Forex Research

[Alpari UK]

UK Opening Call from Alpari UK on 14 October 2014

More bad news for Europe weighs further on sentiment

• More bad news for Europe weighs on sentiment;
• Eurozone industrial production and economic confidence take another hit;
• UK inflation continues to slide, falling to five year low;
• Earnings season may provide support for equity markets.

European indices are on the decline again on Tuesday, as further bad news for Europe puts another dent in sentiment in the region.

It’s been a very busy morning on the economic data front and unfortunately, it’s just been yet another collection of disappointing and worrying figures. The most concerning are the figures from the eurozone where we saw a significant decline in industrial production in August, much larger than forecasts which were already rather gloomy. On top of this, the ZEW survey on economic sentiment showing another sharp drop from 14.2 to 4.1, while the German reading fell below 0, to -3.6, for the first time since November 2012.

The eurozone growth story may be an old one at this stage, but the rate of decline only appears to be accelerating and were seeing nothing from the surveys to suggest confidence is bottoming out. This doesn’t bode well for the end of the year, nor does it suggest that ECB efforts to slow it are having any impact. While I still firmly believe that quantitative easing is not a road that the ECB are interested in going down, they are running out of options. They are either going to have to get creative in the coming months or give in to the fact that it the only thing that can get the eurozone economy moving again, as it has in other major economies.

The Bank of England is facing a dilemma of its own in the coming months. The central bank has been keen to return to normality on interest rate policy, at one point even suggesting it could come this year. That appears to be off the table now but their job is being made much more difficult by the fact that inflation in the UK, as in many other countries right now, is falling and is now at a five year low of 1.2%. This can’t even be blamed on things like falling oil prices, as the core reading also fell last month to 1.5% from 1.9%. If this trend persists, the BoE will find it tough to justify a rate hike, which I’m sure is something many people in the UK will be happy about.

What will be key for the markets over the next couple of months is corporate earnings season. There has been so much volatility over the last week, driven largely by fear, that investors need a reason to buy again. We may only be around two thirds of the way into the 10% correction that so many believe is necessary, but solid earnings reports could make the current levels look quite attractive.

I think the coming earnings season is going to be quite strong for the US, with the economy continuing to recover and move towards a scenario in which Fed support is no longer required. There are likely to be a few common themes throughout earnings season though which are likely to hinder some companies and help others.

One of these is exchange rates following the strong appreciation of the dollar in recent months. Any companies with large overseas operations are going to see the dollar value of these profits fall quite dramatically, which could weigh on overall earnings. Another theme will be exposure to Europe, with the economy here coming to a standstill in the third quarter. European operations are likely to be an issue for a large number of companies and investors will want to know what is being done to overcome this. One final theme which could help many companies, excluding producers, is the slide in oil prices. Reducing costs will help the bottom line which may help cover hits being made elsewhere.

Earnings season will get properly underway today, with Citigroup, Wells Fargo and JP Morgan kicking things off for the banks. We’ll also hear from Intel and Johnson & Johnson, giving investors plenty to focus on to drive the markets. The only question now is whether they’ll be good enough to rid the markets of all this unease and fear that has created all of the recent volatility and selling.

The S&P is currently seen opening 2 points higher, the Dow 19 points higher and the Nasdaq 5 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

UK Opening Call from Alpari UK on 15 October 2014

US futures flat ahead of retail sales and earnings

• Healthcare stocks lead the FTSE lower;
• European pessimism weighs further on sentiment;
• US retail sales seen slowing in September;
• Earnings season picks up with financials back in focus.

Another disappointing start to the European session on Wednesday appears to be dragging on US futures ahead of the opening bell on Wall Street.
Health care stocks are a major drag on European indices this morning after AbbVie announced that it is reconsidering a $54 billion takeover over Shire. We saw earlier this year how volatile health care stocks were as a result of all the M&A activity and Shire at the time was at the centre of it all as many people picked it out as an ideal takeover target. With the deal now appearing to be on the verge of falling through, due to a change in tax rules in the US, the stock has plummeted almost 25% and the entire sector is down almost 7% in the UK.
This is unsurprisingly having a much greater impact on the FTSE than on other European indices, which are also trading lower again today as economic data continues to paint the picture of a region that is destined to fall into another recession . The most concerning aspect of this is the lack of a leader in the euro area at the moment, with Germany appearing to be coping no better than anyone else. The recent data points to the country falling into recession in the third quarter and confidence surveys are showing no signs of bottoming out, suggesting that things are likely to get worse before they improve.
US futures are pretty much flat at the moment, which is how they ended on Tuesday following another volatile session that saw them trading up more than 1% at one stage. The fact that we saw a halt in the slide could make today’s trading very interesting. It could be argued that the halt is a sign that the selling has at least temporarily come to an end which may prompt buying at what could be viewed as more attractive levels. Alternatively, the inability of indices to hold onto gains yesterday may suggest that this is just a breather and selling will continue. If we see a close above yesterday’s high today, it would suggest to me that we could see a more positive end to the week, while a break of yesterday’s low would suggest there’s further downside to come.
There’s plenty for investors to get their teeth into today, with both economic data and third quarter earnings reports due for release. On the economic data front, retail sales figures for September stand out as the most important release. The US economy is very consumer driven and therefore this data can provide great insight into how the economy is performing. It been a great year for the US in terms of retail sales growth but this is expected to have slowed in September, with forecasts currently being for a 0.1% decline.
There’s also a number of companies reporting third quarter earnings, with focus again being on the financials. Among those reporting are Blackrock, Bank of America and American Express. Outside of this sector we’ll get earnings from eBay and Netflix so investors have plenty to get their teeth stuck into.
The S&P is currently seen opening 1 point higher, the Dow 14 points higher and the Nasdaq 9 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

US Opening Call from Alpari UK on 15 October 2014

Markets respond despite poor Chinese data

Asian markets rose with the US dollar overnight as oil prices and gold fell away after another busy day in equity markets. Us markets had a mixed session in the end yesterday with the Dow managing to post small gains yet the S&P falling away slightly. The moves bring to an end a fairly aggressive run that has seen big falls and uncertainty around the equity markets. However the rest bite may only be a brief one as investors remain nervous around equity markets as they continue to show signs of weakness at the very same news stories that have in the past caused no issues. However Asian markets did manage to rally despite poor data from China, the CPI inflation figure fell to 1.6%, it’s the lowest level in 5 years showing yet more signs that the Chinese economy is slowing down. Of course this number comes after disappointing CPI numbers out of the UK and a day before the all-important Eurozone CPI readings tomorrow morning.


Today’s session will be dominated by numbers out of the UK and Eurozone yet again as CPI out of Germany is followed by the unemployment reading from the UK. Germany remains one of the big problem areas for Mario Draghi ahead of his speech this morning. Yesterday’s negative ZEW survey showed that confidence is at an almost 3 year low, with growth and inflation not faring much better. Today we will get the CPI reading and with no movement expected in the 0.8% rate there is no doubt that will be seen as a positive result. Mario Draghi will no doubt face questions over the next step for the ECB when he delivers a speech this morning and any hint towards a round of QE will be seen a positive move by the markets and the only logical next step.

With a rather different picture the UK government and BoE await the latest jobs report in the UK as expectations rise that the unemployment number will continue to improve and now the all-important average earnings number is also expected to show small signs of improvement. Governor Mark Carney outlined average earnings as a key figure that needs to rise before his team start to consider a rate hike in the UK, despite a raft of positive economic data. This seems like a sensible approach with and with that number only creeping to the upside over the last few months the BoE may well feel they have a little more time to play with. Mark Carney also mentioned last week that the BoE will not take into account general election timelines when making his decision over an interest rate hike. That is an interesting comment after sceptics out there, including myself, have been asking whether a rate hike before the general election would be the final nail in the coffin for the Conservative party in May 2015. One thing people do not like is the potential that a government could be taking money out of their pockets just as they step into the ballot box.

All in all today’s session as the potential for yet more in the way volatility with the key economic announcements due for release. Investors will also be looking towards earnings season in the US to give equity markets a further break. Yesterday saw JP Morgan Citi and Wells Fargo and Intel all post fairly strong earnings helping to boost belief that this strong rally isn’t quite over yet. Ahead of the open we expect to see the FTSE 100 open lower by 12 points with the German DAX lower by 7 points.

Read the full report at Alpari News Room​

 

[Alpari UK]

UK Opening Call from Alpari UK on 17 October 2014

Data, earnings and speeches to test bullish sentiment

• Markets rally after monumental effort on Thursday;
• S&P looking more bullish after 10% correction;
• Economic data, earnings and speeches to test new bullish sentiment;
• Yellen speech could stir things up again in the markets.

Equity markets are finally back in the green on Friday, following more than a week of extreme negativity that saw the S&P come very close to a 10% drop from its record highs reached in September.
It took a monumental effort to turn things round though which says a lot about just how bad things had got. In the space of a few hours the ECB announced the reduction of haircuts on Greek debt, Fed officials talked up the potential for more quantitative easing and jobless claims fell to a 14 year low, while a number of other economic releases also exceeded expectations. Even after all this, indices only managed to erase losses and end the session pretty much flat on the day.
Things have got off to a more positive start today though, with European indices currently posting around 2% gains, while US futures are around 1% higher. If there’s one thing we’ve learned over the last week though, things can turn around rapidly so it’s far too early to suggest with any real confidence that this sell-off has ground to a halt.
That said, it’s been clear over the last few days that investors were being tempted into becoming buyers again. On Tuesday, the Dow and the S&P closed near their opening levels, suggesting a cooling in selling pressure, while on Wednesday, markets rallied into the close which is quite a bullish signal. Given that this rally occurred after the S&P had fallen 9.9% from its highs, extremely close to the 10% correction so many had called for, it may suggest that investors are happier with these levels. The fact that we didn’t see indices break below Wednesday’s lows is also quite a bullish technical signal in my opinion.
The real test will be how the market now responds to negative news, such as a disappointing economic release, poor earnings or a slightly hawkish comment from a Fed official. Well, all of these will be tested today. Ahead of the open, we’ll get some housing data for September, with housing starts and building permits numbers being released. Both are expected to rise slightly compared to August which could provide a boost, especially following yesterday’s disappointing NAHB housing market index number. We’ll also get the preliminary UoM consumer sentiment reading for October, which is expected to fall to 84.1 from 84.6. The consumer is very important to the US so this is always worth watching out for, especially at a time when the market is so sensitive.
Janet Yellen is due to speak today which cause a stir in the markets. The Dow rallied 150 points in the space of a few minutes yesterday after James Bullard suggested that the end of QE could be delayed and even increased. Bullard isn’t a voting member of the Fed so you can only imagine what would happen if we got similar admissions from Yellen today.
The S&P is currently expected to open 19 points higher, the Dow 172 points higher and the Nasdaq 40 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

UK Opening Call from Alpari UK on 17 October 2014

Data, earnings and speeches to test bullish sentiment

• Markets rally after monumental effort on Thursday;
• S&P looking more bullish after 10% correction;
• Economic data, earnings and speeches to test new bullish sentiment;
• Yellen speech could stir things up again in the markets.

Equity markets are finally back in the green on Friday, following more than a week of extreme negativity that saw the S&P come very close to a 10% drop from its record highs reached in September.
It took a monumental effort to turn things round though which says a lot about just how bad things had got. In the space of a few hours the ECB announced the reduction of haircuts on Greek debt, Fed officials talked up the potential for more quantitative easing and jobless claims fell to a 14 year low, while a number of other economic releases also exceeded expectations. Even after all this, indices only managed to erase losses and end the session pretty much flat on the day.
Things have got off to a more positive start today though, with European indices currently posting around 2% gains, while US futures are around 1% higher. If there’s one thing we’ve learned over the last week though, things can turn around rapidly so it’s far too early to suggest with any real confidence that this sell-off has ground to a halt.
That said, it’s been clear over the last few days that investors were being tempted into becoming buyers again. On Tuesday, the Dow and the S&P closed near their opening levels, suggesting a cooling in selling pressure, while on Wednesday, markets rallied into the close which is quite a bullish signal. Given that this rally occurred after the S&P had fallen 9.9% from its highs, extremely close to the 10% correction so many had called for, it may suggest that investors are happier with these levels. The fact that we didn’t see indices break below Wednesday’s lows is also quite a bullish technical signal in my opinion.
The real test will be how the market now responds to negative news, such as a disappointing economic release, poor earnings or a slightly hawkish comment from a Fed official. Well, all of these will be tested today. Ahead of the open, we’ll get some housing data for September, with housing starts and building permits numbers being released. Both are expected to rise slightly compared to August which could provide a boost, especially following yesterday’s disappointing NAHB housing market index number. We’ll also get the preliminary UoM consumer sentiment reading for October, which is expected to fall to 84.1 from 84.6. The consumer is very important to the US so this is always worth watching out for, especially at a time when the market is so sensitive.
Janet Yellen is due to speak today which cause a stir in the markets. The Dow rallied 150 points in the space of a few minutes yesterday after James Bullard suggested that the end of QE could be delayed and even increased. Bullard isn’t a voting member of the Fed so you can only imagine what would happen if we got similar admissions from Yellen today.
The S&P is currently expected to open 19 points higher, the Dow 172 points higher and the Nasdaq 40 points higher.

Read the full report at Alpari News Room​

 

[Alpari UK]

Daily Market Update - 17 October 2014 - Alpari UK

https://www.youtube.com/watch?v=mBFNaRWr7Qs

 

[Alpari UK]

Weekly market preview from Alpari UK on 20 October 2014

A big week ahead in the markets, where the emergence of an unexpected correction has seen volatility return with a bang. The focus within the US markets will be geared towards the CPI release in the wake of the disinflationary worries that have dominated affairs in recent weeks. Meanwhile the UK GDP figure is likely to push forward talk of whether rates should move despite tumbling inflation. On the other hand, the eurozone has a somewhat quiet week, where a whole raft of PMI figures look set to dominate affairs.

In Asia, the busy week continues, with Chinese GDP set to draw focus upon a somewhat unpredictable economy of late. Finally, the Australian monetary policy minutes are likely to be the main event to watch out for amid mixed signals from the RBA.

US

The US markets are likely to see significant volatility given the major moves that saw over 10% wiped off most of the major indices. Many of these moves have been attributed to jittery traders who sold off the back of a handful of moderately negative economic releases. Whilst I do not think this is necessarily the full story, it is clear that the markets are highly sensitive at the moment and as such the economic calendar becomes more important than ever. With this in mind, the release of US CPI and manufacturing PMI figures should attract significant interest this week.

The most notable of these two releases is no doubt Wednesday’s CPI reading which will dominate given the current furore surrounding disinflation. Recent comments from Fed members Bullard and Williams have put the potential for a delay or increase in QE on the cards, all of which stems from clear downward pressure upon inflation across the world. Tumbling CPI in the US, UK, eurozone, China and alike has put the topic back on the agenda and monetary policy would typically become more accommodative as a response to any disinflationary threat. With that in mind, Wednesday’s CPI reading will be absolutely crucial for the markets and could cause significant volatility.

The month-on-month CPI reading is expected to improve somewhat, from -0.2% in August to a flat 0%. This is expected to be accompanied by a flatlining year-on-year figure of 1.7%. Another figure to be watching out for is the core number, which strips out volatile elements such as food and energy prices. Interestingly the core estimates point towards the yearly figure remaining at 1.7% and a month-on-month number of 0.2%. Thus for the most part, the markets expect a steady report this month, but with markets fully aware of what further downside could mean, there will be very close attention being paid to this release.

Later in the week, the flash manufacturing PMI is released on Thursday, where markets are expecting to see it pull back somewhat from 57.5 to 57.2. This number is likely to take on a greater significance with the current volatility within the markets, with poor data points leading to a theory that the economy could still do with some more easing. That being said, the US economy has been faring well in the past year and for that reason, I don’t personally follow that rhetoric too much. Ultimately, this is yet another major economic indicator that could move the markets and with a negative move predicted, it could yet help the downbeat story seen within the markets recently.

UK

A somewhat busy week ahead in the UK, where BoE minutes, retail sales and GDP figures allow for a likely continuation of the volatility that we have seen recently.

Wednesday’s BoE monetary policy minutes are going to the be first major event of the week in the UK, with a focus upon interest rates back on the cards. At the time of the last meeting, much of the pressure was geared towards tightening monetary policy in the near term and raising rates in Q2/3 2015. However, what a difference a week or two can make, where the global downside shocks to inflation means that there is a renewed feeling of anxiety within the central banks about raising rates too soon. As such, these minutes will be negated somewhat should we see a more hawkish view given recent developments. However, with the markets feeling like there could be more loose policy around the corner, it makes sense that any dovish minutes would be taken as particularly potent given that the next month’s minutes are likely to be dovish in comparison.

Thursday sees the retail sales figures shine a light upon the consumer base at a time when confidence is high in the UK recovery. For the most part, this measure is pretty volatile and we can see monthly swings into and out of positive growth on a regular occasion. However, last year saw 6 of 12 months with negative growth in MoM retail sales. This year has seen just 2 months out of 8 and so it will be interesting to see if the estimates of a -0.2% fall are set to give a third month of downside YTD. Given the volatility of the MoM figure, I believe markets will take any moderate downside with a pinch of salt. However, any major swings in these figures will be highly notable given the linkages between consumer activity and output growth.

Finally, the release of UK GDP for the third quarter of the year will no doubt dominate trading on Friday, with market interest focusing upon whether the strength seen in the first 6 months can be matched. For the most part, there is not too much pressure upon the UK what with the strong growth that has been seen recently. For that reason, the expected pullback from 3.2% to 3.0% wouldnt be the worst thing in the world given that 3.2% represents the highest rate of growth since 2007. However, any major move in this figure would no doubt be taken as a strong indicator with regards to the health of the economy going forward and thus the onward sentiment will be built on such a move.


Eurozone

A bit of a quiet week in the eurozone, where the major economic releases come in the form of the PMI figures, due out throughout Thursday morning. These surveys have been some of the first indicators of the downturn that has been evident within the likes of Germany in recent months and thus a poor or strong reading can provide a clue to the coming months for the eurozone. The focus of the markets will be particularly geared towards the German manufacturing PMI figure, which posted the first contradiction figure for 15 months in September. Given the reliance upon Germany within the eurozone, the recent downturn has unsurprisingly been treated as a bit of a disaster for the single currency region. Thus should we see further deterioration it would no doubt mean yet more calls for QE from the ECB. Ultimately, the attention will generally be upon whether there is a move in a certain direction for many of the readings. That being said, I believe the most important are the likes of the eurozone numbers, along with French and German manufacturing PMIs. Be aware of the eurozone composite figure which provides a good overview of the whole single currency region given that it includes both manufacturing and services sectors.

Asia & Oceania

A busy week in China, where the Hong Kong protests has somewhat dampened any renewed positivity given the possible impact it could have upon political stability within the Asian powerhouse. However, with the release of the GDP figure along with the HSBC manufacturing PMI number, the focus can try to return to the economic stance of China once again. The GDP figure is of course the most important number when it comes to China, with an economy and political system built on strong growth and high unemployment growth as a result. What we have seen in Hong Kong is no doubt the kind of thing that would be more commonplace should China not see the kind of improvement in living standards that has become apparent over the past decade. As such, it is important for China to remain strong going forward. For some of us, there is the belief that GDP isn’t necessarily everything, with much of the growth coming from artificially propping up many much of the economy. However, for now the focus is upon quantity over quality of growth and thus markets will definitely be closely watching for any movement in this figure. Estimates point towards a pullback to 72.5% in Q3 from 7.5% in Q2.

Thursday sees the release of the HSBC manufacturing PMI figure, where markets will focus upon the ability of the Chinese manufacturing sector to convincingly push out of the slowdown that has been evident in H1 2014. Recent months have been stronger than many expected, yet the pullback towards the 50 mark (which separates expansion from contraction) is certainly worrying for China. Thus this month will be crucial. Should we see this number fall back below 50, it could mean further downside for Chinese manufacturing to come and thus a potential next round of stimulus from the PBOC. Otherwise, a strong reading would accompany solid export numbers seen recently and bring alot more confidence in the recovery.

The main event in Australia is likely to be the release of the monetary policy minutes, due on Tuesday. The focus of the RBA recently has been one of stability, where the economy is too weak in its recovery for any sort of rate rise and the housing sector is too buoyant to reduce rates any more. As such, minutes are always the ideal opportunity to see whether the RBA are going to be leaning more towards a dovish or hawkish outlook.

Read the full report at Alpari News Room​

 

[Alpari UK]

UK Opening Call from Alpari UK - 20 October 2014

European futures higher as focus turns to German inflation

It looks like the volatility in equity markets may not yet be over as investors seem to have decided we can re rally from the lows seen over the last few weeks or so. US and European markets staged an impressive comeback on Friday managing to help lead a recovery to the correction. However we cannot yet rest easy and get back into the long term buying trend, with a whole host of economic data due for release this week and the all-important Chinese GDP figures set for release no one could rule out yet more selling.

The trading week will start a little more subdued this week, much the same as last Monday, with the economic calendar looking rather light of any big releases. However this is likely to be the calm before the storm as early morning on Tuesday we will get the GDP release from China. Chinese growth has been a worry for the markets for a long time, with the Chinese government focussing on that level of 7.7% growth. Tomorrows figures is expected to show growth down as low as 7.2%, a move that could have the potential to spook global equity markets further. Of course the GDP figure is one that is diluted somewhat, with much of the growth coming from stimulus measures. The importance to the market is not dampened by this though and there is real potential for more volatility around this number. With fears over the strength of the US economy, a weaker number from the world’s second largest economy would be a big blow for the global growth story.

Asia and China remains in focus as we move through the week with Thursday seeing the release of the HSBC manufacturing PMI number. Recent months have seen a much stronger figure here, giving investors optimism that China’s manufacturing power can get them out of the slowdown. So yet again a weaker reading could well give traders a reason to dump more stock.

There will be some European data this morning with PPI from German and current account data from the Eurozone, however after Friday’s strong performance in equities and with Asian markets following suit overnight it may well be a case of investors trailing that positive feeling over the weekend. The major indices are very much sitting on a knife edge at the moment. There is the potential for more downside after the falls of the last couple of weeks but Friday would have given people renewed optimism that the global rally could well still be on. This week will be pivotal in telling us whether we have already seen the worst or whether we could well see another 10% fall up towards the end of the year.

Ahead of the open we expect to see the FTSE100 open higher by 29 points, with the German DAX higher by 38 points.

Read the full report at Alpari News Room​

 

[dhiaperfumes]

great info....

 

[Alpari UK]

US Opening Call from Alpari UK - 20 October 2014

Earnings may provide a lift ahead of another volatile week

Volatility has been a massive talking point over the last week and this looks set to continue following some more big moves in Asia overnight and Europe this morning.

I’m not sure we’ll get the kind of volatility seen last week in the coming days, which I’m sure traders will be more than happy about, but compared to the last few years it is likely to remain elevated. It goes without saying that traders like volatile markets as they’re necessary in order to create tradable opportunities, but too much volatility can be as unwelcome as none at all.

The big question this week is going to be whether the correction has played out if what we’re seeing is simply the bears taking a breather. I personally think we have either reached or come very close to the lows we’re going to see this year. I wouldn’t exactly say I’m bullish yet as I think we could yet see a retest of those lows from last week, or even a move slightly below, but I’m not bearish either.

The giveaway could be how traders react to a retest of those lows. Last week the response was panic is why we saw such aggressive selling at even the tiniest piece of negative news flow. If we get a similar response this week then there could be plenty more downside to come but I’m not convinced we will. The S&P came close to a 10% decline from its all-time highs and I think this area will now be well supported.

Earnings season could play a much bigger part in the coming weeks with many more companies reporting on the third quarter. This week alone, around a fifth of the S&P 500 companies are scheduled to report earnings which, given how quiet a week it is on the economic data side of things, could well have a big impact on investor sentiment.

Today there is nothing noteworthy in terms of economic data, but on the earnings front we will get numbers from Apple and IBM, among others. It’s certainly worth keeping an eye on how these perform because it could impact sentiment which affects all markets.

The S&P is expected to open 4 points higher, the Dow 37 points higher and the Nasdaq 8 points higher.

Read the full report at Alpari News Room​