Forex Research

[Alpari UK]

Daily Market Update - 21 November 2014 - Alpari UK

https://www.youtube.com/watch?v=SD8h-NHuYwc

 

[Alpari UK]

UK Opening Call from Alpari UK on 24 November 2014

Central Bank stimulus support markets again on Monday

• Central Bank stimulus support markets again on Monday;
• German Ifo numbers give some reason to be optimistic;
• PMI readings in focus during the US session;
• BoE inflation report hearing, GDP releases and OPEC meeting key this week.

The trading week has got off to a good start on Monday, as the positivity surrounding central bank stimulus that drove markets higher on Friday continues to lift investors. The People’s Bank of China’s decision to cut interest rates on Friday morning for the first time in two years has really given the markets a boost, particularly as people had not expected the central bank to take such bold measures. Targeted stimulus measures had been touted and even an injection of cash, but not a cut in interest rates which potentially shows just how concerned the PBOC is about growth and, maybe even more so, the inflation outlook. Add to this the comments from ECB President Mario Draghi who claimed on Thursday evening that the central bank must to more to prevent the eurozone from falling into deflation territory and we have a very accommodative monetary stance from many of the world’s largest central banks. The Fed may be becoming less accommodative but we have to remember that its balance sheet is still more than $4.5 trillion and interest rates remain at record lows. With this backdrop, what exactly is going to stop markets rallying into next year? The start of the week is going to be a little quiet due to there only being a small number of economic releases scheduled. This morning we had the German Ifo release for November which gave us some reason to be more optimistic, as all three indicators – business climate, current assessment and expectations – rose on the month and easily exceeded expectations. As always with these surveys, this is encouraging but the usual downfalls do apply in that they’re not always that reliable a should therefore be taken with a pinch of salt. That said, it’s certainly nice to see some more positive data coming from the eurozone’s largest and most important economy. In the US today we’ll get a couple more PMI readings for November, with the services and composite readings being released. The services reading is expected to pull back slightly from a month earlier to 56.8, which when you take into consideration last week’s decline in the manufacturing PMI would mean that the composite reading should also decline back towards the 55-56 level. The rest of the week will be a little more eventful, with Bank of England Governor Mark Carney appearing before the Treasury Select Committee tomorrow for the inflation report hearing, while we’ll get GDP figures for the third quarter for the UK and the US in the days following, as well as durable goods orders and inflation data. Not to mention the OPEC meeting on Thursday, when some are expecting a cut in production in order to support prices. The S&P is expected to open 3 points higher, the Dow 18 points higher and the Nasdaq 4 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 24 November 2014 - Alpari UK

https://www.youtube.com/watch?v=E4_yUWTyzYA

 

[Alpari UK]

UK Opening Call from Alpari UK on 25 November 2014

Inflation report hearing to dominate European session

• Nikkei rises despite less dovish minutes
• OPEC meeting expected to see oil output cut
• German GDP expected to confirm avoidance of recession
• BoE inflation report hearing put pressure on Carney over falling inflation.

A cautious yet positive start to the day is expected for the European markets today, following the establishment of record highs in the US and a largely positive session overnight in Asia. The largely hawkish news overnight from the BoJ minutes were to an extent brushed aside as traders instead focused upon the expansive global outlook for monetary policy. As such, European futures are pointing towards a positive open, with the FTSE100 +4, CAC +3 and DAX +17 points.
The big news overnight came from the Bank of Japan minutes, following the introduction of a heightened rate of asset purchases; from Y50 trillion per month to the current Y80 trillion. The shock in the market was highlighted by the 320 pip rise in USDJPY that day, where very few if any analysts saw the move coming. Given this, it comes as no surprise that the BoJ committee found a weak majority to carry the action through, with only 5 out of the 9 members voting to increase asset purchases. The minutes showed a great degree of anxiety over whether the benefits of an increase in asset purchases really outweighed the negatives. This narrow victory for the doves, alongside a clearly apprehensive narrative running through the committee meant that for the time being, it is unlikely we are set to see another such move in the next few months. However, with a speech from Kuroda today driving home the point that he would not hesitate to implement further QE should the Japanese economy need it, there is clearly an ultra-dovish Governor in charge at the BoJ and this can be a decisive factor when trying to push through less unanimous policy changes as was the case at the last meeting.
There has been significant discussions regarding Thursday’s OPEC meeting, at which some expect to see a cut to supply as a means to draw a line under oil price weakness that has severely diminished the ability of member nations to generate like for like cash flow from their exports. The announcement from Russia that they are currently losing around $100 billion per year owing to such oil prices shows the effect this can have upon highly oil dependant nations and as such it comes has no surprise that action is being considered. However, with revenues falling for members, it is likely that many will feel that unless their capital reserves are large, they may wish to export more rather than less, to retain a consistent level of funding. After all, the length of time it will take that global supply cut to reach market prices is an unknown.
Today’s European session sees the final German GDP figure released, with expectations pointing towards confirmation of that 0.1% month on month growth which avoided a recession. Yesterday’s IFO business climate survey finally saw some strength come back in to German sentiment and this was for a large part due to the fact that the economy managed to stave off a dreaded recession. However, with risks and weaknesses clearly remaining, I would not be surprised to see this move lower today which could cause a shock to the markets.
We are also due to hear from Mark Carney and the BoE at the inflation report hearings in London. The downward trajectory of inflation within the UK has been a cause for concern in the BoE, pushing expectations of an interest rate hike further into the future. This appears to be a global phenomenon, driven in a large part by falling energy prices. However, with Carney having recently lowered his expectations of inflation, to the extent that he forecasts a level below 1% in the near future, it will mean a letter will have to be written to explain his reasons for such a move to the Chancellor. It is likely that this extreme situation will be cause for concern at the Treasury Committee and I expect to see greater clarity provided regarding inflation expectations, along with the reasons for such low price growth. Markets will be on the lookout for any reason to change their perception of when rates will rise and for this reason, volatility could characterise this event, due at 10am GMT.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 25 November 2014 - Alpari UK

https://www.youtube.com/watch?v=FppS-LWtTng

 

[Alpari UK]

UK Opening Call from Alpari UK on 26 November 2014

Quiet day sees focus upon overall market sentiment

• Quiet day sees focus upon overall market sentiment
• US GDP and consumer confidence paint alternate pictures
• UK GDP ahead.

European markets are expected to move higher this morning, following a largely positive session overnight in Asia. The inability of the US markets to reach fresh highs did little to dampen investor sentiment elsewhere despite a poor consumer confidence survey as many chose to focus on the strong GDP figure and a globally accommodative monetary stance. Thus European markets are expected to open higher with the FTSE100 +40, CAC +24 and DAX +48 points.
A lack of economic releases overnight means that traders have had little to get their teeth into and for the most part this means having to tap into the overall market sentiment. The sharp increase in the rate of asset purchases in Japan last month, coupled with expectations that the ECB will move to purchase sovereign debt soon (as shown by the move lower in yields recently), means that there is an underlying feeling that whilst the previous rhetoric surrounding the markets was centred around monetary tightening, this couldn’t be further from the truth. The tumbling inflation that has been seen thanks in large part to oil prices has come at the perfect time, forcing central banks to respond by means of pushing back expectations for that first interest rate hike that everyone is speculating upon. Mark Carney played his best poker face yesterday at the inflation report hearings, stating that the next move the BoE will make is going to be a rate hike. However, we do not need to see another bout of QE to be bullish in such a low interest rate environment.
Yesterday saw very mixed messages out of the US, where a unexpected jump in Q3 GDP was somewhat undone by an equally surprising drop in consumer confidence, which reversed the big spike higher last month. The feeling for many is that US Q3 GDP is going to be about as good as it gets for the time being, as it starts to come back off the massive Q2 figure of 4.2%. The estimates across the likes of the UK economy point towards a more stable rate of growth as rates begin to normalise and the house price frenzy of 2014 starts to cool. Whether we will see a rate hike in 2015 remains a bone of contention at this moment, with inflation likely to dictate rates to a large extent. However, when it comes to the question of where the growth will be in the new year, I feel that there is now an overwhelming feeling that the US more so than the UK will experience a very strong 2015. The impact of the ongoing (and seemingly neverending) downturn in the Eurozone is of course greatly impacting the UK who sees the single currency region as its main trade partner. Also, the impact of Russian sanctions will hit the UK more so than the UK simply due to the size of flows between the two countries. However, one thing that many seem to be ignoring the impact that falling energy prices will have upon both businesses and consumers alike. While many believe that QE has a limited degree of impact upon consumer behaviour (see yesterday’s BoJ minutes for example), one thing that businesses and consumer alike have to buy is petrol. Should we see the falling price of petrol reflected properly at the pump, this is probably the strongest form of stimulus yet because it reaches the pockets of almost everyone. For this reason, I think it is likely that this could be the biggest festive season yet in terms of sales, starting this week for Black Friday.
Looking ahead at the European session, the major event of note comes in the form of the UK Q3 GDO number. Just like yesterday’s US number, this is a second revision and thus there is a possibility that it simply confirms the 0.7% figure revealed last month. However, taking a look at the spike we did see in the US number, there is a potential for significant revisions, causing market moves and thus for this reason, it is well worth watching out for this data point.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 26 November 2014

Eyes on the US for further evidence of recovery

• US data in focus ahead of tomorrow’s Thanksgiving holiday;
• Core durable goods orders an important release today;
• Core PCE Inflation seen rising in line with CPI and PPI;
• Tomorrow’s OPEC meeting likely to cause unease in oil markets.

The combination of a highly stimulative environment in many of the world’s largest economies, along with strong recoveries in the US and UK is continuing to buoy markets on Wednesday.
With US markets set to close on Thursday as the country celebrates Thanksgiving, the end of the week may be very quiet as traders turn the holiday into a long weekend. That could make today even busier, especially with some data that would normally be released Thursday being moved forward to today. There is a lot of economic data scheduled for release today which could make for a very volatile US trading session.
Among all of the data releases, there are a number of key readings which makes today a very interesting one for the markets. For example, durable goods orders is due ahead of the opening bell and can be viewed as both forward and backward looking, making it a very good US economic indicator. Not only does it highlight the spending habits of consumers and businesses, the fact that it focuses on large investments on products that last longer than three years, means it provides insight into their economic outlook. People avoid spending on these large goods if they can if they anticipate tough times ahead. This makes it a very strong indicator for the markets. The overall reading can be quite volatile as it includes items such as aircraft orders which are large items and can be quite volatile themselves in nature, so many people focus more so on the core reading, which is expected to rise by 0.5%.
Being released alongside this number is the Fed’s preferred measure of inflation, the core personal consumption expenditure price index. Inflation has become a hot topic this year and is likely to continue to be in 2015, although the US seems to be suffering far less from low inflation than many of the other major nations. The latest reading is expected to pick up slightly from October’s 1.5% reading, which would be in keeping with the CPI and PPI inflation readings, both of which showed an improvement when released last week.
Also alongside these figures we have the latest jobless claims number, which is expected to be below 300,000 for an incredible eleventh week, as well as the latest personal income and spending figures, so 8.30am in New York (1.30pm GMT) is going to be extremely busy from an economic data perspective and significant market volatility could follow.
Things then calm down a little until shortly after the open when we’ll get the latest Chicago PMI, the revised UoM consumer sentiment reading and the latest housing data, with new home sales and pending home sales numbers for October being released. Despite probably being the least important releases of the day, these still have the potential to bring big moves to the markets and therefore should not be overlooked.
Also on people’s minds today is tomorrow’s OPEC meeting when members are expected to discuss the option of cutting oil production in an effort to stop the slide in prices that we’ve seen since June. Many people are expecting no cut in production, as the biggest members of OPEC refuse to give up market share despite revenue falling as prices tumble. There is a big chance that we’ll see some big moves regardless of the decision as there seems to be a fairly even split between those expecting a cut and those not resulting in quite a tense stand-off.
The S&P is expected to open 2 points higher, the Dow 17 points higher and the Nasdaq 8 points higher.

Read the full report at Alpari News Room​

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[Alpari UK]

Daily Market Update - 27 November 2014 - Alpari UK

https://www.youtube.com/watch?v=anKbHFcZpi0

 

[Alpari UK]

UK Opening Call from Alpari UK on 28 November 2014

Falling oil prices to act as QE4

• Oil prices tumble as OPEC play chicken
• Multiyear low Oil prices to act as QE4
• Japanese inflation falls, pushing Nikkei higher
• Eurozone CPI to dominate after key fall in German CPI.

A mixed-looking open is expected for European markets, following a particularly strong Asian session. The release of poor inflation data from Japan drove much of that bullish prices action overnight, while the eurozone CPI number this morning means that many are holding off until what is expected to be a very volatile release takes place.
Meanwhile, the insistence of OPEC upon retaining a steady rate of oil output has shocked the markets, sending both Brent and WTI tumbling, and with it goes the chance of many producers to continue to operate.
The European open is expected to look somewhat mixed, with futures pointing towards the FTSE100 opening -3, CAC -7 and DAX +2 points.
Yesterday’s announcement from OPEC that saw them retain the current 30 million barrels per day output ceiling was somewhat of an market oxymoron, being both expected and shocking in its nature. The influence of the Saudi’s within the group has clearly been the single most influential protagonist within this saga, whose goals from forcing the price even lower are far-reaching, long term and disruptive. The ability to lower prices below the cost of production for many US shale producers means that many will invariably go out of business, leaving the market altogether or selling equipment and setting them back by years. Meanwhile, by lowering oil prices well below Iran’s cost of production, there is the hope that it will avert them obtaining a nuclear weapon anytime soon as funding dries up. However, the knowledge that many of these producers will have set their prices well into the future with buyers means that these ultra-low oil prices could be here to stay for some time yet.
The establishment of a new lower norm for oil prices comes at a very opportunistic moment, as monetary policy for many is beginning to dry up. However, whilst people protest about the 1% getting richer and how previous stimulus effects fail to adequately trickle down to many, it is hard to think of a more wide-reaching and effective stimulus measure than to lower the cost of gas at the pump for everyone globally. For this reason, we are effectively entering the era of QE4, with motorists able to allocate more of their money towards luxury items, while firms are now able to lower costs of production thus impacting the bottom line and raising profits. The impact of this could be bigger than anything that has come before and the first test dummy will be both black Friday and overall holiday season sales which I believe will be the biggest on record as multi year lows in unemployment come amid multiyear lows in petrol prices to culminate in extremely vibrant retail sales environment.
Overnight, the release of Japanese CPI gave Shinzo Abe more to worry about ahead of the snap election, due next month. Unfortunately for Abe, his decision couldn’t have come at a worse time, with Japan falling into recession a week later and now moving ever further away from his 2% target for CPI. The announcement that CPI fell back to 2.9% meant that when taking into account the April sales tax hike, Japan now has the first sub 1% inflation rate in 14 months, at 0.9%. Markets will be watching closely to see if the coming months show any sign of pickup following the BoJ decision to raise asset purchases to Y80 trillion, yet the bullishness in the Nikkei overnight points to expectations that we could see yet another move from the BoJ in the near future, with a Y100 trillion asset purchase scheme a possibility.
The main event within the European markets today will no doubt be the Eurozone CPI reading, which has been the thorn in the side of Mario Draghi for well over a year now. Unfortunately for Draghi, this does not seem to be going away, with market forecasts pointing towards a fall back to 0.3% after a brief respite last month which saw the opposite move from 0.3% to 0.4%. Yesterday’s German CPI reading of 0.6% was particularly notable given that Jens Weidmann has been one of the opponents to a particularly expansionary monetary policy from the ECB, no doubt driven in part by the German fear of hyperinflation like that seen in 1921-24 in what was then called the Weimar Republic. However, deflation must also be a problem for Germany and finally, their CPI levels are beginning to come closer to the average of the region which will likely bring their views more in line with that of Mario Draghi. For this reason, everything is setup for a more dovish ECB going forward as long as CPI remains low and thus should we see a return to 0.3% it is likely that the stock markets will reflect this in a positive way given what it means for potential monetary policy going forward.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 28 November 2014 - Alpari UK

https://www.youtube.com/watch?v=TSs0aAuKMRA