Forex research

[Alpari]

UK Opening Call from Alpari UK on 29 May 2014

Markets finally get some data to act upon

European markers are finally set to look towards the economic calendar today after a week that has seen very little news flow and major announcements for traders to get their teeth into. Over the last few weeks markets have struggled for any real direction with even the currency markets failing to make any waves. However today’s session may finally see a change to that as investors eyes important figures out of the US this afternoon. There is also the added build up to next week’s ECB rate decision. It is not often that markets will pause for a whole two weeks in anticipation of an announcement, however Mario Draghi’s stance on monetary policy will be closely watched and any hint of a change will be jumped on by traders who are nervous that next week’s numbers could cause volatility no matter what the outcome.

The major focus of the day will come from the US GDP readings set for release at 1:30pm. After such a poor reading last time out many will be looking for a boost in these latest revised figures. Previously poor weather had been blamed for shockingly poor GDP growth out of the US, leaving many officials such a Fed Chair Janet Yellen to shrug off the number and instead focus on unemployment when dealing with monetary policy. With such a focus put on the fact that the number was a freak due to the weather there will be added pressure when next quarters figures are released that the number jumps significantly higher. Should the growth level stay around the same then serious question would be asked about just what the focus should be within the Fed. However as we said Janet Yellen has instead decided to focus on unemployment as her barometer for economic strength so with this in mind and having such a strong impact today’s weekly jobs numbers are not likely to pass through unnoticed. Next Friday sees the labour report from the US and with that fast approaching the weekly unemployment readings become more important. Any hint that the overall unemployment rate is going to fall below the 6% threshold will get investors excited. Many believe a drop below the magical 6% level will trigger a hike in the Fed Funds rate, whether the economy is ready for it or not.

Overall the markets will finally have something to get their teeth into with a few pieces of data from the US. However the quiet markets and news flow this week are not necessarily a huge problem as next week’s we could just get a number of traders praying for a brief rest bite to the volatility. With rate decisions, unemployment readings and GDP numbers to name but a few next week, it seems all of the major market stories for 2014 are looking to culminate next week so it would be wise for traders to put on their tin hats and look set to ride it out.

Ahead of the open we expect to see the FTSE open higher by 5 points with the DAX higher by 2 points.

Read the full report at Alpari News Room​

 

[Alpari]

US Opening Call from Alpari UK on 29 May 2014

US futures higher ahead of GDP revision

• US futures higher after mixed start in Europe;
• Downward revision to US GDP expected for Q1;
• Jobless claims, inflation data and pending home sales also eyed.

US futures are pointing to a slightly higher open on Thursday, following another quiet session in Europe where a number of markets are closed in observance of Ascension Day. The three major indices, the FTSE, CAC and DAX are all open for trading but we’re seeing mixed trading results here, with the FTSE 16 points higher, the CAC 8 points lower and the DAX 8 points lower. In the US, the S&P is seen opening 2 points higher, the Dow 26 points higher and the Nasdaq 8 points higher.

The US session should offer traders more to get their teeth into so I expect to see a bit more life in the markets as we near the opening bell on Wall Street. Ahead of the open, we have GDP, jobless claims and inflation figures being released, which I imagine will bring some volatility back into the markets.

The GDP reading probably has the most potential for surprise, with analysts already anticipating a downward revision to the preliminary reading. It was initially thought that the US had narrowly avoided a contraction in the first quarter with 0.1% growth but we’re expected to learn today that this was not the case and, in fact, the US is technically at risk of recession in the current quarter.

I say “technically” because in reality the odds of that happening are extremely slim. The slowdown in the first quarter was driven by unusually poor weather in the US, this has not been seen again in the second. In fact, the data seen so far in the second quarter has been quite encouraging. The only danger today is that we see a significant downward revision that causes people to doubt the recovery in the US, which in my view would be wrong.

The weekly jobless claims should offer a much better picture of the US recovery, as the number has been close to 300,000 for a number of weeks now, actually dipping below it a couple of weeks ago. This shows that not only are companies letting staff go at a slower rate, but people who are leaving jobs are walking into new ones. This is a clear sign of a recovering labour market.

Read the full report at Alpari News Room​

 

[Alpari]

Daily Market Update - 29th May 2014 - Alpari UK

[video=youtube;arIyx-144Lw]https://www.youtube.com/watch?v=arIyx-144Lw[/video]

It's been a quiet start to the trading day in Europe but Market Analyst Craig Erlam expects things to pick up as we head into the US session. In today's video Craig takes you through what he expects to be the key events on Thursday.

 

[caplas]

Thumbs up for keeping formats diverse, for me, personally, it's faster to listen through a video opened in a background tab. Good job.

 

[Alpari]

US Opening Call from Alpari UK on 30 May 2014

US data in focus ahead of mammoth week to come

The end of the week is shaping up to be just as quiet as the rest of it, with mostly low level economic data being released and nothing really driving markets ahead of the mammoth week to come. European indices are trading slightly lower this morning while over in the US, futures are pointing to a relatively flat open with the S&P seen down 1 points, the Dow down 8 points and the Nasdaq unchanged.

This week we’ve seen a combination of low trading volumes and near record low volatility, with bank holiday’s in the US and Europe significantly reducing the number of market participants. This has not been helped by the lack of major economic events this week and even when we have had major releases, the response has been muted.

The only explanation for this is that traders are being very cautious ahead of a huge week to come, with a massive policy decision from the ECB and the US jobs report standing out as the events that could have a significant market impact.

As for today, there is a few pieces of data worth keeping an eye on, although based on events this week, the market reaction will be muted. The core personal consumption expenditure figure is the Fed’s preferred measure of inflation but at current levels it’s unlikely to affect policy decisions.

Personal income and spending is always worth following as it can give some clues about the sustainability of the recovery, which is going to be built on the appetite of the consumer. As long as income growth continues to equal or better spending, it would suggest a consumer driven recovery is on the right path. Also today we have the UoM consumer sentiment reading and we’ll hear from a few Fed members who may provide insight into the timing of the first rate hike, which is expected in the middle of next year.

Read the full report at Alpari News Room​

 

[Alpari]

Daily Market Update - 30 May 2014 - Alpari UK

[video=youtube;9eKO3Yh8pQk]https://www.youtube.com/watch?v=9eKO3Yh8pQk[/video]

Market Analyst Craig Erlam talks about why we've seen such a small amount of volatility in the markets this week and why he thinks that will change next week. He also covers the key data releases today including personal income and spending and the University of Michigan consumer confidence reading.

 

[Alpari]

Weekly market preview from Alpari UK – 2 June 2014

Markets are hoping for a return to volatility this week, with the VIX reaching multiyear lows. The usual plethora of economic announcements bring about renewed hope of a spark coming back into the markets. In the US, the jobs report on Friday provides the most reliable source of market movement. Meanwhile, in the UK the services PMI is expected to push higher in yet another positive indicator for the UK recovery. However, the main event of the week could be Thursday’s ECB rate statement, where Mario Draghi is widely expected to bring about a change to the monetary policy standpoint in response to deflationary fears. In Asia, the Chinese manufacturing PMI figure starts the week early on Sunday morning. And finally the Australian GDP figure is set to shed light on whether the economy is managing to pick up despite the Chinese slowdown.


US

The US economy has been faring well in recent months, coming off the back of a disappointing first quarter. This trend is expected to continue this week, where the focus will largely be upon the jobs market, with the ADP and headline payrolls figures being joined by the unemployment rate.

The first of the major employment figures to be released is the ADP non-farm employment change, due on Wednesday. This figure is the ‘little brother’ of Friday’s official release and as such has a somewhat lessened impact. That being said, there have been countless occasions that the ADP figure has brought major volatility to the fore, especially in times when the Fed decision-making has been called into question. Unfortunately we are currently not in such a period at the moment, with the path of tapering seemingly set unless any major hurdles appear. As such I believe that a higher figure will be treated as a confirmation of the status quo, yet a significant miss could be the occurance which would bring major shocks to the market.

On Friday, the official jobs report is due to be released, with the markets and Fed watching closely for whether there is going to be another strong release following last month’s particularly impressive fall in the unemployment rate. The unemployment rate is typically the most top level measure of unemployment available and as such the likes of the Fed and BoE have used this to create expectations for markets in the past. Despite this being ditched somewhat, this the rate will be watched closely as one of the core measures upon which monetary policy is based on. Following the unprecedented 0.4% drop last month, the unemployment rate is expected to consolidate at 6.3% this time around. The more volatile reading of the two is the non-farm payrolls release, which has the ability to show a more detailed picture of the how employment is changing month on month. Given the expectations for a quiet unemployment rate release, eyes will be on the payrolls for possible market volatility. Market forecasts point towards the potential of a pullback from the major round of hiring last month which saw a rise of 288k employed. With estimates looking out for a number closer to 215k this time around, it is worth understanding whether the Fed sees this as sufficient. Given that we saw tapering persist amid figures below 200k, it is likely that the Fed would continue unchanged in such an event. However, there is no doubt that the Fed wants to see progress and any figure below 200k could bring worries that the stimulus withdrawal is having unintended effects to employment.

Given that the Fed has now ditched their unemployment rate based forward guidance in favour of a more complex ‘spare capacity’ based policy, the thought process of the Fed has become a little more hazy. Janet Yellen has said that there is now going to be an increased emphasis on factors such as the participation rate, earnings growth and the amount of part time work. Thus be aware of the impact that these elements can have upon decision making at the Fed when Friday’s report is released.

UK

The usual events to watch out for at the beginning of the month, where the three PMI releases pave the way for the BoE monetary policy announcement. It is likely that there will be a greater degree of emphasis upon the PMI figures than the BoE announcement given the imposition of a very stable monetary policy environment under Mark Carney. Thus I will be looking out for the Services PMI as the major driver of movement in the markets given the reliance of the UK economy upon the sector. However, it is the manufacturing PMI which is first, being released early on Monday morning. The importance of the manufacturing sector lies largely in the UK economy’s need to diversify away from services which dominate the economic make-up over the past decade. Thus a diversification of the economy allows us to believe the UK would weather any future crises in a more stable manner. In line with that, the UK manufacturing sector has been growing positively for the past 16 months, recently pushing into a yet higher level of expansion. This is expected to be tested this month, where estimates are pointing towards a moderate pullback to 57.1 from 57.3.

On Tuesday, the construction PMI figure is expected to confound three months of disappointing surveys, with a rise from 60.8 to 61.2. Whilst the construction sector accounts for the least proportion of the GDP figure out of the three sectors, this is one of the most evenly distributed within the UK and is expected to provide substantial growth going forward. That being said, the signals from Mark Carney that there could be a targeted cooling in the housing boom is likely to be reflected in this figure going forward and thus it is well worth looking out for.

Finally, the crucial services PMI survey is due on Wednesday, following a particularly encouraging figure last month. Unfortunately this month looks like reversing some of that if estimates are anything to go by, with a reduced figure of 58.3 expected from last month’s 58.7. However, with the unreliability of these figures being clear given previous misses, I believe this figure could prove to be one of the most interest readings of the month. With the UK economy majorly reliant upon the services sector for growth, taxes and stability, any major up-tick would be influential for UK growth going forward. The importance of the services sector is undoubted, accounting for around 85% GDP in recent months. Subsequently, the services PMI figure is a reliable leading indicator of future growth in the UK. Given the size and impact of the services sector in the UK, any major moves in this figure have substantial implications for the economy and thus the markets.

The final event of note in the UK comes on Thursday when the BoE announces their latest monetary policy decision. As time has gone on, this event has become more or less important dependant upon expectations at the time. Unfortunately current expectations point towards very little in the way of changes from the BoE for the time being and thus I expect little from this event, with both interest rates and asset purchases almost certainly set to remain as is.

Eurozone

A somewhat mixed week in the eurozone, where quiet parts are punctuated by major events in the form of the CPI flash estimate and the ECB monetary policy decision. The earliest of these is the CPI inflation figure, which in fact is going to be key to the decision later in the week from Mario Draghi. Given the inability of the eurozone to stimulate any price growth throughout 2014 to date, there has been increasing pressure upon Draghi to implement easing measures to boost prices going forward. Should we see further deterioration in the inflation figure, or else even a failure to move higher, this would put further pressure on Draghi to ease later in the week. Thus markets will be watching very closely for a indication of what actions could be taken later in the week. Expectations are for the figure to remain at 0.7% which should leave the options open for Draghi. However, a move in either way could majorly effect market perceptions.

This leads to Thursday’s interest rate decision from the ECB, where markets are expecting to see the first interest rate cut in 8 months. This comes off the back of ongoing pressure both within the ECB itself and from the public for Draghi to cut rates or take some sort of action to boost the region, increase inflation and devalue the euro. However, so far he has resisted, instead offering the reason that current inflation is attributed to long term structural factors like energy prices, which would not be affected by monetary policy. However, with the euro strength now coming into the fray, it seems Draghi is willing to act given last month’s announcement that we could see some form of action in June. Options range from interest rate cuts to fully blown asset purchases. However, it seems the most frequent estimated response is that he will make a minimal reduction in rates to around 0.1% from the current 0.25%. This would likely disappoint the markets and I believe would have next to no impact upon inflation levels. That being said, Draghi has a way with words and should he not implement any more dramatic steps, it would be highly likely that he will discuss them as future options to appease some of that disappointment. Thus remember that whilst the announcement of what changes, if any, they decide to take, the press conference closely following can often be just as likely to move the markets.

Asia & Oceania

The Asian region is pretty quiet this week, where the main event of note comes on Sunday morning when the Chinese manufacturing PMI is released. The recent rise in the HSBC measure points to a recovery of sorts following a particularly testing period for the Chinese manufacturing sector. Whilst the HSBC figure pushed well into contraction for multiple months, this official figure remained above the key 50 threshold, thus denoting an industry that remains within expansion. Now that we are seeing a response in the HSBC figure, which focuses on smaller firms, it is highly likely that this figure will also expand at a greater rate going forward. The estimates point towards a rise to 50.7 from 50.4, which would be the highest level in four months and a step in the right direction.

Finally, in Australia there is a GDP reading to watch out for on Wednesday, along with Tuesday’s monetary policy decision. Much like the BoE, the RBA has tried to set a stage for stability in the coming period. Subsequently Glenn Stevens has disclosed the fact that whilst cuts to the headline interest rate are highly unlikely, so is any rise rise. Thus I expect little change from this announcement and subsequently a rather quiet event.

However, Thursday’s GDP figure could be the main event of the week, where market estimates point towards the highest rate of growth in almost 2 years at 0.9%. Coming off the back of a very difficult period for the Australian economy, this would be a significant milestone at they attempt to reallocate towards domestic consumption. Whilst 0.9% may not necessarily be the long term goal, it would be a hurdle which would allow for greater confidence of a move back to a steady footing.

Read the full report at Alpari News Room​

 

[Alpari]

US Opening Call from Alpari UK on 2 June 2014

Indices higher on ECB stimulus expectations

• Indices higher on anticipation of ECB stimulus;
• ECB action not likely to be overly aggressive;
• Risk appetite boosted by Chinese manufacturing PMI;
• Eurozone PMIs disappoint, weighing on the euro.

US indices are expected to track European and Asian stocks higher on Monday, with traders appearing to be in a more upbeat mood on the expectation that the ECB will announce a new round of stimulus. As it stands, the S&P is seen opening 3 points higher, the Dow 30 points higher and the Nasdaq 4 points higher.

The ECB is widely expected to loosen monetary policy at the meeting on Thursday, which is likely to support risk appetite in the early part of the week. I don’t expect traders to get too carried away with this though as the scale of the potential stimulus is difficult to predict and based on recent action from the ECB, is unlikely to be overly aggressive. A lot has been said about the central banks new willingness to consider quantitative easing but I expect this is still a little too soon for that, the ECB is unlikely to take such bold steps until all else has failed.

What’s more likely is a small rate cut, potentially combined with a scheme intended to boost lending to businesses, similar to the funding for lending scheme adopted by the Bank of England, and if the ECB is feeling particularly dovish, a deposit rate cut. But even that seems unlikely at this stage.

Also supporting stocks today is the Chinese manufacturing PMI reading, released over the weekend, which rose to 50.8, a fourth consecutive monthly improvement. Despite all of the concerns regarding Chinese growth this year, this number hasn’t crossed the line into contraction territory once which may suggest the slowdown hasn’t been as bad as first thought. Alternatively, it may just highlight the fact that the survey predominantly covers the larger firms that are supported by the Chinese government, rather than the overall sector right now.

The eurozone PMIs were pretty disappointing which has helped weigh on the euro this morning, although this sell-off was well and truly underway already, with traders again potentially anticipating ECB action on Thursday and looking to take a position early.

Economic data is going to continue to be the focus as we head into the US session, with two manufacturing PMIs being released alongside some lower level figures.

Read the full report at Alpari News Room​

 

[Alpari]

Daily Market Update - 2 June 2014 - Alpari UK

[video=youtube;I4HcQziD4ow]https://www.youtube.com/watch?v=I4HcQziD4ow[/video]

 

[Alpari]

UK Opening Call from Alpari UK on 3 June 2014

Markets hold off in anticipation of the Eurozone CPI release

The European markets are seeking to buck the recent trend of positivity today with futures pointing to a pause in the incessant strength seen across the global developed markets in recent weeks. This comes in stark contrast to yet another strong Asian session which saw the Nikkei trade at a two month intraday high following strong data out of China. However, the pause seen across European indices futures along with most of the euro pairs is likely attributed to the release of today’s CPI figure out of the Eurozone which will likely provide markets with an idea of whether Mario Draghi will take strong action at the ECB meeting on Thursday. European markets are expected to open marginally lower, with the FTSE100 -18, CAC -5 and DAX -9 points.

The overnight Asian session saw further gains in the likes of the Nikkei and Hang Seng, feeding off the strength seen in the S&P500 and Dow yesterday. The core drivers of the US strength came from the US manufacturing PMI figure which following two blunders from ISM which saw the originally disappointing figure of 53.2 swapped out for an impressive 56.0, only to be revised for a second time to 55.4. This did represent a stronger than expected figure and given the propensity in the markets to push higher in current climates, the major indices did exactly that. Meanwhile, the Asian influences came from China, where the non-manufacturing PMI managed to build upon the strong rise in the manufacturing figure earlier this week by bucking the recent decline in this figure. The slowdown in the Chinese region has been immediately apparent within figures like the HSBC PMI data, along with trade figures and housing data. However, the likes of the headline PMII figures were not far behind and thus the push back towards stronger expansion is yet another sign that the slowdown may be over in many aspects. The only bum note came with the final revision to the HSBC manufacturing PMI which eroded some of the gains seen in the original release that impressed so much. However, the fact that the measure still came in significantly higher than previously expected meant that the market paid little attention on this occasion.

This morning saw the RBA release their latest monetary policy decision, with significantly less fanfare than months gone by. This was warranted given the muted response across the markets following the decision to keep rates unchanged for the 9th consecutive month. In recent months, Governor Glenn Stevens has become notably less active in his attempts to lead the markets with dovish rhetoric of days gone by, instead adopting a more stable stance which makes for somewhat less interesting meetings. In line with this, the RBA retained it’s 2.5% headline interest rate and the statement led to believe that this will remain in place for some time.

Looking to the European markets, the main event of note is always going to the Eurozone CPI figure, due out early in the session. The mixed expectations regarding whether we will see Mario Draghi take concrete steps to address the disinflation issue is one of the main drivers of market sentiment at the moment, with the EURUSD having lost 400 pips following last month’s meeting. In that meeting Draghi laid out a clear willingness for the ECB to act should inflation forecasts determine the need for such action and today’s announcement will no doubt play into those forecasts. Now we have all seen Draghi talk the talk on a number of occasions. However, his unwillingness to walk the walk is something which worries me and thus I believe there is no certainty that the ECB will take action even if the markets perceive it as a near certainty. The fact that we have seen such a decline in the EURUSD means that much of any rate decision has already been factored into the market and as such there is a high likeliness that the markets are disappointed even if we did see action taken by the committee. That being said, today’s CPI and unemployment figures will likely provide markets with the much needed perspective to fuel any bias they have with regards to ongoing expectation of action from the ECB. Should we see weak inflation and a rise in unemployment, you would be hard fought to find a trader who did not expect some sort of action. However, should we see a strengthening of CPI, coupled with a fall in unemployment, this could be enough to throw a spanner into the collective market mind-set and will likely bring about a few doubts regarding policy.

Also this morning, look out for the construction PMI out of the UK economy, which is seeking to push back towards the upside following a disappointing few months. The construction sector remains the smallest of the three measured within the PMI series. However, it also remains one of the most responsive to any changes to the BoE outlook for interest rates going forward. Thus given the emphasis upon the timing of the first interest rate hike, I believe we will start to see further weaknesses creep in as mortgages and lending costs are raised in anticipation of such a move. The housing boom seen in the South-East clearly has been having a profound effect upon construction over the past year, however with that showing signs of slowing down, it will be interesting to see how the industry as a whole responds.

Read the full report at Alpari News Room​