Press review - page 179
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The GBP/USD pair rose during the course of the week, slamming into the 1.70 handle. This area offered resistance again, and now as a result we closed just below it. However, if we can get above the 1.70 level, we feel that this market goes much, much higher. In fact, the market should head to the 1.75 level if we get clear that area, making it a very bullish market to be in. We have no interest in selling this market, and believe that short-term pullbacks will continue to bring in buyers
The EUR/USD pair spent most of the week falling, and tested the 1.35 level for support. Because of this, we think that the area will be targeted, and if we can break below there on a daily close, this market could fall apart. The Euro would fall to the 1.33 level as far as we can tell, and would be a sell. However, this area has been fairly resilient so we are quite ready to start selling yet. The bounce could happen, and we could stay within the fairly tight range that we have been in for the last month.
Investing Terms
Simple stock investing glossary for your handy reference,
10-K: It is comprehensive summary report of a company's performance that public companies in the US are required to submit to Securities and Exchange Commission (SEC) each year.10-Q: It is comprehensive report of a company's performance that all public companies in the US are required to be submitted quarterly to Securities and Exchange Commission (SEC)
52-Week High/Low: The highest and lowest price at which a stock traded in the past 12 months or 52 weeks
Ask: Ask Price also called offer price, offer, asking price or simply Ask, is the lowest price a seller of a stock is willing to accept for a share of that given stock.
Annual Report: An annual publication that public corporations must provide to shareholders to describe their operations and financial conditions
Bear Markets: A market condition in which the prices of securities are falling or are expected to fall
Bid: Bid price is the highest price that a buyer is willing to pay for a particular stock.
Blue Chip: A nationally recognized, well-established and financially sound company
Book Value: also known as carrying value is the value of an asset according to its balance sheet account balance. It is equal to Cost of asset minus the accumulated depreciation.
Bonus Issue: An offer of free additional shares to existing shareholders
Broker: is an Individual or firm that arranges transactions between investors for buying and selling for a commission, when the deal is executed
Bull Markets: A financial market of a certain group of securities in which prices are rising or are expected to rise.
Capital Gain: An increase in the value of a capital asset that gives it a higher worth than the purchase price
Credit Risk: the risk that the issuer will default or fail to pay the debt.
Cyclical Stock: A stock that rises quickly when economic growth is strong and falls rapidly when growth is slowing down
Debt to Equity Ratio: D/E is a financial ratio indicating relative proportion of entity's equity and debt used to finance an entity's assets. This ratio is also known as financial leverage
Defensive Stock: A company whose sales and earnings remain relatively stable during both economic upturns and downturns
Delisting: The removal of a listed security from the exchange on which it trades
Dividend Payout Ratio: The ratio of dividend paid to shareholder to its earnings
Dividend Policy: The policy a company uses to decide how much it will pay out to shareholders in dividends
Enterprise Value: is the value of a company, incorporating equity, debt and cash. It is essentially a way of measuring what it would cost to buy the company. It is calculated as market capitalization plus debt, minority interest and preferred shares minus total cash and cash equivalents
Equity: The value of an ownership interest in the company. It is equal to funds contributed by owners plus the retained earnings.
Free Cash Flow: is the amount of cash that a company has left over after it has paid all of its expenses, including investments.
Growth Stock: Shares in a company whose earnings are expected to grow at an above-average rate relative to the market
Income Stock: A stock with a history of regular dividend payments that constitute the largest portion of the stock's overall return
Index: A statistical measure of change in an economy or a securities market
Insider: Any person who has knowledge of, or access to, valuable nonpublic information about a corporation
Interest Rate Risk: the risk that bonds get affected from interest rate changes
Life Cycle: The course of events that brings a new product into existence and follows its growth into a mature product and into eventual critical mass and decline
Margin of Safety: A principle of investing in which an investor only purchases securities when the market price is significantly below its intrinsic value.
Market Capitalization: The total dollar market value of all of a company's outstanding shares
Mergers And Acquisitions - M&A: A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another with no new company being formed
Net Income: is a company's earnings or profit as reported on the income statement. Revenues minus all expenses gives you net income.
Preferred Stock: A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock
Price-Earnings (P/E) Ratio: A valuation ratio of a company's current share price compared to its per-share earnings.
Recurring Revenue: The portion of a company's revenue that is highly likely to continue in the future
Reverse Stock Split: A reduction in the number of a corporation's shares outstanding that increases the par value of its stock
Secondary Market: A market on which an investor purchases an asset from another investor rather than an issuing corporation
Small Cap: Refers to stocks with a relatively small market capitalization
Speculative Stock: A stock with extremely high risk relative to potential return
Stock Exchange: A market in which securities, options or futures are traded
Working Capital: It represents operating liquididty available to a business. It is a measure of a both a company's effieciency and is short term financial health. Current assets minus current liabilities gives you working capital
FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)
Monday 6/16
Group G Germany vs. Portugal
Group G Ghana vs. US
Group F Iran vs. Nigeria
Eurozne CPI is forecast to be 0.5% on the year for May, which was the original estimate. The core CPI expected to be 0.7%, also as originally estimated. May’s inflation data gave room for the ECB to act, which would maintain bearish pressure on the EUR.
US Empire State Manufacturing Index for June is expected to be 15.2, a drop from the 19.0 reading for May. May’s reading was the highest in 2 years, and even a drop to 15.2 would be the 2nd highest in 2 years.
US Industrial Production for May is forecast to have grown 0.6%, after a reading of -0.6% contraction for April.
FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)
Tuesday 6/17
Group H Belgium vs. Algeria
Group H Russia vs. Korea
Group A Brazil vs. Mexico
RBA’s Monetary Policy Meeting Minutes will be released. It will cover the June 3rd RBA decision to keep the official cash rate at 2.50%. The last rate change was in July 2013, when the bank cut rates from 2.75% to 2.50%.
UK Consumer Price Inflation (CPI) y/y for May is forecast to be 1.7%, slightly lower than the 1.8% annual inflation rate reported for April. The lower the inflation rate, the more room the BoE has to maintain its current monetary policy. If the inflation rate however edges toward 2.0%, the market will likely move rate hike expectations to earlier in 2015. Governor Carney spooked the BoE doves when he said the bank might raise rates earlier than the markets expected, and the markets expected about mid-2015, so now the expectations will be shifting to early 2015.
German ZEW Economic Sentiment for June is forecast to rise to 35.2 from the 33.1 reading in May. Although this would show a rebound, a 35.2 reading would be the second lowest in 17 months, since January 2013, when it was 31.5.
The Eurozone’s ZEW Economic Sentiment for June is forecast to be 59.6 up from the 55.2 reading in May. A reading close to 60 is very positive, as it represents the readings of economic sentiment before the financial meltdown in 2007 and 2008.
US Building Permits is forecast to be 1.07M on an annualized term for May. This is not much different from the 1.08M reading in April, and reflects an increasing trend since the aftermath of the financial crisis.
US CPI m/m for May is expected to edge down to 0.2% from 0.3% in April. The core reading is forecast to remain at 0.2%. Higher than expected inflation can move FOMC rate hike expectations forward, while low inflation allows the bank to keep rates low for longer.
FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)
Wednesday 6/18
Group B Australia vs. Netherlands
Group A Cameroon vs. Croatia
Group B Spain vs. Chile
The Bank of Japan’s Monetary Policy Meeting Minutes will be released at the start of the 6/18 session, which is still the evening of 6/17 in the US. These minutes will explain the latest vote to maintain the monetary stimulus as is, even amid economic improvements.
The Bank of England’s vote to maintain rates early in the month will be revealed. Anything other than a unanimous
vote would reflect a shift in the MPC’s policy perspective.
FOMC Statement and Press Conference will probably be the most anticipated event risk this week. The bank is expected to keep rates the same, and continue to taper at the rate of $10B less QE a month from its now $45B/month rate. The market is monitoring for clues on whether a rate hike will come earlier in 2015, or in the second half of the year.
New Zealand’s GDP for Q1 is forecast to have been 1.2%, up from the 0.9% reading for Q4 2013. With NZD-strength returning, it will be important to see strong economic data to support the current rate of rate hikes – 3 rate hikes in a row adding to 75bps – that brought the OCR to 3.25%.
FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)
Thursday 6/19
Group C Colombia vs. Côte d’Ivore
Group C Japan vs. Greece
Group D Uruguay vs. England
The Swiss National Bank Monetary Policy Announcement and Press Conferenceare usually not market movers. The SNB is expected to maintain its key rate near 0% and continue to support the EUR/CHF above 1.20.
UK Retail Sales m/m for May is forecast to have fell, at -0.5% after a strong 1.3% readign in April.
US Jobless Claims is forecast to be 316K this week, similar to the 317K last week. A reading close to 300K or under 300K should point towards a steady job market recovery. We are not quite there, but closer in the recent couple of months vs. the first few months of the year. Overall, since the financial crisis, jobless claims numbers have been trending down.
Philly Fed Manfuacturing Index is forecast to be 14.3 in June, slightly down from the 15.4 in May. This would still be a relatively positive reading despite a slight drop off from May.
FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)
Friday 6/20
Group D Italy vs. Costa Rica
Group E Honduras vs. Ecuador
Group E Switzerland vs. France
German PPI is forecast to have been 0.2% in May, up from -0.1% in April. Wholesale inflation has been low, which gives ECB more room to act. A return to 0.2% or higher for a few months will be needed to suggest inflation steady enough for a rate hike.
BoJ Governor Haruhiko Kuroda will speak. The Bank of Japan has been keeping the stimulus measures open ended. It has mentioned many areas of success this year due to the aggressive stimulus measures, which invites the idea of tapering. First mention of tapering, and you will probably see a surge in the Japanese Yen. It will probably not come on Friday, but always be ready.
Canada’s CPI m/m in May is expected to have been 0.2%, down from the 0.3% in April. The core CPI is expected to remain at 0.2% on the month.
Canada’s Retail Sales m/m in May is forecast to have rebounded to a growth of 0.4%, after a -0.1% reading in April. The core retail sales reading is also expected to rise to 0.4% from the 0.1% in April.
The dollar ended Friday’s session flat against a basket of other major currencies as escalating tensions in Iraq underpinned safe haven demand for the greenback, offsetting an unexpected decline in U.S. consumer confidence.
Concerns over the ongoing Sunni insurgency in Iraq hit market sentiment on Friday, after insurgents took control of the Iraqi cities Mosul and Tikrit, fuelling fears over the impact of reduced oil supply on global growth.
The escalating violence in Iraq overshadowed a report showing that U.S. consumer sentiment unexpectedly deteriorated in June.
The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 80.75 late Friday.
The dollar was higher against the yen, with USD/JPY up 0.28% to 101.99 late Friday. For the week, the pair was down 0.49%.
The euro edged lower against the dollar, with EUR/USD dipping 0.08% to 1.3541 at the close, not far from the four-month trough of 1.3502 reached on June 5. For the week, the pair lost 0.38%.
The single currency has weakened broadly since the European Central Bank cut rates to record lows earlier this month, in order to combat the threat of persistently low inflation in the euro area.
Elsewhere, the pound ended the week close to five year highs against the dollar after Bank of England Governor Mark Carney said Thursday that U.K. interest rates could rise sooner than investors expect.
GBP/USD was up 0.24% to 1.6968 late Friday, after rising as high as 1.6990 earlier in the session, the most in almost five years. The pair ended the week with gains of 0.99%.
Sterling rose to one-and-a-half year highs against the broadly weaker euro, with EUR/GBP down 0.30% to 0.7981 late Friday, extending the week’s losses to 1.32%.
The New Zealand dollar turned lower on Friday amid increased safe haven demand, with NZD/USD slipping 0.26% to 0.8663.
The pair rallied to a one month high of 0.8699 Thursday after the Reserve Bank raised its benchmark interest rate to a five-year high of 3.25% and indicated that borrowing costs would rise again as strong economic growth fuels inflation pressures.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Federal Reserve policy meeting, while Monday’s preliminary report on euro zone inflation will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 16
- The euro zone is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation.
- Canada is to publish a report on foreign securities purchases.
- The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.
Tuesday, June 17- The Reserve Bank of Australia is to publish the minutes
of its latest policy meeting, which contain valuable insights into
economic conditions from the bank’s perspective.
- Switzerland is to release data on producer price inflation, while the U.K. is to release data on consumer price inflation.
- The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
- Later Tuesday, the U.S. is to produce data on housing starts, building permits and consumer prices.
Wednesday, June 18- New Zealand is to release data on the current account, while Australia is to publish an index of leading economic indicators.
- The
Bank of Japan is to publish the minutes of its latest policy meeting,
which contain valuable insights into economic conditions from the bank’s
perspective. Japan is also to release data on the trade balance.
- The BoE is to publish the minutes of its latest policy setting meeting.
- The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.
- Canada is to produce data on wholesale sales.
- Later
Wednesday, the Federal Reserve is to announce its federal funds rate
and publish its rate statement. The announcement is to be followed by a
press conference with Fed Chair Janet Yellen.
Thursday, June 19- New Zealand is to publish data on gross domestic
product, the broadest indicator of economic activity and the leading
measure of the economy’s health.
- The Swiss National
Bank is to announce its libor rate. The bank is also to publish its
quarterly monetary policy assessment and hold a press conference.
- The
U.K. is to release data on retail sales, the government measure of
consumer spending, which accounts for the majority of overall economic
activity.
- The Eurogroup of euro area finance ministers are to hold meeting in Brussels.
- The
U.S. is to publish the weekly report on initial jobless claims as well
as a report on manufacturing activity in the Philadelphia region.
Friday, June 20The dollar pushed higher against the Swiss franc on Friday as safe haven demand was underpinned by concerns over the escalating conflict in Iraq, supporting the greenback.
USD/CHF was up 0.17% to 0.9000 late Friday from 0.8982 on Thursday. For the week, the pair rose 0.32%.
The pair is likely to find support at 0.8950 and resistance at 0.9040.
Concerns over the ongoing Sunni insurgency in Iraq hit market sentiment on Friday, amid fears over the impact of reduced oil supply on global growth.
The dollar shrugged off a report showing that U.S. consumer sentiment unexpectedly deteriorated in June.
The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.
The report came a day after data showed that U.S. retail sales rose less than expected in May, but the previous month was revised higher.
The Commerce Department said Thursday that U.S. retail sales rose 0.3% in May, falling short of expectations for a 0.6% gain. However, retail sales for April were revised up to a 0.5% gain from a previously reported increase of 0.1%.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 80.75 late Friday.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Federal Reserve policy meeting, while Thursday’s rate statement by the Swiss National Bank will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.
Monday, June 16
- The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.
Tuesday, June 17- Switzerland is to release data on producer price inflation.
- Later Tuesday, the U.S. is to produce data on housing starts, building permits and consumer prices.
Wednesday, June 18- The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.
- Later
Wednesday, the Federal Reserve is to announce its federal funds rate
and publish its rate statement. The announcement is to be followed by a
press conference with Fed Chair Janet Yellen.
Thursday, June 19