The survey showed a „dire level of investor pessimism“, which surpassed the lows seen during the COVID-19 pandemic and the 2008 global financial crisis. Of note, expectations of global growth and corporate profits have plunged to a record low.

Meanwhile, investors raised their cash holdings to more than 6% – the highest since October 2001. Adding to that, recession fears have ramped up to levels last seen since May 2020 while BofA’s infamous investor sentiment remains at ‚maximum bearishness‘.

This article was written by Justin Low at www.forexlive.com.

• All institutions have a role to play in addressing fragmentation
• The problem is that ECB is way too often the only player in town
• That has to change
• Incomplete EMU architecture, sluggish reform, political bickerings – this is where fundamental fragmentation originates
• It is crucial for ECB to not become victim of its ability to respond and adapt, leaving counterparts becoming less willing or motivated to act

He’s throwing the ball back to the fiscal court and it is about time. Most policymakers don’t want to get too involved in the politics but in Europe, the whole framework in itself is to blame as to how a lot of the recent problems are cropping up. It’s tough when you get countries with different dynamics – not just financially but also from a socioeconomic perspective.

This article was written by Justin Low at www.forexlive.com.

Stocks and options may have some
similarities, but they are two different types of investment, especially when
it comes to their risk-reward potential.

And while stocks and
options can be worthwhile investments, each performs better in certain
situations.

Choose stocks when…You Know Enough About
Stock InvestingThe stock selection
process requires in-depth research and proper analysis, but choosing options
will need more than just data.

Before you can even
select options, you must first apply for trading options and be approved. You
can only start choosing options and placing orders to trade them once you
receive the approval. In addition, you would need a margin account and
considerable capital to qualify for options trading.

That’s why mutual funds
or exchange-traded funds (ETFs) consisting of various stocks make a better
choice than options, particularly with beginner and even some intermediate
investors.

You’d Rather Not Follow
the Market

Stocks need to be
monitored from time to time, although the amount of time you need to keep an
eye on them is usually less than what is required by options, which have set
expiration dates.

They’re Volatile

It can be pretty easy
for options to be out of the money (OTM) and expire worthless if you’re rooting
for a particular stock that’s quite volatile. Investing in stocks can provide
you with a permanent stake, but you need to survive the ups and downs, and
that’s often unlikely to happen with options.

You’re Aiming Long-Term

Stocks typically make
significant gains in the long run, although the journey ahead will not be
smooth sailing. That said, options’ short-term nature is more against your
favor during tough times in the market since they can expire before stock
prices start taking the optimistic route again.

Choose options when…You Seek Higher Returns

Like stocks, options
offer a high-reward potential. Still, keep in mind that such a benefit also
carries a serious risk with it. While options could amplify your potential
returns twofold, threefold, or even more, you’re risking losing a lot. And that
could happen in the span of a few weeks or months.

So if you plan to buy
options, make sure you are in a financial position where losses from trading
options can be managed and will not easily drag your capital down should your
trade goes wrong.

You’re Looking to Earn
an Income

Some investors sell
call options against their stock positions or write put options to generate
income. These strategies provide a good and pretty low-risk way to trade
options.

You Want Buy Stocks at
a Discount

Using options to
purchase stocks can help you hold shares at a discount. Instead of buying a
company’s stock directly, you can sell a put option on the stock, which lets
you set a price you’re willing to pay for the stock.

Moreover, you
immediately collect premiums for selling put options, which you can trade to
make an additional profit for your account.

You’re an Experienced
Investor

Options can be risky
and complex investments that first-time investors should avoid, at least until
they have enough knowledge and an excellent idea of what they are doing. Active traders seeking flexibility may
also find a suitable candidate in options.

This article was written by ForexLive at www.forexlive.com.

The dollar was already looking a little sluggish before the ECB report here and the headlines only helped to compound the softness in the greenback so far this week. EUR/USD got a shot in the arm, rising above 1.0200 and contesting a break above key technical resistance as outlined here.

In turn, that set off another wave of dollar selling as we see the currency turn to be the weakest performer on the day currently. GBP/USD is trading back up above 1.2000 as buyers look to erase the weekly decline from last week:

Meanwhile, USD/JPY is down 0.3% to 137.65 with large option expiries at 138.00 likely to play a role now in limiting gains before rolling off later in the day. USD/CAD is also trading back under keeping the downside pressure under 1.3000 to 1.2940 currently, as sellers look to build on the rejection of 1.3200 last week.

Looking at commodity currencies, AUD/USD is up over 1% to near 0.6900 at the moment as buyers look to try and establish some footing in chasing a push back towards 0.7000 potentially:

As much as the dollar is down across the board, I’m still not convinced of this being where there is a major turnaround in the dollar trend. Once again, this looks more like a retracement after more broad-based moves in recent weeks with EUR/USD hitting parity a trigger point.

From a fundamental perspective, there is not a lot to like about the euro and the ECB hiking rates by 50 bps this week won’t change that.

The market is running with a 75 bps rate hike by the Fed as being less bullish for the dollar but come next week, I think we may see the script flip the other way around. The Fed is still looking towards a terminal rate of around 3.50% to 4.00% and unless that changes, the dollar has a good reason to stay underpinned; all else being equal.

That might set up EUR/USD for a fade trade around the 50.0 Fib retracement level at 1.0283 or potentially closer to 1.0400. Likewise, AUD/USD might find itself running against a wall at 0.7000 if risk sentiment fails to hold its own, and yesterday’s lack of confidence isn’t encouraging.

This article was written by Justin Low at www.forexlive.com.