Forex Research

[Alpari UK]

Daily Market Update - 17 November 2014 - Alpari UK

http://http://www.youtube.com/watch?v=cuOdLRKeU0I

 

[Alpari UK]

UK Opening Call from Alpari UK on 18 November 2014

European data in focus as markets ignore China weakness

• Another batch of disappointing Chinese data fails to weigh on sentiment;
• Chinese markets fall for second day since Monday’s Hong Kong-Shanghai connect debut;
• RBA could cut rates next year as data deteriorates and concerns around Chinese property market rise;
• UK inflation seen stabilising in October but PPI still points to further disinflation going forward;
• Latest ZEW readings seen stemming the decline but current situation remains dire.

European futures are pointing to another positive start on Tuesday despite data overnight providing further evidence of China’s slowing economy, as investors continue to turn a blind eye to the weaker data coming from the world’s second largest economy.
Once upon a time, there would be turmoil in the markets at the sight of some less than appetising Chinese data but it appears that is no longer the case, at least for now. The markets appear to have accepted that China’s economy is cooling off a little and have fully priced it in. What’s more, with inflation so low at 1.6% and other indicators such as the PPI readings pointing to further disinflation going forward, the data actually increases the possibility of more monetary stimulus from the People’s Bank of China. So in fact, as long as the data continues to just disappoint, it could actually be seen as a positive for the markets.
Chinese markets appear far more downbeat at the data at first glance but I think Tuesday’s decline has more to do with the Hong Kong-Shanghai stock connect than the economic data. Yesterday’s debut was also met with declines on the session which is nothing to be concerned about. The markets have had months to price this in, it’s only natural that we’ll see some profit taking. It’s a similar idea to buying the rumour, selling the news but in this case I guess it’s buy the announcement, sell the debut.
The release of the Reserve Bank of Australia minutes from the previous meeting highlighted the fear among policy makers about the Chinese property market and its impact on the economy. With the property market likely to deteriorate further for the foreseeable future and other Australian economic data pointing to difficulties ahead, some are already speculating the rates could be cut next year, rather than rise which is what the consensus view currently is. Credit Suisse has highlighted falling inflation expectations, rising unemployment and deteriorating confidence as being some of the reasons why the RBA may be forced to consider a rate cut next year.
Disinflation is seen as a serious risk to a number of major economies at the moment, including that of the UK, where we’ll get the latest batch of figures this morning. The headline CPI reading for October is expected to show inflation actually rising marginally to 1.3%, which may have suggested that the decline is stabilising, had Bank of England Governor Mark Carney not warned last week that it’s likely to fall below 1% and remain there for some time. Assuming he is correct, that would suggest this is only a temporary lift and the decline will continue in the coming months. This is supported by the latest PPI readings, with the latest year on year output reading seen showing prices falling by 0.2%.
Also being released this morning is the latest ZEW economic sentiment surveys for the eurozone and Germany. In both cases, we’re expecting an end to the 10-month long decline, with both numbers seen creeping higher in what is hopefully a sign of a stabilising economy and more positive economic outlook, but more likely just a one time blip. The German current situation survey is still seen falling to 1.8, the lowest since June 2010.
The FTSE is expected to open 16 points higher, the CAC 8 points higher and the DAX 20 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 18 November 2014 - Alpari UK

https://www.youtube.com/watch?v=dykQJhQ0k1g&list=PL9AE6BFC876359986

 

[Alpari UK]

US Opening Call from Alpari UK on 18 November 2014

Abe, ZEW figures and UK and US inflation in focus today

• Confidence in German economic outlook on the rise;
• UK inflation rises but remains well below target;
• Shinzo Abe confirms delay in next sales tax hike and new elections;
• US inflation data and Kocherlakota speech in focus today.

The latest ZEW economic surveys showed analysts and institutional investors are more optimistic about conditions in the eurozone’s largest economy than they’ve been since July and far more so than the markets had expected. Of course these surveys can change quite dramatically from month to month so I don’t think anyone is going to get too carried away with it, but it’s certainly encouraging. There was also a marginal improvement in the current situation measurement, despite expectations for another decline so there’s definitely positives to take away from this. That said, it did come with a warning on the fragility of the economic environment, with geopolitical tensions continuing to weigh on the economy.
We’ve seen further evidence of the low inflation environment that Bank of England Governor Mark Carney addressed last week, from the October CPI reading which rose slightly to 1.3%. Core inflation remained at 1.5%, below expectations of a small rise to 1.5%. Given that Carney last week claimed that he will soon have to write a letter to Chancellor George Osborne, as inflation is expected to fall below 1% and only return to 2% at the end of the forecasting period of three years, this can’t come as a surprise to anyone. With Carney claiming that inflation will return to 2% in three years, it’s very unlikely that any further loosening of monetary policy is planned.
Japanese Prime Minister Shinzo Abe called a surprise press conference this morning in which he confirmed the rumours that have circulated in the markets over the last week. In response to the poor showing in the third quarter, which drove Japan into technical recession, Abe pushed back the next sales tax hike, from 8% to 10%, by 18 months to April 2017. Abe claimed that the delay was necessary as a second hike could threaten the exit from deflation. He also stated that it would not be delayed a second time which I’m not sure anyone is going to buy as doing this at the wrong time will do more harm than good, hence today’s announcement. Abe also confirmed that the lower house will be dissolved on 21 November, with elections taking place in December. There wasn’t a huge reaction to this though because as already stated, it’s been rumoured for a week and therefore as far as the markets are concerned, it’s old news.
Next up we’ll get inflation data from the US, in the form of the October PPI readings. The amount paid by producers gives a strong indication of future consumer price inflation and these can therefore be viewed as a good leading indicator. Both the PPI and core PPI readings are seen pulling back slightly in October, potentially highlighting future disinflation in the US at a time when the Fed is looking to raise rates and the rest of the world is experiencing difficulties with inflation.
We’ll also hear from FOMC voting member Narayana Kocherlakota, who is due to speak at the St Paul Rotary in Minnesota. Given that these speeches can invite questions, we may get some hints over future Fed policy which have the potential to move the markets.
The S&P is expected to open 1 point lower at 2,040, the Dow unchanged at 17,647 and the Nasdaq 3 points lower at 4,210.

Read the full report at Alpari News Room​

 

[Alpari UK]

UK Opening Call from Alpari UK on 19 November 2014

BoJ kicks things off on busy day for central banks

• BoJ leaves monetary policy unchanged after turbulent week;
• BoE minutes may bring more hawkish tone as inflation heads south;
• MPC voting could provide strong insight into future path of interest rates;
• Markets expected more hawkish tone from FOMC minutes later.

We have a big day ahead of us in the financial markets and attention is going to be firmly on the central banks, with the Bank of Japan having just announced its latest policy decision and minutes from the recent Bank of England and Federal Reserve meetings to come later.
Japan has really been in the spotlight recently, ever since the BoJ last met and announced an unexpected increase to its bond purchases to 80 trillion yen per year, from 60-70 beforehand. Since then, the country has fallen into recession, forcing Prime Minister Shinzo Abe to delay the next sales tax hike by 18 months to April 2017, and the lower house of parliament has been dissolved – as of 21 November – and new elections called for December. It’s a really rocky time for Japan at the moment and all of this more than likely explains the BoJ’s decision to raise its bond purchases last month.
Given that the BoJ got in there early last month, it was always unlikely that we were going to see further bond purchases announced this morning. I’m also not convinced that the BoJ needs to do any more right now, not with Abe’s commitment to implement more fiscal stimulus measures should they win the election and given how accommodative the central bank already is. Too much is also being made of this technical recession as well, the same happened last time the sales tax was raised, it’s only natural in a low growth economy where the consumer makes up around 60% of GDP.
Shortly after the European open, focus will shift from the BoJ to the BoE, as the minutes from the meeting two weeks ago are released. The BoE has long been seen as one the major central banks most likely to raise interest rates first, with some forecasts at times suggesting it would come as early as the end of this year, although that is largely the fault of Governor Mark Carney who dropped that bombshell earlier this year at the annual Mansion House event.
While the BoE is currently looking more likely to tighten monetary policy than loosen it, I don’t think this will come until the end of next year at the earliest. This is nothing to do with the fact that the economy is cooling because that is perfectly normal, it’s the inflation problem that’s facing many central banks now, with Carney only last week admitting that it’s likely to fall below the BoEs lower boundary of 1% and stay there for a while before returning to the 2% target in three years. Surely the BoE can’t be considering raising rates at a time when the Governor is being forced to write a letter to the Chancellor explaining why inflation has been allowed to fall below the acceptable range.
With that in mind, the minutes could offer a more dovish tone than we have become accustomed to from the BoE, while the two members that have voted for rate hikes at the last three meetings may reconsider their position. Any backtracking from Martin Weale or Ian McCafferty could be the clearest sign to the markets that the first rate hike remains some way off.
Later on this evening we’ll wrap things up on the central bank front with the minutes from the recent Fed meeting. The Fed now looks to be in a much better position than even the BoE to raise interest rates next year but even it has inflation concerns that may force it to delay the first hike a little. The case in the US may not be as bad as it is elsewhere but inflation remains below target. That said, the latest PPI data, released yesterday, may hint at higher prices in the coming months, bringing the inflation rate back towards target and making the Fed’s decision a little more straight forward.
The FTSE is expected to open 10 points higher, the CAC 10 points higher and the DAX 15 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 19 November 2014 - Alpari UK

https://www.youtube.com/watch?v=zXbjtYwzNHo&list=PL9AE6BFC876359986&index=1

 

[Alpari UK]

US Opening Call from Alpari UK on 19 November 2014

Attention turns to the Fed as BoE turns more hawkish

• BoJ stands pat after last month’s surprise stimulus efforts;
• BoE minutes more hawkish than Carney comments last week;
• FOMC minutes to elaborate on hawkish statement a few weeks ago;
• Housing data also in focus in the US today;
• Oil prices remain under pressure ahead of next week’s OPEC meeting.

The trading day is being dominated by central banks on Wednesday as the Bank of Japan stands pat following last month’s surprise stimulus and the Bank of England minutes show members to be more hawkish than expected. Still to come we have the FOMC minutes from the previous meeting which as always has the potential to really shake things up in the markets.
The BoJ’s decision to leave monetary policy unchanged came as no surprise to the markets, despite seeing significant weakness in the data over the last week. Policy makers clearly anticipated these figures at the meeting a month ago when they increased the monetary base to ¥80 trillion and therefore there was no need to act again today. Whether they’ve done enough remains to be seen but I think it would be ridiculous to overreact at this stage. It can’t come as a massive surprise that the economy fell into recession when the same thing happened last time there was a sales tax hike and the same will probably happen again in 2017.
The minutes from the BoE meeting a couple of weeks ago came as more of a surprise as they didn’t appear to support the views expressed by Governor Mark Carney at the quarterly inflation report press conference. Carney had suggested that inflation will fall below 1% for some time and only return to 2% in three years, which appears to go against the comments in the minutes. The minutes show some of the seven that voted against a rate hike highlighting the risk of inflation overshooting the 2% target and a tight labour market leading to wage growth soon which could boost CPI pressure. Once again we’re getting mixed messages from the BoE but I think right now, the markets are more inclined to agree with the views of Carney last week and many are moving back their rate hike expectations to the end of next year at the earliest.
Next up we have the minutes from the FOMC meeting a few weeks ago. The statement that was released alongside the decision a few weeks ago was erring on the hawkish side, with the FOMC appearing more optimistic on the economy and the labour market. They also gave the impression that they don’t envisage low inflation being a problem, as is being experienced in many other parts of the world, which I would imagine makes a rate hike more probable. The minutes today should elaborate more on this but I imagine investors will go into this expecting more hawkish comments from the Fed, which when Janet Yellen is at the helm tends to be a little dangerous.
On the data side, we’ll get some housing data early on in the US session, with building permits and housing starts for October and MBA mortgage applications for the week to November 14 being released. Both building permits and housing starts have been pretty steady over the last year or so, but remain well below the levels seen before the financial crisis. As it stands, we’re seeing no signs of this changing and I think the markets will be content with the status quo for now, which is what is expected.
We’ll also get the latest crude oil stocks data from EIA today, although I’m not convinced we’ll get the usual reaction to it. Oil prices have been declining for a long time now and remain very heavy despite consolidating a little as of late. I think people are more focused on OPEC’s reaction to the decline next week though and whether production will be cut in an attempt to support prices.
The S&P is expected to open 3 points lower, the Dow 20 points lower and the Nasdaq 3 points lower.

Read the full report at Alpari News Room​

 

[Alpari UK]

UK Opening Call from Alpari UK on 20 November 2014

Markets flat but data-heavy session lies ahead

• FOMC minutes offer nothing new and get muted market reaction
• HSBC PMI points to stalling in Chinese manufacturing activity in November
• Japanese trade deficit shrinks as exports surge on weaker yen
• Eurozone PMIs and UK retail sales in focus this morning.

Europe looks set to open a little flat on Thursday as last night’s FOMC minutes and data from China and Japan overnight failed to provide much direction for the markets.
There wasn’t really anything in the minutes that markets weren’t expecting. The Fed’s concern about the disinflation risk is nothing new, as is the expectation among most members that inflation will return to the 2% target in the medium term. There was no discussion regarding interest-rate hikes and no timetable was given, which doesn’t help us. The only potential surprise was Narayana Kocherlakota’s vote against ending quantitative easing, although even this isn’t that big a deal as he is a strong dove and therefore such a move in perfectly in line with his outlook, especially given his concern over inflation.
Once again overnight we got a very disappointing data release from China and the markets shrugged it off. This time it was the HSBC manufacturing PMI that declined further, narrowly avoiding falling into contraction territory with a 50 reading for November. Regardless of what the market response is, we’re seeing a worrying trend here and the markets confidence that we’re going to see some targeted stimulus is being tested. While Chinese growth looks almost certain to miss the 7.5% target set earlier this year, it appears the government is comfortable as long as it doesn’t fall below 7% and as long as that’s the case, it’s willing to accept some weakness.
As for Japan, we saw the greatest increase in export last month since February , while imports were below expectations resulting in an overall trade deficit of 977 billion yen. It appears Japanese exporters are benefiting from the weakness in the yen that we’ve seen in recent months, although this can work against the country as well at a time when it is importing large amounts of energy. That said, energy prices are very low right now which must be helping matters.
There is lots of economic data being released on Thursday so we shouldn’t be surprised if we see a substantial pick-up in market volatility throughout the European session. First up we have the manufacturing and services PMI readings for the eurozone, Germany and France. These are all preliminary readings for November and are expected to show marginal improvements on the month. While this may be seen as a positive as the bar has been set very low in recent months, I think we’d have to see more of an improvement to get investors excited.
We’re expecting a good month in October for UK retail sales which are seen rising by 0.3% on a month by month basis, which would mean a 3.8% improvement on last year, or 4.2% on the core reading. This is very encouraging as we enter a very important holiday season, a time of the year when the consumer is particularly important. In recent years we’ve seen retailers starting the sales period earlier and earlier as they strive to shift as much of the holiday stock as possible. These figures suggest this won’t be as much of an issue this year although it’s something I’ll certainly be keeping an eye on.
The FTSE is expected to open 4 points lower, the CAC 3 points higher and the DAX 9 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 20 November 2014

US data comes to the fore as eurozone slump goes on

• UK retail sales accelerate at fastest pace in six months;
• Eurozone PMI readings plummet again despite hopes of stabilisation;
• US CPI in focus as FOMC shows concern of falling inflation;
• Manufacturing, labour market and housing data also being released.

It’s been a mixed morning in Europe this morning as the latest PMI readings spell further doom and gloom for the eurozone, while in the UK, retail sales were far better in October than expected in a welcome boost to consumer spending ahead of the important holiday season.
The monthly increase in sales was the highest since April and it could come at a better time. The holiday period is so important to the UK, an economy that is very reliant on the consumer, and data like this that suggests the consumer is feeling a little flush is very welcome. There had been signs of late that the economy is cooling a little but this would suggest that it is not being felt by the consumer. The strong monthly performance gave us the nineteenth consecutive month of year-on-year growth and the highest in six months. The improvement was also broad based which is an encouraging sign, with only non-store retailing failing to record growth.
The news was less good for the eurozone, with the PMI data once again reminding us that not only are current conditions poor as the economy barely avoids stagnation, but also that confidence in the economic outlook is continuing to diminish. There was hope today that we were going to see marginal improvements across the board, maybe showing signs of stabilisation, but that certainly didn’t materialise with the French services sector was the only one to beat expectations and even that was from a low base in contraction territory.
There’s still plenty of data releases to come today from the US, starting with the latest CPI inflation and jobless claims figures before the opening bell on Wall Street. Inflation has been a global concern this year, although some countries like the US are faring much better than others, namely the eurozone. That said, as the FOMC minutes showed yesterday, the potential for falling inflation is a concern for the Federal Reserve and it is something that could delay the first rate hike. Narayana Kocherlakota, one of the most dovish FOMC members, wanted to delay the end of quantitative easing last month on fears of low inflation. If prices continue to decline, he could gather support and at the very least push back the first rate hike to the end of next year, or even 2016.
One thing that may make this less of a problem for the Fed though is that the country is nearing what it deems full employment. At this point, the availability of qualified personnel is low and companies therefore have to pay more to attract or retain staff. It’s this wage growth that causes upward inflationary pressures in the economy which is what the Fed is banking on and why it believes the 2% target will be achieved in the medium term, allowing them to raise interest rates for the first time since May 2006.
Being released alongside this is the latest jobless claims number which is expected to be below 300,000 for a tenth consecutive week which is incredibly rare and shows just how strong this recovery is. The flash manufacturing PMI is also being released shortly after the open and is expected to rise to 56.2 from 55.9 last month, as is the Philly Fed manufacturing index and existing home sales for October so there’s still plenty to come today.
The S&P is expected to open 8 points lower, the Dow 64 points lower and the Nasdaq 17 points lower.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 20 Noviembre 2014 - Alpari UK

https://www.youtube.com/watch?v=0smV3-W8ZL0