Forex research

[Alpari UK]

UK Opening Call from Alpari UK on 31 May 2013

EURUSD

This pair has turned a little bullish over the last 48 hours, after appearing very bearish over the last month or so. The pair looked destined to re-test the neckline of the head and shoulders, however this may now have all changed after the pair broke above a key resistance level around 1.30. Now that the pair has broken above the 50 fib level, along with the middle bollinger band on the daily chart and the 50 and 200-day SMAs, it seems sensible to assume that the trend has now changed. However, before I turn bullish, I think we need to see the 61.8 fib level broken, especially as this appears to have acted as resistance yesterday. At this stage though, that looks likely, with the 200-day SMA and 50 fib level both appearing to be providing support for the pair. For me, whichever of these breaks first will determine the next move for the pair. That said, if we break above the 61.8 fib level, it doesn’t mean we’ll necessarily see an aggressive move higher, we could see further range trading between 1.30 and 1.32, as we saw throughout April, before the market decides on the next move.

GBPUSD

Sterling appears to have turned bearish again after finding resistance around the 100-day SMA this morning. The pair has looked quite bearish for a while though, with the rally over the last couple of days only looking like a brief retracement on the overall downtrend. It is finding support this morning around 1.52, which has previously been a support level for the pair, however if we see it break below here, it should prompt a move back towards 1.50, and potentially this years lows of 1.4830. The next level of support should come around 1.5150, a previous level of resistance, followed by 1.5109. The 1.50 level is key though, given that this has been a major level of support for the pair since the middle of March. That said, if the pair continues to push higher, it should find resistance around 1.5280, 50-day SMA, followed by 1.5320, both of which have previously been resistance levels.

USDJPY

We’re continuing to see weakness in the dollar yen pair, although it appears to be finding strong support around the 50 fib level, just above 100, which in itself is a huge level of support. I will be very surprised to see a break below here, given that it is such a huge level of support. That said, traders don’t appear too desperate to buy at this level either. As a result, the pair could get stuck in a range for a while, before we see the continuation of the uptrend. If we do see continued weakness in the pair today, then I expect it to find support around 100.36, the 50 fib level, followed by 100, where the 200-period SMA on the 4-hour chart crosses that key support level. This is also a major psychological level for the pair. Any move higher should find resistance around 101.30, where the pair has failed to close above on the 4-hour chart since Wednesday.

 

[Alpari UK]

US Opening Call from Alpari UK on 31 May 2013

Markets continue to fall ahead of US consumer confidence figure

Today’s US opening call provides an update on:

* Market correction continues as lower European markets point to negative US open
* Eurozone unemployment rises again to bring record high
* US consumer confidence figure anticipated to rise
* Canadian monthly GDP expected to fall ahead of Mark Carney’s exit

The markets have continued to fall today in what has become a hugely volatile period for the global markets, spurred on initially by the 7% loss in the Nikkei over a week ago. Many of our analytical team here at Alpari have been calling for a market correction for some time now, with record highs being reached on the back of increased liquidity and low bond yields as opposed to actual economic strength and growth. The Nikkei225 in particular has been the largest benefactor of the recent rise, increasing over 60% in the past year despite the recent pullback. Whether this is merely a temporary correction in the markets leading to further upside is yet to be seen, however the feeling is now that the markets have changed from using any excuse to rise into one where any negative event is likely to bring about a strong pullback in the indices.

The European markets have begun the day trading lower, with the FTSE100 currently down 75 points, CAC down 50 points and DAX down 80 points. This is in part associated with the Eurozone unemployment data released earlier today, which indicated that the unemployment for the bloc has now reached a record high of 12.2% as expected. On the whole this portrays a region which continues to worsen and is unlikely to improve anytime soon. The release of the OECD growth estimates on Wednesday also included key recommendations of US style quantitative easing measures for the Eurozone which was followed up by a shift in emphasis from austerity and towards growth targeting by the European Commission. Taken as a whole we can expect there to be more structural reforms in the coming period to bring about growth and subsequently lower unemployment, yet this will take some time to bring into effect.

The markets are looking towards the key University of Michigan’s consumer confidence index figure later today, where the markets are expecting a rise from 83.7 to 84.1. This figure has the tendency to bring about fairly significant shifts in the markets as a result and most recently the release has come in better than expected. Earlier in the week we saw the CB consumer sentiment figure come in significantly higher than expected and this could give a strong indication of where this UoM figure may come in. The market expectation of a 0.4 increase could be a little on the cautious side with the last two figure coming in approximately 5.4 and 3.1 higher than forecasted. Subsequently I am looking for a better than expected rise in this figure.

Lastly, we are looking towards Canada for the monthly GDP release which is expected to show a fall from 0.3% to 0.1%. Much has been made of the strength of Canada’s economy with Mark Carney gaining the top BoE job as a response to the handling of the economy. However, we are now looking towards Canada as an area of potential weakness and this release could be one such indicator. Each monthly GDP release has either met or beat expectations in the last five occasions and subsequently a lower than expected figure could be a sign of things to come.

The US markets are expected to open lower, with the S&P500 down 10 points and DJIA 88 points lower.

 

[Pat494]

BTW the MT5 platform is 2 hours ahead on UK time. Looks like Moscow time ?
Can I amend this ?

 

[Alpari UK]

BTW the MT5 platform is 2 hours ahead on UK time. Looks like Moscow time ?
Can I amend this ?

Hi Pat494,

Both MT4 and MT5 are set to EET (Eastern European Time), which is GMT+2 during winter time and changes to GMT+3 with the Daylight Saving Time. The server time cannot be adjusted.

Alex

________
Alexander Chadwick

 

[Alpari UK]

Daily Market Update - 31 May 2013 - Alpari UK

0:48 Eurozone unemployment hits record highs
1:06 Eurozone inflation rises ahead of ECB meeting
2:02 US consumer confidence eyed this afternoon

Daily Market Update - 31 May 2013 - Alpari UK - YouTube

 

[Pat494]

Hi Pat494,

Both MT4 and MT5 are set to EET (Eastern European Time), which is GMT+2 during winter time and changes to GMT+3 with the Daylight Saving Time. The server time cannot be adjusted.

Alex

________
Alexander Chadwick


Thanks for a quick answer. Perhaps a will-do for MT6 ?

 

[Alpari UK]

Thanks for a quick answer. Perhaps a will-do for MT6 ?

Happy to help

Have a great weekend ahead!

________
Alexander Chadwick

 

[Babyblush]

Reading the research and knowing about this is really very much informative but how far we use this for market speculation is important and dependent upon traders skill.

 

[Alpari UK]

UK Opening Call from Alpari UK on 3 June 2013

Manufacturing PMI’s set to dominate as markets continue lower

Today’s UK opening call provides an update on:

• Chinese manufacturing PMI provides boost over weekend
• Markets expected to open lower as Nikkei225 leads the way
• Australian retail sales disappoint
• Chinese HSBC manufacturing PMI revised downwards bringing doubt to markets
• European, UK and US manufacturing PMI releases set to dominate later

The week started early on Saturday as China released the manufacturing PMI figure moments after the close of global forex markets at the end of the US session. Set against an increasingly pessimistic backdrop, the Chinese economy managed to bring a substantial boost to the global economy by beating expectations for the first time in 11 months. An increase from 50.6 to 50.8 may not seem to be a world beater, yet this is hugely important given this crucial indicator was widely forecasted to fall below the 50 mark and subsequently move out of expansion and into contraction.

The global indices have been experiencing an increasingly torrid time of late, with the FTSE100 falling almost 300 points since reaching a 5 ½ year high of 6716. Subsequently, the perceived strength of the Chinese economy is crucial given the over reliance of various developed nations upon the increased levels of economic activity brought about by a vibrant China. The manufacturing sector, being the mainstay of Chinese growth, is consequently one of the most important barometers of on-going economic strength. Thus the unexpected increase in the value of the Chinese manufacturing PMI figure represents a substantial boost to global growth and in particular the Australian and Japanese economies.

However, despite this the markets are expected to open lower this morning, led by the Japanese Nikkei225 index which is currently trading over 3% lower this morning. This follows on from an almost 20% fall from the 5 ½ year high set almost two weeks ago and highlights the volatile nature of the markets at this moment in time. The recent weakness within global equities always looked set to occur from the moment the likes of the S&P500 reached record highs given the weaknesses inherent within most advanced economies currently. However, the increased liquidity derived from substantial monetary loosening measures globally along with a shift away from fixed income investments owing to low bond yields has forced markets higher until the substantial correction we have recently seen.

It is yet to be seen whether this marks the beginning of a more extended downturn or whether we are merely within a temporary retracement where the markets merely overheated momentarily. Either way, it is clear that we have shifted from a position whereby any excuse can be used for markets to rally higher, towards one where markets fall given any available opportunity. The losses experienced within the Australian ASX200 this morning despite the strong Chinese PMI figure show how difficult markets are finding it to gain traction for a move higher.

The Australian markets also looked towards the monthly retail sales figure for April which was released earlier this morning. Unfortunately this failed to provide the boost the Australian economy currently needs, coming in just short of estimates at 0.2%. That being said this does represent a move back into growth after a contraction of 0.4%last time around. Currently the Australian dollar is treading a fine line where most AUD pairs are around a key historical level of support and thus any significant loss could see a break below leading to a potentially sizable continuation of the recent devaluation in the currency. That being said, with the RBA due to make a decision regarding the current interest rate level, the further the dollar falls, the less likely they will feel the need to provide a further stimulus after last month’s rate cut.

Looking forward, today looks set to be dominated by the release of various manufacturing PMI figures from the likes of the Chinese, UK, Eurozone and US economies. Off the back of Saturday’s release, today’s China release was an opportunity to reconfirm a renewed feeling of strength within the Asian powerhouse. That being said we did not expect too much in the way of change given this is simply the second revision of the HSBC manufacturing PMI release for May. However the markets were surprised once more as the release came in well below markets estimates at 49.2, from an original figure of 49.6. Unfortunately this goes some way to undoing the positive work done by Saturday’s figure as both are provided for the month of May and thus the picture for the Chinese economy becomes increasingly convoluted.

Going forward, the two key releases will generally be the UK and US manufacturing PMI figures. The UK number is due to be announced around 9am BST with a rise back into expansion from 49.8 to 50.3 predicted. This move into or out of expansion is typically the key shift for any PMI release and thus today is likely to be greeted with a response within the markets either way.

Later in the day, the US ISM manufacturing PMI figure is expected to fall marginally from 50.7 to 50.6, which would represent the third consecutive fall in this key indicator. Again, this is one of those events that really has the potential to move markets. However this will only occur should we see a significant shift away from the forecasted amount.

Also this morning, we are looking towards the Eurozone where the beleaguered Spanish and Italian economies release their manufacturing PMI figures. Again, this is not likely to provide too much in terms of market focus given the fact that the latest figures are so far below the 50 mark. However, for both we expect a substantially improved number which points to a gradual improvement in the economic environment in each of these two key countries.

EURUSD

A mixed picture for the eurodollar today, where substantial gains were partially undone on Friday, painting a more indecisive scene ahead of trading throughout Monday. However, today’s price action could quite clearly have a significant role to play as the whether the pair look destined to continue in this current period of consolidation and sideways price action or whether we are looking to retest the recent lows towards the latter stages of the week. The daily chart points to a clear descending triangle formation which nears completion and thus I expect this upper descending trend-line to be respected as this also coincides with the 200 day moving average. This coupled with the stochastic and CCI indicators (both showing market to be overbought) point towards a move lower in the coming period with the ascending trend-line (1.279) and Fibonacci retracement (1.2726) providing key targets. That being said, if the price action can break and close above 1.306 today we would be looking at a much more bullish picture for the pair.

Looking at the weekly chart, the picture becomes a little more convoluted, where two features dominate. Firstly, there is a clear head a shoulders formation in existence since September 2012. This would ordinarily point towards a move lower by the height of the head, thus pointing to a move lower than the 2012 low of 1.2 should we break below the key neckline around 1.273. However, it is worth noting that this head and shoulders exists within a wider framework where a strong descending trend-line was broken and this can be highly bearish for a pair. Ultimately I am bearish for the pair given the expectations of increased monetary loosening in the eurozone going forward whilst the US discusses the tapering their current asset purchases.

GBPUSD

Cable trades higher this morning after Friday erased much of the recent gains in the pair. The break below the ascending trend-line has been bearish for the pair throughout the month of May and today will be key in understanding whether this is likely to provide a return to the 1.484 region over the coming period. The upcoming level around 1.524 is likely to provide significant resistance as has been the case over a number of times in the past. The stochastic and CCI indicators are both at or around overbought and thus the emphasis for the week is bearish for me. However, I am looking for the 1.524 level to hold strong to force this pair lower.

Taking a look at the weekly chart it is clear how important that 1.524 level is historically and any ability to break above this region would be treated as highly bullish for the pair. The stochastic and CCI indicators are both pointing towards a move higher and should they be correct, we could be looking towards a move back into the range the pair traded within over the previous four years.

USDJPY

Dollar yen has been retracing significantly over the past week, sparked off in part by comments coming out of the region which indicate that the BoJ could be satisfied with the current level along with growing doubts over the validity and theoretical soundness of Abenomics policies. The pair currently trades flat after initial gains this morning and has the potential to retest the key level of 100 with a view to turning previous resistance into support. Around these levels I remain bullish for the pair and expect us to reach the previous highs around 103.7 over the coming fortnight. The stochastic and CCI indicators are both around oversold which also back up this theory. However it is quite possible that given the uncertainty inherent within the global markets at present that this pair becomes increasingly unpredictable and choppy price action persists.

Taking a look at the weekly chart, it is clear that at our current level we are testing the bottom of this ascending standard deviation channel dating back to October 2012. This boundary has never been broken and closed below throughout this period and I do not expect this to be the case this week. However, should this occur, it would portray an increasingly bearish picture for the pair. That being said, I expect a strong bullish candle for this week off the back of such significant losses over the two weeks gone.

 

[Alpari UK]

US Opening Call from Alpari UK on 3 June 2013

Strong European PMI figures fail to lift markets

Today’s US opening call provides an update on:

* Strong European PMI figures provide boost to the markets
* UK manufacturing PMI rises to five month high
* European indices remain down as selloff in the market continues
* US looking forward towards PMI figure to reverse the slowdown

A strong start for the European markets today as manufacturing PMI figures painted an improved picture across the Spanish, Italian and UK manufacturing sectors. The day is fairly unique for the fact that so many economies are releasing the exact same economic indicator, as China also provided their manufacturing PMI while the US are set to do the same later today. Within Europe, the a strong out-performance provided markets with an increased view that there is significant progress being made towards getting some of the harder hit economies back onto an even keel. In Spain, the expected increase from 44.7 to 45.5 was smashed after a rise to 48.1 brought the index back into sight of the much fabled 50 mark which denotes a sector in expansion rather than the current contraction. Similarly, in Italy the figure rose from from 45.5 to 47.3 despite markets predicting a rise to 46.2. Whilst this is a welcome boost for the markets and in particular the single market, it is worth noting that both countries still have manufacturing sectors in decline and given the mixed fortunes of this measure, there is no reason to predict a continued improvement with any certainty.

In the UK there was a somewhat more impressive manufacturing PMI release, with the sector expanding at an increased pace after the PMI rose from a revised figure of 50.2 to 51.3 despite expectations that it would come in only marginally above the key 50.0 mark. The manufacturing sector is by no means the core driver of growth within the UK given its over-reliance upon the services based industries. However as the country attempts to shift some of its focus away from those core area and diversify its growth base, this figure will no doubt provide great satisfaction to the likes of George Osborne.

Despite the strong results in Europe, the global indices continue to struggle as Japan paved the way to the week’s trading by ending their trading day 3.7% lower concluding an almost 20% sell-off from the 5 year highs set almost two weeks ago. Taking the lead from Japan, the UK and European equities have since failed to gain any significant traction provided by these strong PMI figures, as the FTSE100, CAC and DAX continue to trade lower. Much has been made of this recent pullback after many of the markets reached record or long term highs on the back of very little economic and fundamental strength.

The increasing availability of credit associated with banks having finally fulfilled their capital retention requirements, coupled with increased liquidity provided by the expansion of global central bank asset purchases has driven markets to levels which seem overvalued from a fundamental standpoint. Add to this the shift away from fixed income as associated with the record low bond yields from ‘safe haven’ issuers such as the UK and US and we have the most unstable and artificial stock market rally in history.

The US is largely looking towards the release of the manufacturing PMI figure to provide the same kind of improvement experienced within the US and Europe later today. The ISM release is expected at 10am ET and will be closely followed given the fact that over recent times we have seen significant responses from the market as a result of the sizable spikes seen in what is a fairly volatile figure. The fall from 54.2 to 50.7 has occurred over the last two releases, indicating the steep decline in purchasing managers expectations leading up today’s release. Subsequently there is certainly the potential for high volatility around this figure where any jump below 50 would be taken badly by the markets.

US markets are expected to fare more positively than their European counterparts, with the S&P500 expected to open +4 points and the DJIA +42 points.

 

[Alpari UK]

Daily Market Update - 3 June 2013 - Alpari UK

0:17 Chinese Manufacturing PMI from Saturday undermined by HSBC revision
1:13 European manufacturing PMI beats expectations but continues to contract
1:45 UK manufacturing expands further, rising above forecasts
2:18 US manufacturing PMI falls into contraction, bringing the markets lower

Daily Market Update - 3 June 2013 - Alpari UK - YouTube

 

[Alpari UK]

UK Opening Call from Alpari UK on 4 June 2013

Markets rise again while the RBA keeps rate unchanged

Today’s UK opening call provides an update on:

• Markets expected to rise after yesterday’s widespread sell-off
• US PMI fall leads to dollar weakness after almost two week appreciation
• Australian RBA opt to keep rates steady at 2.75% despite on-going slowdown
• UK construction PMI expected to rise after yesterday’s positive manufacturing figure

European indices are expected to open higher today off the back of substantial losses experienced globally in what was a mixed day yesterday. The recent downturn has been seen by some as a retracement in what has proven to be an overall uptrend and subsequently there are widespread expectations of further upside over the coming period. However, it seems evident to those looking at markets from a more fundamental standpoint that this market correction has been due for an extended period of time.

One thing that is clear is that there has been an increasingly close correlation between the value of the dollar and the strength of global equity markets. Subsequently, as the dollar begins to lose value, it brings about an increasing likeliness that the equity markets will rally once more. Yesterday’s fall in the US PMI index may have initially brought about a temporary drop in the value of the likes of the S&P500, however, soon the potential impact this figure is likely to have upon the decision to taper QE led to a recovery and thus confirmation of this mutual relationship.

Yesterday we saw the devaluation of the US dollar across the board, spurred by the release of the disappointing ISM manufacturing PMI figure in the afternoon. This represents the first serious challenge to the strength of the dollar for almost two weeks bringing some of the most beleaguered currencies back into the green. In particular, the likes of the Australian and New Zealand dollars managed to claw back some of the substantial losses sustained over the past two weeks, in a move which brought about a more bullish tone for some of the alternate currencies.

It is the Australian dollar which continues to dominate headlines today, after the Reserve Bank of Australia took the decision to keep interest rates steady at 2.75% in a move which favoured a ‘wait and see’ approach after the reduction from 3% at last month’s meeting. RBA governor Glenn Stevens cited increasingly favourable financial conditions, such as funding availability for sovereign economies, as a core driver of growth going forward for the international economy. That being said, the inflation rate target of 2-3% is currently accommodative for further easing by the RBA with a current rate around 2.2%.

The recent devaluation as driven by last month’s rate reduction did not go unnoticed, however the RBA view the Australian dollar as remaining comparatively high given the decline in export prices experienced over the past year. Given the inflation outlook, coupled with the view that the Australian dollar remains overvalued, I am expecting a high likeliness of a further cut at next month’s meeting should the economic conditions not improve.
Looking forward, the UK construction PMI release looks set to dictate on-going sentiment. Market predictions point to a shift closer towards the widely heralded 50.0 mark having been in contraction for seven months now. However, given the outperformance of the manufacturing PMI figure yesterday, there is a more positive bias placed upon today’s release. Subsequently, there is a clear potential for the figure to rise higher than predictions, with the potential for shift into expansion.

Whilst the construction sector not the core driver of growth within the UK, its importance should not be underestimated due to the strong multiplier effects a vibrant construction industry has upon the rest of the economy. Furthermore, a strong construction industry brings about positive connotations about the easing credit market within the UK. Lastly, the ability for today’s figure to perform better than expected will feed into expectations of a strong services PMI figure tomorrow.

The European markets are expected to open higher, with the FTSE100 +35 points, CAC +13 points and DAX +38 points.

EURUSD

The strong performance of the euro yesterday brought an increasingly bullish picture to the fore for this pair today after the candle closed marginally higher than the descending trend-line dating back to early February. The dollar weakness seen yesterday allowed this pair to rise, yet a clear respect for the 100 day moving average kept the price action in check. Subsequently, today we are looking at a crucial day of trading whereby our outlook for the pair can be further clarified with either a move higher, thus confirming a breakout from the descending triangle, or a move back into this formation to increase expectations of a return to the lows of 1.278. Taking the stochastic and CCI indicators into account, my bias is for a push lower into the triangle and a continuation of the devaluation in the euro. This is also consistent with the standpoint that the Fed is seeking to taper their stimulus package, whilst the ECB are expected to become increasingly loose with their monetary policy, thus pushing the euro lower.

Meanwhile on the weekly chart, the picture becomes a little more convoluted. The potential head and shoulders formation in existence since September points towards a push lower back down to the previous lows around 1.2 However, this is part of a larger retracement off the back of a descending trend-line breakout which would be bearish for the pair. However, when taking into account the fact that the pair have seen the price action retrace back to the 38.2 Fibonacci, followed by the 50.0 and subsequently returning to the 38.2, it seems like a very structured retracement as a part of a wider downtrend for the pair. That being said, we are currently trading in an uptrend over the last month which seems set to continue given the stochastic and CCI indicators are pointing to the upside. My target is for a return to 1.3149 and a push back to the downside from resistance at the 100 week moving average.

GBPUSD

Cable trades lower today off the back of significant upside after yesterday’s poor US PMI figure. The pair have subsequently pushed higher, finding resistance at the 61.8 Fibonacci retracement and subsequently closing around the 50.0 retracement at 1.53. This current move seems to be a repeat of the previous trend whereby the losses during December-March were retraced by 50% prior to a further move back to the downside. In this instance, the pair have found resistance at 50% of the previous downturn and I expect to see further losses over the coming period. This is given further credence by the existence of both stochastic and CCI indicators being in overbought territory.

Taking a look at the weekly chart, yesterday’s push to the upside becomes increasingly important as this allowed the pair to break through a historical level of support and resistance around 1.524. The ability of the pair to hold above this level is always going to look bullish for the pair and this is backed up by the upward pointing CCI and stochastic indicators. Ultimately it is a tale of two charts, yet for the time being, I expect to see the price action retest 1.524 to find confirmation of new found support prior to a potential move higher.

USDJPY

Significant losses in this pair yesterday saw the 100.0 level broken convincingly in a move which is highly bearish for the pair. The ability to close below this level has subsequently brought about a situation whereby a level previously regarded as a key support level can now turn back into resistance as was the case throughout April. Today will subsequently be highly crucial for the longer term outlook for the pair as confirmation of new found resistance would bring about an increasingly bearish picture for the pair while a push back above 100.0 would bring the bulls back to the market.

On the weekly chart, the picture becomes even clearer as to the importance of today’s price action. Currently resting on a confluence of points, where a key level of resistance coincides with the lower boundary of a well respected channel, along with the 100 week moving average. The ability to close below this level this week would be hugely bearish for the pair and thus point towards significant losses for the pair. That being said, it is clear that the BoJ is actively targeting the devaluation of the yen and thus any significant strengthening will likely bring about a further response in terms of monetary loosening.

 

[Alpari UK]

US Opening Call from Alpari UK on 4 June 2013

Strong European releases pave way for potential bull market

Today’s US opening call provides an update on:

* Australian interest rate decision remains steady yet provides dovish tones
* Spanish unemployment change continues strong week for the eurozone
* European indices regain ground in potential turnaround for the markets
* UK construction PMI beats expectations to cap off positive morning for European markets
* US markets look towards trade balance figure for further export strength

This morning, the Reserve Bank of Australia (RBA) announced their latest interest rate decision off the back of last month’s 25 basis point cut. The ultimate decision to keep the rate steady at 2.75% did not come as a significant surprise for the markets as the RBA took a ‘wait and see’ approach given the lag associated with monetary loosening measures on the whole. However, the markets have since taken much of the rhetoric provided by the central bank as a clue as to both the future interest rate policies along with the perceived strength of the Australian dollar. Governor Glenn Stevens stated that whilst the increasing availability of credit to sovereign nations has brought about a more positive tone to the economic environment, the bank remains open minded to further monetary loosening owing to the perceived overvaluing of the AUD. Despite recognising the benefit of last month’s cut in devaluing the Australian dollar, the fall in export prices mean that further losses would be required to bring the economy back into a more favourable position.

Spanish unemployment provided a key boost to the Eurozone this morning by announcing a highly significant fall in unemployment. Markets had originally factored in a reduction of approximately 50,200 , which would have represented an improvement of 4,100 people. However in a welcome surprise, the number of unemployed fell by 98,300, the largest reduction in 11 months. This comes off the back of yesterday’s positive Spanish and Italian manufacturing PMI figures and helps contribute to a growing feeling that the Eurozone is beginning to gain more traction in its push back towards stability.

The European stock indices have pared some of yesterday’s losses this morning as the positive start to the week has begun to impact upon trader sentiment. The market seems to be moving in highly volatile and prolongued trends recently, with much of the long term highs being wiped out by widespread losses over the past two weeks. However, signs are appearing that we could be entering a period whereby markets begin to gain a more bullish tone and start to head higher. The FTSE100 is currently trading +45 points, CAC +17 points and DAX +41 points.

The UK construction PMI continued to bring about a more positive tone to markets this morning, defying forecasts by pushing back into expansion for the first time since October 2012. Expectations that we were likely to see a rise back towards the all important 50.0 mark seemed to potentially be a little conservative and given yesterday’s out-performance in the manufacturing PMI figure, today’s strong rise to 50.8 seemed increasingly possible. The markets are now focusing upon tomorrows crucial services PMI release to complete a clean sweep for the UK economy ahead of Thursday’s BoE monetary policy decision. The services PMI is always the most important of the sectors given the UK over-reliance upon the likes of insurance, financial and legal services for a substantial proportion of its GDP. However, the ability to move into expansion within some of the alternate sectors is crucial in generating a strong economy which is highly diversified in nature.

Lastly, in the US session we are looking towards the trade balance figure later today as a key indicator of the export strength that has been propping up this indicator over recent times. The increasing value and volume of oil exports within the US has been a key contributor to US GDP and dollar demand in recent times in association with the shale gas revolution. However, the US trade balance is expected to shift further into deficit with market forecasts expecting around USD-41.4 billion deficit. However, it is less about the figure and more about the constituent structure of this figure which is of importance to understanding the strength of weaknesses within the US industry.

US markets are expected to open lower, with the S&P500 -4 points and DJIA -36 points.

 

[pboyles]

I'm happy to help however, I can't usefully add anything to whatever I've already told you.

Alex

________
Alexander Chadwick
Alpari (UK) Representative

Jagero Ltd, who claim to have a legal agreement with you, are now the subject of an FCA warning.

Jagero Ltd - Financial Conduct Authority

 

[Alpari UK]

Jagero Ltd, who claim to have a legal agreement with you, are now the subject of an FCA warning.

Jagero Ltd - Financial Conduct Authority

Quite right too. We fully support the FCA in their decisions.

Alex

________
Alexander Chadwick
Alpari (UK) Representative

 

[Alpari UK]

Daily Market Update - 4 June 2013 - Alpari UK

James Hughes discusses the RBA rate decision and Wednesday mornings GDP figures and how they affect the Aussie. He also looks ahead to a busy week on the economic calendar and considers how traders will position themselves ahead of Friday's US jobs report.

Daily Market Update - 4 June 2013 - Alpari UK - YouTube

 

[Alpari UK]

UK Opening Call from Alpari UK on 5 June 2013

Disappointing Australian GDP figure leads markets lower

Today’s UK opening call provides an update on:

• European markets expected lower, taking a lead from Asian sell-off
• Australian economy back in focus as GDP figure falls short
• European services PMI figures in focus after strong start to week
• US ADP employment figure expected to bring boost to markets
• ISM non-manufacturing PMI figure in focus after Monday’s strong sell-off

The European markets are expected to open lower once again this morning highlighting the substantial volatility evident within the markets currently. The ability of Asian markets to rally has become increasingly crucial in understanding where the European markets will open in a move away from the usual dual linkage between the US and European markets. This three way relationship has been borne out of the fact that Asian sessions have become increasingly hard to ignore given the size and impact the Asian markets now hold. Furthermore, given the substantial returns seen across in the Nikkei 225, there are an increasingly high amount of traders within Europe and the US whom are holding substantial positions in Asian companies and indices.

Australia is once again back in focus this week as the quarterly and annual GDP figures looked set to bring about a renewed sense of clarity after the recent sell-off in the Australian dollar and S&P/ASX200 index. However, it was not pretty for the commodity driven powerhouse, with both measures falling short of estimates and continuing the decline in these core figures which runs back to June 2012. On a quarterly basis, Australian GDP remained the same at 0.6%, despite an expectation of a rise towards the 0.8% mark. However, it was the annualised figure which dissapointed the most, falling from 3.1% to 2.5% despite predictions of a more moderate reduction to 2.7%.

The value of the Australian dollar has been in focus over recent periods whereby a reduction within the headline interest rate by the RBA last month sparked a sell-off. Subsequently the AUD has been brought to a crossroads whereby any further shift lower could break through key support, leading to substantial future losses and the establishment of a new long term bear market for the currency. Today's news was seen as a potential catalyst for this sell-off, yet should the price action manage to hold strong throughout the day, this could be the sign that there is sufficient strength to see the pair return to stronger levels over the coming weeks.

Eurozone economic health comes back into focus today with the release of services PMI figures from both the Spanish and Italian economies. The relative strength of these two troubled economies will remain questionable regardless of the potential rise in these figures. However, the emphasis within the markets is upon increased expectations of a positive figure following on from Monday’s outperformance within the manufacturing PMI’s.

Similarly in the UK the headline services PMI figure is released this morning, following on from substantial out-performance of both the manufacturing and construction PMI’s on Monday and Tuesday respectively. In an almost carbon copy of last month’s releases, the three interlinked figures have the opportunity to beat expectations by returning a figure above the predicted 53.1. Given the substantial rises in both manufacturing and construction figures earlier in the week it is likely that the services sector can overcome the meager 0.2 increase expected in the markets. The relative importance of the services sector within the UK as a core driver of growth means that this figure will be followed closely by traders and should we see the positive release I expect, it would be likely to feed into trader sentiment going forward.

In the US, the initial unemployment figure of the week is released ahead of Friday’s non-farm payroll figure. Today it is the turn of its ugly sister in the form of the ADP non-farm payroll figure; typically seen to be notable as an indicator of in which direction the headline figure could play out later in the week. Market analysts predict an improved figure of 171k from 119k which would represent the largest rise in employment for three months. Two things to note about this figure are that primarily held in high regard owing to the perceived influence relationship between this and its namesake. However, this is being increasingly disproven as time going on owing to the substantial differential between both these two releases in recent months. Subsequently this release should be viewed based upon its own merits.

Later in the day, the markets are expecting to see an improvement in the ISM non-manufacturing PMI figure from 53.1 to 53.4. The importance of this figure should not be underestimated given the reaction seen in the markets off the back of Monday’s reduced ISM manufacturing PMI release. Subsequently there is substantial focus placed upon this release which is attempting to reverse the downturn in this figure which has fallen 2.9 over the last three months, missing expectations over the past two occasions. Subsequently I am somewhat cautious about this release and have an overly negative bias given prior disappointments along with Monday’s poor figure.

European markets are expected to open lower, with the FTSE100 -30 points, CAC -15, and DAX -33.

EURUSD

Eurodollar continues to trade higher today in what seems to be a period of somewhat indecisive price action for the pair after yesterday’s spinning top formation. The clear respect of the 100 day moving average provides us with a growing feeling that potentially we have seen the top to this rally and the breakout above the descending trend-line could subsequently be a ‘fake break’, ahead of a push back below 1.3. For this notion to hold I would be looking for the price action to maintain below the moving average today ahead of a move lower in the coming period. The stochastic and CCI are both around overbought and thus point to a potential move lower over the coming days. It is an increasingly volatile week ahead, with the unemployment figures due in the US and thus traders should be wary of holding positions for longer time frames owing to the potential for significant fundamental side shocks.

Taking a look at the weekly chart, we are provided with more of a bullish tone, whereby the current trend to the upside is supported by both the stochastic and CCI indicators. However, there is clear resistance around the 1.315 level which is the confluence of both the 38.2 Fibonacci from the entire 2011/12 downtrend, along with the 100 week moving average. The current head and shoulders formation is somewhat negated by the fact that we are in the middle of a trend-line breakout. However, I believe that this consolidation peaked around the 50.0 Fibonacci level and thus until a candle closes above 1.315, I am bearish for the pair for a move back down to 1.2.

GBPUSD

Cable has been trading higher this morning off the back of marginal losses in yesterday’s session. This seems to have brought about a new level of support at 1.53 which represents the 50.0 Fibonacci retracement of the recent 2013 downtrend. However, I expect this move lower to be tempered somewhat by the existence of resistance around 1.5378 which is the level whereby the 100 day moving average meets the 61.8 Fibonacci retracement. Both the stochastic and CCI indicators are both overbought and thus I expect to see a pullback in the coming days.

Taking a look at the weekly chart, a more bullish picture emerges, whereby the importance of the current level is evident given the historical support found around 1.524-1.538. The establishment of a higher low back in May provides an increased feeling that we may see the pair subsequently post a higher high, which would be backed by the currently oversold stochastic and CCI indicators. However, we would need to see a convincing move above the current levels to clear resistance before looking for a strong move back up above the 15 week high of 1.56.

USDJPY

A bearish move for the dollar yen pair yesterday despite seeing some of the previous losses regained. The failure of the pair to close above that all important 100 handle provides increasing evidence that we have now found new resistance which would be crucial for a subsequent move lower. The indicators point to a move higher over the coming days, however I remain bearish below 100 and thus the next substantial level of support is likely to be found around the 23.6 Fibonacci retracement of the entire move higher around 97.5.

Taking a look at the weekly chart, the price action remains around the threshold of an ascending channel which has not seen a candle close below it since the yen started selling of back in October 2012. I am looking for a close below this level for an indicator of a move lower as supported by the downward pointing stochastic and CCI indicators.

 

[Alpari UK]

Daily Market Update - 5 June 2013 - Alpari UK

James Hughes talks about the Aussie reaction to the GDP figures and looks ahead to a very important week on the economic calendar. He also looks at AUDUSD, EURUSD and GBPUSD charts and talks about this morning's eurozone services PMI readings.

Daily Market Update - 5 June 2013 - Alpari UK - YouTube

 

[Alpari UK]

US Opening Call from Alpari UK on 5 June 2013

Mixed morning in Europe ahead of busy days in US

Today’s US opening call provides an update on:

* Australian GDP disappoints in yet another blow to the economy
* Mixed morning for the eurozone after services PMI figures are released
* UK Services PMI figure beats expectations in PMI hat-trick
* US expecting strong ADP non-farm payroll figure
* ISM non-manufacturing PMI release grabs attention after Monday’s shock

The markets came to terms with yet another blow to the Australian economy after yet another poor release this morning. The expectations of a rise in the quarterly GDP figure failed to come to fruition with the 0.6% rate staying steady instead of the 0.8% figure predicted across the markets. Furthermore, when taking into account the year on year figure, an increasingly bleak picture comes to the fore in an economy which has been hit hard by the reduction in export prices over the past year. The yearly figure shows that for Q1, the economy grew at 2.5%; 0.6% lower than the previous figure of 3.1%. A note from RBA governor Glenn Stevens yesterday disclosed the bank’s willingness to take the interest rate lower in the coming period where necessary and given his insistence that the Australian dollar remains overvalued, I expect to see a reduction in this rate at next month’s meeting. This is a view which is shared by Goldman Sachs who believe the rate will be reduced in July and November.

A mixed morning in the eurozone after a host of prominent countries released their services PMI figures for the month of May. Off the back of better than expected manufacturing figures on Monday, the markets were predicting a significant uptick in these figures, yet were left largely disappointed after only Spain posted a better than expected figure of 47.3 (from 44.4 in April). Elsewhere, Italy, France and Germany all posted poor numbers in a clear indication that the crisis is most certainly ongoing in the region. The most disappointing of these figures was the German failure to push above the crucial 50.0 mark which was within reach today from a basis of 49.6 from April.

Across the channel, the UK was proving to be experiencing a significantly more productive morning, releasing the May services PMI figure. By posting a substantial increase (54.9 from 52.9), not only did it substantially beat market forecasts, but also provided a clean sweep of PMI figures for the month, after the manufacturing and construction figures both came in well above expectations earlier in the week. This provides us with an increasingly positive picture of the UK economy given that a similar out-performance occurred across all three sectors in April too which allows us to believe there is now an element of consistency within the recovery. In a notable response, JP Morgan has now retracted a call for further QE, predicting that the economy has clear upside potential. As a result they posted renewed GDP forecasts of 1% for Q2 and 1.5% for Q3. However, the official report provided alongside today’s release predicts a more moderate increase of 0.5% for Q2 which would likely present one of the strongest Q2 growth performances of G7 economies.

In the US, the markets looks forward to a busy day of trading, with the release of the ADP non-farm payroll figure paving the way for a employment focused end of the week. The ability of this figure to provide any substantial indication of Friday’s non-farm payroll release is arguable given the poor record of any correlation between the two over recent months. However, this is still a figure which is treated with respect across the markets and thus traders are likely to be wary of any market shocks as a result of today’s release. Forecasts within the markets are placing expectations around a shift higher from 119k to 171k off the back of three consecutive months of reduced employment figures. Subsequently I am a little more pessimistic for this release, with a lower figure around 150k seeming more likely. That being said, guess the payroll figures has always been somewhat of a fools game so traders will tend to be treading carefully around this release.

Lastly, we are expecting the ISM non-manufacturing PMI figure later in the day, which is predicted to bring about a rise in the figure from 53.1 to 53.4. What has become clear over the past week is how sensitive markets are becoming to economic releases of this sort given the substantial sell-off seen on Monday after the manufacturing figure came in well below expectations. I do not expect to see as strong a reaction regardless of the figure posted today simply due to the fact that this is unlikely to fall below that crucial 50.0 mark which denotes an industry in contraction. However, markets will be following this figure keenly as a potential precursor to additional significant market movement.

US markets are expected to open lower, with the S&P500 -6 points and DJIA -48 points.

 

[Alpari UK]

UK Opening Call from Alpari UK on 6 June 2013

Volatile day ahead as markets turn to BoE and ECB

Today’s UK opening call provides an update on:

• Global volatility set to continue in busy day ahead for markets
• BoE MPC announce final monetary policy statement under Sir Mervyn King’s supervision
• ECB interest rate decision is the big ticket item of the day after last month’s reduction
• Final unemployment claims release before tomorrow’s non-farm payroll release

The global equities markets have continued to fall off the back of mixed signals yesterday after the ADP non-farm payroll disappointed while UK services PMI and US ISM non-manufacturing PMI figures brought about an improved outlook to proceedings. That being said, the current status quo to sell on bad news and sell on good news held true as the FTSE100 lost over 2% and the S&P500 saw over 1.3% wiped off its value. However, today looks set to bring about the potential for further volatility with the release of both BoE and ECB monetary policy decisions which have to potential to set the markets into a spin.

First of these announcements is the BoE asset purchase and interest rate decision undertaken by the nine member monetary policy committee chaired by Sir Mervyn King. This announcement has turned from one of the most prominent events in the monthly calendar into somewhat of a non-event. However, today is notable as it represents the final MPC meeting in his illustrious 10 year career as BoE governor; guiding the UK economy through arguably the most difficult global recession in history. King has remained a staunch supporter of increasing asset purchases throughout the past months, however the committee has held strong in voting against any additional easing. Subsequently, there is very little chance of a rise in the current GBP375 of asset purchases for a number of reasons.

Firstly the decision to introduce further quantitative easing in the final month of Mervyn King’s reign as governor would be seen as ill advisable as it fails to provide the incoming Mark Carney little leeway to make any tangible impact from the beginning if he sees fit. Previous noises coming out of the BoE had indicated that Carney’s job could be constrained by inflationary pressure, making any substantial monetary loosening almost impossible given the inflation targeting policy implemented by the Chancellor of the exchequer. However, the recent reduction in the CPI measure of inflation provides an environment within which Carney can make an impact.

Secondly, the release of a better than expected UK services PMI figure yesterday brought about widespread recalculation of growth rates given the positive outlook, with JP Morgan now citing expectations of 1% growth in Q2 and 1.5% for Q3. This may be a little enthusiastic, with the official report citing the potential for 0.5% growth, however the outlook for the economy is clearly becoming increasingly strong. Subsequently there is little appetite within the MPC for a boost, especially given the diminishing returns associated with quantitative easing.

Later in the day, the ECB faces a closer run decision as the markets second guess whether Mario Draghi will lead the interest rates lower for the second consecutive month. On the whole, there is little expectation of a reduction to 0.25% given the eurozone has yet to feel any real response to last month’s rate cut. However, I believe we will more than likely see some form of market response to both elements of the events. Firstly, the release of a steady rate would likely bring about an increased feeling of strength within the euro. However, as we have seen in the past, Draghi’s post announcement press conference has the ability to provide a substantially larger response from the markets. Subsequently markets will be on the lookout for any continued loose rhetoric regarding future monetary policy such as the negative rate comment a month ago as a precursor to a potential sell-off in the euro.

Finally, we are looking forward to the US unemployment claims figure, due out at the same time as the ECB interest rate decision. This is a weekly figure and will be unlikely to provide too much of a significant response from the markets, especially given the gravity of the simultaneous ECB announcement. However, this is a key indicator watch as a precursor to Friday’s non-farm payroll figure, especially after seeing the disappointing ADP payroll figure yesterday. The unemployment claims releases have become arguably more of an accurate indicator as to whether we are going to see a positive or negative posting on Friday. Subsequently traders will typically take note of this figure as a means to plan any positions when attempting to trade the all important payroll decision tomorrow.

European markets are expected to open lower, with the FTSE100 -20 points, CAC -10 points and DAX -15 points.

EURUSD

The eurodollar continues to tread water around the 100 day moving average this morning off the back of two similar consecutive days. What is becoming increasingly clear is that given the volatility associated with today’s ECB rate decision, traders have been taking positions in anticipation. That doesn’t necessarily come in the form of a long or short position, but can also lead to the reduction of the number of positions held given the gravity of the ECB announcement and the volatility as exemplified by last month’s statement. I expect to see significantly higher volatility today, whereby the likely decision to keep rates steady will bring about a spike higher towards 1.315-1.32. However, the subsequent statement from Mario Draghi has the potential for significant devaluation given the potential for further negative rates rhetoric. Thus do not be surprised should we see a move higher followed by a subsequent move lower during the press conference.

Taking a look at the weekly chart, it is significantly more bearish, whereby this weekly candle looks highly likely to close above the descending trend-line. The bearish head and shoulders pattern remains negated somewhat by the fact that it takes place in the middle of a consolidation following a significant descending trend-line break rather than as a top or bottom of a trend. However, given the clear Fibonacci structure, I remain bearish for this pair until a weekly candle closes above 1.315.

GBPUSD

A strong day for sterling yesterday off the back of an impressive services PMI figure and subsequent revisions to the UK growth forecasts. This served to push the pair into a more bullish outlook, bringing about greater expectations of further upside momentum in the coming period. Despite performing a bearish cross two days ago, the stochastic indicator has now crossed back to the upside and is subsequently providing an indication that further upside momentum could be imminent. The target for this pair is for a move back up towards the 50.0 Fibonacci retracement from the December to March downtrend at 1.552 and subsequently posting a higher high around 1.57. Today’s BoE monetary policy announcement is unlikely to provide any renewed hope for QE and thus the depreciative nature of the meeting seems to be somewhat negated.

Taking a look at the weekly chart, the pair are close to clearing a key region of historical resistance, as provided by several previous support levels. The ability to move back above this level is highly bullish for the pair and indicates a move back into the previous trading range between 1.53 and 1.615 is possible. The stochastic and CCI indicators are both pointing to the upside and subsequently I remain bullish for this pair.

USDJPY

The significant losses continued apace yesterday for the dollar as the new found strength in the yen pushed the price level down to the 20 day low of 98.85. Today looks likely to retest this level and the potential for a widespread sell-off in the pair is becoming more of a reality then theory. The daily chart shows that the pair have well respected an ascending trend-line since the inception of this uptrend and subsequently given the positive incline, we look certain to either see a strong appreciation of the pair back up towards the 100 handle, or else the first break below this trend-line since it was formed in 2012. Should we see a break below this crucial trend-line, I would be highly bearish for the pair in the short term given the fact that Shinzo Abe will most likely provide every form of rhetoric possible to bring about further depreciation of the yen in the medium term. That being said, this trend-line has been tested before and a significant rally has ensued. Subsequently until it has been broken, the expectation has to be for what has gone before and thus a move higher towards 100.0 seems the most likely currently. The stochastic and CCI indicators both support this as they are both oversold and pointing upwards.

On the weekly chart, the pair have broken below a key standard deviation channel on the way down to today’s current price level. Looking back, this is the first time since the rally begun that we have seen three consecutive bearish candles. The CCI and stochastic indicators both point towards a move back to the downside, however both have been in overbought for some time now and thus may not be as reliable as fr a chart with more significant swings. My outlook remains bullish (for a move back towards 100) until this ascending trend-line is broken, upon which I would be looking for a shift lower towards 97.3 and 96.5.