Weekly Outlook: 2016, June 19 - June 26

Weekly Outlook: 2016, June 12 - June 19

Risk off sentiment dominated during most of the week, but things reversed later on. It’s all related to the UK’s EU Referendum which happens in the upcoming week. Apart from this, two testimonies from Janet Yellen, US Durable Goods Orders and German surveys will play a role around the big vote. These are the highlights on forex calendar.

1. German ZEW Economic Sentiment: Tuesday, 9:00. The current pick-up in consumer spending is probably related to low inflation and is expected to reverse in the coming months. Investor’s confidence is expected to drop further to 5.1 this time.
2. Janet Yellen speaks: Tuesday and Wednesday at 14:00. Federal Reserve Chair Janet Yellen will testify before the Senate Banking Committee, in Washington.
3. US Crude Oil Inventories: Wednesday, 14:30.
4. British EU Referendum: Thursday, with polls closing at 21:00 GMT and clear results due early on Friday.
5. US Unemployment Claims: Thursday, 12:30. The number of new claims is expected to reach 271,000 this week.
6. German Ifo Business Climate: Friday, 8:00. German business sentiment is expected to reach 107.6 in June.
7. US Durable Goods Orders: Friday, 12:30. Core orders are forecast to rise 0.1%.

the source

5 Big Forex Mistakes Small Investors Make

"Some $5 trillion daily move in foreign currency trading (aka forex), and that is a number that dwarfs the amount of money traded on stocks (said by some experts to be under $100 billion daily counting all exchanges). That is a huge pot of dough and here's the reality: small investors are very much welcome and rewards can be huge."

"That's because most trades involve leverage - a lot of it. A trader may control $10,000 worth of assets with as little as $100 on the table, or $100,000 of assets with $1,000 in the game. Fairly commonly are 100 to 1 leverage plays, and that means small money can produce big payoffs. It also means there's a potential for wipe-out, absolute devastation."

1. Over-using leverage. "Brokers will give you much more leverage than you should be using."
2. Buying and selling on news.
3. Thinking time is on your side. "Most aspiring traders bet on single positions as if they knew the time to enter and exit the market is right. Yet, oftentimes their timing is wrong."
4. Ignoring currencies with big spreads.
5. Thinking like a retail investor. Teach yourself to think like a banker.

the source

• In a vote to leave, GBP would come under significant pressure, while risk currencies (CHF and JPY) benefit. Potential policy responses limit the degree of strength. We expect the effects on EUR/USD to be relatively muted.
• The payout for Bonds is asymmetric. In a vote to remain, yields would rise but not significantly, and mostly in the Euro-area core. Upon “Leave”, the path of least resistance is for yields to drop substantially, especially in the UK & the US.
• The bond yield/policy cushion, combined with the healthy distance from the macro shock, implies less downside for the S&P than for the FTSE or Eurostoxx upon "Leave". Upon "Remain", the S&P could plausibly make fresh highs.
• Euro-area periphery yields and corporate credit spreads have significant room to widen in a decision to leave, although temporarily perhaps before a policy response is triggered. The upside is capped in an event to "stay".
• Risk sentiment swings may affect emerging market assets, but much less so relative to Euro-area and UK assets, given the cushion from lower US yields.
• Lastly, we anticipate limited pass-through to Oil prices. The broad decline in US real rates creates more upside than downside in Gold prices.

the source

GBP/USD : 1,639 pips price movement by Brexit Referendum Results Expectation

• "The U.K. is poised to leave the European Union after a historic referendum, vote tallies showed early Friday, setting the stage for an unprecedented and messy untangling with far-reaching implications."
• "As of 6:05 a.m. local time Friday (1:05 a.m. ET), NBC's British partner ITV News put "Leave" at 51.8 percent with "Remain" garnering 48.2 percent, with the "Leave" campaign racking up the necessary 16.8 million votes to win."
• "The results in favor of an exit — or "Brexit" — sent shockwaves through global markets. The pound plunged to $1.35, it's lowest level since 1985."

the source