In the case of monetary policy, a dove is an individual who believes that low interest rates should be maintained. They maintain that low interest rates encourage growth within economies as they increase consumer borrowing demand and boost consumer spending.
Sustained low interest rates can cause notable increases in inflation, but doves believe that this negative effect is minimal in the grand scheme of things.
Doves are in favour of quantitative easing, considering it a means of stimulating an economy.
The opposite of a dove. These individuals are pro high interest rates as they see them as a means of controlling inflation. They are less concerned with economic growth.
Hawks are opposed to quantitative easing as they believe that it distorts asset markets.
A bull is an individual (or more specifically an investor) who believes that a certain market, industry or security will rise in value. A bull will purchase assets presuming that they will rise in value, and can consequently be sold at a later date for a higher price.
Example: Dollar bull
A Dollar bull is a speculator or investor who believes that the US Dollar is going in a positive direction and will rise in value in comparison to other currencies. For them, it is complete and utter madness to bet against the US economy and USD.
The opposite of a bull. Bears believe that a certain market, industry or security will decrease in value. Generally negative about a given market, security or asset (as opposed to a bull’s overwhelming optimism), bears will try to profit from falling prices.
Quantitative Easing (Q.E.)
A monetary policy that increases money supplies and lowers interest rates. In this policy central banks purchase securities from the market (or government securities like bonds). This inundates financial institutions with capital, thereby increasing the money supply with the aim of promoting lending and increasing liquidity.
A currency war is a scenario in which several countries deliberately attempt to weaken the value of their own currencies, thereby stimulating their respective economies. Quantitative easing and lowering interest rates can be used to decrease the value of currencies.
This is also known as “competitive devaluation”.
This is the buying of a currency, stock or commodity in the belief that it will increase in value.
This is also known as “long position”.
This is the selling of a borrowed currency, stock or commodity in the belief that it will decrease in value. For example, if an investor sold a borrowed currency on the market, the currency would eventually need to be returned. The investor does this by buying back the currency. If the currency has decreased in value, the investor buys it back for less than it was sold, consequently making a profit.
This is also known as “short position”.
This is the prevailing attitude of investors toward a particular market or security. The activities and changes in security price in a market communicate its sentiment e.g. increasing prices reveal a bullish sentiment.
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GBP The latest remarks from the EU Commission Chief Juncker triggered a fresh selling wave around the Pound yesterday. Moreover, the UK Times reported that the Prime Minister Theresa May is expected to back down on Brexit date plan, which will also keep any recovery moves short-lived.VIEW FULL ARTICLE
GBP The Pound traded slightly stronger on the back of the employment data which unveiled average earnings creeping higher to 2.3% excluding bonuses. The GBPUSD is trading up 0.15% at around 1.3430 against the US Dollar following Dollar weakness overnight.VIEW FULL ARTICLE
GBP UK CPI rose by 0.3% in November and the year-on-year rate nudged up to 3.1%, the highest since March 2012. The core rate held at 2.7% which was in line with expectations. The Bank of England had expected a peak in October but this increase will cause some unease...VIEW FULL ARTICLE
GBP Sterling has stabilised today after a weak end to last week. David Davis stated that the UK won't pay the Brexit divorce bill if they fail to reach a trade deal with the EU by March 2019 and kept the British Pound under some selling pressure yesterday.VIEW FULL ARTICLE