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 Michael Saunders, an external Bank of England Monetary Policy Committee (MPC) member, stated that pay growth was likely to strengthen to at least 3.0% for 2018 and that there was not much slack left in the labour market.VIEW FULL ARTICLE
GBP UK consumer prices dipped to 3.0% year-on-year from 3.1%, in line with consensus forecasts, despite growing 0.4% in December. The core rate declined to 2.5% from 2.7%, although the RPI inflation rate increased to 4.1% from 3.9%.VIEW FULL ARTICLE
GBP Dollar weakness continued to drive the market movements yesterday, although Sterling also benefited from strength in oil prices and optimism surrounding global growth. The Pound peaked around 1.3820 against the Dollar with stop-loss selling triggered once past 1.3800 with Sterling resisting selling pressure against the Euro.VIEW FULL ARTICLE
GBP Dollar weakness dominated Friday morning with Sterling pushing to highs above 1.3600. With stronger-than-expected US CPI data, Sterling was resilient with little in the way of selling interest. Sterling also gained net support from confidence in the global economic outlook and high energy prices.VIEW FULL ARTICLE