources. The new forum could be unveiled on Monday during the European Commission President’s visit to India.The EU will aggressively police online content from Big Tech platforms such as Google (GOOG) and Meta’s Facebook (FB), according to the FT