USD reached its highest level against the YEN in 12 years

The US dollar makes rally against the yen, after earlier today reached its highest level since December 2002. The main reason that analysts point for  the sharp rise is related to the expectations that Fed will raise interest rates later this year.

The bets that the US Federal Reserve will raise interest rates soon are again at the center of investors' attention. Signs of improvement in the economic performance of the US economy are the foundation of renewed speculation that the central bank will start to increase interest rates.

The sharp appreciation of the dollar against the yen is coming against the backdrop of the significant difference in the policies of central banks in the US and Japan. While the Fed is close to rising interest rates, the Japanese bank continues with the aggressive program of quantitative easing, without a clear plan when pouring money into the economy will stop.

Frustrating economic news in the first quarter shaken investors and they pulled back their bets for appreciation of the dollar against the yen, but in recent days the couple renewed unidirectional movement.

The market participants commented that they expect verbal intervention from the authorities in Tokyo to stabilize the yen. Forex strategist Nomura Securities Yunsuke Ikeda commented that the pair USD / JPY could reach 125 soon, but his expectations are that hedge funds will conclude their profits before the next report on changes in non-agricultural employment in the United States, which will be carried next Friday.

New growth in the current account deficit of Canada

The deficit on the current account of Canada increased again in the first quarter of the year reached 17.47 billion Dollars. In the first three quarters of 2014 followed a downward trend.

Analysts had expected the negative balance to be higher -  18.6 billion. And the data from October - December 2014 were revised from 13.9 billion to  13.1 billion.

Increasing the deficit since October is due mainly to trade in goods, and more specifically - energy products. The trade deficit reached a record of 7.25 billion, as exports fell to 128 billion. The value of sold abroad energy products decreased by 5.9 bln Dollars, despite the higher trade off  volumes.

Gold is going down

The gold is at approximately two-week bottom after yesterday’s depreciation by 2% when positive data came out from USA and increased expectations that the Federal Reserve will raise interest rates this year.

The dollar also held large profits after the rally that led to the biggest daily decline of gold after 30 April. The spot price is 1188 dollars, and yesterday it bottomed 1185.35 dollars per troy ounce and the lowest value after the 12th.

Yesterday it became clear that business investment in the US rose in April for the second consecutive month, while consumer confidence has reported a rise this month. This increase alerts that economic growth has gained momentum after slowing in the first quarter. Sales of new properties in USA also rose last month.

The strong data are synchronized with the speech of Fed Chairman Janet Yellen last week that the central bank is confident in the rise in interest rates this year. Her comments led to a rally in the US currency and an eight-year high against the yen and the strong rise against the euro. This made dollar-denominated assets like gold more expensive for buyers using other currencies.

According to some analysts, the market prematurely calculated secure economic recovery and this can be refuted on Friday, when the GDP for the first quarter may be revised to a drop compared to the original estimate of growth of 0.2%.

Charter Communications announced Time Warner Cable acquisition

Charter Communications announced that will acquire the media giant Time Warner Cable.

The agreement between the both companies is for $195 a share in a cash and stock deal 

worth  $ 55.1 billion, reported  “USA today”.

The new company, which also will include Bright House networks,  will provide strengthened TV and Internet  services for 23.9 million customers in 41 states.

This deal can be described as very prosperous in perspective  as the company acquire corporation with much greater revenue and market share.  Just last week Comcast failed to buy Warner.

The preliminary market shares of Charter increased by 4%, while Time Warner's by 11%. 

The current CEO of Charter Communications Tom Rutledge will be president of the new company, which will be called New Charter.

Deal for 1.2 billion dollars

Suntory Beverage & Food Ltd will acquire the unit for manufacture of soft drinks Japan Tobacco Inc (JT)  for the amount of 150 billion  Yen (1.2 billion Dollars) after the tobacco producer decided to cut its losses in the drinks business.

The production of food and drinks belongs to Suntory Holdings trade mark and they will acquire all shares in two of the divisions of JT.

The strong presence of Suntory Beverage & Food in the Japanese soft drinks market and its market power enabled him to develop brands and services of JT.

The tobacco company has already stated in February that it would withdraw from the business of soft drinks by the end of September. JT entered drinks business in 1988 and is the 10th largest producer of soft drinks in Japan.

Japanese beverage producers to a great extent owe their growth in demand abroad because of problems with domestic demand coming from a shrinking and ageing population.

Last year Suntory Holdings accomplished more extensive purchases, one of which is acquiring of Beam Inc  for about 16 bn  Dollars. Recent transactions were for  the manufacturer of coffee Roots and for the flavoured drinks Momono Tennensui.

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FCA fines major banks for forex rigging

5 of the biggest banks in the world have pleaded guilty in the charges that have manipulated the foreign exchange  market. This means that they will have to pay a total fine of $ 5.7 bn  according to US authorities.

The five banks that were involved in the fraud are JP Morgan, Citigroup, Barclays, RBS and UBS.

Barclays is the one that will have to bear the biggest part of the sum - $ 2.4 bn after in November  it did not join the other banks for  clarifying the regulations.

Loretta Lynch, newly appointed Minister of Justice in the US, said that since 2007 almost every day traders secretly manipulate exchange rates of exchange. According to her, a huge number of customers, investors and institutions affected by these actions.

Japan economic growth

For the first quarter  the Japanese economy increased by more than predicted after stronger domestic demand that accelerated GDP growth.

The increase for the prediod January-March 2015 is  0.6% , according to preliminary data of the National Statistics in Tokyo. Expectations were for increase by 0,4 %. The growth compared to the same period of 2014 even reached 2.4%, which exceeded forecasts for a 1.6% expansion.

Statistics showed that the demand in the private sector has increased in the last quarter by 4.3% compared to the same period last year. Although export growth exceeded forecasts  rising by 10% , the imports compensated for the increase, jumping 12% compared to a year earlier.

This information partly supported the allegations that the Japanese economy is recovering, although still at a moderate pace after last year's recession caused by the increase in the tax on sales.

New records for the US indices

US indices Dow Jones and S & P 500 recorded new historical highs despite the contradictory comments from members of the Fed.

S & P 500 climbed to 2129.2, recording an increase of 0.3%. Since the beginning of the year the index is almost 3% above. Dow Jones increased to the historical 18298.88, Nasdaq increased to 5078.44.

The FED  Chairman for Chicago Charles Evans announced  that inflation is still low and interest rates should remain near zero until next year.

The shares of Apple rose by 1.1% after the  investor Carl Icahn announced that the shares are underpriced and should be worth two times more. Rumors of the purchase of Altera from Intel helped shares of both companies respectively with 5.65% and 1.27%.

S & P 500 - USA

The index continued its strong upward rally, supported by inflows of liquidity in the economy. After the fast growth of the index, resulting in the values he found lasting over 1900 points, next level of resistance is the psychological level of 2110. In a turnaround, key support levels expected in 1915, 1900 and 1820.

Alibaba sued again by Kering SA

The Chinese e-commerce giant Alibaba  (NYSE: BABA) is facing serious problems because of a possible trade in counterfeits. The Paris-based holding company Kering SA, which owns the world famous brands like Gucci, Balenciaga and Yves Saint Laurent, has filed a lawsuit in a court in Manhattan against the Chinese corporation. The prosecution – the Internet company facilitates the business with illegal goods of numerous counterfeiters with its online shopping sites, marketing and payments.

Alibaba rejects the accusations as groundless. According to the company over the years, it has assisted various international brands in combating counterfeiting.

This is the second time that Kering brands sued Alibaba. In July last year there was a similar situation ,but a little bit later the suitcase was withdrawn. Then Kering and Alibaba announced that they intend to work together in the fight against counterfeits. But according Kering since then the things are in a deadlock.

Similar lawsuits emphasize financial risk for Alibaba. In September, the company raised 25 billion dollars from investors in record high IPO.The Internet company for a long time has to deal with allegations of distribution of a large number of counterfeit products on its shopping platform Taobao. The greatest danger for the Chinese is the possibility of damage to the reputation and image among investors and brand manufacturers.

Last year some manufacturers of luxury goods such as Burberry, which is now officially selling their products on the sites of Alibaba, received assurances that the Chinese will take serious measures to fight the illegal trade. However, Alibaba has not concluded such agreements with all affected manufacturers of luxury branded goods.

Investors are redirecting from Greece to Bulgaria

The ongoing crisis in Greece and the inability  to negotiate an agreement with creditors may additionally encourage the foreign investors to focus on the neighboring country Bulgaria.

Bulgaria adheres to strict budgetary discipline, has a low government debt and has harmonized with EU legislation and this makes it an attractive country for investment.

European Commission (EC) has recommended to Bulgaria to pay special attention to the negative external economic positions of inter company indebtedness and inadequate labour market. The recommendations are part of the annual review of the Commission on the economic recovery.

European Bank for Reconstruction and Development (EBRD) raised its forecast for growth of Bulgarian economy. The Bank expects 1% growth this year compared to the previous forecast of 0.8 percent. Bulgaria's economy grew by 1.7 % last 2014 despite the difficulties in the banking sector.

To bet on the pound

Forex strategists from Deutsche Bank advise their customer to make purchases of GBP. The long positions GBP/EUR are particularly attractive. Tree main factors explain this recommendation.

First, the recent slowdown in the dynamics of GBP subsequently led to rise of the pair EUR/GBP from the perspective of the present interest differential.

Second, the markets continue to sell the British currency. "The information about speculative positions, published last Tuesday revealed prevailing short positions in sterling, despite the changes in positioning of the dollar against other currencies like the kiwi and the Swiss franc. In other words, asset managers barely have cut huge amount of short positions in the pound, and reports indicate that the increase in wages was made thanks to the lower cost of production of British companies ", commented from the bank.

Third, the cyclical indicators give us ground to expect a continuation of the upward potential. Deutsche Bank analytics believe that  the base salaries will continue to increase.

Real estates remain the main source of wealth of Chinese millionaires

The number of Chinese millionaires with personal wealth of more than 10 mln Yuan (1.5 mln USD) reached 383 000, according to the "White Paper" of Chinese millionaires published by Forbes Magazine and China Construction Bank.

"White Paper" shows that many of China's new rich people have earned his fortune in trade and production. The main source of their wealth remain real estates. Due to the increasing value of dwelling in the past 10 years, nearly 11.6% of new millionaires have managed to accumulate their fortunes with investments in this market. This partly explains the still rising property prices in the country despite the global financial crisis.

Most millionaires are located in Guangdong province (southern China) - 80 thousand. Following are the millionaires from East China Jiangsu and Zhejiang provinces and the megalopolises Beijing and Shanghai. Total in these five areas live 53 percent of Chinese millionaires.

Airbus shares collapsed after fatal incident in Sevilla this weekend

The Airbus’s A400M aircraft  crashed this weekend in Sevilla,Spain during a test flight just 15 minutes after takeoff. Four of the six crew members died and two others were seriously injured and rescued from the burning wreckage.

In late 2001, European defense ministers signed a contract for production of 200 military transport planes A400M model in order to replace ageing military aircrafts. Development work on this project suffered a series of escalating costs and delays.

On Monday investors reacted negatively to the development process. The share price of Airbus declined by over 4% on the Frankfurt Stock Exchange. Securities traded in Paris depreciated by about 5%.

Because of the accident the engine supplier MTU also is incurring losses, whose shares depreciated by 1.5 percent. In 2007 MTU was indicted for the delay in the supply of machines and for the slow development of the engine.

Airbus seems to be haunted by bad luck. Recent months there have seen a series of accidents. In late December  aircraft type A320 of AirAsia crashed. At the end of March Germanwings A320 was overthrown by its pilot in the Alps.

The Swiss National Bank started the year with 30 billion CHF loss

In the first quarter of 2015 the Swiss National Bank has suffered losses worth 29,3  bln Francs (28,6 bln euros), according to the statement of the financial institution.

The Central bank suffers losses due to the fortification of the Swiss franc against the euro, reports Deutsche Welle.

In the middle of January 2015 the regulator suddenly changed the currency peg CHF/EUR and as a consequence the Swiss franc began to grow rapidly.

The minimum euro exchange rate of 1.20 Swiss francs was introduced in 2011. After its cancellation franc rose by almost 20%, which entail a significant depreciation of the investments of the Central Bank in foreign currency.

What a Trader should put on focus when is looking for information

ActivTrades continues the tradition to organize a series of webinars with exclusively useful information for both beginners and professionals.

Yesterday 7 May 2015 was held the latest webinar with guest speaker Paul Wallance .

He gave useful guidance on how to detect the unnecessary  information and to focus on what matters most with more professional approach.

To be in the course of the upcoming events you can check here:

http://www.activtrades.co.uk/index.aspx?page=events_webinar

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Exchange rates and inside problems have negative effect on 21st Century Fox profit

21st Century Fox announced a drop in profits for the first quarter due to ongoing problems in the television network Fox, higher costs to broadcast sports events, as well as unfavourable exchange rates, reported New York Times.

On Wednesday 21st Century Fox announced a net profit of 975 mln dollars, or 46 cents per share for the first quarter compared to 1.05 billion dollars, or 47 cents a share, for the same period last year. Revenues amounted to 6.84 bln dollars, which is unchanged from the last year.

The results of the company exceeded the expectations of Wall Street. Analysts forecast earnings of 39 cents per share for the first quarter.

The financial results reflect the company's progress in some areas, especially in the film industry, but also difficulties in its most important area: finding new successful shows on television and cable programs. Advertising revenues of the television network Fox declined by 7% because of the poor ratings. The lower ratings of cable networks FX and National Geographic have also negatively affected profits.

The pressure on the new management team of the Fox television network restructuring is obviously quite strong. Chase Carey, chief operating officer of the 21st Century Fox, said several times in a conference call with analysts that network performance is unacceptable, but promised that things will improve.

Iran is fully prepared to produce 5.7 bln barrels oil a day in 2018

The oil Minister of Iran Bizhan Namdar Zanganeh announced that the country is ready to increase the oil production to 5.7 bln barrels per day if the sanctions against the country are abolished.

 The Iranian government intends to perform sales in the Asian market, not in EU markets.

Zanganeh commented also that Iran expects OPEC to regulate the quotas so that Tehran to obtain the share of the market to which strives.

Currently the oil cartel has not reduced yet the production quotas, although oil price fell to around 50 dollars a barrel.

The meeting of the leaders of the organization will be held in early June.

I look forward to see what will be the development of the oil market after the decisions,that will be taken on this meeting. 

Facebook’s net profit fell with 20%

At the end of the first quarter of 2015 the net profit of US company Facebook Inc (NASDAQ: FB), which owns the largest social network in the world fell with 20% - up to $ 512 million, or 18 cents per share, compared with $ 642 million, or 25 cents per share for the same period last year. Nevertheless, the results exceeded expectations of the market.

The adjusted profit has increased with 20% - up to 42 cents per share, says the company statement.

The income from advertising on Facebook in January to March has increased by 46%, up to $ 3.32 billion. In February the company announced that the active advertisers exceeded 2 million comparing to 1.5 million in June 2014.

According to the company, Facebook recorded higher revenues at the expense of growth in sales of mobile advertising: in the last quarter it brought almost three quarters (73%) of total advertising revenues compared to 69% for October-December and 59% in January-March 2014

At the end of the first quarter the number of active users of the social network has constitute 1.44 billion. For only one year their number has increased with 13%.

Chinese industry shrinks with a more rapid pace than expected

The Chinese industry represents less than expected in April, marking the most significant attenuation of business activity for the last year. PMI index, calculated by HSBC, was revised from 49.2 to 48.9 points, below forecasts of strategists correction to 49.4 and below the March result of 49.6.

The indicator reached the lowest value since April 2014, when amounted to 48.1 points, well below 50 points, marking expansion.

Today's report by HSBC outlines a grim picture of the government's PMI index for the Chinese industry, which was published on Friday and retains its value from March to 50.1 points.

According to analysts, the difference is due to the fact that the study by HSBC is giving more importance  to the smaller export companies. This disappointing performance is most probably due to the decrease of domestic consumption, while new business from abroad is showing signs of improvement.

"The Chinese manufacturing sector began poorly the second quarter, new orders decrease with significant pace in a year, and production is stagnating." - Said HSBC's chief economist for China Hongbin Kew.

Good morning

Good morning everybody! Have a nice weekend!