Forex research

[Alpari]

US Opening Call from Alpari UK on 6 June 2014

We could be set for another day of high volatility in the markets as the US Department of Labour releases the latest jobs report. While this event may have been a little overshadowed this week by yesterday’s ECB meeting, I still expect it to generate a lot of interest and volatility in the markets. Ordinarily we can expect to see a little caution ahead of the release and that is evident this morning, with European indices and US futures both trading only marginally higher. Ahead of the opening bell on Wall Street, the S&P is seen 1 point higher, the Dow 18 points higher and the Nasdaq 3 points higher.


While it could be argued that the May report is not as important as recent months, a poor showing today would undoubtedly see questions resurface about the strength of the economic recovery. In previous months it was crucial that we saw better figures than what are normally deemed good enough during a recovery because the first quarter of the year was so disappointing. That is not necessarily the case now and as long as more than 200,000 jobs were created in May, I think the markets will accept it.

Following the Fed’s decision to look at a broader range of data as part of their revised forward guidance, other aspects of the jobs report have become increasingly important, while the unemployment rate has become less so. Participation has been a major talking point over the last couple of years, with many pointing to this as being part of the reason for the decline in unemployment. This may have contributed to last month’s 0.4% drop in the unemployment rate and therefore we shouldn’t necessarily be disappointed if that rises this month, as long as participation picks up as well.

Aside from the jobs report, there’s very little else being released today, not that investors need another major event right now to try and make sense of and price into the markets.

Read the full report at Alpari News Room​

 

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Daily Market Update - 6 June 2014 - Alpari UK

[video=youtube;zqYJ3qvrcf0]https://www.youtube.com/watch?v=zqYJ3qvrcf0[/video]

Market Analyst Craig Erlam looks ahead to the US jobs report and what he thinks the markets are expecting and what will be viewed as acceptable.

 

[Alpari]

Weekly market preview from Alpari UK – 9 June 2014

The last week was an extremely busy one for the markets, with the ECB announcing a number of policy measures designed to bring some life back to the eurozone economy through both boosting support for small businesses and weakening the currency to improve competitiveness of its member states. The jobs report on Friday may have turned out to be something of a non-event but the week as a whole was quite eventful.

This coming week may not look so eventful but there’s still plenty for traders to get their teeth into, be it the Bank of Japan meeting, US retail sales or the unemployment data from the UK. On top of all of this, traders will have to absorb all of the information from last week and decide what this means going forward. All things considered, I expect volatility to be much better than what we’ve become accustomed to as of late, the last few days aside, with the uncertainty having disappeared for now and traders now focusing back on the data for signs that the global economy is headed in the right direction.

US

Compared to the week just gone, the coming days are not going to be the busiest in terms of economic data. That said, with so much data still to absorb from the week just gone, I don’t see that being too much of an issue in terms of market volatility. The key release this week, without doubt, is going to be the retail sales report, which is arguably one of the most important pieces of data each month.

In an economy like the US, where the consumer is so important, retail sales reports provide important insight into how the economy is really performing. While some figures may suggest things are on the up, if the consumers aren’t putting their hands in their pockets, there is something to be concerned about. Fortunately, that is not the case in the US right now, where retail sales have been on the rise for three consecutive months. We’re expecting a fourth consecutive positive number for April on Wednesday, with sales seen rising 0.5%.

Of the other releases due this week, weekly jobless claims stands out as another that people will turn to for further evidence that the recovery is on a solid footing. Aside from the odd blip, these numbers have been very good so far this year, falling close to 300,000 on a number of occasions. We’re expecting a similar result this week, with the number seen falling slightly to 306,000. Aside from being a good sign that companies are letting fewer people go, it also shows that people are finding it easier to leave one job and find another. This is a sign of a much healthier economy than we have seen in recent years.

Finally we have the preliminary University of Michigan consumer sentiment reading, which is seen rising from 81.9 to 83.2 in June. As mentioned earlier, the consumer is extremely important to the US economy so an improvement in the retail sales figure along with a pick up in sentiment for the coming months is just what we need to see if the improvement in the economy is going to be sustained.

UK

It wouldn’t necessarily be accurate to suggest that UK data is slipping under the radar right now, but compared to elsewhere, it’s not viewed as being hugely important. The reason for that is that people are using the data to determine what exactly its central bank will do in response, as this tends to get the biggest response in the markets. As it stands, the Bank of England is unlikely to either loosen or tighten monetary policy any time soon, making UK data of lesser interest to investors as that of the US or, in particular, the eurozone. As long, that is, as the data continues to point to a strong sustainable recovery.

So far there’s been no problems on this front. The UK has recorded strong economic growth, with confidence remaining strong and the consumer becoming increasingly confident that the worst is behind them. That will only continue to be the case as long as unemployment continues to fall, wages start to grow faster than inflation and the BoE remains accommodative. The latter is all but guaranteed as long as inflation doesn’t pick up significantly while. Unemployment has become less of an issue since the BoE broadened the range of things it was looking at when deciding on when to hike rates. The biggest problem stalling the recovery right now is wages. If wages don’t rise above inflation, the sustainability of the recovery will continue to be questioned.

The unemployment rate is expected to improve in April, dropping to 6.7% from 6.8% previously. This would be the lowest rate of unemployment in more than five years, giving both consumers and businesses even more confidence that the worse is behind us. Wages remains a problem and despite the average rising to 1.7% in March, it is expected to fall back to 1.2% in April.

There are a few other key pieces of data being released this week that’s worth watching, including the April manufacturing production figure, which is expected to show 0.4% growth, a fifth consecutive monthly increase. The other is the NIESR GDP estimate for the three months to the end of May. This should provide some useful insight into the figure we can expect for the second quarter. The number has been improving over the last few months and if we can see a similar improvement in the second quarter it would only boost confidence in the recovery.

Eurozone

It’s going to be a very quiet week when it comes to the euro area. There is bank holiday’s in France and Germany on Monday, which will likely lead to lower trading volumes next week. Aside from that, there is very few economic releases scheduled, with the only notable ones being industrial production for France and the eurozone. Even these are unlikely to have much of a market impact.

Asia & Oceania

Of all the regions, this one is looking the most interesting this week. That’s not to say we’re expecting the kind of weeks just seen in Europe, but there’s certainly more potentially market moving releases and events than in any other region. The most notable of these potentially comes from Japan, where the central bank is due to announce its latest monetary policy decision on Friday. While I believe the chances of any change in policy is slim; as we’ve learned from central banks in the past, particularly those in countries that are still trying to get back on a stable footing, we can’t rest on our laurels. The BoJ is very likely to ease again this year and there’s no guarantee that won’t be on Friday. The sales tax hike is likely to have a negative impact on the economy and therefore inflation. There is a chance that the BoJ has already seen enough evidence that confirms this and will decide to act, although as mentioned earlier, I believe this is unlikely.
Aside from this, there is plenty of other data being released from Japan, such as manufacturing data and current account figures for April. The final first quarter GDP reading is due to be released on Monday and is expected to show the figure being revised down slightly to 1.4%. This is only a marginal revision and should therefore not have much of an impact on the markets, but anything more significant could be viewed as concerning.

There’s also a few notable economic releases coming from China this week, such as the inflation reading on Tuesday and industrial production and fixed asset investment on Friday. Chinese inflation is not a huge concern at the moment as it has been below, or at, the People’s Bank of China’s target since the start of the year. This month it is expected to rise to 2.4%, 0.1% below target, which is still not a concern. Only when it moves significantly above this should we be concerned about the PBOC tightening policy and threatening the growth levels we’ve become accustomed to.

Read the full report at Alpari News Room​

 

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UK Opening Call from Alpari UK on 9 June 2014

European futures rally on encouraging data from Asia

• European indices seen higher on encouraging Chinese, Japanese and US data;
• Friday’s jobs report provides boost in Asia over night;
• China records highest trade surplus in more than five years;
• Japanese GDP sees unexpected upward revision.

European indices are expected to start the week on a positive note following the release of some encouraging data from China and Japan, while some overspill from Friday’s jobs report in the US isn’t doing any harm to sentiment either. The FTSE is expected to open 21 points higher this morning, while the CAC is seen 16 points higher and the DAX 29 points higher, or around a third of a percentage point in all cases.

The week has got off to a good start, with investors in Asia displaying some relief at Friday’s jobs data in the US. Of course, today is the first opportunity for Asian investors to react to the numbers and as we saw during the final session of last week, there was a little bit of uncertainty ahead of the release. Expectations were arguably a little punchy coming off such a strong month in April, but that never turned out to be the case, in fact, they were almost spot on.

Aside from cheering another encouraging jobs report, investors have also been boosted slightly by trade figures from China. The country reported a trade surplus just short of $36 billion in May, it’s largest surplus since January 2009. This came as exports rose by 7%, up from 0.9% the month before, while imports surprisingly fell by 1.6%. The clear positive here comes from the boost in exports, with the numbers potentially being less impacted by the distortions in the figures at the start of last year. What we may finally be seeing again is real (or as real as it gets for now) export figures for China. Of course the imports component of the data is still a concern which is probably why investors haven’t exactly got carried away with the data.

The release of this morning’s Japanese GDP revision has only given investors more reason to be positive this morning. Having previously expected a slight downward revision to the number, investors were instead treated to an upward revision to 6.7% on an annualised basis. What made this sweeter was that it was driven by capital investment, a sign that the message of Abenomics is getting through to the right people. Now, we can’t get too carried away with this data because it is very likely to be followed by a pretty dreadful second quarter. The key now for Japan, and for the Bank of Japan at the next few meetings, is how the country bounces back. That will determine what the next course of action is, whether it be monetary or fiscal stimulus, or neither.

The European session is shaping up to be a rather quiet one today. A combination of bank holiday’s in France and Germany, and a lack of economic data providing any kind of catalyst, may result in yet another low volume day. That said, traders were given a lot of information last week and we may see a case of this still being fully priced in today. Not to mention, the removal of so much uncertainty following last week’s ECB decision and Friday’s jobs report should help volatility and volume levels over the coming weeks.

Read the full report at Alpari News Room​

 

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US Opening Call from Alpari UK on 9 June 2014

US futures unchanged despite encouraging data in Asia

• US futures unchanged despite encouraging data in Asia;
• Chinese headline trade figure not telling the whole story;
• Japan could be facing significant contraction after posting strong growth in Q1;
• US session expected to be quiet with no data scheduled for release.

We’re expecting a relatively flat start to the week in the US, following a bright start in both Asia and Europe. While traders in both of these regions appear to be responding well to Friday’s jobs payrolls, the surge in Chinese exports and the upward revision to Japanese first quarter GDP, those in the US are not so impressed.

Of course, when we’re talking about the jobs report, it could be argued that this was fully priced in on Friday but I’d expect the data from Asia to be having more of an impact. That said, while both the Chinese and Japanese figures did have clear good points, these were somewhat offset by something less positive.

For example, Chinese exports rose by 7% resulting in the highest trade surplus in more than five years. On the face of it this is a big victory in what has been quite a disappointing year. On the other hand, it was around this time last year that the Chinese leadership started to get on top of the false accounting practices in which businesses were disguising capital inflows as genuine exports. With this no longer distorting both last year’s and this year’s figures for the early part of the year, we should now start to see better figures being reported. The other issue was the surprising drop in imports which will cast doubt on attempts to become a country more focus on domestic consumption than investment and exports.

The Japanese figure was another that looked extremely positive, with first quarter GDP rising to 6.7% on an annualised basis. The fact that this was driven by capital investment only makes the headline reading appear more impressive. However, the main reason for this surge in growth was consumers making additional purchases ahead of the sales tax hike on 1 April. Growth should be significantly lower in the second quarter as a result, with some already forecasting a 4% contraction, again on an annualised basis. It’s only once we know the second quarter figure that we can really make a judgement on the situation in Japan and whether Abenomics is really working.

As we’ve seen in Europe, where many countries are enjoying a bank holiday, the US session is expected to be rather quiet today. In fact, there are no significant pieces of data scheduled for release and trading volumes are likely to be quite reduced, largely due to the bank holiday’s in Europe.

Ahead of the opening bell on Wall Street, the S&P is expected to open unchanged, the Dow up 8 points and the Nasdaq up 1 point.

Read the full report at Alpari News Room​

 

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Daily Market Update - 9 June 2014 - Alpari UK

[video=youtube_share;aS-2qA4zPpo]http://youtu.be/aS-2qA4zPpo[/video]

 

[Alpari]

UK Opening Call from Alpari UK on 10 June 2014

Chinese inflation leaves room for further stimulus

European markets are expected to open somewhat cautiously, futures pointing towards marginal losses. This comes despite a largely positive Asian session where the likes of Hong Kong and Chinese markets seeing substantial upside. The inability of European markets to rise this morning points to a possible pullback of sorts following Thursday’s ECB driven upside. Thus European markets are expecting to see a negative open, with the FTSE100 -12, CAC -1 and DAX -7 points.


A pretty quiet day ahead in the markets, where the UK manufacturing production figure represents the only major event of note in the European session. As such, we have seen moves to counterbalance the markets following last week’s major shocks in the form of the ECB’s decision to implement a plethora of policy changes, along with the US jobs report impact. On the whole these two events taken in totality amount to a boost for the stock markets, alongside a mixed euro reaction. Given that Mario Draghi was clearly targeting a weakening of the euro, it is safe to say that the markets have somewhat disappointed given the extent to which Draghi went to ensure he saw a strong reaction.

The overnight session saw the Chinese inflation data post a larger than expected rise in CPI to 2.5% year on year. Delivered less than a day after the PBoC delivered yet another stimulative step in the form of a reduction in the RRR rate, today’s inflation figure remained well below the 3.5% target set out by the Chinese government. With governments the world over worrying about falling prices and the threat of deflation, today’s number represents a somewhat ‘sweet spot’ for China, allaying fears of a disinflationary environment but also remaining low enough to allow for future stimulus measures. Yesterday’s decision from the PBoC to cut the reserve requirement for some select banks has the potential to free up capital and raise liquidity in the business sector. However, given the lack of details regarding size, there is little way of knowing exactly by what degree it could change the economy’s fortunes given recent weaknesses.

This afternoon’s release of the UK manufacturing and industrial production figures bring the spotlight back onto the manufacturing sector following last week’s somewhat disappointing manufacturing PMI figure. The little ugly sister of the services sector, manufacturing is often seen as a bonus should we see a major push in growth. However, with the issues associated with an overreliance upon a set of similar and interconnected services sectors, the development of a healthy manufacturing sector is beneficial from a stability, growth and a balance of payments viewpoint. Typically the requirement for a substantial market move is a month on month figure around 1%. However, with today’s manufacturing production growth expected around 0.4%, we could be some way from this figure.

Read the full report at Alpari News Room​

 

[Alpari]

US Opening Call from Alpari UK on 10 June 2014

US futures pull back from record highs ahead of the open

US futures are pointing slightly lower on Tuesday, although if yesterday is anything to go by this should not be a concern as indices once again closed at record highs despite a difficult start to the session. Ahead of the opening bell on Wall Street, the S&P is seen 3 points lower, the Dow 14 points lower and the Nasdaq 5 points lower.

The run in US equities right now is concerning quite a few people as volume is failing to confirm the moves. This doesn’t seem to be inhibiting it in any way though as it continues to create new highs on almost a daily basis. The daily gains are not that significant but the sheer number of them means the collective gain cannot be ignored.

Friday’s jobs report from the US won’t have done the rally any harm whatsoever as it showed another good month of job creation, while not significantly revising down the figure from the month before. We are still lacking that next major catalyst that would justify a significant move higher in the markets and likely bring with it higher volumes, but that’s not proving too much of a problem right now. Perhaps the measures taken by the ECB last week are being viewed as a form of stimulus despite traders at the time being rather sceptical.

This week is looking much quieter on the data front which means traders may have to look elsewhere to justify the moves. Today for example, there aren’t any notable US economic releases scheduled, although we do still have the NIESR GDP estimate for the three months to the end of May just after the US open. This could provide some good insight into the kind of growth we’ve had in the second quarter, which is likely to be pretty much in line with previous quarters, if not marginally better.

Read the full report at Alpari News Room​

 

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Daily Market Update - 10 June 2014 - Alpari UK

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

 

[Alpari]

UK Opening Call from Alpari UK on 11 June 2014

UK jobs numbers headline quiet data session

• Indices seen taking a breather at the start of Wednesday’s session;
• Asia offered little direction over night as the world bank lowered growth forecasts;
• UK jobs report the only major economic announcement today.

European indices are set for a rather flat start on Wednesday, with the FTSE currently seen opening unchanged at 6,873, the CAC 1 point lower at 4,594 and the DAX 1 point lower at 10,027.

The lack of direction early in the session is probably just a case of traders taking a breather following a few positive days for equities. In recent days we have seen the DAX breach, and hold above, 10,000 for the first time, while the FTSE is trading at the top of its recent trading range and lies only 77 points from its all time highs, set at the end of 1999.

A lot of people are currently bemoaning the lack of volume confirming the rally in some indices at the moment, which is a valid concern, but that is doing nothing to hold it back. What’s more, we’re not seeing any significant corrections along the way, with indices simply taking short breathers before continuing on the path higher. That’s exactly what appears to be happening again today and if recent US sessions are anything to go by, these opening levels should not be taken as an indication of how the session will play out.

The Asian session over night provided little direction for the markets, with indices there ending the day mixed. A report released by the world bank which showed GDP forecasts for the developing world for this year being revised lower, from 5.3% to 4.8%, probably didn’t help sentiment over night. That said, it can hardly come as a surprise when you consider the slowdown we’ve seen in China so far this year, not to mention the impact that the woeful first quarter in the US and the crisis in the Ukraine will have had on the developing countries. In fact, I’m a little surprised it wasn’t revised even lower, although there’s still plenty of time to do so.

With little data being released again on Wednesday, focus will be on the UK where we do at least have some important numbers due out. Ordinarily, top of the list here would be the unemployment rate, but that is not necessarily the case today, not among investors anyway. While this is important and will probably be what makes the headlines across many of the news wires, the other data is arguably equally important now that the Bank of England has opened up its forward guidance to take into consideration a wide range of economic indicators.

As a result, average earnings has become a key focal point, with the BoE determined to see earnings growth exceed inflation following a long period in which the consumer has been becoming poorer simply because prices are rising faster than wages. While many are pointing to a rise in the minimum wage to help overcome this, the BoE is focused on a more natural route and this appears to finally be paying off. By focusing on improving productivity levels, while at the same time reducing the slack in the labour market by maintaining an accommodative monetary policy stance, we appear to be almost in the position again whereby wages will rise naturally again. This may be a more painful approach but it may also be the best one for the long term economic health of the country.

Wage growth is seen pulling back in April, to 1.2%, both including and excluding bonuses, but the longer term trend is looking more positive. Unemployment is also expected to fall to 6.7% in April, reaching its lowest level in more than five years.

Read the full report at Alpari News Room​