Forex Research

[Alpari UK]

UK Opening Call from Alpari UK on 9 September 2014

Europe seen lower as the EU announces fresh sanctions

• Europe seen lower as the EU announces fresh sanctions on Russia;
• UK data being released but the focus remains on the Scottish referendum;
• Apple to unveil its new iPhone, new battery could be the gamechanger.

European indices are expected to open lower again on Tuesday after a new package of sanctions was agreed against Russia in relation to its part in the crisis in eastern Ukraine. The implementation of the sanctions will be delayed though in order to give the recently agreed ceasefire a chance to work. In all honesty, given the shelling seen yesterday in two cities in eastern Ukraine, I'm not overly confident that this will last, but as always, I remain hopeful.

Once again today, things are looking fairly quiet from an economic data standpoint. The focus will undoubtedly be on the UK today, with the BRC having already released retail sales data for last month, industrial and manufacturing production figures being released this morning, NIESR releasing its GDP estimate for the three months to August and Bank of England Governor Mark Carney speaking in Liverpool.

Even with all of this, I do question just how much investors are going to respond with many appearing far more concerned with the Scottish referendum vote in nine days. Carney's comments could provide some support for the pound, which has pretty much been in freefall over the last couple of months. Any suggestion that the central bank may be tempted to raise rates this year, for example, would surely reverse some of the declines seen, although how much is difficult to say. A referendum with an uncertain outcome, both in terms of voting results and what a "yes" vote would actually mean, may be seen as a far more important issue than the exact timing of the inevitable first rate hike to investors right now.

While there may be little potential for upside in the pound from today's releases, I wouldn't be surprised if disappointing data was taken as another opportunity to sell the currency. Already this morning we've seen that an unexpectedly strong retail sales report from the BRC had no impact whatsoever so there's no reason to expect anything else from the other data releases today.

The currency markets have come back to life quite a bit recently as central bank easing in the euro area, fears relating to the Scottish referendum and weakness in commodity currencies pave the way for a stronger dollar that in reality has little to do with the greenback itself. Traders have been forecasting a stronger dollar for most of this year, although I think many envisaged that the rally would begin sooner and have more to do with the end of quantitative easing and potential rate hikes than every other currency having a race to the bottom.

Whether from an investor perspective or just that of a fan, all eyes will be on Apple today as it announces the latest release of its smartphone. As always, Apple has let very little slip about the new device ahead of the launch but there has been a huge amount of speculation that the company will introduce the smartphone in two new larger sizes in order to compete with its competitors, along with a new design and, according to a number of sites yesterday, a significantly improved battery. Given consumers repeated complaints about smartphone batteries, the latter is the potential game changer in my opinion. The company may not have been as innovative in recent years but if it can offer a much improved battery, all may be forgiven.

The FTSE is currently seen opening 12 points lower, the CAC 16 points lower and the DAX 32 points lower.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 9 September 2014

Carney speech, UK GDP and Apple in focus today

It’s going to be another quiet day in terms of economic data from the US on Tuesday, but fortunately there is other things that will certainly keep investors’ attention during the session.

They key talking point today is likely to be the launch of the latest products from Apple, the largest component of the S&P 500. It is widely expected that Apple will unveil the iPhone 6 which will be available in a 4.7” and 5.5” display, both of which are larger than that of the iPhone 5S. This is expected to come alongside the launch of the new iWatch which has apparently been in the works for a long time and Apple has not been the first to the market.

The problem that Apple faces today is that under the leadership of Tim Cook, the company has had a tendency to underwhelm at these launches and in the eyes of many, has gone from an innovative company to a copycat that is more concerned with matching its rivals than leading the way. This may explain some of the weakness in Apple’s share price in recent days which could leave plenty of upside potential, including a new record high in the share price, should Cook deliver.

I don’t think a new phone and iWatch alone will cut it as these are priced in. There’s been rumours about other things that Apple could announce such as a new stronger sapphire screen for the iPhone, which is expected on the iWatch, that would make it more scratch resistant, and a mobile payments functionality. This may appease investors a little but the one that has the potential to be a game changer for Apple would be the new battery that has been rumoured. Users of smartphones have long complained about battery life and if Cook could deliver an iPhone with significantly better capability than its competitors, I think it would be enough to bring a large number back that have strayed in recent years. This would surely excite Apple investors.

Elsewhere we do have more data to come from the UK, with the NIESR GDO estimate for the three months to August being released. This should give us an up to date idea of what growth we can expect to see for the third quarter, with the first month suggesting it’s likely to be a little weaker than we’ve seen over the last year. We’ll also hear from Bank of England Governor Mark Carney who will talk in Liverpool on monetary policy. Carney’s comments are always closely followed by the markets, especially as we near the first rate hike which is expected early next year. With sterling currently suffering as a result of the Scottish referendum, it will need something very hawkish from Carney to significantly lift the pound.

The S&P is currently expected to open unchanged, the Dow 1 point lower and the Nasdaq unchanged.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 9 September 2014 - Alpari UK

https://www.youtube.com/watch?v=a1VT-90yei0

James Hughes looks at the effect the Scottish referendum is having on sterling, he also looks at the economic calendar for the rest of the week.

 

[Alpari UK]

Webinar - 9 September 2014 - Alpari UK

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

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]

UK Opening Call from Alpari UK on 10 September 2014

Carney testimony headlines quiet European session

• Investors once again getting nervous at record highs;
• Rising yields blamed for weakness in equities this week;
• Carney to testify in front of the Treasury Committee.

European futures are expected to open around a quarter of a percentage point lower on Wednesday following a similarly disappointing trading session in the US and Asia overnight.

Once again we're seeing an unwillingness to continue to buy into the rally near the record high levels that US indices currently find themselves around yet at the same time, every time we see a dip in the market, investors are flooding to buy. Maybe that suggests that investors believe the markets are fairly priced at these levels. Many people have said recently that while it may not be a great time to buy at the moment, it's also not a time to sell, which would explain the ongoing buying of the dips to exploit short term weakness in the market.

A lot of the declines overnight are being attributed to the rising bond yields, particularly in the US but also abroad. Rising yields may reflect a slight repricing of the first rate hike with some believing that markets had priced in a later hike than the Fed is suggesting. While that may be true, this should only cause short term weakness in the markets as we haven't seen anything that would suggest the Fed itself has brought forward its rate hike expectations.

Some of the weakness in the markets right now could also be attributed to the lack of economic data being released this week. At a time when news flow is also slow, it's difficult for investors to find any real drivers for markets and instead all we get is choppiness and maybe a little profit taking. We're not even getting any direction from the Federal Reserve as we're currently in the blackout period when policy makers aren't allowed to speak in public.

While today is looking pretty quiet again in terms of economic data, there is one very notable economic event taking place, the Bank of England inflation report hearing. BoE Governor Mark Carney and other members of the MPC are due to testify before the Treasury Committee on inflation and the economic outlook.

Given that this is a major central bank and the Treasury Committee has never been one to go easy on the them, this does have the potential to create some big moves in the markets, particularly at a time when the first rate hike is just around the corner. The only problem we have is that the BoE has been very open about its views on monetary policy and the economy in recent months, with Carney only this week stating that the first rate hike is likely to come during spring next year. Given that clarity, along with the fact that he's confirmed that any hikes thereafter will be gradual, what else could we learn today? Is this going to be another boring few hours of politicians trying to get the central bank Governor to back their policies. Unfortunately, I think this is exactly what's going to happen. That said, you can never be complacent during these events and significant volatility should always be expected.

The FTSE is currently seen opening 12 points lower, the CAC 12 points lower and the DAX 30 points lower.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 10 September 2014

BoE in focus during quiet US session

Early indications suggest we’re going to see this week’s pullback in US indices grind to a halt as both the S&P and the Dow run into support around the 20 DMA and previous lows, respectively. With little driving markets today in terms of economic data or newsflow, these levels may well hold up, as pre market levels point to a slightly positive start with the S&P seen 3 points higher, the Dow 35 points higher and the Nasdaq 9 points higher.

Prior to this week, we’d seen quite an impressive run in US indices, particularly the S&P and the Dow, helped to a large extent by the Fed’s unwavering commitment to remain accommodative for a considerable amount of time after the end of asset purchases in October. The fact that the Dow barely managed to eke out new highs before pulling back while the S&P just about managed to break 2,000 suggests there isn’t much in this rally at the moment. That said, from a technical standpoint, the two week consolidation seen in both indices could be viewed as bullish given the rally that occurred in the lead up to it.

Apple is likely to continue to be one of the more interesting stocks today, following the release of its two new iPhones and the iWatch. The stock was very volatile following the announcement yesterday before ending the session lower. Now that people have had time to reflect, we should get a better idea of how people viewed yesterday’s launch and whether they were satisfied with what Tim Cook had to offer.

The launch itself offered few surprises but I think overall there was a great disappointment that Apple hasn’t addressed some key issues that has pushed users onto other devices, most notably the battery life. Instead it moved to copy the competition once again, further confirming the company’s new status as a follower rather than an innovator. The iWatch was probably slightly better than people expected but it was not enough to send people away with the kind of buzz that Steve Jobs used to.

As already mentioned, the day is void of notable economic releases. The only important event is the Bank of England inflation report hearing, where Governor Mark Carney and his fellow MPC members will testify before the Treasury Committee on inflation and the economy. This can be a big event for the markets, particularly the pound which has been plummeting recently as uncertainty grows surrounding the Scottish referendum. Any hawkish comments from the MPC may provide temporary reprieve for the pound, although for the next eight days or so, this is likely to play second fiddle as the referendum is seen as a much bigger threat right now.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 11 September 2014

US futures lower ahead of jobless claims data


• Lower inflation and liquidity withdrawals from the PBOC hit Chinese shares;
• FTSE down on China exposure but sterling rallies on new referendum poll;
• US jobless claims the only major economic release on Thursday.

A mixed morning in Europe is providing little direction for US markets ahead of the open, with futures currently pointing to a slightly softer open.

There wasn’t much more direction from Asia overnight, where Chinese shares ended the session lower on deflationary concerns and the People’s Bank of China’s decision to withdraw some liquidity from the financial system. The latter appears to have been done to stem the recent strength being seen in the Chinese Yuan which may be sparked by speculation.

Withdrawing liquidity at a time when people are concerned about inflation in the country, which fell to 2% in August, is not likely to be well received by the markets. The drop in inflation was largely driven by volatile food prices and the number could therefore rebound in the coming months. On a more positive note, the lower inflation figure does give the PBOC an opportunity to increase its targeted stimulus measures in the coming months which could help the country achieve the 7.5% growth target that some see it falling short of currently.

The FTSE’s exposure to China is what’s weighing on the index this morning, but the pound is performing much better in the currency markets after polls showed that voting on the Scottish referendum had moved back in favour of the better together campaign. The poll showed a six point lead for the “no” vote which is a big change from the YouGov poll over the weekend which showed a two point lead for the “yes” vote.

This change may suggest that some of those undecided voters have not been convinced by the lack of guarantees that the independence campaign offers, with the future currency, central bank, monarchy and membership in Europe up in the air. Without assurances on any of these, I can’t see the majority voting for independence and I expect the vote to gap to widen on the voting before next week. Announcements by RBS and Lloyds that they would move their head offices to London if Scotland votes for independence, as well as yesterday’s plea and offering from the UK government to the Scottish people to remain a part of the union is also likely to have swayed some people.

As has been the case for most of the week, the day is looking a little light on the data front. Initial jobless claims data is the only noteworthy release on Thursday and is expected to show another figure around the 300,000 market.

The S&P is currently expected to open 5 points lower, the Dow 44 points lower and the Nasdaq 9 points lower.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 11 September 2014 - Alpari UK

https://www.youtube.com/watch?v=9QqMqywEWiA

Market Analyst Craig Erlam talks about some of the key topics moving the markets on Thursday including Chinese inflation data, the Australian jobs report, US jobless claims data and the Scottish referendum.

 

[Alpari UK]

US Opening Call from Alpari UK on 12 September 2014

US futures flat as the consumer comes under the spotlight

It’s been a very quiet week in the financial markets and European indices are on course to end on a mixed note, while US futures are pointing to a slightly weaker open.

The FTSE and the pound are being well supported again today after the latest YouGov poll showed a u-turn in the voting on Scottish independence with 52% of people saying they would vote no. While this isn’t exactly a huge swing in the voting, with the previous poll showing 49% against independence, the mere fact that its moved in favour of staying a part of the United Kingdom has brought some calm back to the markets.

The worst part of all of this is the fact that no one really knows what will happen if Scotland votes for independence and it’s that uncertainty that is freaking people out. With the UK enjoying a strong recovery at the moment, especially compared to the US and the eurozone, this is the last thing it needs. Once this vote passes and the people of Scotland vote to remain a part of the UK, which I am sure they will, people can once again start to focus on the good news story that is the economic recovery.

The fresh batch of economic sanctions that the EU has imposed on Russia are likely weighing on sentiment today, which is probably largely responsible for the weaker end to the week. We have already seen that these sanctions don’t only harm Russia, there are consequences for the countries imposing them, and while they are necessary, the markets do not respond well to them.

The US session today is likely to be another quiet one although there are a couple of notable economic releases for traders to watch out for. The numbers give an overview of how the consumer has been spending of late and how they are likely to act going forward, so they are likely to be tracked very closely by traders and could have a significant impact on the markets. The consumer is extremely important to the US economy and any drop is spending or confidence will be concerning.

As it stands, we’re expecting a 0.6% increase in retail sales and a rise in consumer sentiment to 83.2 which is very encouraging. The US recovery has been very strong over the last six months and if it continues at this pace, the Fed will have to consider bringing forward its first rate hike. We’ve already seen this week that investors are starting to price this in after rumours surfaced that the Fed will not release such a dovish statement next week, withdrawing its commitment to keep rates low for a considerable amount of time after the end of asset purchases. If this does happen, we may well see further pricing in of an earlier rate hike.

The S&P is currently expected to open unchanged, the Dow down 3 points and the Nasdaq unchanged.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 12 September 2014 - Alpari UK

https://www.youtube.com/watch?v=ePy2p09Ho90