Forex Research

[Alpari UK]

Daily Market Update - 11 August 2014 - Alpari UK

https://www.youtube.com/watch?v=3kN4UzmDi4c

 

[Alpari UK]

UK Opening Call from Alpari UK on 12 August 2014

European confidence to be tested ahead of key data

• European markets set for flat start as US and Asian markets struggle for direction
• ZEW and CPI readings in the Eurozone will give insight into whether ECB measures are beginning to work
• Wednesday will be busiest day for data so markets may be in the calm before the storm
• President Obama supports new candidate for Prime Minister in Iraq

European markets are set to be pretty much unchanged as we approach the open this morning, after a pretty uninspiring session on Asia saw major markets struggle for any real direction. US markets couldn’t add to the gains seen by Asia and Europe in their sessions, only managing to post modest gains. Yesterday’s session was one of the quieter of the week on the economic calendar, so if the markets have started off with a whimper we are expecting much more fireworks in the next couple of days. Yet again it will be a mixture of geo political and economic news stories that dominate the market flow, but with some high level readings due out of the Eurozone we should be looking at a session with much more for traders to get their teeth into.

As is the theme for this week overnight saw data released from Asia, and while last night’s figures were not the headliners of the week, Chinese money supply, Australian housing data and Japanese industrial production would of all been closely watched by anyone trading any Asian crosses, or indices. As is evident by the lack of market movement on the Nikkei, or ASX overnight the majority of these figures came out in line with expectation. The numbers will build with importance as the week marches on with numbers out overnight tonight undoubtedly the biggest in Asia this week as the BOJ monetary policy meeting minutes are released along with Japanese GDP readings for Q2 and Chinese retails sales and industrial production.

Europe is the headline act for Tuesday’s session however and despite the figures being released not being the major numbers of the week, the outcome will likely give us some invaluable information about the state of the Eurozone economy. Mid-morning sees the ZEW economic sentiment figures released for Germany and the Eurozone as a whole. Lately German economic data has been awful, with GDP, CPI and unemployment numbers all struggling. The issue the EZ has is that without a strong German it has no chance of real economic recovery. Mario Draghi has thrown everything by the QE labelled kitchen sink at the boosting dragging inflation to the upside and kick starting growth but all of these measures will worthless should Germany not show signs of strength. Today’s reading will tell us just how well people think the plans by the ECB are working. The ZEW survey recently has been falling as numbers have gradually got worse and Russian threats to Europe haven increased. Today’s readings are expected to fall to 41.3 from 48.1 in the Eurozone as a whole and to a lowly 18.2 from 27.1 in Germany. These terrible predictions not only show you how negatively people see the ECB measures and the economic outlook as a whole, but they also show you the level of fear that retaliatory Russian sanctions are causing to Germany. Only last week Vladimir Putin moved to ban certain foods from western Europe being exported into Russia. With farmers now having to find another buyer for almost 10% of their produce, we could be looking at another real problem in terms of inflation as food prices will start to fall on bigger the usual stockpiles and start to cause a huge issue for not only farmers but the overall inflation figure. All this of course happening as the ECB fights with everything it’s got to pull the inflation figure away from the very real fear of deflation.

Ahead of the open we expect to see the FTSE 100 open pretty flat, higher by 4 points with the German DAX pretty much the same, lower by 3 points.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 12 August 2014

US futures edge higher ahead of data light session

It’s been another slow morning in the markets, with a light economic calendar and geopolitical concerns compounding to push traders to the side lines and await a further catalyst to bring back some much needed volatility.

Much has been made of the rising geopolitical risk recently with conflicts in the Ukraine, Iraq and Gaza ongoing, although the latter has eased up a little thanks to the latest agreed ceasefire not yet being broken. All things considered, these events haven’t actually weighed too heavily on the markets, but they have contributed in preventing any further gains being made, along with a few other important factors.

Especially during the summer months when trading volumes tend to be much lower, these quieter days on the economic data side of things tend to bring only marginal gains or losses, as we’re seeing today. The disappointing showing in some European indices today can partially be attributed to some profit taking following the strong start to the week, while the disappointing ZEW figures will also be contributing to the decline.

Expectations were quite low ahead of the release, which is perfectly understandable given the impact we’ve already seen on a number of data releases from the crisis in the Ukraine. This would help explain the softer opening in Europe as well as the fairly muted reaction to another disappointing batch of ZEW numbers.

The numbers missed across the board, with sentiment on the current situation in Germany sliding significantly into contraction territory, from 55.5 to 44.3. Meanwhile, overall economic sentiment in Germany fell to its lowest since December 2012 in a clear sign of how much the situation in Ukraine is impacting the economy of the eurozone, including its strongest member. Eurozone economic sentiment also fell to its lowest level since December 2012.

The rest of the day is looking much quieter in terms of economic data. This leaves market participants with very little to focus on except any further developments in Ukraine, Iraq or Gaza, which as we’ve seen on numerous occasions has the potential to seriously shake things up at any moment.

Ahead of the open, the S&P is seen 5 points higher, the Dow 34 points higher and the Nasdaq 9 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 12 August 2014 - Alpari UK

https://www.youtube.com/watch?v=V1Pxfr0bB0M

 

[Alpari UK]

UK Opening Call from Alpari UK - 13 August 2013

BoE Inflation Report headlines on hugely busy session

• BOE inflation report due for release along with unemployment data from the UK
• Sterling to be very busy throughout the session
• Japanese GDP shows huge fall, while BOJ point to continued recovery
• German CPI could show further contraction in Europe’s biggest economy

Today’s trading session looks like being an incredibly busy and important session as economic data is due for release from around the globe. We have already seen important data overnight from Asia as the BOJ meeting minutes were released as well as Japanese GDP data. The GDP readings out of Japan was expected to be poor after the introduction of the sales tax that came into force within the last quarter. Expectations were for GDP to shrink by 7.1% YoY, however the figure came in at 6.8%. The sales tax which of course hit consumer spending with both the retail sales figure and factory output numbers over the last quarter also down on the back of the sales tax number. However due to the nature of the fall and the one expectations of the introduction of the sales tax I would expect to see a recovery in this number and for the Japanese economy to continue to recover in the next quarter. The BOJ however didn’t offer much in the way of headlines from their meeting minutes, stating that geo political tensions must be monitored. They also reiterated the thought of many that the economic recovery was still largely on track and that no change in fiscal policy was currently needed.

This morning sees the release of the BOE quarterly inflation report and Mark Carney happens to be delivering this information on the day that we also get unemployment data out of the UK. The unemployment data is of course key when it comes to the state of the economy, and the Banks decision on fiscal policy. Although forward guidance is not now focussed on the rate, many analysts believe that the 6% unemployment rate is a key area. Should we see a drop below that level it would be very hard for the MPC to fight the argument for continued low rates, especially if the average earnings number continues to move higher. Average earnings was a large part of why the governors first round of forward guidance was shelved. If wages are not rising at a similar rate to jobs being created then hitting the cost of living further with a rate hike would have severely hurt a lot of the general public in the pocket, and my sceptical head says that’s not something you want to be doing as we run up to a general election in May 2015.

What we are likely to see from the BOE today is very much the same story as before. I had been in the camp that a rate hike was just around the corner, but the scepticism over the election seems to have bitten me a little harder these days. I expect Mr Carney to reiterate his extended rates for an extended period speech, much like his US counterpart. What will be interesting will be his inflation outlook. There is no getting away from the fact that UK PLC is currently performing well and the current inflation level of 2.1% is pretty much perfect for the government and BOE. It will be the fear of rocking the boat which we see today. Inflation may be in a good position at the moment but as the Eurozone situation shows it can fall very quickly, and once its down there it’s very hard to drag higher. So there will be cautious optimism from the bank, a very British feeling eloquently conveyed by a Canadian at 10.30 this morning.

We are also looking a lot of data from Europe today the bulk of which comes out of Germany. The Germany economy has been a pig recently, struggling on all fronts. GDP, CPI, exports and imports and industrial production have all posted weak numbers. This of course could pose a huge threat to the Eurozone and gives the ECB huge problems. The overall problem for the Mario Draghi is without a strong Germany, we do not have a strong Eurozone, and the fear is that all the measures thrown at dragging the economy out of the mire could well be about to fail due to the failing of the single currency’s largest economy. CPI inflation for Germany is set to fall again today, with expectations for a fall to 0.8%. IF the CPI in Germany can fall this far then it doesn’t paint a very bright picture for when we get the overall Eurozone CPI reading tomorrow.

So it’s likely to be a busy day, especially in the UK so we can expect big volumes through Cable and the sterling pairs. Ahead of the open we expect the FTSE100 to open lower by 9 points, with the German DAX higher by 16 points.

Read the full report at Alpari News Room​

 

[Alpari UK]

Webinar - 12 August 2014 - Alpari UK

https://www.youtube.com/watch?v=3TLp4LXW3o0

Weekly Market Webinar

Live every Tuesday afternoon our chief market analyst James Hughes, market analyst Craig Erlam and research analyst Joshua Mahony take a look at the major stories moving the markets. They will also look at some of the charts and discuss the big technical levels traders should be looking out for.

Click here to Register for our Webinar

 

[Alpari UK]

US Opening Call from Alpari UK on 13 August 2013

US retail sales in focus following dovish UK inflation report

• BoE cuts wage growth to 1.25% from 2.5% prompting mass sterling selling;
• Carney message mixed highlighting differing views among BoE policy makers;
• UK unemployment falls but wage growth also declines;
• US retail sales and Fed speeches in focus on Wednesday.

US futures are pointing marginally higher on Wednesday, tracking the moves made in Europe and Asia overnight. The focus this morning has very much been on the UK, with the release of the jobs report and the Bank of England inflation report.

A significant cut to the BoEs wage growth forecast saw sterling crash to a more than two month low against the US dollar, as traders took the revision to mean that the central bank won’t hike rates this year, pushing back some forecasts to the start of 2015. I think this always looked like the more likely scenario anyway but prior to today, there had been a growing number of investors pricing in an earlier hike, something that now appears less likely.

While the sterling reaction would suggest a very dovish inflation report and press conference, this was not necessarily the reality of it. Governor Mark Carney highlighted that while productivity was previously lower than it had expected, it had also improved much more than expected, resulting in a small net increase. This begs the question, if productivity is improving then why aren’t we seeing more wage growth?

This isn’t just stumping the markets, the BoE doesn’t appear to have any more idea on why this is than the rest of us. The comments from Carney and the other policy makers were very none-committal, which may have contributed further to the dovish response in the markets as they surely can’t start hiking rates when they don’t fully understand what exactly is going on.

The inflation report release came after the UK jobs report which, like the press conference, was fairly mixed but highlighted the poor wage growth still being seen in the country. The better than expected drop in jobless claims and drop in the unemployment rate was not enough to offset the weaker than expected wage growth, which showed a 0.2% decline when wages are taken into consideration. The selling seen in sterling after this release shows that the markets are finally coming round to the idea that wage and productivity growth, along with inflation, are going to be the key drivers of monetary policy going forward, not employment.

With the UK data and inflation report now behind us, focus will turn to the US economy, in particular the consumer. Retail sales are seen as one of the major economic releases of any month, especially at a time when people are looking for evidence that the US economic recovery is on a sustainable path. The consumer is very important to the US economy so proof that consumer confidence is high is always encouraging. That is what we’re expecting to see today, with core sales seen rising by 0.4%, in line with the increase in June.

We’ll also hear from two Fed member, one of which, William Dudley, is a voting member of the FOMC. As we approach the first rate hike, which I expect to come in the first quarter of next year, comments from Fed officials are likely to have more impact on the markets. Recently, Fed Chair Janet Yellen has refused to lower her dovish shield making any market reaction to hawkish comments unlikely, but it is always worth listening to comments for any change of tone that could pre-empt a similar change from the Fed in the coming months.

Ahead of the opening bell, the S&P is expected to open 7 points higher, the Dow 47 points higher and the Nasdaq 14 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 13 August 2014 - Alpari UK

https://www.youtube.com/watch?v=8yn3QmI-OUE

Japan GDP falls to -1.7% - 00:35
Mixed UK employment picture as earnings fall - 02:40
BoE inflation report focuses on accommodative stance - 04:02

 

[Alpari UK]

UK Opening Call from Alpari UK on 14 August 2014

Eurozone takes centre stage after the BoE show

If yesterday’s session was dominated by the UK with the inflation report and unemployment numbers, then today is most certainly Europe’s day as CPI and GDP data are both released out of the Eurozone. There is also the chance to drill down into the countries, most notably we get a look at GDP out of Germany. Yesterday’s CPI reading out of Germany came in as expected at the lower levels, but today’s reading is potentially more important. Later in the session we finally get a few nits of data out of the US as retail sales are releases as well as some Fed speak.

Yesterday’s inflation report from the UK saw BoE Governor Mark Carney put the emphasis back on to the electorate when it comes to the timing of interest rates. However instead of looking at the overall unemployment rate he is now look at the average earnings numbers. The governor revised down the expectations for earnings saying that he did not expect peoples average earnings to rise as fast as unemployment is falling. This will be music to the ears of some people, very much like it was music to the ears of the markets yesterday. It will also be pretty nice to hear from the government, not only are the bank now going to wait on raising interest rates, they are going to wait until you have enough money coming in to afford the rise in your mortgage payments. However yesterday did show that despite tall of the positive numbers coming out of the UK we are not yet have a fully recovered economy, and it could be a little while yet before we are in a position to move towards that sense of reality that people have been calling for.

If the UK is still showing strong signs, then I’m afraid to say that the Eurozone is still deep in the mire. Yesterday’s figures on inflation in Germany showed no signs of improvement with CPI inflation in the Eurozone biggest economy falling to 0.8%. Today sees inflation numbers from the Eurozone as a whole and the expectation is for this figure to fall again, in line with Germany by 0.1% to 0.4%. The situation between Russia and western Europe is of course not helping matters but the most worrying situation is the fact that the ECB plans implemented a few months back are showing absolutely no signs of making an impact. Inflation levels are still dangerously low and today will also see the GDP figure potentially fall from a previous 0.9% to 0.7%. With the numbers remaining terrible there will be added pressure for Mario Draghi to do the only thing he hasn’t already put into the economy and that is a round of QE. He stopped just short of QE when announcing funding for lending schemes and TLTRO’s, but it is now looking like QE could not only be the only way out for the Eurozone, its also all they have left in their arsenal.

Ahead of the open we expect to see the FTSE100 open flat with the German DAX higher by 13 points.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 14 August 2014 - Alpari UK

https://www.youtube.com/watch?v=7p62PuIuSx8

French and German growth data brings worries back to the market -
Eurozone GDP growth stagnates - 00:25
CPI remains at 0.4% - 03:40
What does this mean for ECB policy? - 04:00