Currencies

EUR/USD breaks out

Initially, Euro began the weak consolidating, but ended up breaking through some major resistances and trying to make new highs. The trigger for the spike, came after the release of the December ECB meeting minutes, which showed that policymakers expressed confidence in the manner in which the Eurozone economy was moving and could consider a gradual shift in policy relatively soon. Moreover, news that the German Chancellor, Angela Merkel, may have paved the way to a stable coalition government, along with the US economy missing non-economic numbers over the last few days pushed the pair through the 1.21 levels and it ended the week just above the 1.22 region.

In this week, the pair may start with a slight correction but with the lack of major news from both the nations in the coming week, we should see a continuation of the bullish move with EUR/USD pair rising to 1.23 and 1.24 levels.

Pound breaks key resistance levels

The GBP/USD had a remarkable second week of 2018 with the currency cross rising to the highest level since June 2016 Brexit referendum. Although the beginning of the week was marked by political jitters with UK government reshuffling, the GBP/USD managed to hold above $1.3700 level unaffected by reports of massive labor market outflows and investment and output losses following possible disorderly Brexit scenario.

At this point, pullbacks are buying opportunities, and that the 1.3650 level will probably be a bit of a floor, although a soft one. There are plenty of reasons to think that this upswing continues, as the US dollar has been getting pummeled against almost everything. The British pound has been oversold for some time, and now that the markets are getting over the shock of the United Kingdom leaving the European Union, it makes sense that more believe in the pound, expressed by the purchasing of the market.

Bullish momentum in GBP should continue as it has broken key resistance levels.

Equities

German economic momentum continues

The German economy’s solid 2017 performance extended into the final three months of the year, with growth of about half a percent. The expansion, tops off a year that saw the fastest growth since 2011 and investment join private consumption as a growth driver. That sets the euro area’s largest economy up well for 2018, which is further good news for the currency region, already enjoying the strongest expansion in a decade.

Company surveys and industrial data had signaled a vibrant German performance in the fourth quarter, and strong business sentiment and order flows may boost prospects for 2018. Germany 30 is likely to extend its bull run.

Wall Street hits new highs

Most US benchmarks continued their rally and ended the week at record highs as the 4th quarter earnings season got underway. Dow jones industrial average closed at all time high on Friday, buoyed by mostly upbeat results from major banks while bullish economic data (robust retail sales data) which further boosted investor optimism about economic growth. Banks stocks also gained momentum after data showed CPI rose their fastest since January signally that inflation is gathering some steam. Subdued inflation has been weighing on the pace of rate hikes. Higher interest rates are seen as a boon for banks, boosting their net interest margin.

Investors are hopeful that U.S. tax overhaul would facilitate future profits by reducing tax bill and stimulating more business.

Music streaming makes Vivendi valuable

Popularity of Spotify, and streaming in general, is making music rights more valuable. Vivendi’s biggest moneymaker, Universal Music Group, is the world’s top rights-holder for music, representing acts such as the Beatles, Katy Perry, and Kanye West.

Universal will benefit from worldwide competition for new streamers. This year, the division will bring in €5.95 billion in revenue and €868 million in earnings before interest, taxes, depreciation and amortization. In 10 years, it could double revenues. Vivendi, with a hand in music, TV, and videogames, is valued at $37 billion. Its music holdings alone could be worth more than $40 billion, due to streaming. We believe this is a stock with deep value.

A play on factory automation trend

Keyence designs and makes advanced automation sensors and 3-D vision systems, plus more mundane products such as bar-code readers, laser markers, measuring instruments, and digital microscopes.

Keyence is a beneficiary of the AI, robotics, and industrial-automation boom. Sales of its factory automation sensors have been particularly strong in China, where labor costs are rising. As manufacturing grows more data intensive, factories require more sensors and vision systems to collect data and become smarter. Revenues rose 25.6% over the past year and are forecast at nearly 20% next year. Net income grew 35.2% in the current fiscal year ending in March and is projected to rise from 15% to 20% annually over the next two years. We are bullish on this stock.

Metals

Gold Prices surges at 4-month high

Gold prices rose to four month highs shrugging off renewed signs of US inflationary pressure as dollar fell to lows amid euro and sterling pressure. On Wednesday, concerns emerged that China could stop or slow their buying of U.S. Treasuries. China is one of the largest official holders of U.S. assets and world’s biggest foreign holder of U.S. Treasuries. This report sent U.S. Treasury yields higher. Technically even though rising bond yields are supposed to put Gold prices under pressure as they share a negative correlation, since December, 2017, the relationship has turned positive. But when bond yields jump as traders are afraid of inflation or don’t want to hold the U.S. dollar, it doesn’t have to be negative for the yellow metal. This is why we expect the prices for the yellow metal to go up.

Energies

Cold Snap pushing prices higher

With the bomb-cyclone disrupting daily activities and forcing to turn up temperatures indoors in Eastern US, the week to January 5 led to the biggest ever weekly withdrawal from natural gas storage, data by the U.S. Energy Information Administration (EIA) showed on Thursday. Weather forecasts also suggest that U.S. temperatures will remain mostly within seasonal limits for the rest of the winter. This situation broadly helped the stock, which are still below the five-year average, get a boost. Prices can be expected to go up further during the week mainly due to drastic rise in demand. Technically, we can observe a Bear Butterfly harmonic pattern under construction on the daily chart, which lends the 161.8% extension for our bullish target.

Oil set for fourth week of gains

WTI Crude oil prices were trading at three-year highs last week, fuelled by a surprise fall in US production accompanied by ongoing optimism that OPEC-led output cuts would continue to drain the excess supplies from market. Oil prices remained supported since the U.S. Energy Information Administration reported on Wednesday that crude oil inventories dropped by 4.9 million barrels in the week ended January 5, versus analysts' expectations for a decline of 3.9 million barrels.

Moreover, earlier this week, data showed that US crude oil production fell by 290,000, the most since October, as the winter storm “bomb cyclone” continues to disrupt output. The drop in US crude oil supplies for eight consecutive weeks suggest further upside rally in oil prices.

 

About Century Financial Brokers

Established in 1989, Century Financial Brokers L.L.C.is the region’s leading financial brokerage firm and a well reputed online trading service provider in the United Arab Emirates. Since inception, Century continues to have a strong commitment and dedication towards providing superior and personalized customer experience, and empowering its customers through education, training and support, in line with the values and beliefs of its founder, Mr. SulaimanBaqerMohebi, a dynamic and visionary business leader.

Century operates on the world’s leading platform which also provides a wide-range of financial instruments, covering 6 asset classes, across 100 markets worldwide with products ranging from Currencies, Commodities, Indices, Metals, Energies, and Inter-Bank Money Markets for both local and expatriate investors, to meet their diverse trading and investment needs.

 

Source: Matrix PR