• 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.

Value investing is
sometimes misunderstood that several investors end up putting money into
low-priced investments that are not popular or attractive at the moment.

In fact, value
investing involves choosing quality assets in a calculated manner and having
the determination to go against the flow. To better understand this investment
method, here are a few rules to follow if you plan to practice value investing.

Be Aware of the
Investment’s Intrinsic ValueMany investors rely on stock price movements to decide whether they
should buy or sell their holdings. On the other hand, value investors usually
believe a stock price can be similar to its intrinsic value in the long run.

As a result, value
investors see an opportunity to purchase a stock at a discount when it is
trading for less than its underlying value in the market.

A stock’s intrinsic
value can be determined in several ways. You can use a simple price-to-book
(P/B) ratio to compare the company’s market value to its book value. Typically,
a P/B ratio under 1 means the stock is selling below the firm’s net asset value
(NAV).

Another simple metric
is the price-to-earnings (P/E) ratio, which compares the company’s share price
to its earnings per share (EPS). A low P/E ratio often suggests that the firm
is undervalued, making it a value stock.

If you’re looking to be
more specific, you can try financial metrics such as the price/earnings to
growth (PEG) ratio and the enterprise value to earnings before interest, taxes,
depreciation, and amortization (EV/EBITDA) ratio.

Note that while there
are various ways to calculate an investment’s intrinsic value, value investors
don’t rely on the stock’s market price alone to decide what they will do next.
Rather, determining the intrinsic value is a crucial factor for them.

Calculation Over
Speculation

Economist and father of
value investing Benjamin Graham teach in his book The Intelligent Investor that
value investing is an investment method that requires fundamental analysis and
in-depth research.

In addition, value investing
aims to minimize the risk of permanent capital losses and allow investors to
turn a decent profit instead of putting money into risky investments that are
not certain to provide adequate returns.

Considering those
features, you can say that value investing is anything but speculative.
Instead, it is calculative, qualitative, and somewhat predictive.

Avoid Going with the
Flow

Value investing focuses
on the opposite end of the market noise. That is because stock prices usually
trade below their underlying value when the majority of investors have their
attention elsewhere.

Value investors often
take the route different from the one chosen by most investors. While that may
seem like a not so wise decision, being certain of your choices matters more
than being afraid of looking like an irrational investor.

Not every investor can
be a contrarian player in the market, although it is essential to be one if
you’re looking to thrive as a value investor.

Have a Good Grasp of
the Investment

Stock selection is a big part of
value investing that separates it from other investment strategies.

In choosing potential
value investments, you need a good amount of information about the asset and
the company. That includes knowing the type of business the company engages in,
its industry, competitive advantage, etc.

It’s also important to
keep up with any developments that may affect the firm. You can do that by
reading and analyzing the company’s financial statements and quarterly
analysts‘ calls or getting in touch with the management.

In addition, you can
consider getting the opinions of other shareholders about matters such as
competition, clients, and output to gain a better idea of the firm’s outlook.

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

It’s a relatively straightforward risk positive day as markets carry over the mood from Friday. Here’s a snapshot of the equities space at the moment:

• Eurostoxx +1.4%
• Germany DAX +1.3%
• France CAC 40 +1.4%
• UK FTSE +1.4%
• S&P 500 futures +1.0%
• Nasdaq futures +1.2%
• Dow futures +0.9%

There isn’t much else for traders and investors to work with but the scraps and pieces from Friday last week. But as much as we are seeing risk optimism and the dollar losing some notable ground, best be wary that it might not take much for things to switch around.

There are still risk headwinds in the form of recession fears and Europe still has a potential gas crisis looming. Meanwhile, while market players are focused on the 75 bps vs 100 bps debate on the Fed, let’s not forget that the central bank is still poised to raise rates towards the region of 3.50% and 4.00% potentially. As soon as the above debate is over and done with, the point of the terminal rate is arguably still reason enough to keep the dollar in a good spot, all things considered.

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

I wouldn’t chalk up much of this move to the pound, even if it is the best performing major currency today. It is all about the dollar at the moment as the softer greenback is paving the way for other major currencies to gain. As markets also carry over the mood from Friday, the more positive risk sentiment is also weighing on the dollar (and to some extent, giving the pound a lift as well; something something sterling behaving like a risk currency).

GBP/USD is now trading up to 1.1982 – its highest since 11 July – as buyers look towards retesting 1.2000 on the day:

I mentioned earlier that with there being little for markets to work with, this may be a more straightforward session where risk dominates. That appears to be the case now and while there is scope for the dollar to retrace as well, just be wary of key levels up ahead.

As highlighted earlier, the 1.0200 mark may be one to watch technically for EUR/USD and 1.2000 is also going to be a key psychological level for cable in that sense. I would argue that commodity currencies have more room to roam with AUD/USD potentially eyeing back a push towards 0.7000 and that might also give cable some scope for additional gains considering its recent behaviour.

To start off the new week, all the attention is on the dollar and risk sentiment and as long as trading sentiment continues to focus on that, we could see some of the early moves here extend a little more.

But as mentioned earlier, I’d still wager that this is merely a dollar retracement and that the bulls aren’t done yet considering that the Fed hasn’t wavered much in its resolve to hike rates towards the terminal region around 3.50% to 4.00%.

Once markets get past this whole 75 bps vs 100 bps debate, the focus on the above will most likely keep the dollar underpinned.

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

• But neutral rate is lower than pre-global financial crisis times
• I don’t think we’re done on rate rises
• Don’t want to lean against idea that bank rate goes to 2%, but not endorsing it either

Ugh, neither here nor there by Saunders and I’ll just repeat my message from earlier:

„Just be aware that Saunders will be stepping down as BOE policymaker on 8 August. That said, his remarks does echo what the central bank has been preaching for a while now. However, it isn’t so much what the market perceives as punters are fearing that the BOE may have to stop in their tracks as the UK economy grinds towards a recession.“

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

• Doesn’t regard bank rate of 2% or higher next year as being unlikely, implausible
• Cost of not tightening promptly enough is relatively high
• Rather than focus on precise forecast for bank rate next year, key point is that tightening cycle may still have some way to go

Just be aware that Saunders will be stepping down as BOE policymaker on 8 August. That said, his remarks does echo what the central bank has been preaching for a while now. However, it isn’t so much what the market perceives as punters are fearing that the BOE may have to stop in their tracks as the UK economy grinds towards a recession.

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

• As EURO and USD was looking it is getting to parity, a trade idea to fade the recent decline and go long was created
• The trade idea had 3 buy orders ready below EURUSD 1
• But only 1 of those got filled before the Euro USD pair shot up
• This leaves the stop loss too far and the profit of the position unprotected
• But moving a stop too early in a trade is not a great idea, either, since the market can quickly stop a trader out. Still, after a few days of a move and enough distance made between the current price of EURUSD and the entry price, that update to the stop loss can be made
• What about the other EURUSD buy orders waiting below? These need to be cancelled. After adjusting the stop loss, never leave older orders that can be filled in the future, to your surprise
• Could a trader wait and watch price, looking if EURUSD gets to the suggested buy order, and then follow some more candles, and then, perhaps, enter? Yes. BUT, sharks are already waiting with buy orders at attractive prices, and when their orders fill, price shoots up so quickly, leaving a trader in confusion and with a partially missed opportunity. The idea here was to set a buy order ahead of time and prevent that
• What about the profit target, should it be adjusted? Perhaps a new one created? There are a several options for those, as shown in the technical analysis video for EURUSD below, which also presents a EURUSD technical analysis update with a recent price chart:

Trade the EURUSD at your own risk. Visit ForexLive technical analysis for future perspectives and occassional trade ideas.

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

US President Biden travelled to the Middle East to plead for higher oil output. I’ve seen plenty of „No, actually he went for …“ . Sure, he had meetings on other issues, but for Biden, oil is the big concern right now. US mid-term elections are right around the corner and angry motorists will need to be placated.

The main financial media outlets are noting an increase in output is not imminent, any decision will have to wait, at least, until the next oil cartel (OPEC+) meeting).

Reuters summarise Biden’s trip with the headline „Biden fails to secure major security, oil commitments at Arab summit“. In brief:

Biden came to Saudi Arabia hoping to reach a deal on oil production to help drive down gasoline prices

He leaves the region empty-handed but hoping the OPEC+ group …

„I look forward to seeing what’s coming in the coming months“
Bloomberg:

Saudi officials stressed any decision to pump more would be made in the framework of OPEC+

“We listen to our partners and friends from all over the world especially consumer countries,” Foreign Minister Prince Faisal bin Farhan told reporters. “But at the end of the day, OPEC+ follows the market situation and will supply energy as needed.”—

As it stands then, we await August 3 (the next OPEC+ meeting) to see if perhaps the trip has paid dividends in terms of higher oil output.

Oh, yeah. The fist bump. Seems to be the main headline item.

Keep your eye on oil though, folks. We’ll be on deck for Sunday evening, US time, Monday morning in Asia for oil futures to reopen, 6pm NY time.

This article was written by Eamonn Sheridan at www.forexlive.com.