upside

Gold has been trading upside as I expected and I see potential for the further upside continuation towards the upside references.    Due to the mid-long term upside trend and the short-term upside momentum, I see potential for the further growth towards the upside reference. Upside objectives are set at the price of $2.047 and $2.078 MACD oscillator is showing bull reading, which is good sign for the upside continuation. Key support is set at the price of $1.935

GBP/USD has been trading upside as I expected. The momentum is still strong to the upside and there is the chance for the higher prices towards upside reference. Due to the mid-long term upside trend and the short-term upside momentum, I see potential for the further growth towards the upside reference. Upisde objective is set at the price of 1.2670 MACD oscillator is showing bull reading, which is good sign for the upside continuation.   Key support is set at the price of 1.2310    

Technical outlook: The US dollar index has hit the initial projected target at about 104.15 as seen on the 4H chart here. The Fibonacci 1.618 extension was exceeded as the bulls registered a high close to 104.23. The index reversed sharply from there, dragging the index lower through 103.00 before finding some near-term support. It is seen to be trading close to 103.70 at this point in writing.     The US dollar index seems to have more room on the upside to complete the rally, which had begun from the 100.34 lows. After witnessing a straight rally from 100.60 towards 104.23 levels, the price could consolidate ahead of 105.50 which looks like the next Fibonacci extension and target. Near-term support is seen just below 103.00.   The US dollar index should be targeting 105.50 and higher in the next few trading sessions. Please also note that 105.50 is the next price resistance and the bulls want to take that out to complete the larger-degree corrective pattern. After hitting 105.50, the US dollar index could begin a bearish reversal dragging the price much lower.   Trading idea: A potential rally through 105.50 remains possible in the near term.    

Singapore: Retail sales surprise on the upside again in April. April retail sales beat market expectations to gain 3.6% year-on-year   April retail sales rise 3.6% Singapore's retail sales bested market expectations to rise 3.6% YoY, beating the consensus estimate for a 1.9% YoY contraction. On a monthly basis, retail sales were up 4.2% while excluding motor vehicles, sales were up 4.2%. Retail sales have held up surprisingly well despite elevated inflation, possibly supported by the return of visitors to Singapore. Monthly visitor arrivals have recently hit one million for the first time since the pandemic and could be helping drive the strong sales for food & alcohol (30.5% YoY) and wearing apparel & footwear (13%YoY). Meanwhile, sales for supermarkets and hypermarkets finally posted growth after several months of contraction.     Retail sales could continue to surprise on the upside should tourist flows continue Despite the recent uptick in inflation, we believe that retail sales can continue to post growth if the boost driven by foreign visitor arrivals is sustained. Monthly visitor arrivals were as high as 1.8 million before Covid-19 and the steady march back to those levels could offset softer domestic household spending due to elevated inflation. Furthermore, retail sales can accelerate once price pressures cool perhaps towards the end of 2023.

Technical Market Outlook: The EUR/USD pair has been seen bouncing from the local low made at the level of 1.0675 and so far the high of the bounce was made at the level of 1.0732. The intraday technical resistance is seen at 1.0780, so bulls need to break out above this level in order to continue higher. Any breakout below the level of 1.0675 would sustain the bearish outlook and put the level of 1.0636 for a test (swing low). The weak and negative momentum supports the short-term bearish outlook for EUR as the bulls are not able to move above the neutral level of fifty on the RSI indicator.     Weekly Pivot Points: WR3 - 1.07335 WR2 - 1.07121 WR1 - 1.06983 Weekly Pivot - 1.06907 WS1 - 1.06769 WS2 - 1.06693 WS3 - 1.06479   Trading Outlook: Since the beginning of October 2022 the EUR/USD is in the corrective cycle to the upside, but the main, long-term trend remains bearish. This corrective cycle might had been terminated at the level of 1.2080 which is 61% Fibonacci retracement level. The EUR had made a new multi-decade low at the level of 0.9538, so as long as the USD is being bought all across the board, the down trend will continue towards the new lows.  

Technical Market Outlook: The EUR/USD pair has been seen bouncing from the local low made at the level of 1.0675 and so far the high of the bounce was made at the level of 1.0732. The intraday technical resistance is seen at 1.0780, so bulls need to break out above this level in order to continue higher. Any breakout below the level of 1.0675 would sustain the bearish outlook and put the level of 1.0636 for a test (swing low). The weak and negative momentum supports the short-term bearish outlook for EUR as the bulls are not able to move above the neutral level of fifty on the RSI indicator.     Weekly Pivot Points: WR3 - 1.07335 WR2 - 1.07121 WR1 - 1.06983 Weekly Pivot - 1.06907 WS1 - 1.06769 WS2 - 1.06693 WS3 - 1.06479   Trading Outlook: Since the beginning of October 2022 the EUR/USD is in the corrective cycle to the upside, but the main, long-term trend remains bearish. This corrective cycle might had been terminated at the level of 1.2080 which is 61% Fibonacci retracement level. The EUR had made a new multi-decade low at the level of 0.9538, so as long as the USD is being bought all across the board, the down trend will continue towards the new lows.  

Rates Spark: Where rates upside could come from Yield curves are already consistent with the new hawkish message from central banks, so any rise in yields is more likely to come from economic data. Yields may well continue rising, to 4% for 10Y Treasuries, but this pis set to come with a more inverted curve.   Data is already in the price, as is the new more hawkish central bank reaction function At the fundamental level, rates are currently driven by two forces. Firstly what the market’s current economic projections suggest is the appropriate path for policy rates in the future to bring inflation to target, and second what central banks suggest this path should be. Most of the time, these two estimates are very close to each other. It is worth remembering that in a “data dependent” setting where central banks are reacting to incoming data, efficient markets should quickly reprice with each important economic release, that is if central banks’ reaction function is clearly communicated and understood. Market interest rates over the past few weeks have been driven by a reassessment in central banks’ reaction function     This point of the above reminder is to highlight that the retracement higher in market interest rates over the past few weeks has been driven mostly by a reassessment in central banks’ reaction function, especially in a context where the global outlook, for instance China's recovery, is dimming.   Cases in point are the resumption of the Bank of Canada’s hiking cycle, or the Fed’s skipping the June meeting but communicating that more hikes are likely. From here, the question is whether the much-awaited Powelltestimony tomorrow will deliver a further update to the Fed’s reaction function, or if markets materially differ from what the Fed sees as the appropriate path for policy rates.     Dollar and euro swap forwards are no longer pricing cuts before early 2024

In this report, we update our valuation for Molecure. Our new FV is PLN 23.2ps, implying 8% upside vs. the current price. We maintain a HOLD recommendation. Molecure's OATD-02 immuno-oncology program successfully entered phase I clinical trials in early 2023, and we expect initial safety and efficacy data at higher doses in 4Q23. The company's lead program, OATD-01, appears on track to enter the phase II clinical trial in sarcoidosis later this year. After Molecure to filed an application with the FDA to start this program, we expect approval in 3Q23 and first dosing in 4Q23.   We believe the monetization of both assets is a key story for Molecure in 2024-25E, but first the company has yet to secure funding for development beyond 1Q24. In our opinion, the stock issue scenario is the most likely; recently the annual general meeting authorized the management to issue up to 2.8m new shares. Despite the positive development of the clinical program, we expect the share price to remain under pressure due to this upcoming potential share offering.     OATD-01 to start phase II trial in sarcoidosis in 2023E. Molecure submitted IND motion to the US regulator FDA to start phase II of OATD-01 in sarcoidosis. Molecure targets starting a phase II study in patients in the US and the European Union in 4Q23, while the results will be available in 1H25. As the start of phase II clinical trials is approaching, we removed part of the discount on the success rate due to the uncertainty surrounding Galapagos’ termination. We value OATD-01 at PLN 8.7ps, while with no discount it would be valued at PLN 16.5ps. OATD-02 started clinical trials, first partial results in 4Q23. In March, Molecure dosed the first patient in phase I clinical trials of OATD-02.     The company plans 5- 6 cohorts in a dose escalation study with 30-40 patients recruited in three Polish centers with advanced or metastatic solid tumors. Molecure says it will present data regularly after each cohort. We believe data from higher doses will be critical as it could show initial efficacy and safety data that could be a catalyst for a potential partnering on this program, which we think could take place in 2024E. We value the OATD-02 program at PLN 14.5ps. AGM authorized new share issue.   Molecure AGM authorized management to issue up to 2.8m new shares (20% dilution) implying an SPO value of up to PLN 60-65m. The company has cash secured until 1Q24. We believe that a new share issue is the most probable source of financing the development of OATD-01 and OATD-02; in our view it may take place in 3/4Q23.     We believe that a potential decision of the main shareholder to participate in the share issue would be a supportive factor for the equity story. Recommendation and valuation. We reiterate our HOLD rating for Molecure with a new FV set at PLN 23.2, implying 8% upside vs. the current price.  

Canada’s GDP surprises to the upside US PCE Price Index eases in June ISM Manufacturing PMI expected to contract The Canadian dollar is trading at 1.3259, up 0.07%. Canadian markets are closed for a holiday and I expect USD/CAD movement to be limited. On the economic front, the US releases ISM Manufacturing PMI. The index is projected to tick lower to 46.9 in June, down from 47.0 in May.   Canada’s GDP climbs in May Canada wrapped up the week with a strong GDP report. The economy is estimated to have gained 0.4% in May, after flatlining in April. The Canadian economy continues to surprise with its resilience despite rising interest rates. The Bank of Canada raised rates to 4.75% earlier this month after a five-month pause, arguing that monetary policy was not restrictive enough. The BoC statement pointed at strong consumer spending and higher-than-expected growth as factors in the decision to raise rates. The BoC also expressed concerns that inflation could remain entrenched above the 2% target. The strong GDP report has added fuel to speculation that the BoC will raise rates again on July 12th but there is also concern that higher rates will lead to a recession. Canadian 10-year bonds have fallen further below the 2-year bonds, as the yield curve inversion, a predictor of recession, has become even more pronounced. Inflation has been falling and headline inflation eased to 3.4% in May, down from 4.4% in April. Core inflation also declined to 3.8%, down from 4.2%. The question remains whether inflation, still well above the 2% target, is falling fast enough to prevent another rate hike in July. In the US, there were more signs that inflation is weakening. On Friday, the PCE Price Index, which is the Fed’s favourite inflation gauge, declined from 0.4% to 0.1% in June. As well, UoM Inflation Expectations dropped to 3.3% in June, down from 4.2% in May and the lowest since March 2021. Despite these signals that inflation is decelerating, the Fed is widely expected to raise rates at the July meeting.   Canada’s GDP surprises to the upside US PCE Price Index eases in June ISM Manufacturing PMI expected to contract The Canadian dollar is trading at 1.3259, up 0.07%. Canadian markets are closed for a holiday and I expect USD/CAD movement to be limited. On the economic front, the US releases ISM Manufacturing PMI. The index is projected to tick lower to 46.9 in June, down from 47.0 in May. Canada’s GDP climbs in May Canada wrapped up the week with a strong GDP report. The economy is estimated to have gained 0.4% in May, after flatlining in April. The Canadian economy continues to surprise with its resilience despite rising interest rates. The Bank of Canada raised rates to 4.75% earlier this month after a five-month pause, arguing that monetary policy was not restrictive enough. The BoC statement pointed at strong consumer spending and higher-than-expected growth as factors in the decision to raise rates. The BoC also expressed concerns that inflation could remain entrenched above the 2% target. The strong GDP report has added fuel to speculation that the BoC will raise rates again on July 12th but there is also concern that higher rates will lead to a recession. Canadian 10-year bonds have fallen further below the 2-year bonds, as the yield curve inversion, a predictor of recession, has become even more pronounced. Inflation has been falling and headline inflation eased to 3.4% in May, down from 4.4% in April. Core inflation also declined to 3.8%, down from 4.2%. The question remains whether inflation, still well above the 2% target, is falling fast enough to prevent another rate hike in July. In the US, there were more signs that inflation is weakening. On Friday, the PCE Price Index, which is the Fed’s favourite inflation gauge, declined from 0.4% to 0.1% in June. As well, UoM Inflation Expectations dropped to 3.3% in June, down from 4.2% in May and the lowest since March 2021. Despite these signals that inflation is decelerating, the Fed is widely expected to raise rates at the July meeting.   USD/CAD Technical USD/CAD is putting pressure on resistance at 1.3254. Next, there is resistance at 1.3328 1.3175 and 1.3066 are providing support  

There is more room to the downside for market rates, but we will go up first Given all of this, we anticipate that the US 10yr Treasury yield can get back above 4%, back to where it was before the SVB story changed the dynamic. The 10yr could well take out the previous high, and remain elevated for a time. With European central banks tending to show urgency on the inflation issue, there is ample room for eurozone market rates to rise too. The 10yr Bund yield is quite likely to break back above 2.5%, and then trend towards 3%. The cycle high seen when SVB went down was 2.75% – that’s liable to be taken out.   We think these are moves that should be faded through, as increasingly we expect the residual oomph factor to be outweighed by an increasing angst factor. Growing unease with respect to the commercial real estate loan portfolios being held by banks will also begin to count. And further falls in inflation should be a natural outcome as demand slows. Once key core inflation readings have moved below 3%, the way will be clear for the Fed to consider rate cuts. A 2% handle is all that’s needed (so, for example, 2.9% will be good enough). The ECB won’t be too far behind. So sure, anticipate further rises in market rates now, but prepare for much bigger falls ahead.  

GBP: CPI is a big risk event Our team discussed here how the latest UK wage growth figures likely paved the way to a repeat 50bp hike by the Bank of England in August. The faster-than-expected inflation deceleration in the US hit the pound in some non-dollar crosses, largely because of the vulnerability of the ultra-hawkish BoE market rate expectations. Such vulnerability of the pound remains very much present now as markets continue to factor in 130bp of tightening to a peak in the UK, leaving ample room for dovish repricings. This week’s UK CPI print is thus a major risk event for sterling since signs of deceleration in price pressure would likely nudge the dial in favour of 25bp over a half-point hike in August. Markets currently price in 45bp for August, so the downside risks likely exceed the upside for the pound.  

NZD/USD     The New Zealand dollar got a boost after Chinese leaders signal more support is coming to the economy at this week’s Politburo meeting.  Commodity prices across the board got a boost and that helped the kiwi-dollar end its six-day decline.  The New Zealand might start looking attractive again as long as the Fed does not signal a hawkish skip and trigger a massive move back into the greenback.  Major support lies at the 0.6150 region, but if bearish selling accelerates, prices might not find support until the 0.5900 level, which could potentially form a bullish Gartley pattern. If bullishness returns to the kiwi, further upside could eye a return towards the 0.6400 area. Major resistance would like at the 0.6550 level.

Technical Market Outlook: The EUR/USD pair has bounced from the key technical resistance located at 1.0834 and is heading towards the 100 MA on H4 time frame chart located at 1.0887. The big Head & Shoulders pattern on the H4 time frame chart extends the market drop the downside with a potential target seen at the level of 1.0636 (H&S measurement), however, now is the time for a pull-back. The intraday technical support is seen at the level of 1.0841 and the intraday technical resistance is located at 1.0893. The strong and positive momentum on the H4 time frame chart supports the short-term bullish outlook for EUR.     Weekly Pivot Points: WR3 - 1.08599 WR2 - 1.08348 WR1 - 1.08265 Weekly Pivot - 1.08097 WS1 - 1.08014 WS2 - 1.07846 WS3 - 1.07595   Trading Outlook: Since the beginning of October 2022 the EUR/USD is in the corrective cycle to the upside, but the main, long-term trend remains bearish. This corrective cycle might be terminated at the level of 1.1286 which is 61% Fibonacci retracement level when it is hit, so please keep an eye on this level and the way the market participants (bulls and bears) will deal with it.    

Threats and opportunities The evolution of demand along with the macroeconomic environment are beyond the company's control, yet they are among key drivers of its operational / financial results. (1) Regulatory changes, (2) technological progress, (3) competitive pressure and (4) the ability to adapt to market trends are identified both as major business opportunities and risks. We believe, however, that Newag has expertise and organizational capabilities to effectively address the these challenges. Valuation and recommendation The weighted average of DCF and comparative valuation implies a Dec’24 TP of PLN25.0/share (39% upside). In the effect, we issue an Outperform rating for the stock.  

Market recovery as a key driver We initiate coverage of Marvipol Development with a BUY recommendation and set a FV of PLN 10.49 per share (upside of 31.2%). We point to the ongoing presales recovery and we predict that the company will pre-sell 495 and 586 units in 2023E and 2024E, respectively, which should support 2025E-26E results (in 2024E, the company will deliver projects with lower profitability, which most likely will negatively affect net profit; we predict a significant improvement in 2025E) and cash flows. We do not underestimate the group’s exposure to stable logistics activity (we do not exclude potential disposals), expected return to dividend payments (we assume DPS of PLN 0.8 in 2024E) and solid balance sheet. On our forecasts, the company currently trades at P/E ratios of 5.0x in 2023E, 9.6x in 2024E and 5.8x in 2025E, concurrently with a P/BV of 0.5x. Demand recovery and expansion in offer to support pre-sale volumes. After very weak 2022 data (decrease in pre-sales to 207 units, -45% y/y), we anticipate that the company will present a solid rebound, driven by improvement in market circumstances and expected new commencements. Thus, we forecast that 2023E pre-sales will amount to 495 dwellings (+139% y/y; +130% y/y in 1H23) and will continue the trend in 2024E, with a hike of a further 18% y/y. Poor 2024E results and a rebound in 2025E. As of now, we predict that the company will reach a net profit of PLN 67m in 2023E. We presume that the developer will report rather uninspiring numbers in 2024E, driven by a less favourable delivery mix (lower margins), and we expect a deterioration in profit to PLN 35m. We believe, that profitability and volumes will improve in 2025E and we arrive at a net profit of PLN 57m. Possible divestments in logistics division to boost cash position. The group intends to dispose of at least part of its logistics portfolio, which in turn would support its cash position. We assume that the total value of the three existing projects, dedicated to Marvipol Development, may reach ca. PLN 189m. We would expect potential transactions in 4Q23E and 2024E as the investment market should gradually rebound. Expected return to recurrent dividend pay-outs. In our forecasts, we assume that the company will return to regular dividend payments, starting from 2024E. We assume a dividend payout ratio of 50% and DPS of PLN 0.8 in 2024E, which implies a DY of 10.0%. Multiple valuation. On our forecasts, Marvipol Development currently trades at a P/E of 5.0x in 2023E and 9.6x in 2024E. As to P/BV multiples, we arrive at 0.5x in 2023E and 2024E, which implies a 70% discount vs. peers.