Japan media reports the G7 summit this weekend may end acrimoniously due to trade dispute

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Yuan wobbles on Trump trade comments, details of China rate reforms awaited

HONG KONG (Reuters) – The yuan wavered on Monday after U.S. President Donald Trump said he was not ready yet to make a trade with China.

Traders were also cautious ahead of the debut of China’s new benchmark lending rate on Tuesday, which was announced at the weekend.

Analysts believe the reforms will open the door to rate cuts, possibly as early as Tuesday, but are divided over the size of any initial reduction and how much it may help struggling smaller companies in the near term.

Spot yuan traded at 7.0447 per dollar at midday, pretty much unchanged from the last session close and 0.12 percent away weaker than the midpoint , which was set by the People’s Bank of China at 7.0365.

The central bank on Saturday unveiled long-awaited interest rate reforms to help lower borrowing costs for companies and support slowing growth, which has been dragged by its protracted trade war with the United States.

The revamped loan prime rate (LPR), effective on Tuesday and linked to rates in medium-term lending facility (MLF), is the equivalent of a 45 basis point rate cut on loans, ANZ analysts wrote in a note on Monday. Several traders said they expect the new LPR to trim by 10 to 15 basis points.

The tweak will help achieve the State Council’s goal of easing financing costs for small businesses by 1 percentage point, but tax cuts will also shoulder part of that, according to a Shanghai-based trader.

“We need to hear more about the supplementary measures,” to gauge how far LPR and MLF rates will fall, said another trader in Shanghai.

However, unlike more open markets such as the United States, China’s capital control will likely cap the pressure from lower interest rates on its managed currency, said a Hong Kong-based trader, adding “it will trade where the PBOC wants it to be.”

Traders said the U.S.-China trade talks will continue to dominate the yuan’s direction in the near term.

White House economic adviser Larry Kudlow said on Sunday trade officials from the two countries would speak within 10 days and a Chinese delegation is flying to the United States to follow up.

But Trump said on the same day he is “not ready” for a deal with Beijing, hinting again that he would like to ongoing protests in Hong Kong resolved first.

Trump also said he would not like to deal with Huawei Technologies Co Ltd – even after Reuters and other media outlets reported on Friday the U.S. Commerce Department is expected to extend a reprieve for the company to buy supplies from U.S. companies.

The was trading 0.14 percent softer than the onshore spot at 7.0545 per dollar.

The global () rose slightly to 98.207 from the previous close of 98.142.

US China interest rate – Aug 19, 2019 – https://fingfx.thomsonreuters.com/gfx/mkt/12/4892/4849/US%20China%20interest%20rate%20-%20Aug%2019,%202019.jpg

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Trade ideas thread – European session 16 August 2019

Daily thread to exchange ideas and to share your thoughts

Happy Friday, everyone! Hope you’re all doing fine as we look to wrap up the trading week today. It’s been a quiet and calm start to the day so far with markets siding with a more optimistic risk mood to start the European morning.

Equities are holding firmer and Treasury yields are also higher across the curve as we begin the session. As such, the aussie is able to eek out mild gains while the franc is a little on the back foot. Surprisingly, the yen is little changed amid all of this but I reckon it’s only a matter of time before things start to move in that regard – especially if risk moves accelerate.

Barring any hiccups from trade headlines, I reckon markets will observe a calmer end to the week before the focus starts to turn towards central banks again next week ahead of the Jackson Hole symposium on 22-24 August.

What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
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Vietnam Investors Shrug Off U.S. Trade Threat in Favor of Growth

© Reuters.  Vietnam Investors Shrug Off U.S. Trade Threat in Favor of Growth © Reuters. Vietnam Investors Shrug Off U.S. Trade Threat in Favor of Growth

(Bloomberg) — Foreign investors in Vietnam stocks are shrugging off the threat of additional U.S. tariffs on the country’s exports, even as the Southeast Asian manufacturing hub draws increased scrutiny from President Donald Trump’s government.

Robust economic growth and the government’s planned sale of stakes in state-controlled companies will offset dips in equity prices triggered by trade frictions, according to investors including Federico Parenti at Sempione Sim SpA in Milan.

“I didn’t change my view,” said Parenti, who helps manage about $ 3 billion including Vietnam equities at Sempione Sim in Milan. “When you invest in a country, you do it for the long term.” Vietnam Dairy Products JSC and Saigon Beer Alcohol Beverage Corp. are among the firm’s holdings.

Foreign investors have poured $ 843 million into Vietnam’s $ 191 billion stock market in the 12 months through Aug. 14, even as the benchmark Ho Chi Minh Stock Index fell about 0.9% in the period. The gauge has climbed 9.7% so far this year through yesterday’s close, the most among Southeast Asian markets and outpacing the 0.8% rise in the MSCI AC Asean Index.

The government’s sale of shares in state-enterprises helped raise about 5.16 trillion dong ($ 222 million) in the first half of this year, adding to a record $ 5.09 billion from initial public offerings last year. Corporate tax breaks, along with economic expansion exceeding 6%, “augur well for the capital market,” said Mark Mobius, who runs Mobius Capital Partners LLP.

To be sure, most investors can’t ignore the risk of the U.S. increasing duties on Vietnam goods, said Felix Lam, who manages close to $ 2 billion in Asia Pacific equities at BNP Paribas (PA:) Asset Management. While Lam doesn’t hold Vietnam shares as turnover is too low for his mandate, he said an increase in liquidity could allow him to buy the stocks.

READ: Vietnam Won the U.S.-China Trade War But Is Now in Trouble

“If trade negotiations take longer and are more severe, then Vietnam will be affected alongside other Asian countries,” said Lam. Still, he added, “one would expect that companies would have captured quite a lot of that in their share prices already.”

The Trump administration has been increasing pressure on Vietnam to reduce its growing trade surplus with the U.S., including increasing to 400% in July the duty on steel imports that it alleges originated in Taiwan and South Korea. Exports to America equaled 20% of gross domestic product last year and almost 26% in the first half of 2019.

For Bharat Joshi, who helps oversee $ 650 billion as a fund manager at Aberdeen Standard Investments, Vietnam’s domestic demand outweighs risks arising from trade tensions. The firm counts Vietnam Dairy Products as an “anchor investment” in the country.

“There is structural growth happening on the ground, you have rising middle-class income, demand for credit is starting to expand, and the government is doing all it can to privatize,” said Joshi.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Exclusive: China curbs gold imports as trade war heats up

© Reuters. FILE PHOTO: A sales assistant places gold ornaments at Caibai Jewelry store in Beijing © Reuters. FILE PHOTO: A sales assistant places gold ornaments at Caibai Jewelry store in Beijing

By Peter Hobson and Yawen Chen

LONDON/BEIJING (Reuters) – China has severely restricted imports of gold since May, bullion industry sources with direct knowledge of the matter told Reuters, in a move that could be aimed at curbing outflows of dollars and bolstering its yuan currency as economic growth slows.

The world’s second largest economy has cut shipments by some 300-500 tonnes compared with last year – worth $ 15-25 billion at current prices, the sources said, speaking on condition of anonymity because they are not authorized to speak to the media.

The restrictions come as an escalating trade confrontation with the United States has dragged China’s pace of growth to the slowest in nearly three decades and pressured the yuan to its lowest since 2008.

China is the world’s biggest importer of gold, sucking in around 1,500 tonnes of metal worth some $ 60 billion last year, according to its customs data – equivalent to one-third of the world’s total supply.

Chinese demand for gold jewelry, investment bars and coins has trebled in the last two decades as the country has rapidly become wealthier. China’s official gold reserves meanwhile rose fivefold to nearly 2,000 tonnes, according to official data.

Chinese customs figures show it imported 575 tonnes of gold in the first half of the year, down from 883 tonnes in the same period of 2018.

In May, China imported 71 tonnes, down from 157 tonnes in May 2018. In June, the last month for which data is available, the decline was even sharper, with 57 tonnes shipped compared with 199 tonnes in June last year.

The bulk of China’s imports – from places such as Switzerland, Australia and South Africa and usually paid for in dollars – are conducted by a group of local and international banks given monthly import quotas by the Chinese central bank.

But quotas have been curtailed or not granted at all for several months, seven sources in the bullion industry in London, Hong Kong, Singapore and China said.

“There are virtually no import quotas now issued in China,” one source said. In June and July “next to nothing” was imported by banks, they said.

The Chinese central bank did not respond to a written request for comment.

Imports have not fallen to zero because some banks may still be receiving some quotas and other import channels, such as refineries receiving semi-pure mined gold, remain open, four of the sources said.

GRAPHIC: Chinese gold imports – https://tmsnrt.rs/2YEVuhE

They said China’s likely motive for restricting gold shipments was to help limit the amount of money leaving the country amid a plunge in the value of the yuan.

Beijing has previously taken steps to curb capital outflows when its currency weakened, such as squeezing the supply of , clamping down on import invoicing and encouraging banks to send home dollars held overseas.

It has also restricted gold import quotas before – most recently in 2016 after the yuan weakened sharply, bullion bankers said.

But not to this degree. It’s “unprecedented,” said an industry source in Asia.

“Gold going in is money going out,” said one of the people, adding that Chinese buyers tend buy dollars to pay for metal. “It’s all linked to what’s going on in terms of how the central bank is handling the currency,” the person said.

The yuan has sunk more than 10% against the dollar since early last year and the central bank this month allowed it to slide below the key threshold of 7-per-dollar for the first time in more than a decade.

While there is no clear official data to gauge capital outflows from China, a popular measure is a component in its balance of payments called errors and omissions, which point to outflows of $ 88 billion in the first three months of this year, the most on record.

GRAPHIC: Chinese capital outflows – https://tmsnrt.rs/2YL19Tn

With foreign exchange reserves at $ 3.1 trillion – the world’s largest – China has the capacity to defend its currency.

But restricting gold imports is an easy way to curtail outflows without affecting people’s lives, bullion bankers said.

So far the effect on the wider gold market has been muted.

A sharp rise in prices has prompted many in China to cash in their gold for profit, boosting local supply, while resurgent demand elsewhere in the world has been strong enough to soak up extra metal.

Slowing global economic growth is pushing more institutional investors, particularly in Europe and North America, toward gold, traditionally seen as a safe place to invest, while central banks are buying at the fastest pace in half a century.

However, the cost of gold in China could rise if the surge in recycled supply fades before import restrictions are lifted, and supply could rapidly exceed demand outside China if institutional investors slow their purchases.

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Forex – Yen Gains despite Trade War Reprieve, Euro Steady

© Reuters.  © Reuters.

Investing.com – The safe haven yen was higher on Wednesday despite a decision by U.S. President Donald Trump to postpone additional tariffs on some Chinese imports, as investors remained skeptical over prospects for a swift resolution to the trade spat.

The temporary reprieve in the trade war supported risk-off trades on Tuesday, but analysts warn that the optimism is already fading over a resolution to the trade war between the world’s two largest economies, which has threatened global economic growth.

Unrest in Hong Kong, worries about Brexit, and Middle East tensions mean risk aversion could quickly flare up again and roil markets.

“If we think only about the United States and China, there could be more room for dollar gains and yen losses, but this does not mean trade frictions have been resolved,” said Tohru Sasaki, head of Japan markets research at JP Morgan Securities in Tokyo.

“There are still a lot of geopolitical risks, such as Hong Kong, Brexit, and the Iranian situation. I don’t expect significant (risk-on) moves.”

The was down 0.28% to 106.42 yen by 04:00 AM ET (08:00 GMT) .

The also fell 0.6% to 72.15 yen while the fell 0.3% to 68.71 yen.

Against the , the dollar rose 0.33%.

Trump on Tuesday backed off his Sept. 1 deadline for 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods, in the hopes of blunting their impact on U.S. holiday sales.

Still, trade negotiations between the U.S. and China have progressed in fits and starts, so many investors and analysts have scaled back expectations for a resolution in the near term.

The , measuring the greenback against a basket of six currencies was little changed at 97.58 after jumping 0.4% on Tuesday.

The was a touch higher against the dollar at 1.1182.

The single currency showed little reaction to data showing that the German economy, the euro zone’s largest, 0.1% in the second quarter, amid fallout from the trade war.

The was little changed against the greenback at 1.2056.

–Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Japanese Yen Rises Despite Positive Trade News; China Data Underperform

© Reuters.  © Reuters.

Investing.com – The Japanese yen rose on Wednesday in Asia despite positive trade news. Underperforming Chinese data and a political crisis in Hong Kong supported the safe-haven currency.

The pair fell 0.2% to 106.50 by 1:23 AM ET (05:23 GMT).

Tariffs on Chinese goods are being delayed to Dec. 15, while certain products are being removed due to “health, safety, national security and other factors,” a statement said overnight.

The tariffs were originally scheduled to come into effect in early September.

The news sent stock markets higher. The yen, which usually moves in directions opposite to most risk assets, also surprisingly rose.

The safe haven yen was already trading higher against the U.S. dollar overnight as investor sentiment was shaken by political unrest in Hong Kong.

On Tuesday, protesters managed to close down Hong Kong’s airport for a second day. Overnight, U.S. President Donald Trump tweeted that the Chinese government is moving troops to the border with Hong Kong.

Hong Kong’s leader Carrie Lam said earlier this week that further violence involving protests could push the territory “down a path of no return”.

“If we think only about the United States and China, there could be more room for dollar gains and yen losses, but this does not mean trade frictions have been resolved,” said Tohru Sasaki, head of Japan markets research at JP Morgan Securities in Tokyo, in a Reuters report.

“There are still a lot of geopolitical risks, such as Hong Kong, Brexit, and the Iranian situation. I don’t expect significant (risk-on) moves.”

Meanwhile, weaker-than-expected Chinese data also provided additional boost to the safe-haven yen.

Growth of Industrial production and retail sales both came in lower than expected, official data showed on Tuesday.

The Chinese yuan gained despite the data. The pair last traded at 7.0194, down 0.3%.

The that tracks the greenback against a basket of other currencies inched up 0.1% to 97.678.

The pair and the pair were down 0.2% and 0.1% respectively.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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U.S. and Britain discuss trade deal that could take effect on Nov. 1

© Reuters. U.S. National Security Advisor John Bolton arrives for a meeting with Britain's Chancellor of the Exchequer Sajid Javid  at Downing Street in London © Reuters. U.S. National Security Advisor John Bolton arrives for a meeting with Britain’s Chancellor of the Exchequer Sajid Javid at Downing Street in London

LONDON (Reuters) – Britain and the United States are discussing a partial trade accord that could take effect on Nov. 1, the day after Britain is due to leave the European Union, a senior Trump administration official said on Tuesday.

The official also said visiting U.S. national security adviser John Bolton and British trade minister Liz Truss had discussed the possibility of the two countries’ leaders signing a road map declaration toward a trade deal at this month’s G7 summit meeting in France.

The official told reporters that Bolton and British finance minister Sajid Javid had discussed the possibility of a temporary trade agreement that covered all sectors and could last for something like six months.

During his two-day London visit, Bolton told British Prime Minister Boris Johnson that President Donald Trump wanted to see a successful British exit from the European Union on Oct. 31 and that Washington would be ready to work fast on a U.S.-UK free trade agreement.

Bolton, who has now left Britain, was seeking an improved U.S.-British relationship with Johnson after sometimes tense ties between Trump and Johnson’s predecessor, Theresa May.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Yen Rises Amid Trade Concerns; Yuan Remains in Spotlight

© Reuters.  © Reuters.

Investing.com – The safe-haven yen gained on Monday in Asia amid concerns surrounding the Sino-U.S. trade war.

The pair dropped 0.2% to 105.42 by 1:39 PM ET (05:39 GMT).

On Friday, U.S. President Donald Trump said he was not ready to make a deal with China and even called the scheduled trade talks in September into question.

Meanwhile, the remained in the spotlight after the People’s Bank of China (PBOC) set the official midpoint reference at 7.0211 per dollar on Monday, which was stronger than what analysts expected but was still the third consecutive session weaker than the key 7-yuan-per-dollar level.

The pair last traded at 7.0628, up 0.03%.

Last week, the U.S. Treasury announced that it officially labelled China as a currency manipulator after Beijing allowed the yuan to fall past 7 per dollar for the first time since 2008. White House trade advisor Peter Navarro warned that Washington will respond forcefully if China continues to weaken its currency to counter the effects of tariffs placed by the U.S.

The PBOC later denied it is deliberately devaluing the Chinese currency.

China’s moves “stoked fears of a competitive devaluation policy, putting pressure on other Asian currencies,” analysts at risk consultancy Eurasia Group wrote in a note that was cited by CNBC.

The article noted that China is not likely to allow any further rapid depreciation of the Chinese currency since “substantial devaluation would drive capital outflows and create one-way bets in the market on further depreciation, as seen in 2015 and 2016.”

China would want to keep the pace of depreciation against the dollar gradual, the analysts added. “The bank will also be careful not to allow the (yuan) to depreciate on a sustained basis against a broader basket of currencies.”

The pair and the pair were both largely unchanged at 0.6788 and 0.6470 respectively.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Yen Gains as Trade War, Global Growth Fears Weigh

© Reuters.  © Reuters.

Investing.com – The safe haven yen was broadly higher on Monday as uncertainty over the next stage in the U.S.-China trade war and growing fears over a slowdown in global growth hit market sentiment.

Uncertainty over the U.S.-China trade dispute persisted after U.S. President Donald Trump on Friday said he was not ready to make a deal with China and even cast doubt over a round of trade talks due to take place in September.

Goldman Sachs over the weekend cut its forecast for U.S. economic growth, warning that a trade deal was unlikely before the 2020 presidential election and that the risks of a recession were increasing.

“Overall, we have increased our estimate of the growth impact of the trade war,” the bank said in a note.

National Australia Bank downgraded its estimates for a range of major currencies as it now expects “nothing positive will happen” on the trade front at least through early 2020.

It expects the greenback to broadly hold firm in the face of policy easings by other major central banks while , and euro are seen on a slippery slope.

The greenback was down 0.18% against the to 105.46 by 0:27 AM ET (07:27 GMT), not far from a seven-month low of 105.25 hit on Friday.

The was also weaker against the Japanese currency at 118.04 yen and close to its lowest since April 2017. The was at lows not seen since 2016, trading at 127.27 yen.

The dollar was a touch lower against the after the Chinese central bank’s daily fixing came in firmer than market expectations. That helped eased some fears that Beijing would use its currency as a weapon in its trade war with Washington.

A week ago, China let its currency slip to weaker than 7 to the dollar for the first time since 2008, which some saw as an offset to U.S. tariffs. The change pressured emerging market currencies across Asia and boosted the yen.

All eyes will be on Chinese figures on July retail sales and industrial output due Wednesday to gauge the impact of the long-running tussle with the United States on domestic activity.

Market attention will also be on the U.S. Federal Reserve annual symposium at Jackson Hole later in the week, where investors hope to get some clarity on the future path of interest rates. Markets are expecting nearly 100 basis points of cut from the Fed by next year.

Sterling edged higher against the , rising 0.15% to 1.2050.

The pound reached two-year lows against the dollar on Friday after data showed the U.K. economy unexpectedly contracted in the second quarter, only adding to the bearishness over Brexit and the chance of a no-deal exit.

The was a touch lower against the dollar at 1.1185, as the prospect of snap elections in Italy weighed.

–Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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