UK Trade vs The World With the UK leaving the European Union next year, its trading arrangements with the bloc will change. How they will change will be determined over the coming months when both parties start the second phase of the negotiations. This will shine a light on what the agreement will look like and how it will impact the world’s fifth largest economy post Brexit.

Since the Brexit referendum in June 2016, the UK has indicated that it wants to strengthen its ties with India, China, Australia and New Zealand. But how does UK trade look against the rest of the world? Positive Trade The UK has a trade surplus with 67 territories around the world, including its closest neighbour Ireland, as well as Switzerland, Australia and the United Arab Emirates.

The UK’s biggest trading partner by far is the United States to whom they exported nearly £100 billion worth of goods and services in 2016. The United States imported just over £66 billion worth of goods and services in 2016 making a trade surplus of just over £33 billion. Source: Office for National Statistics Negative Trade The UK has a trade deficit with the biggest economies of the European Union; including Germany, Spain, the Netherlands and Belgium.

UK’s biggest trade deficit is with Germany – Europe’s largest economy. In 2016, the UK imported £75 billion worth of goods and services from Germany, while exporting just over £49 billion - a trade deficit of around £25 billion. However, being a member of the European trading bloc allows the UK to trade with no restrictions with the 27 other members.

The EU accounted for 48% of goods and services exports from the UK in 2016. While goods and services imports from the EU were worth more than the total from the rest of the world. Source: Google Maps / Office for National Statistics Source: Office for National Statistics

UK Making Post-Brexit Plans 2018 is shaping up to be a defining year for the relationship between the United Kingdom and the European Union. After making sufficient progress in the first phase of negotiations, talks will now begin on the trade arrangements after the UK leaves the EU. Even though the UK cannot agree on any trade arrangements outside of the EU before it leaves the trading bloc, it is already looking for potential trading partnerships around the globe.

One of them is the Trans-Pacific Partnership (TPP). What is the TPP? The TPP (currently changed to Comprehensive and Progressive Agreement for Trans-Pacific Partnership) is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The agreement was originally signed in February 2016, but is currently renegotiated after the United States withdrew from the agreement. The UK joining would effectively help to revive it. The agreement cuts over 18,000 tariffs between the member countries and represents around 40% of the world’s economic output.

The aim of the deal is to develop economic ties between member countries, cut tariffs, and boost economic growth. UK Talks The UK has held informal talks to join the TPP in a bid to start trade agreements after it leaves the EU. The proposal, developed by UK Secretary of State for International Trade Liam Fox, would make the UK the first member of the TPP that does not border the Pacific Ocean. “With these kind of plurilateral relationships, there doesn’t have to be any geographical restriction”, Greg Hands, the UK’s Trade Minister, stated.

A spokeswoman from the Department for International Trade said: “We have set up 14 trade working groups across 21 countries to explore the best ways of progressing our trade and investment relationships across the world. It is early days, but as our trade policy minister has pointed out, we are not excluding future talks on plurilateral relationships.” It is worth pointing out that the combined spending from the 11 TPP nations makes up less than 8% of the UK’s export market, with Japan (the largest economy within the TPP) taking around 1.6% of UK exports, while Germany alone accounts for 11%. However, it is unlikely any deals will be agreed to before the TPP itself has been renegotiated and the UK formally leaves the EU.

We are four months into 2016 and the global economic prospects are still uncertain. The International Monetary Fund (IMF) chief has just issued another warning in recent days, stating that the outlook for global growth is weak and has encouraged policy makers across the world to work together to “bolster confidence, support growth, and guard more effectively against the risk of a derailed recovery”. According to the IMF, lower consumer-led expenditure and governments that are less likely to use fiscal facets to support the economy, coupled with high levels of public debt (which are now the highest since World War 2) are creating a prolonged low-growth environment that can have very serious socio-economic implications.

Most of the developed nations have already embarked on a negative interest rates policy to address the low economic growth. However, as evidenced by this warning, their efforts have not yet been successful and markets and economies are still facing many uncertainties. Euro Area interest rates at various maturities Potential Trading Opportunities Although sluggish growth and negative interest rates are not pleasing for the majority of fund managers and pensioners, certain drivers and trends can potentially create opportunities to the benefit of traders.

Below is an overview of some of these drivers and their follow-on impact on the Japanese Yen, ASX200, gold and the Aussie dollar. Please note that these are our analysis of the market environment. They are not trade recommendations and you should have your own risk management strategy in place when trading the markets. 1) Opportunities and challenges in the banking sector All traders, whether equity or FX, should always keep an eye on the banking sector because stress and pressure in this space can affect every tradeable security across the globe (remember GFC?).

The low growth environment has put banks under downward pressure from various sources. First, it has limited the amount of investment activities which has inherently meant lower revenues for banks which are the traditional providers of investment capital. Second, it has made many banks deal with negative interest rates.

Banks are not yet willing to pass the negative rates to their customers because they want to keep their market share and to discourage people from cashing in their deposits. Therefore, negative rates have caused bank profits to shrink as the difference between interests they receive and the interest they pay has narrowed. Third, the prolonged lower commodity prices resulting from slower demand from China and other emerging economies has pushed a number of mining and energy companies, which have had large debts, to the edge of bankruptcy.

This is obviously bearish for banks as they have been the capital (loans) providers to these companies. Although Australian banks don’t yet have to deal with prospects of negative rates, they have pretty much remained in synch with their overseas counterparts, thanks to the end of the mining boom and lower commodity prices and bankruptcies in the mining and energy sector. For example, ANZ Bank has just announced that they will lose an extra $100 million in mining related bad debts.

Furthermore, Aussie banks are quite vulnerable to the property market here in Australia. Over the years, Australian banks have loaned out billions of dollars to property investors and therefore would have a lot to lose should the property market bubble burst. Major four banks performance From a trading perspective, deterioration in the banking sector can cause a chain of systematic risks which in turn may switch on a number of “risk off” trades.

Using the historical relationship between banks and asset markets, I have calculated that if the current downward trend in global and domestic banks accelerates and markets start to price in an additional weakness in this sector, some trading opportunities may arise in AUDUSD, AUDJPY, ASX 200 and Gold (In AUD). The table below shows how much these assets may move should Australian banks drop by an extra 20% from here: As you can see, ASX 200 index and AUDJPY traders may actually find meaningful medium-term trends should the banking sector start to deteriorate again. AUDJPY has recently enjoyed great buying support from yield-hungry Japanese investors as Australian currency offers a relative attractive yield.

At the moment, the pair has found solid resistance around 86.00 and deterioration in the banking sector can be a catalyst for this resistance to uphold and push the currency pair back to the 78 -79 band. 2) Trading Interest Rates Movements The U.S interest rate set by the Federal Reserve plays a significant role in any short and medium term trading. In response to continued low growth prospects and in the aftermath of the January and February volatilities, the once hawkish Fed which was singling 4 rate rises for this year, has stepped back and is currently signalling a rather softer tone towards rate rises. Just to remind the readers that interest rates are a measure of economic activities.

When policy makers think the economic conditions are getting stronger, they would raise interest rates to control the inflation. When they see economic conditions worsening, they reduce interest rates to stimulate the economy. The graph below (also known as the Dot Plot in the investment community) shows how the Fed governors were thinking about the 2016 economy (in terms of interest rates) both in Dec 2015 and March 2016.

The numbers on the left axis are the projected interest rates and the size of each circle shows the number of governors forecasting a particular rate. As you can see, in Dec 2015, the majority of Fed officials were thinking the rates would go around 1.35% by the end of 2016. However, since then, things have changed and the majority of Fed governors are now thinking we are more likely to be around 0.85% by the end of 2016.

Should the above dots keeps falling to the stage where U.S signals a possible rate cut and more importantly, a move towards negative interest rates, it will have some drastic impact on many tradeable securities. If markets start to price in any chance of U.S rates going negative, the Aussie dollar will lose significant amounts to USD, JPY and gold. The details are in the table below: Though I’m not predicting that the U.S rates will go negative, we are now living in an unchartered territory where everything seems to be possible.

If you talked about the likelihood of negative rates two years ago, most analysts would have laughed you out the door. But here we are today with most of the developed nations interest rates in the negative territory. Therefore, I would closely monitor anything related to the US interest rates.

US-10 year yield since December 2015 3) Trading Opportunities in USD/JPY pair While analysts are scattered around the future direction of the US dollar itself due to Fed’s change of tone, the case of the USDJPY is relatively straightforward. It’s the world’s most traded safe haven currency and trends downwards each time there is another negative surprise or volatility in the markets. In theory, USDJPY should have gone up when the Bank of Japan (BOJ) introduced negative interest rates earlier this year.

However, due to lack of investment opportunities brought by the low growth world and the fact that this pair acts as a barometer for global risk environment, it dropped by some 9.7% since the start of the year and brought short-term traders an abundance of trading opportunities (please refer to our previous article about this point). At the moment, there is nothing that suggests the current economic conditions are going to disappear. It is possible that the existing downward trend USDJPY can in fact continue for as long as the Fed is not taking a serious stance on U.S interest rates.

The biggest risk to the above scenario is a possible BOJ market intervention. The stronger Yen (lower USDJPY) is negative for Japanese economy as it makes their products more expensive abroad. Japan’s economy is highly export driven and higher Yen does not help.

Therefore, at some stage BOJ may decide that enough is enough and start selling Yen in a large scale to push their currency lower. But if history is of any guidance, BOJ’s probable intervention may only create additional shorting opportunity as these interventions have a poor record of effectiveness in changing the currency pair’s downward trends. The opinions and information conveyed in the GO Markets newsletter are the views of the author and are not designed to constitute advice.

Trading Forex and CFD’s is high risk. Ramin Rouzabadi (CFA, CMT) | Trading Analyst Ramin is a broadly skilled investment analyst with over 13 years of domestic and international market experience in equities and derivatives. With his financial analysis (CFA) and market technician (CMT) background, Ramin is adept at identifying market opportunities and is experienced in developing statistically sound investment strategies.

Connect with Ramin: Twitter | LinkedIn

You might have heard about Hong Kong in the news, recently they celebrated twenty years of “return to the motherland”. Before we discuss the HK50 index, it’s let’s briefly review the historical and political situation. You might be asking yourself, is Hong Kong a separate country or part of China? [caption id="attachment_57013" align="alignright" width="450"] Source: https://www.hsi.com.hk/HSI-Net/static/revamp/contents/en/dl_centre/factsheets/FS_HSIe.pdf [/caption] In the strictest sense, Hong Kong is part of China, her official name being Hong Kong Special Administrative Region of the People's Republic of China.

Confusingly, Hong Kong has her own immigration policy, money, stock exchange, postage stamps, flag, etc. This peculiar arrangement is due to the fact that Hong Kong was a British colony from 1841 to 1997. The treaty on “return” stipulated that Hong Kong would continue to operate in a different fashion than most of China, known as “One country, two systems”.

The Hang Seng 50 (HK50 on the GoTrader MT4) has a market capitalization-weighted index of 50 of the largest companies that trade on the Hong Kong Exchange. These companies cover approximately 65% of its total market capitalization. Finance represents almost half of the index.

An additional quarter is weighted in information technology, properties, and telecommunications. As you can see in the weekly view below, HK50 recently broke the 25,000 point mark for the first time in nearly two years. From an all-time high in April 2015, it was last over 25,000 in July 2015.

Continuing a rally from January 2016 which saw the index drop to a five year low. [caption id="attachment_57014" align="alignleft" width="600"] Source: Go Trader MT4 HK50[/caption] Despite the fact that the index’s constituent companies are listed in Hong Kong, 55% of the companies are based in China. A meteoric rise from 5% in 1997, 25% in 2003 and an all-time high of 59% in 2009. HK50 is tied at the hip to the Chinese economy.

How tied is HK50 to mainland Chinese companies you ask? On Tuesday July 4 th shares suffered their worst day in 2017, falling 1.5%, representing the biggest one-day percentage fall since December 15 th. Tencent, one of the ten most valuable companies in the world, headquartered in nearby Shenzhen and making up nearly 11% of the composite.

Tumbled 4% relating to recent negative comments around its popular one-line game products, we should continue to see growth as China's first-quarter GDP growth hit 6.9%, the highest level since the fall. By: Samuel Hertz GO Markets

Trading Forex - USD/CNH The Chinese Yuan (RMB) has doubled its share of global currency trading from 2013 to 2016, advancing from the ninth place to the sixth-most traded currency pair, according to the triennial survey conducted by the Bank for International Settlements last year. This highlights the growing importance of the Chinese Yuan as a global currency. CNH (Chinese offshore yuan) and CNY (Chinese onshore yuan) A crucial difference between the two is that CNY is strictly controlled by the People’s Bank of China and only traded domestically while CNH is allowed to trade outside the mainland – mostly in Hong Kong.

The PBOC set the CNY rate every weekday and it can move within a 2% range during the day. Although the CNH rate is mostly determined by market forces, it tends to stay within close range of the CNY as per the chart below. A Fundamental look – Spot USDCNH U.S. and Chinese Industrial Production Latest figures show that U.S. industrial production was unchanged in February following a 0.1% drop in January, with 0.5% rise of manufacturing output for its sixth consecutive monthly increase.

Meanwhile, Chinese industrial production rose by 0.3% since January following a 0.2% decrease at the beginning of 2017. As coincident indicators of overall economic activity and GDP, these industrial production figures seem to influence positively on CNH more than USD before release of next month numbers. U.S. and Chinese CPI Chinese CPI weakened from 2.5% to 0.8% in March, 1.1% lower than market anticipation while U.S.

CPI declined from 0.6% to 0.1% in the same month and was higher than market forecast. This change of U.S. CPI was in line with the prediction and even 0.1% higher, contributing to achieving target inflation and further revising up U.S. dollars.

A declining CPI may be viewed as a positive on an already inflated Chinese economy. With the lowest three-month implied volatility among emerging market’s currencies, Chinese yuan is stated by Chinese policy makers as “stable” with no surprise now. An increase in M2 money supply despite Chinese restrictions on capital outflows may put more pressure of the CNY.

U.S. and Chinese Trade Balance 7 th March 2017 - $-60B, Chinese trade balance was much lower than forecast ($170B) and broke its long-term trend of trade surplus, levying a heavy burden on the depreciation of Chinese yuan. U.S. actual balance ($-48.5B) was slightly lower than anticipated ($-47B) leaving the USD unchanged. U.S.

Interest Rate Hike As per market expectation, the Federal Reserve voted to raise benchmark lending rate by a quarter percentage point, to a range of 0.75% to 1%, on the early morning of March 16 th (2pm, 15 th March, New York time). An inflation target of 2%, full-employment and stable prices are starting to come together indicating further hikes this year, giving momentum to increased investor confidence about an improving US economy. The Fed statement still projected two more interest-rate hikes this year, offering a strong bullish sentiment for U.S. dollars in the medium to long term.

Source: GO Markets MT4 Platform According to daily USD/CNH graph, it shows a clear-cut primary upward trend composed of increasing peaks and toughs since 2016, despite 3 retracements happened at the beginning of 2016, in July 2016 and at the end of last year. In 2017, a reversal has been pushed back since 2 nd Feb suggesting a consolidation around ¥6.8720. Further upside of USD/CNH looks likely and this uptrend seems likely to continue in the long run.

For short-term speculators, keeping an eye on relevant policies and events as well as doing more detailed technical analysis are both required. The Key Things Worth Nothing for Month Ahead New York Time 10am, 28th March U.S. Conference Board Consumer Confidence 8.30am, 30th March U.S.

First Quarter GDP 8.30am, 4th April U.S. Trade Balance 2pm, 5th April U.S. FOMC meeting 8.30am, 7th April U.S.

Unemployment Rate 10pm, 12th April China Trade Balance, industrial Production and First Quarter GDP 8.30am, 14th April U.S. CPI 23rd April - 7th May First Round of French Presidential Election By Irene Wang, GO Markets For more resource on Forex trading check out our Forex Trading For Beginners introduction, Forex Trading Courses, open a Forex Demo Account or open a live Forex Trading Account.

There has been quite a lot of talk about oil in the news recently with some analysts suggesting the price could reach $100 per barrel, which would be the highest since 2014. Whether that will happen, that is another story. In this article, we take a look at world’s largest crude oil exporters.

Saudi Arabia Saudi Arabia is the world’s largest crude oil exporter with $133,6 billion worth of oil exports in 2017 which was around 15,9% of the total crude oil exports in the world. The middle eastern country is highly reliant on its oil exports and it has the 2nd largest proven oil reserves in the world. In recent years, we have seen the Kingdom announce ''Saudi Vision 2030'' which outlines plans to diversify its economy to reduce its dependence on oil.

One of the most notable plans is the new city called Neom, you can find out more about the ambitious city plan by clicking here. Capital: Riyadh Official language: Arabic Population: 33,000,000 Gross Domestic Product: $683 billion Currency: Saudi riyal (SAR) Russia Russia is world’s second largest crude oil exporter at with $93,3 billion (11,1% of the total) worth of oil exports last year. Russia is the biggest country in the world and has the 11th largest economy in the world at $1,5 trillion, according to the World Bank.

It’s biggest export partners are the European Union, China and neighbour Belarus. Russia is 8th on the list of world’s largest proven oil reserves. Capital: Moscow Official language: Russian Population: 144,526,636 Gross Domestic Product: $1,5 trillion Currency: Russian ruble (RUB) Iraq Iraq is third on the list with $61,5 billion worth of oil exports in 2017, 7,3% of the total.

Iraq was one of the founding member Organization of the Petroleum Exporting Countries (OPEC) with Iran, Kuwait, Saudi Arabia, and Venezuela when it was established back in 1960. Iraq’s economy is highly depended on oil with oil production accounting for 2/3 of the country’s GDP. Capital: Baghdad Official language: Arabic and Kurdish Population: 37,202,671 Gross Domestic Product: $202 billion Currency: Iraqi dinar (IQD) Canada The North American country is the fourth largest crude oil exporter in 2017 with $54 billion worth of crude oil exports (6,4% of the total).

Canada has the 3rd largest proven oil reserves with 95% of these reserves are in the oil sands deposits in the western province of Alberta. Capital: Ottawa Official language: English and French Population: 37,067,011 Gross Domestic Product: $1,6 trillion Currency: Canadian dollar (CAD) United Arab Emirates The United Arab Emirates, the third largest economy in the Middle East is the 5th largest crude oil exporter with $49,3 billion worth of oil exports in 2017 (5.9% of the total). Even though United Arab Emirates has the most diversified economy in the Gulf Cooperation Council (GCC), a regional intergovernmental political and economic union which is made up of all Arab countries of the Persian Gulf, it is still highly dependent on oil.

Capital: Abu Dhabi Official language: Arabic Population: 9,575,729 Gross Domestic Product: $382 billion Currency: UAE dirham (AED) This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.

Click here for more information on trading oil commodities.