Euro: No Longer a One-Way Bet

Lior Alkalay - INO.com Contributor - Forex


It’s been barely five months since the Brexit referendum and yet here we are again, another European referendum, another political battle. This time around, it is Italy’s future in the balance and the Euro’s integrity at stake.

This upcoming referendum, due on Sunday, is a vote for constitutional reform that will abolish Italy’s dual parliamentarian system. Currently, Italy’s Parliament has two chambers, the Senate and the Chamber of Deputies. And, peculiar as it may sound, both have the same powers, but rather than balance they simply paralyze one another.

Why It Matters For The Euro

So, that begs the question, why is a referendum in Italy so important for the Euro? In one word: Banks. In the past few months, the Eurozone economy has started to show some signs of life. Among the data releases, Eurozone Manufacturing PMI rose to 53.7, retail sales in Germany has their strongest monthly gain in five years, and the Eurozone trade balance surplus rose by 37.8% over last year. Even in Italy, the Manufacturing PMI is holding above the 50 level, signaling expansion. All of which is "courtesy of a low Euro” that benefits European exporters. And yet, core inflation in the Eurozone is incredibly low at 0.8% and credit activity is weak, with the M3 level turning stagnant. Even the ECB’s €80 billion in monthly liquidity operations have thus far been insufficient to revive credit growth which is essential for the Euro recovery. At the heart of the problem is Europe’s banking system and its need to capitalize. Continue reading "Euro: No Longer a One-Way Bet"

Sterling Close To A Turnaround?

Lior Alkalay - INO.com Contributor - Forex


Ever since the surprise leave vote in the UK, investors have braced for a financial tsunami that could overwhelm the UK economy. Thus far, there has only been one real casualty—the Pound Sterling. All the while, the UK economy has surprised forecasters. The UK Manufacturing PMI already bounced back to an impressive 55.4; retail sales were surprisingly resilient and, most puzzling to economists, UK 3rd quarter GDP grew at a healthy clip of 2.3% Q3 year-over-year. So, what is really going on? Continue reading "Sterling Close To A Turnaround?"

The Aftermath Of Brexit Has Created A Buying Opportunity

By: Joseph Hogue of Street Authority

Geopolitical issues have dominated the markets this year, and polls have been useless in lending any kind of certainty to asset prices.

OPEC has successfully managed expectations for a production freeze, even if an eventual deal is still unlikely, which has driven oil prices to nearly double since their February lows. Few would have predicted in January the momentum of the Trump campaign and the potential uncertainty on global trade.

As important as these events have been, however, 2016 will likely be remembered for one event in particular. Continue reading "The Aftermath Of Brexit Has Created A Buying Opportunity"

Article source: http://www.streetauthority.com/node/30701042

It's Official, They Exit! Risk Aversion Chronicles: Gold Leads The Safety Demand!

Aibek Burabayev - INO.com Contributor - Metals


Today is a historic day in World financial history, which will be recorded in our memory forever! And it was a long and sleepless night all over the world as financial markets were frozen in agonizing suspense.

We should admit that Britons are firm and consecutive in pursuing their goal of independence. Almost a quarter century ago, they decided to withdraw their currency from the European Exchange Rate Mechanism (ERM) and they didn’t turn off their road yesterday on the final referendum.

Bookies and analysts got it all wrong as they forecasted the win of the "STAY” option, but more and more we have witnessed that all efforts to calculate human emotions and perceptions fail. The economic consequences for Brexit are harmful to the UK in a short term, but they still voted to leave. People are irrational in their behavior and the realization of this fact would bring the dramatic changes in the economic science in the future. Continue reading "It's Official, They Exit! Risk Aversion Chronicles: Gold Leads The Safety Demand!"

See EU Later - Brexit is for Real

Hello MarketClub members everywhere! The votes are counted and almost everyone got this one wrong, including the British betting shops. It's official - England is leaving the EU after 43 years.

I guess I was in the right camp when I posted this on June 14th.

The early reaction was the British Pound falling to its lowest levels since 1985 and stock markets around the world crashing. The one bright spot was the rush into gold which once again shot up over the $1300 level and seems poised to move to the $1400 level.

MarketClub's Mid-day Market Report

Indices: Looking at the major indices here in the U.S. this morning they are all going to be sharply lower and under pressure. Continue reading "See EU Later - Brexit is for Real"