ecb

U.S. Advance GDP Data Awaited, ECB and BOC Monetary Policy Meetings Under the Spotlight

U.S. shares soared strongly to hit record closing highs on Friday. At the close in NYSE, the S&P 500 (SPX) gained 0.51 percent, to 2,575.21, up 0.9 percent for the week and posting a sixth week of gains. The Dow Jones Industrial Average (DJI) also registered a sixth week of gains after having added 0.71 percent, to end at 23,328.63 on Friday. The stock benchmark index broke above 23,000 this week and record a jump of 2 percent for the week.

Meanwhile, the Nasdaq Composite (IXIC) climbed 0.36 percent, to 6,629.05 to post its fourth week of advance. U.S. equities were supported after the U.S. Senate passed a budget resolution for 2018 on Thursday, which is believed to pave the way for President Donald Trump’s tax-cut plan to be approved without Democratic support.

The U.S. dollar also witnessed a strong bullish run on Friday with the greenback jumping higher versus most of its majors on Friday as boosted by optimisms over the progress on tax reform and speculation that a new Fed chair would continue a market-friendly monetary policy. The U.S. dollar index, which gauges the strength of the greenback against a trade-weighted basket of six major currencies, rose by 0.57% to 93.54.

In an interview with Fox Business Network on Friday, President Donald Trump said that he was considering nominating both Fed Governor Jerome “Jay” Powell and Stanford University economist John Taylor for the central bank’s top two posts. Incumbent Fed Chair Janet Yellen’s term will end in February 2018 while the vice chair position is also open after Stanley Fischer resigned effective a week ago. Decision on a new chair will be announced by November 03rd.

The dollar was also boosted by upbeat economic data after the National Association of Realtors on Friday reported that existing home sales rose 0.7% to a seasonally adjusted annual rate of 5.39 million units last month. The reading beat analysts’ forecast of a 1% decline to a rate of 5.30 million.

For the week ahead, the U.S. is to release preliminary figures on third-quarter economic growth on Friday amidst expectations calling for an annual growth rate of 2.6% after a strong reading of 3.1% in the previous quarter. The decline is due to expected losses in retail sales, industrial production, homebuilding and home sales caused by Hurricanes Harvey and Irma.

Before the release of the GDP report, market participants will also await data on durable goods orders and new home sales scheduled to be published on Wednesday as well as data on weekly jobless claims due on the next day.

Meanwhile, the Canadian dollar slumped to one-and-a-half-month low after the country released subdued inflation data and retail sales data. The Loonie lost more than 1 percent against its American counterpart, sending the pair USDCAD to as high as C$1.2615 – the strongest level since August 31st.

Elsewhere a slump in the Canadian dollar added to upside momentum in the greenback after Canada released subdued inflation data and retail sales data growth missed expectations. Indeed, Canada’s annual inflation rate accelerated higher in September for a third straight month, came in at 1.6% last month after a rise to 1.4% in August. However, the reading was slightly below the expected 1.7% projection and also below the Bank of Canada’s preferred 2% target.

By contrast, Canadian retail sales unexpectedly fell in August, contracting by 0.3% which completely missed the expected +0.5%.

Next week, the Bank of Canada’s interest rate decision is due on Wednesday, with most experts expecting the central bank to hold its benchmark rate unchanged at 1.0% after the bank had surprisingly hiked rates for the second consecutive time at its previous meeting in September.

The British Pound reversed higher on Friday, adding 0.24% to $1.3190 after both European Council president Donald Tusk and UK Prime Minister Theresa May attempted to downplay claims that Brexit negotiations had reached an impasse. Sterling lost ground on Thursday following a report published by the Office for National Statistics which showed UK retail sales plunged deeper than expected in September.

Particularly, UK retail sales slipped by 0.8 percent on a monthly basis following rises in July and August, sending growth rates of prices in the third quarter to its lowest annual rate since 2013. Economists only forecast a decline of 0.1 percent.

The Office for National Statistics is to report preliminary data on U.K. economic growth for the third quarter on Wednesday with economists forecasting that the report will show the economy grew 0.3% in the three months ended September 30. The U.K. economy also expanded at the rate of 0.3 percent in the previous three-month period. If confirmed, the British economy would grow 1.4% in the third quarter on an annualized rate.

Turning to the Euro, the single currency closed the week lower, sending the pair EUR/USD down 0.64 percent. The European Central Bank’s latest interest rate decision is due on Thursday, with no major policy changes expected. Even though, investors will focus on President Mario Draghi’s press conference which is scheduled 45 minutes after the rate announcement for fresh clues on the ECB’s plan to start unwinding its monthly quantitative easing program.

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Boosted By Sharp Jump in Mobile Payments, PayPal Shares Advance Amidst Rosy Outlook

Shares of PayPal Holdings Inc. took up by more than 4 percent in the extended session on Thursday after the mobile-payments company reported a better-than-expected third-quarter profit and upgraded its guidance for earnings through the rest of the year.

PayPal’s shares soared 4.03 percent to trade at $69.96 after the San Jose, California-based payments company said it earned $380 million of net income, or 31 cents a share in the third quarter, up from $323 million, or 27 cents a share, in the year-ago period.

For the three-month ended September, the PayPal reported adjusted earnings of $560 million, or 46 cents a share. The reading marked a rise of 32 percent compared to the same period last year and also beat analysts’ expectations calling for earnings of 39 cents a share on revenue of $3.565 billion.

Thanks to sharp growth in mobile payments whose volumes surged 54 percent during the last quarter compared with the year-ago period, to about $40 billion, PayPal witnessed its revenue jump 21.4 percent to $3.24 billion from $2.67 billion recorded in the same quarter last year.

PayPal also raised its guidance for the fiscal year 2017’s adjusted earnings to a range of $1.86 to $1.88 per share from $1.80 per share to $1.84 per share. Meanwhile, earnings are forecast to reach a range of 50 cents to 52 cents per share during the fourth quarter, which is in line with analysts’ estimate of earnings of 51 cents. Revenue is expected to come in between $12.92 billion and $12.98 billion.

Trade suggestion

Buy Stop at 70.00, Take profit at 72.00, Stop loss at 69.00

 

Natural Gas Futures Drop to Two-month Lows After EIA Data Release

Natural gas futures prices plunged strongly to the weakest level in more than two months on Thursday after a weekly report showed U.S. supplies of natural gas rose much more than expected last week.

November natural gas dropped nearly 2.6 percent to trade at $2.78 per million British thermal units in North American trading session, down significantly from $2.861 before the data release. The price tumbled to the lowest level since August 07th.

According to data published by the U.S. Energy Information Administration, U.S. national storage increased by 51 billion cubic feet for the week ended Oct. 13, compared to analysts’ forecast calling for a climb of 50 billion cubic feet. As stated by the report, total stocks now stand at 3.646 trillion cubic feet.

Trade suggestion

Sell Stop at 2.7800, Take profit at 2.7500, Stop loss at 0.7950

 

Nervousness Ahead of New Government Formation Sends Kiwi To Nearly-five-month Lows

New Zealand dollar tumbled broadly against its major rivals on Thursday as market participants were waiting for the country’s announcement on the new government following an inconclusive election on September 23rd.

The Kiwi plunged by more than 1.2 percent to trade at $0.7065 in Asian trading session, sending the pair NZDUSD to the weakest level since May 30th. The local currency was hit hard after New Zealand First leader Winston Peters on Thursday said he would support the Labour Party to form government for the first time in nine years.

With the backing of the New Zealand First Party and the Green Party, the new government led by Jacinda Ardern will control 63 of the 120 seats in parliament. The Labour party only win 46 seats in the election last month. The Kiwi dropped amidst concerns that policy changes may cause the economy to lose growth momentum.

Trade suggestion

Sell Stop at 0.70600, Take profit at 0.70150, Stop loss at 0.70800

 

Benefited from Robust Sales, Abbott Reports Better-than-expected Earnings

Shares of Abbott Laboratories soared more than 1 percent in North American trading session on Wednesday after the pharmaceutical company reported third quarter’s profit and sales that topped analysts’ estimates thanks to robust sales of medical devices and generic drugs.

Abbott shares gained nearly 1.5 percent to trade at $55.88 after the Illinois-based company said it earned $603 million, or 32 cents per share last quarter, compared to a loss of $329 million, or a loss of 24 cents per share, in the year-earlier period.

Revenue was reported to rise from $5.30 billion in the same period last year to $6.83 billion in the three months to September. The reading topped analysts’ forecast calling for sales of $6.73 billion. Abbott forecast full-year adjusted 2017 profit from continuing operations of $2.48-$2.50 per share, compared with previous guidance of $2.43 to $2.53.

Trade suggestion

Buy Stop at 55.90, Take profit at 57.10, Stop loss at 55.30

 

ibm

Revenue Slips for 22nd Straight Quarter, IBM Shares Advance on Upbeat Q4 Guidance

Shares of International Business Machines Corp. jumped dramatically in the extended session on Tuesday after the technology company released better-than-expected earnings for the third quarter.

IBM shares surged more than 5.5% to trade at $154.72 per share after hours. The Armonk, New York-based company reported net income of $2.73 billion, or $2.92 a share for the three-month period to September, down from $3.2 billion, or $2.98 a share, in the year-ago period. Adjusted for non-recurring items, earnings were reported to reach $3.30 a share.

Revenue also fell compared to the same period last year, slipping for the 22nd straight quarter. However, revenue ticked down slightly to $19.15 billion from $19.23 billion in the year-ago period, which was much better than the $18.6 billion analysts had been expecting.

IBM’s chief financial officer, Martin Schroeter, said the company forecast a stronger than usual seasonal bounce in revenues for the current quarter. Boosted in part by sales of its new mainframe server, fourth-quarter revenue is projected to hit $22 billion to $22.1 billion, which would top analysts’ average estimate of $21.8 billion for sales.

Trade suggestion

Buy Stop at 154.80, Take profit at 156.00, Stop loss at 154.20

 

Netflix Adds More Subscribers Than Expected in Q3, Shares Extend Gains

Shares of Netflix Inc. advanced in after-hours trading session on Monday after the streaming giant said it added more subscribers than expected in the third quarter and projected growth to be in line with Wall Street expectations.

Netflix shares added nearly 0.3 percent to trade at $205.30 per share after having closed 1.6 percent higher in regular trading. For the three-month period ended September, Netflix announced that net income soared to $129.6 million, or 29 cents per share, from income of $51.5 million, or 12 cents per share during the same quarter a year ago.

Meanwhile, revenue for the third quarter was reported to reach $2.98 billion, up from $2.29 billion a year ago and above forecasts calling for a rise to a reading of $2.97. Moreover, Netflix said it added 5.3 million subscribers around the world in three months to September, which was well above Wall Street’s forecast of 4.5 million and also up from with the 3.6 million the company added during the same quarter last year.

For the current quarter, Netflix forecast 6.3 million additions, which would send its customer base in all its markets to nearly 115.6 million. The reading is also higher than analysts’ average estimate of 6.25 million.

In its investor letter that accompanies its earnings, Netflix said that it would increase its spending on original content to $7 billion to $8 billion next year in an attempt to plan for life in a post-Disney future. Walt Disney Co. in August announced that it would create its own streaming network and end its current partnership with Netflix by the end of 2019.

Trade suggestion

Buy Stop at 205.30, Take profit at 210.00, Stop loss at 203.00

 

FED

Euro Falls to One-week Lows As Trump Reportedly Favors A Policy Hawk As Next Fed Chair

The euro extended its downbeat rally to a fourth consecutive trading session on Tuesday after the dollar strengthened following a report showed U.S. President Donald Trump was favoring a policy hawk as the next head of the Federal Reserve.

The single currency dropped more than 0.3 percent in European trading session on Monday after shedding 0.25 percent the previous day, sending the pair down to trade at $1.17600 – the lowest level in one week.

The greenback edged higher after the New York Fed’s business conditions index released on Monday jumped to the highest reading since September 2014. The figure climbed to a three-year high of 30.2 in October from 24.4 in September, easily beating economists’ expectations calling for a reading of 20.

The U.S. dollar continued to tick up following a report that said President Trump was favoring Stanford economist John Taylor to head the Fed. Taylor is seen as a more hawkish policymaker than current Fed Chair Janet Yellen

Trade suggestion

Sell Stop at 1.17600, Take profit at 1.17200, Stop loss at 1.17800

 

WTI Futures Hit The Highest Since Late September on Concerns over Disrupt Supplies

Crude oil futures gapped up and soared to more than two-week highs on Monday, with prices supported by concern that tensions between Iraqi forces and Kurds will disrupt supplies.

November West Texas Intermediate crude jumped more than 1.2% to hit a session high of $52.37 a barrel on the New York Mercantile Exchange in early trade on Monday. The contracts eased back but soon resumed their upbeat moves, up 0.84 percent to trade at $51.58. Prices look set to close at the highest settlement price since September 27th.

Iraqi forces were reported to launch a campaign to retake control of the area surrounding Kirkuk on Sunday. The ethnically diverse area controlled by the semiautonomous Iraqi Kurdistan region is one of the nation’s key crude-producing hubs. Government troops reportedly took control of the North Oil Company, fueling an already intense dispute sparked by a Kurdish independence referendum last month and raising concerns over oil exports of Iraq – the second-largest oil producer in the Organization of the Petroleum Exporting Countries.

Trade suggestion

Buy Stop at 57.800, Take profit at 58.400, Stop loss at 57.500

 

Euro On A Decrease Versus Yen After Draghi Turns Down Germany’s Call for Rate Hike

Euro extended losses versus its Japanese counterpart to a second trading session on Friday after European Central Bank President Mario Draghi poured cold water on German hopes over an era of low or negative rates nearing its end.

The euro lost about 0.2 percent to trade at 132.55 yen in European trading session on Friday, paring a weekly gain. ECB President Mario Draghi on Thursday reiterated that the central bank’s asset buying program would continue until policymakers see a sustained improvement in the outlook for inflation, which has still been below the ECB target of around 2 percent.

In his speech at an event in Washington, where he is due to attend the G20 meeting, Draghi also added that he planned to maintain the current ultra-low rates “well past” the end of its asset purchases in December. Draghi’s comments battled back German calls to exit from years of easy money in the euro zone.

Speaking earlier in Washington, ECB chief economist and policy dove Peter Praet warned that inflation data has not shown any upbeat move, suggesting that monetary policy needed to remain easy.

Trade suggestion

Sell Stop at 132.550, Take profit at 132.150, Stop loss at 132.750