Forex research

[Alpari]

UK Opening Call from Alpari UK on 5 January 2015

Eurozone dominating as markets come back to work after Christmas

Good morning and Happy new year!

Isn't it depressing!

This Monday finally sees the return of most traders from the Christmas break and also the return of the volume into these markets. We may have had an extended Christmas break but it very much seems that the news stories dominating market direction have not changed, with a slip lower in the oil price, the ECB driving the Euro lower and the Non farm payroll number all dominating proceedings as we jump back into this first full week back. We also come back on a fairly busy week for the economic calendar this week with Eurozone CPI, PMI numbers, BOE rate decision and the US jobs report all set for release this week. So any one who thought they could just ease themselves back into things with a comfortable week will have a bit of a shock coming.

The Eurozone is the main talking point as we get going this morning as the Euro weakened to a nine year low against the US dollar trading below 1.1800. This is no surprise after the drama of the last couple of weeks with Greece, Germany and Mario Draghi himself. Greece seem to be edging closer to a Eurozone exit as the major political parties get themselves ready for elections later this month. It has been said over the weekend that German Chancellor Angela Merkel is now ready to cut losses in terms of the overall Euro area and accept a Greek exit from the single currency union. Germany itself has been struggling with extremely poor economic data, with unemployment CPI, GDP growth and import and export growth all looking sluggish. CPI readings this morning out of Germany will give yet another clue into how well the Germans are managing to hold off the drastically low inflation number for the Eurozone as a whole. Last week also saw ECB president Draghi hint yet again that a full round of government bond buying was just around the corner after he told us that further preparations were being made. Expectations now seem to pushing towards the next ECB meeting for the news of full blown QE, and with Eurozone CPI is expected to show that prices fell for the first time in five years in December which would add further weight to Mario Draghi’s plan.

However hitting the CPI readings as ever is the continuing slide in the oil price. Oil saw a brief rest bite over the Christmas period as lower volumes meant that the falls were not extended however with a full session of solid trading volumes today we are already seeing lower prices. WTI crude oil dropped to $51.78 overnight. The news of lower oil prices will not be a positive thing for those looking for a strong number in the CPI readings from Europe later in the week. Despite the fact that some write off the low oil prices as something unnaturally dragging the CPI readings down we cannot escape the fact that even if you strip out the oil price from your readings, anything on a domestic level still needs energy to run, meaning that the oil price is not as irrelevant as people would like to think when looking at the core CPI readings, which are expected at 0.7% for December when we get the reading on Wednesday.

As the week moves on we have a whole host of economic data due to release, most notably the US non farm payroll number. With the Fed still looking on track with its monetary policy and potential date for rate hikes this number should be judged on a month by month basis these days and not as a tool to gauge the date for a rate hike. Continued dollar strength should continue its weekly theme no matter what the payroll result on Friday, however as usual equity markets are likely to be in for some fierce volatility over the number.

Ahead of the open we expect to see the FTSE100 open lower by 10 points and the German DAX lower by 11 points.

Read the full report at Alpari News Room​

 

[Alpari]

US Opening Call from Alpari UK on 5 January 2015

Slow start to a big week for the US expected

• Focus on Europe as Greek elections threaten ECB QE plans;
• UK a concern with general election, EU vote and cooling economy weighing;
• US session quiet but busy week lies ahead.

A quiet start to the week for the US despite the return of many traders following the new year break as a lack of economic data or events leaves investors looking for direction elsewhere.

For now, it’s Europe that’s guiding investors with snap Greek elections later this month potentially setting a precedent for elections in other austerity stricken countries this year, with the anti-austerity Syriza party currently leading in the polls. While a Greek exit won’t be as catastrophic as it would have been a few years ago, it’s certainly undesirable and should Syriza rise to power, the eurozone faces the tough task of doing what it can to keep Greece in the union while not incentivising other countries to vote in parties of similar mindset. For this reason, it’s going to be a massive year for the eurozone.

With this in mind, the ECB faces a tough choice when it meets in a couple of weeks in the first of its now 6-weekly meetings. The market has quite heavily priced in the adoption of quantitative easing from the ECB, which it has been rumoured to be preparing for this month’s meeting. However, with Syriza leading the polls which may cause issues around its membership of the currency block and therefore the ECBs willingness to buy its bonds, the central bank may be forced to rethink its plans and either exclude Greece or opt for some other form of stimulus, which I imagine the markets wouldn’t take to as well.

The UK is also becoming increasingly viewed by investors as one to steer clear of with a general election due later this year which is simply too close to call, a vote on EU membership in the pipeline if the Conservatives remain in power and the economy showing signs of broad based cooling following a strong 18-month run. The only thing that’s supported the currency recently has been the fact that the Bank of England is likely to be one of the first major central banks to raise interest rates but even this now looks unlikely until next year.

He construction PMI this morning providing further evidence of the cooling in the economy, falling to 57.6 from 59.4, much larger than the expected drop to 59. This was the third consecutive month that we’ve seen a decline in the number although we should take a couple of things into consideration with this. Firstly, a decline in construction activity in the winter months is not that uncommon. Secondly, 57.6 is still a very good reading and points to continued strong growth in the sector which should not be sniffed at.

The US session is looking a little quieter today but things will pick up as the week goes on. Between PMI readings tomorrow, FOMC minutes on Wednesday, jobless claims on Thursday and the jobs report on Friday, it’s not going to be a straightforward first week for investors although it should set things up nicely for the year.

The S&P is expected to open 9 points lower, the Dow 68 points lower and the Nasdaq 16 points lower.

Read the full report at Alpari News Room​

 

[Alpari]

Daily Market Update - 5 January 2015 - Alpari UK

[video=youtube;ihfE7zoJDoc]https://www.youtube.com/watch?v=ihfE7zoJDoc[/video]

 

[Alpari]

UK Opening Call from Alpari UK - 6 January 2015

Oil below $50 and potential Greece exit dominate markets

Good Morning all!

The first full week after the Christmas period started off with a bang yesterday as equity, currency and commodity markets all posted big moves as fears surrounding the lower oil price and the political situation in Greece saw traders sell their assets. WTI Crude oil dropped below $50 a barrel for the first time since 2009 before rallying slightly to trade slightly higher than the huge psychological figure. T the start of 2014 oil prices had been around the $105 per barrel level, 12 months on the picture could not be any different with the global economy continuing to worry that a lower oil price could hit the large oil producing nations. During yesterdays equity session European, US and Asian markets all fell sharply with oil and energy stocks leading the major bourses lower. The Dow ended lower by over 300 points with the Nikkei ended lower by over 2.5%.


With the new year has come the same old problems for global financial markets with the supply glut and weaker demand for oil causing tumbling prices in both brent and WTI crude oil. The lower prices could well be driving a lot of oil producing nations in to extremely tough economic times as the current price drops way below the cost price for these countries to actually extract oil from the ground. With the likes of Russia and a lot of the middle east needing the oil price between $105 – $90 to break even you can see why a lot economies are struggling when the price is barely treading water at $50 a barrel.

Europe is the other major talking point in global markets yet again this week and it feels like we have moved full circle on the Eurozone crisis as markets are yet again dominated by a potential exit from the euro area by Greece. After years of political fighting and billions of Euros in bailout money it could be that we are closer to a Greek exit than we have ever been as the greatest power in the Eurozone now see the exit of Greece from the Euro as a viable option for a sustainable and recovery Eurozone. German Chancellor Angela Merkel has almost voiced her support for a move by Greece after years of being totally against any move to break up the Eurozone saying that she now believes that the Eurozone could cope with an exit. With elections called for later this month and populist parties who are opposed to further Eurozone led austerity measures leading the way in the polls it is almost a case of who will act first will it be Greece’s people voting for no Eurozone or will the ECB blink first and call for the change.

Of course Greece isn’t the only story in Europe as the ECB continues its internal fight to see whether the economy needs a full round of government bond buying quantitative easing pumped in. Mario Draghi has been hinting since last April that QE is something that could be looked at but over the last couple of weeks we have seen the strongest hints yet that stimulus will be added to the economy to try and boost growth and pull the ultra low inflation number higher. Wednesday will be a key day this week as the Eurozone CPI reading is released. Obviously a lower oil price is going to affect this reading, but a poor number cannot be just brushed under the carpet due to lower energy prices. The German reading yesterday showed CPI at its lowest level in 5 years and a continued week number as expected in Europe’s number on Wednesday would be further proof that the full round of QE could be ready for delivery as soon as next weeks ECB rate meeting.

Ahead of the open we expect to see the FTSE100 open lower by 11 points with the German DAX higher by 8 points.

Read the full report at Alpari News Room​

 

[Alpari]

Daily Market Update - 6 January 2015 - Alpari UK

[video=youtube;wN86ha3Bkkk]https://www.youtube.com/watch?v=wN86ha3Bkkk[/video]

 

[Alpari]

UK Opening Call from Alpari UK - 7 January 2015

Good Morning!

Asian stocks extended losses for equity markets overnight as the energy and commodity story continued to dominate proceedings for global market. The oil price is the only thing that investors can focus on at the moment and with the drop in both WTI and Brent Crude oil continuing it currently seems that there is no light at the end of the tunnel. Many will be asking just how much lower this oil price can go before some kind of stabilising effect kicks in, however after every $10 fall experts have been calling the end of the slide but have seen it continue to drop like a stone. Traders will be looking for the $40 level now as a base for the oil price but after further comments from Saudi Arabia yesterday hinting of still no move to curb output then no one would be surprised to sees us drop yet lower than that level. Breakeven prices and Fracking costs have long been broken and it now almost seems we will keep going lower until the members of the OPEC cartel literally can no longer afford a slip in prices.

There are other stories moving markets today, with some important data due for release over the next few days. Europe and the potential QE and Greek exit from the Eurozone is the other main story that people are able to get their teeth into. This morning sees the all-important Eurozone CPI reading and it could well be the first time we see a period of deflation as the headline figure could potentially drop to -0.1%. However markets may not look to this as such a bad thing and could in fact see equities boosted as it would almost certainly confirm that a full blown program of QE was right around the corner and could be with us as early as next weeks ECB rate setting meeting. Gain we cannot look away from the oil price here as it would be the lower energy costs that drag the CPI inflation figure to this low. However the worrying factor for Mario Draghi and the ECB will be that the core CPI number, that strips out energy prices has still been falling at the same rate as the headline number just from a slightly higher base. This means that domestic prices are falling regardless of the drastic fall in oil prices.

AS the week now rolls on we get more and more data to work in tandem with the low oil price. Obviously today the CPI reading in Europe will take centre stage but this afternoon also sees us start to gear up for Friday’s non farm payroll number with the ADP payroll figure. Tomorrow sees the BoE policy meeting and despite not much expected, many will want to see if there is any hint of a change in monetary policy. Friday will of course see the payrolls and jobs report from the US, always a big story and likely to give yet more fuel to the markets along side this drastically low oil price that has the entire market panicking and playing the “risk off” card jumping out of risky assets and into the safe havens such as the US dollar and gold prices.

Ahead of the open we expect to see the FTSE open higher by 13 points with the German DAX higher by 19 points.

Read the full report at Alpari News Room​

 

[Alpari]

Brent Crude Breaks Below $50 for the First Time Since May 2009

Brent crude broke through the psychologically significant $50 a barrel this morning at the first time of asking, providing further evidence that traders are not interested in picking bottoms in the oil price collapse just yet, despite it being down more than 56% in a little over six months. This is the first time Brent has traded below $50 since May 2009 and the fact that traders barely even hesitated at this level makes $40 a barrel for Brent crude look extremely likely. With momentum only appearing to gather, I don't even think it will stop there unless we see a change in stance from OPEC (more specifically the Saudi's given their clear pull in the group) or US shale companies starting to fall, which is clearly what OPEC is banking on.

Brent is now wavering around the $50 level but this simply looks like a dead cat bounce more so than anything else, making further losses in the short term look very likely, just as we saw in WTI a couple of days ago. With traders playing such little attention to technical levels until now, it's difficult to highlight key levels but there are many levels between current prices and 47.26 - April 2009 lows - that have been strong support and resistance levels previously so we may see sellers take their foot off the gas a little in this region. Should this break though, particularly today, then $40 and even $36.20 - December 2008 lows - look a strong possibility.

Read the full report at Alpari News Room​

 

[Alpari]

US Opening Call from Alpari UK - 7 January 2015

Focus turns to FOMC minutes as Brent pierces $50

Oil is once again what everyone is talking about this morning after Brent crude pierced the $50 a barrel level for the first time since May 2009, although there are plenty of other things to focus on today as the FOMC releases the minutes from its December meeting and we get the latest update on job creation from ADP.

The $50 level in Brent crude was widely seen as the next big psychological level at which traders may be tempted to lock in some profits or even be tempted to buy into the decline, although this was far from guaranteed as the same level in WTI proved to be nothing more than another hurdle that traders were more than happy to clear. We do appear to have seen more of a reaction to the level in Brent, with it having bounced as high as $51.63 since, although in the grand scheme of things this isn’t much better than the rally to $50.88 in WTI shortly after reaching the same level.

As it stands, this looks nothing more than a dead cat bounce and I expect traders to remain very reluctant to be overly bullish at these levels as the fundamental picture has not changed. I’ll be very surprised if the $50 level holds until the end of the day, let alone in the longer term. The fact of the matter is that there is still an oil supply glut and demand isn’t there. Unless one of these factors change, oil prices are going to remain very heavy. The decline may slow and probably will but I would not bet against both WTI and Brent breaking through $40 in the coming weeks.

It’s not just oil producing countries and energy firms that are feeling the pressure of falling oil prices, central banks in oil importing nations are also being put into an uncomfortable position, whether it being the Fed and BoE having to question the timing of the first hike or the ECB potentially being forced into bond buying despite an important election taking place in Greece only a few days later.

This morning it was confirmed that the eurozone has finally fallen into deflation territory for the first time since 2009, driven by a 6.3% decline in energy prices which won’t come as much of a surprise to anyone given the movements in oil prices. All other prices remained quite stable, while services actually rose by 1.2% which explains why the core reading rose to 0.8% from 0.7% the month before. The rise in the core reading may potentially give the ECB the opportunity to delay its next stimulus package until after the Greek election when it will have a much better idea of what it’s dealing with.

I don’t think the rise in the core reading has done anything to change the consensus opinion in the markets though, with equity markets appearing to react positively to the drop into negative territory of the headline figure, suggesting they’re still convinced that QE is still on the cards this month and potentially even more so.

The decline in oil prices doesn’t appear to be changing the Fed’s view on upcoming interest rate hikes from current record lows, with everything continuing to point to the middle of the year for the first hike. That said, with oil continuing to plummet, this may change and if we get any indication that this is the case in today’s minutes, it would more than likely have a major impact on the markets.

While the inflation decline in the US hasn’t been close to as bad in other countries, it is certainly heading lower and already below the Fed’s 2% target. If this is to continue, the Fed will be in the very difficult position of seeing a strong economic recovery but potentially being forced to leave rates at the current lows so as to not exacerbate the inflation problem. The minutes may provide further clarification on whether this is the case or if they consider the movement in oil prices to be temporary and not threatening thereby continuing on the course of rate hikes as planned.

Today also sees the release of the non-farm employment change figure which is seen as an estimate of Friday’s non-farm payrolls figure based on the numbers compiled by ADP, which provides payroll services to a large number of corporations. The release is generally not seen as a very accurate estimate of the official NFP figure but it can give an indication of whether we’re going to see a big swing away from expectations, which is more what this is used for.

The S&P is expected to open 12 points higher, the Dow 94 points higher and the Nasdaq 21 points higher.

Read the full report at Alpari News Room​

 

[Alpari]

Daily Market Update - 7 January 2014 - Alpari UK

[video=youtube;WgF-b5_nsy8]https://www.youtube.com/watch?v=WgF-b5_nsy8[/video]

 

[Alpari]

UK Opening Call from Alpari UK - 8 January 2015

Oil prices push back and lead equity recovery

Good morning!

Oil prices yet again have dominated the overall market direction over the last 24 hours as a slight rebound in major prices has seen equity markets recover losses incurred earlier in the week. However we are going to need to see much more of a recovery if prices are going to continue to recover as yesterday only saw a brief rest bite and a potential dead cat bounce on both WTI and Brent crude oil. However there has been talk over the last 24 hours that $40 could be the absolute price floor for oil as all oil producers continue to lose money even with the price above $50 a barrel. However those eyeing a price floor at $40 are also concerned that any recovery from this level may not happen until the second half of the year.

So with oil prices rebounding slightly and lower than expected Eurozone CPI hinting at a move to introduce QE at next weeks ECB meeting, equity markets were able to post some nice gains. However last nights Fed meeting minutes saw Janet Yellen warn yet again of global growth fears hitting all economies. Of course we know the Fed are well on track and the US is leading the way in terms of economic recovery but the global growth issue is something that all economies must be worried about. She also hinted that interest rates in the US could go up before inflation picks up. Of course inflation in the US is nowhere near as low as in the Eurozone, but yesterday showed that Janet Yellen is willing to stick to her plan without waiting for the oil price to drag the inflation level higher.

Later today we will get the BoE rate decision and of course the expectations for today’s meeting are no change across the board. In the UK we are almost sitting in a bit of a sweet spot in terms of the economy where currently things are both positive for the electorate and government/central bank. With growth figures, unemployment and average earnings figures moving in the right direction the government is happy with the current economic position. The one fear is of course the lower inflation figure, a figure which is insuring that while average earnings slowly go up prices remain static if not lower. It almost shows that at the moment there is no real need to push ahead with a change in monetary policy and we may not see a rate hike now in the UK until 2016. It also shows that the fear of deflation at the moment for the UK is not a totally bad thing after all, especially when the current government will be asking the electorate to go to the poll in the next 5 months.

The last two days of the week are obviously busy ones with the BoE following on from Eurozone CPI and leading into CPI from China overnight and then of course the all-important US jobs report and non farm payroll number tomorrow afternoon. So despite a lot of data already being release so far this week and the dominating oil price causing yet more big swings in markets, the moves are certainly not over for the week just yet, as the first full week of the new year continues to keep everyone on their toes.

Ahead of the open we expect to see the FTSE 100 open 72 points higher with the German DAX higher by 120 points.

Read the full report at Alpari News Room​