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0:12 Bank of Japan Governer to step down early
1:31 Caution in Eurozone ahead of tomorrow's EU Summit and ECB statement
2:15 CHARTS - USD/JPY and GBP/USD

Daily Market Update - 6 February 2013 - Alpari UK - YouTube

Forex research: Global markets daily

 

[Alpari UK]

US Opening Call from Alpari UK on 6 August 2014

Risk aversion seen on Russian threat in Ukraine

• Traders risk averse on Russian plans sanctions and troops gather on Ukrainian border;
• Flight for safety prompts Gold rally, $1,300 level eyed;
• Light data session leaves UK GDP as only notable release.

Ukraine is back in the headlines on Wednesday as the Kremlin prepares retaliatory sanctions against Europe and the US and the Polish Foreign Minister claims Russian troops have gathered on the Ukrainian border.

Geopolitical risk has been one of the major things hanging over the markets in recent months. It hasn’t necessarily prompted a significant amount of selling despite the Russian annexation of Crimea, the Israeli ground offensive in Gaza or ISIS’ actions in Iraq, which makes me think that any response to Russian sanctions or troops gathering on the border will be quite small.

That said, Europe in particular has very carefully selected sanctions that will have minimal impact on its own economy while acting as a deterrent to Russia in its bid to support the Russian separatists. With Russia now looking to impose sanctions of its own, as well as clearly being undeterred by current sanctions if reports of a build-up of troops on the border are true, harsher sanctions from the US and Europe may be necessary that could cause much more harm to their own economies.

Even worse, if Russian troops cross the border, with Putin justifying the actions as an attempt to protect Russian speaking civilians, the situation could escalate quite rapidly and force Europe and the US to take a stand. This is the biggest fear for investors right now and explains why we’re seeing more risk aversion in the markets today, following the late sell-off in the US last night.

As always tends to be the case during periods of risk aversion in the markets, investors are favouring the safe haven assets so far today, with Gold edging higher on the day to trade at $1,288.60. While these gains are only marginal on the day, it’s worth noting that much of the flight to safety occurring yesterday evening. We’re seeing a similar scenario with US indices ahead of the open, with futures currently pointing only a little lower as much of this has already been priced in.

As for the rest of the day, developments in the Ukraine are likely to dominate, especially as there is no major economic data being released. The only notable release actually comes from the UK and even this doesn’t tend to be much of a market mover. The NIESR GDP estimate for the three months ending July should give an idea of how the UK has performed in the first month of the quarter but this figure rarely surprises which may explain why the market impact is so small.

Ahead of the US open, the S&P is expected to open 7 points lower, the Dow 72 points lower and the Nasdaq 15 points lower.

 

[Alpari UK]

Daily Market Update - 6 August 2014 - Alpari UK

Markets tumble as Russian scaremongering hits risk sentiment - 00:27
New Zealand employment data mixed - 02:08
German factory orders disappoint - 03:29
UK production figures all come in to the downside - 05:10

 

[Alpari UK]

UK Opening Call from Alpari UK on 7 August 2014

Russian sanctions overshadowed by border troop build-up

• Russian retaliatory sanctions fail to cause much of a stir
• Threat of Russian invasion into Ukraine causes market jitters
• Australian unemployment spikes higher
• ECB monetary policy decision likely to dominate European session.

European markets are largely flat following yet another disappointing Asian session which saw losses across the board in response to an ongoing Russian threat in Ukraine. The imposition of sanctions from Russia yesterday appears to have had little effect to local markets, with traders seemingly focused more so on Mario Draghi and the ECB who are due to speak later today. Subsequently, European markets are expected to open fairly flat, with the FTSE100 +2, CAC -5 and Germany -11 points.


Global sanctions against Russia have been gradually increasing since the annexation of Crimea and later the downing of MH17 via weaponry that has been claimed to have been provided by the Russian military. However, up until now Russia has chosen to remain patient and thus yesterday’s announcement of Russian limits to imports has come later than many expected. Putin’s promise that any actions in response to sanctions would be geared to ensure Russian consumers are not ill-effected could not be any more wide of the mark, with restrictions on imports of US and EU goods likely to limit supply and drive up inflation. The impact upon producers at home will also be felt, given that Moscow is the biggest buyer of European fruit and vegetables by far.

Alongside the war of economic sanctions, there is also the potential for a military war and that is what the markets have been afraid of over the past few days. The 20,000 battle ready Russian military personnel that have amassed at the Ukrainian border is at best a threat but at worst the pretext to a military campaign that many believe will take place under the context of a ‘humanitarian mission’. The past two months have seen Ukrainian government forces taking back swathes of rebel held territory and as such there is clearly a feeling that those rebels that have been fighting using Russian military equipment and intelligence could actually need full boots on the ground to gain back the advantage. Whether this occurs or not is difficult to call and as such there is a certain edginess in the markets rather than a fully blown crisis mode. However, with Russian media having portrayed the ‘plucky rebels’ as Russian comrades in need of humanitarian help, there is likely to be a growing clamour for Putin to send troops in to gain back those areas that have been lost to Ukrainian military in ‘New Russia’. Unfortunately ‘New Russia’ is in fact Southern and Eastern Ukraine and as such any military intervention could mean another land grab and an even greater ratcheting of tensions in what is one of the biggest breakdowns in Russian/Western relations since the Cold War.

Elsewhere in the markets, Australian hopes of a swift and clean transition from an export led economy to one reliant upon domestic consumption have been dashed, with unemployment rising to its highest level since 2002. The rise to 6.4% shocked the markets, with many expecting the previous rate of 6% to remain steady. However, today is unfortunately a continuation of an upward trending unemployment rate that has been rising since mid-2011 when it bottomed out at 4.9%. This is in stark contrast to most of the other major economies which have seen their employment levels rise as we progress out of the 2008 financial crisis. However, it is clearly a stark reminder of the impact weakness in China and major export markets have had upon Australian jobs especially when coupled with depressed commodity prices. The impact to the markets have been notable, sending the Australian dollar lower across the board. However, the impact to monetary policy I believe will be very little in the immediate future. Glenn Stevens insisted that there will be a period of calm where rates are neither raised nor cut and today’s announcement will likely simply lengthen this timeline rather than push them into moving towards any further cuts.

Looking ahead to the European session, the focus is going to be upon central bank policies with both the BoE and ECB announcing their most recent monetary policy. From a policy standpoint, I believe both announcements will somewhat of a non-event. However, it is the ECB meeting that has the potential to really move the market, with many looking to the subsequent Q&A session from Mario Draghi for potential clues to future actions. The ongoing deterioration of Eurozone inflation means that for now we remain in a place where asset purchases cannot be ruled out and for this reason, there is still the possibility that Draghi could drop a bombshell on the markets by hinting as to its potential use. In all likeliness he will seek to let his most recent range of policy measures kick in, yet any inclination or hint that QE could be around the corner is likely to be greeted by substantial volatility in the markets.

 

[Alpari UK]

Daily Market Update - 8 August 2014 - Alpari UK

00:14 - Russian fears continue to depress the markets
02:37 - Australian unemployment jumps to 6.4%
04:28 - ECB and BoE fail to provide too much market action
05: 55 - Unemployment claims the second lowest figure since 2008

 

[Alpari UK]

UK Opening Call from Alpari UK on 8 August 2014

Iraq fears drive yet more geopolitical risk-off sentiment

• US airstrikes to take place against the Islamic State
• Chinese trade balance provides strong export growth yet weakening imports
• Trade balance figures the order of the day as UK and Germany both announce their figures.

Global markets are seeking to end the week in the same way it started, with geopolitical risks yet again leading to depression of the indices as traders buy safe haven assets once more. This time the focus has shifted back to Iraq following the US announcement of targeted airstrikes in the region. A busy overnight Asian session has given way to a what is likely to be a somewhat quieter Friday for both European and US markets in terms of economic announcements and thus this risk-off sentiment is likely to continue to dominate. European futures point towards a negative open, with the FTSE100 -48, CAC -44 and DAX -95 points.

Just when we thought that the markets were able to return to an economic focus, another one of the many geopolitical risk regions has flared up, with the announcement that the US is willing to utilise targeted airstrikes against the Islamic State militants that have been moving across the country. Following US involvement in the country, there is no doubt that the US have been following developments closely, with previous estimations that the Islamic State has slowed their advances shown to be misguided. In fact, they have now begun moving into the semiautonomous Kurdish regions, whilst also appropriating the country’s largest dam, in Mosul. The threat to a country such as the US is that many of the Islamic state fighters have originated from Western nations and as such, a greater involvement in this conflict could mean that upon returning to their country you will have a number of battle hardened terrorists seeking to enact revenge against Western countries for their involvement against the ‘Islamic State’. That being said, with the current purge of religious groups such as Christians and the Yazidis, what is occurring is tantamount to genocide against those who do not follow their extreme brand of Islamic religious observation. Thus what will be interesting is seeing exactly how active the US becomes in this crisis and for how long for given that both the Kurdish and Iraqi armies do not seem either adequately equipped or mentally prepared to fight such a brutal and driven enemy. The idea of swathes of the Middle East being controlled by such an entity must of course be the last thing any developed (or underdeveloped nation) would want.

Overnight saw a somewhat mixed picture emerge out of China, where a booming trade balance figure saw exports rise at the highest rate since May 2013 (14.5%), whilst imports posted a negative growth figure for the third time in five months (-1.6%). This meant that the picture has become increasingly difficult for economies such as Australia whereby imports of their raw materials have fallen, yet the promise of greater exports leads one to believe that greater demand must surely be just around the corner. However, for China the picture was much clearer, providing a much needed boost to growth prospects which is sure to quell the need for any further stimulus measures for the time being. The increased demand particularly from Europe and the US is in stark contrast to the poor German factory orders earlier this week, which were attributed to weakening Eurozone demand.

Taking a look ahead at the European session, the focus is likely to remain on the topic of trade balance figures, when the German and UK economies announce their latest figures. Whilst these can be important, it is highly unlikely that they will be as well followed as the Chinese figures given the role China has upon global growth. However, at a time when German economic data is beginning to show some signs of a resurgence following a disappointing Q2, this release will give us yet another insight into exactly how their prized export market is faring at the current time.

 

[Alpari UK]

UK Opening Market Call from Alpari UK on 11 August 2014

Markets set for strong start as markets look to data later in the week

Good morning all!

European markets are set for a stronger open this morning when trading gets underway after a strong performance overnight in Asia saw the major markets jump to the upside. The week ahead is likely to be one that keeps one eye on geo political situations, despite the economic calendar being jam packed full of data for the week. The data in fact started over the weekend as we saw a reading from China on its CPI inflation, and despite these readings coming in bang in line with expectations markets have jumped aggressively. There is yet more data out in Asia as we get going early on this morning with consumer confidence readings and the BOJ monthly economic survey. Asia will be a dominating force throughout the week, with Wednesday the most important day for data with Japanese GDP and BoJ meeting minutes as well as Chinese retail sales and industrial production numbers.

Today’s European trading session could actually be a fairly quiet one in terms of market led data. The economic calendar is looking very light of data and this could quite easily let the geo political situations take centre stage. Over the weekend while a three day cease fire was finally being observed in Gaza, Iraqi Prime Minister when on state television to angrily criticise the President Fuad Masum. The US, who have already launched four airstrikes on IS militants sent a letter backing the President and urging Iraq to form an inclusive government. President Masum has the power to intervene in a row that would see Mr Maliki serve a fourth term as Prime Minister after winning an election in April. However he has not been offered the term and so far President has failed to intervene in the row, heightening tensions in a country that must remain united if it is to put a stop to the growing IS militants.

Although the stories in Iraq, Russia and Ukraine are likely to continue to dominate news agenda’s acorss the globe there is a whole host of economic data due for release this week, with Wednesday the busiest day by far. As stated earlier Asian markets will be begin with data from Japan and China, but then focus quickly shifts to the UK and Eurozone. Most notably we will get more CPI readings from the Eurozone. This of course takes on added importance as Mario Draghi waits to see whether his plan of TLTRO’s has started to work in pulling the figure higher. However his work may all go to waste if Russia continue to ban major foods from western Europe. If farmers have to find new buyers for almost 10% of the products it could well be that this drives the inflation price lower as food price fall on a surplus of goods. Now this may be down the line a little but is a very real danger should the tit for tat sanctions continue to be enforced.

Overall markets will start to a fairly quiet day in terms of data but will most definitely pick up as the week goes on. The real worry for markets will be the uncertainty over the horrendous stories gripping Iraq and Gaza. Any escalation in fighting or major developments will of course give traders and extra unwanted story to keep an eye on when it comes to their trading. Ahead of the open we expect to see the FTSE100 open higher by 42 points with the German DAX higher by 89 points.

 

[Alpari UK]

Weekly market preview from Alpari UK – 11 August 2014

Geopolitical events permitting the coming week will again see the main economic data releases coming out of China and europe. As regards the latter the focus will be on whether the latest economic statistics reveal that Beijing will need to carry out further stimulus measures or not. The latest trade numbers from the country’s customs bureau showed imports unexpectedly falling, hinting at some lingering weakness in the Asian giant’s growth profile.

Meantime, and in the UK, all eyes will be on Wednesday’s Inflation Report. If the most up-to-date market commentary is to be trusted then there might be growing differences amongst the members of the Monetary Policy Committee (MPC) as to the best timing for the first increase in Bank Rate in this interest rate cycle. Precisely in that regard, some observers believe that the MPC may be about to announce a change in its reaction function, subtly moving to place modestly more emphasis on nominal wages as a key determinant of interest rate increases.

The employment report due out on the day before will shed further light on how the degree of slack in the UK economy is progressing. Lastly, and in the Eurozone, figures will be forthcoming throughout the week regarding gross domestic product in France, Germany and for the euro area more broadly, alongside the latest final estimates for consumer price inflation in the month of July.

The headlines through the week will be as follows:

• Russian sanctions on Europe could have devastating affect on ECB plan for stabilising the eurozone economy.
• US air strikes on ISIS militants in order to protect US based personnel and assets in northern Iraqi cities and help those stranded religious minorities stranded and threatened by the fighting violence.
• Asian markets fall into focus as China and Japan both have a busy week on the economic calendar.
Europe looks to ECB’s plans on inflation with CPI reading looking to show weather measures have started to work.
• UK unemployment figures due on Wednesday looking to show further improvement.

Geo political situations aside, the UK could well be the quietest region this week as the economic data looks to focus on other areas of the world. The major talking point will come on Wednesday when the ILO unemployment rate is released. Despite Mark Carney’s forward guidance shifting from its focus on the unemployment many think the current rate still holds sway when discussions are had around rate hikes. The feeling is that a drop below 6% would be a move that would make it very hard for policy makers to ignore. With average earnings numbers also getting better, it would leave the members of the MPC with a decision to make. However, my view is rather more sceptical as I don’t see the any kind of monetary policy change until after the 2015 general election.

The US markets are looking fairly quiet in terms of the economic calendar but it is likely to be growing tensions from between the US and Russia and between the US and the Islamic State. U.S. jet fighters hit Islamic State artillery positions in northern Iraq on Friday, the first of what is expected to be a series of American strikes meant to halt the Sunni extremist advance on the Kurdish capital of Erbil, the Pentagon said. The U.S. F/A-18 jet fighters dropped 500 pound laser-guided bombs on mobile artillery positions outside Erbil.

The strikes were the first since President Barack Obama authorized U.S. military action to target radical Islamic forces in the Kurdish city, where the U.S. has diplomatic and military personnel aiding the Kurds.

Obama said last week that he had authorized targeted airstrikes and emergency-assistance missions in northern Iraq, saying the U.S. must act to protect American personnel and prevent a humanitarian catastrophe. Mr. Obama said the goal of strikes would be to stop militants closing in on the northern city of Erbil, a Kurdish stronghold, or to allow local forces to aid the Yazidis, the religious minority.

The Bank of England is set to update central bank watchers on its view of spare capacity in the labour market at its quarterly Inflation Report this Wednesday. Any sign that the monetary policy committee feels more slack has been absorbed would suggest rises to interest rates sooner rather than later. Since the last report in May, wage growth appears to have been much weaker than the Bank had anticipated, whereas growth and employment data have beaten expectations.

Key labour market figures from the Office for National Statistics are expected to show that unemployment has taken a further fall, and nominal earnings growth is set to go negative. Also on this week’s agenda are the ONS’ second growth estimate for the second quarter of this year and Rics data on housing market strength.

 

[Alpari UK]

Daily Market Update - 11 August 2014 - Alpari UK

 

[Alpari UK]

UK Opening Call from Alpari UK on 12 August 2014

European confidence to be tested ahead of key data

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

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

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

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

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

 

[Alpari UK]

US Opening Call from Alpari UK on 12 August 2014

US futures edge higher ahead of data light session

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

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

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

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

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

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

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

 

[Alpari UK]

Daily Market Update - 12 August 2014 - Alpari UK

 

[Alpari UK]

UK Opening Call from Alpari UK - 13 August 2013

BoE Inflation Report headlines on hugely busy session

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

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

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

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

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

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

 

[Alpari UK]

Webinar - 12 August 2014 - Alpari UK

Weekly Market Webinar

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

Click here to Register for our Webinar

 

[Alpari UK]

US Opening Call from Alpari UK on 13 August 2013

US retail sales in focus following dovish UK inflation report

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

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

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

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

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

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

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

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

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

 

[Alpari UK]

Daily Market Update - 13 August 2014 - Alpari UK

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

 

[Alpari UK]

UK Opening Call from Alpari UK on 14 August 2014

Eurozone takes centre stage after the BoE show

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

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

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

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

 

[Alpari UK]

Daily Market Update - 14 August 2014 - Alpari UK

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

 

[Abdul2012]

Hi,
Thank you for the update ,
Cheers

 

[Alpari UK]

US Opening Call from Alpari UK - 15 August 2014

US futures edge higher as central bank stimulus hopes grow

Disappointing economic data is proving to be the best thing for the markets right now as traders look to central banks to provide additional stimulus in order to support the mild economic recovery.

This is particularly the case in the eurozone, where, as we saw yesterday, growth isn’t just eluding the periphery, it’s also proving a difficult task for the core. The three largest members of the eurozone – Germany, France and Italy – all failed to record any growth in the second quarter, with Germany contracting by 0.2% and Italy falling into its third recession since the crisis began.

With inflation currently standing at a miniscule 0.4%, pressure is growing on the ECB to start a program of quantitative easing in order to avoid slipping into the unenviable state that Japan found itself in for the last couple of decades, of marginal growth and deflation. The ECB has been very reluctant to buy government bonds in recent years and is likely to put it off for a few more months yet, as it only recently announced an alternative batch of stimulus measures, but that isn’t stopping investors betting on another stimulus package.

It’s not just the ECB that traders are banking on remaining accommodative, forecasts for the first rate hike from the Bank of England are also being scaled back and the Fed has so far refused to change its dovish stance while so much slack remains in the labour market. I’m not convinced that we’ll see indices majorly surpassing the current record highs, but it may be enough to sustain them near those levels for a little longer.

As for today, there’s plenty of economic data being released, although none of these are high impact numbers. The empire state manufacturing index, UoM consumer sentiment reading and industrial production figures will all be released and could have some impact on the markets, but given the timing of the release, it’s unlikely to be excessive.

Ahead of the opening bell on Wall Street, the S&P is expected to open 5 points higher, the Dow 40 points higher and the Nasdaq 12 points higher.