Alpari
Alpari Representative
- Messages
- 122
UK Opening Call from Alpari UK on 8 August 2013
Europe to open higher on improved Chinese trade data
Today’s UK opening call provides an update on:
• Chinese trade data improves in July;
• BoJ appears in no hurry to loosen monetary policy further;
• Australian unemployment remains at 5.7%;
• Pull back in US indices continues on expectations of September tapering.
Strong trade figures from China provided a significant boost to Asian indices over night, and look to be having a similar impact on European futures as well, with indices currently expected to open in positive territory.
Both imports and exports were much better than both the previous month, when both surprisingly fell, and the forecasted figures. Imports were up 10.9% in July, following a drop of 0.7% in June, while exports rose 5.1% following a 3.1% decline. While these figures are encouraging, I remain very sceptical about the trade data coming out of China.
China may be committed to cracking down on activities which distort the export figures, such as disguising credit inflows as legitimate exports, but this is going to take some time to stamp out. Also, there’s been suggestions for quite a while now that Chinese data may be manipulated to appear far better than it actually is, which hardly makes it reliable.
The Japanese yen continued to rally following the release of the Bank of Japan interest rate decision and statement. The lack of additional easing from the BoJ is what’s responsible for a lot of the yen strength recently, with the markets clearly having withdrawal symptoms from the lack of new QE activity recently and craving more.
The statement from the BoJ was not very dovish at all, which suggests the central bank is very unlikely to announce any additional easing before the end of the year. The BoJ pointed out again that the economy is continuing to recover moderately, while insisting that inflation is likely to continue to rise.
Data out of Australia was relatively mixed, with the unemployment rate remaining at 5.7%, despite expectations of a 0.1% increase. However, both full-time and part-time employment fell in July, which is going to be a concern. The Reserve Bank of Australia cut interest rates for an eighth time in two years earlier this week in a bid to halt the recent decline in the economy. However, many including myself, still expect another rate cut later this year, as the economy continues to suffer following the end of the mining boom, which the country became far too reliant on in recent years.
US indices continued to retreat over night, with investors taking advantage of the lack of news and data to provide some relief to the rally that has seen the S&P and Dow hit record highs on numerous times this year. People are continuously calling for some form of healthy retracement in US equities at the moment following the aggressive move higher this year and I think that’s all we’re seeing.
The move lower is being aided by investors trying to predict when the Fed will start scaling back its asset purchases. The consensus on this changes more than the UK weather, with investors now leaning towards a September taper despite the disappointing jobs report last week. This is why it’s so important to keep tabs on what the FOMC members say on a day to day basis because even the opinions of non-voting members are moving the markets at the moment.
Ahead of the open we expect to see the FTSE up 9 points, the CAC up 19 point and the DAX up 32 points.
Europe to open higher on improved Chinese trade data
Today’s UK opening call provides an update on:
• Chinese trade data improves in July;
• BoJ appears in no hurry to loosen monetary policy further;
• Australian unemployment remains at 5.7%;
• Pull back in US indices continues on expectations of September tapering.
Strong trade figures from China provided a significant boost to Asian indices over night, and look to be having a similar impact on European futures as well, with indices currently expected to open in positive territory.
Both imports and exports were much better than both the previous month, when both surprisingly fell, and the forecasted figures. Imports were up 10.9% in July, following a drop of 0.7% in June, while exports rose 5.1% following a 3.1% decline. While these figures are encouraging, I remain very sceptical about the trade data coming out of China.
China may be committed to cracking down on activities which distort the export figures, such as disguising credit inflows as legitimate exports, but this is going to take some time to stamp out. Also, there’s been suggestions for quite a while now that Chinese data may be manipulated to appear far better than it actually is, which hardly makes it reliable.
The Japanese yen continued to rally following the release of the Bank of Japan interest rate decision and statement. The lack of additional easing from the BoJ is what’s responsible for a lot of the yen strength recently, with the markets clearly having withdrawal symptoms from the lack of new QE activity recently and craving more.
The statement from the BoJ was not very dovish at all, which suggests the central bank is very unlikely to announce any additional easing before the end of the year. The BoJ pointed out again that the economy is continuing to recover moderately, while insisting that inflation is likely to continue to rise.
Data out of Australia was relatively mixed, with the unemployment rate remaining at 5.7%, despite expectations of a 0.1% increase. However, both full-time and part-time employment fell in July, which is going to be a concern. The Reserve Bank of Australia cut interest rates for an eighth time in two years earlier this week in a bid to halt the recent decline in the economy. However, many including myself, still expect another rate cut later this year, as the economy continues to suffer following the end of the mining boom, which the country became far too reliant on in recent years.
US indices continued to retreat over night, with investors taking advantage of the lack of news and data to provide some relief to the rally that has seen the S&P and Dow hit record highs on numerous times this year. People are continuously calling for some form of healthy retracement in US equities at the moment following the aggressive move higher this year and I think that’s all we’re seeing.
The move lower is being aided by investors trying to predict when the Fed will start scaling back its asset purchases. The consensus on this changes more than the UK weather, with investors now leaning towards a September taper despite the disappointing jobs report last week. This is why it’s so important to keep tabs on what the FOMC members say on a day to day basis because even the opinions of non-voting members are moving the markets at the moment.
Ahead of the open we expect to see the FTSE up 9 points, the CAC up 19 point and the DAX up 32 points.
Read the full report at Alpari News Room