Alpari UK
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Weekly market preview from Alpari UK – 18 August 2014
A mixed week ahead, as markets attempt to focus back on the fundamentals rather than continuous geopolitical fears which have been resurfacing one after another. Whilst this week is certainly not the showstopper that we have seen earlier in the month when the majority of central economic figures are provided, the release of BoE and Fed minutes along with Jackson Hole speeches means that there is a great chance to see significant volatility. Meanwhile, the release of a whole raft of PMI figures out of the eurozone gives a chance to make up for hugely disappointing GDP figures which have brought about the threat of yet another recession.
A somewhat quiet week in Asia means that the main event of note comes on Thursday when the HSBC manufacturing PMI figure is released in China. Meanwhile, the Japanese focus will be aimed towards the trade balance data on Wednesday. Finally, in Australia the release of RBA minutes completes a week that could see a major role in retrospective central bank releases especially given the existence of the Jackson Hole Symposium towards the end of the week.
Also be on the lookout for any progression of the Ukraine story, where ‘humanitarian aid’ from Russia certainly has the potential to flare up the situation once more. Finally, be aware of anything within the Middle East regarding Gaza or Iraq.
US
The US is once again going to be central this week, with the Fed outlook taking central stage for the most part. The release of FOMC minutes on Wednesday has the ability to provide a major move in the markets, yet it is the Jackson Hole Symposium which really can steal the show. This annual meeting brings together central bankers, academics, finance ministers and financiers from around the world to discuss the topics of the day, which on this occasion is titled “Re-Evaluating Labor Market Dynamics.” From a US standpoint, the major keynote speech comes on Thursday when Janet Yellen takes the stand. This meeting has been the stage upon which Janet Yellen’s predecessor sought to announce two separate rounds of bond buying to the markets. However, it remains to be seen if Yellen sees this meeting in quite the same light as Bernanke. The stage is certainly set to do so given Yellen’s unwillingness to provide any stable timeframe for interest rate hikes, instead sticking to the line that they will rise “a considerable time” after asset purchases end. This is certainly a subjective phrase and thus should we hear anything more concrete at this meeting, it has the potential to send the markets wild. Remember that whilst we are hoping to see Yellen announce something earth shattering, there is a high likeliness that in practice we are more likely to have to interpret a more detailed view on the labour market and relate that view upon what it could mean for rates going forward.
Prior to this meeting, the release of minutes from the last FOMC meeting are due on Wednesday, with people looking out for any signs that the tide is changing with regards to when we should see rates rise. There are already some members that feel the “considerable time” has already been used up and thus that the Fed should start moving soon on rates. With that in mind, I will be on the lookout for any members who have moved towards a more hawkish stance which is certainly a process which will happen increasingly over the coming months.
UK
A fairly quiet week ahead in the UK, where the release of retail sales and BoE minutes make up the only economic releases which have any likeliness of moving the markets. This is despite the release of CPI data, which I believe is highly unlikely to provide much volatility given its proximity to the much sought after 2% target.
The release of BoE minutes provide a clearer view of what specific outlooks are within the MPC with regards to a possible rate hike. The inflation report earlier this month provided us with further clarification with this respect, where Mark Carney said that rates would be expected to rise in 2015. This was largely expected, however, it will be interesting to see the views of other members and thus be on the lookout for any members fighting against the tide. The most notable of any such move would be to vote for a rate hike, yet the expectation is that all 9 members will continue to vote against such a move.
Thursday’s retail sales release provides a great insight into the behaviour of consumers within the UK at a time when the economy is booming out of the downturn that has plagued the global economy for the past 6 years. A strong consumer base is absolutely key to growing domestic demand of services in the economy and thus Thursday’s figure is well worth watching out for. Markets are expecting to see the figure pick up to around 0.4% from the 0.1% seen last month. Historically, this figure has the propensity to oscillate around from positive to negative growth throughout the year and thus it would be a good sign to see a second consecutive month of positive growth in this measure.
Eurozone
A somewhat patchy week for the eurozone ahead, where the release of various PMI figures on Thursday will be the only major economic data release of note, with the focus turning to the speech from Mario Draghi at Jackson Hole on Friday. Thursday’s PMI releases provide the major eurozone economies an opportunity to turn things around following the hugely disappointing GDP figures which saw Germany fall into negative growth, where the French and eurozone economies both stagnated with 0% quarter on quarter growth. Unfortunately this comes prior to even really feeling the effects of the Russian sanctions which have been imposed from both sides. With Russia making up a significant proportion of eurozone demand, there is a high likeliness of another poor growth figure in Q3. However, this will likely be reflected ahead of time through poor PMI figures given that they are a leading indicator. Thus look out for any deterioration in this figure to give a better idea of how the sectors are faring in the eurozone. On the face of it, pretty much all of the figures are expected to fall, apart from the French manufacturing figure, yet with that set to remain within contraction, the future looks pretty bleak in the eurozone.
On Friday, ECB President Mario Draghi is set to provide his keynote speech at the Jackson Hole Symposium where markets are hoping for gain further insights into his outlook for employment and monetary policy. With eurozone inflation continuing to flirt with the idea of deflation, the markets have been waiting to see one of two things. Either the recent range of measures imposed by Draghi (TLTRO’s, negative deposit rates and an end to the sterilisation of bond purchases) will kick in, bringing the inflation rate higher to alleviate pressure upon the ECB Otherwise Mario Draghi will have to finally step up to the plate and implement an asset purchase programme. It feels unlikely at the moment and thus the emphasis is likely to be upon improvements in the jobs market and how he expects those new measures to impact the eurozone. However, watch out for any hints that he would be willing to take the further steps if needed and what would be a threshold to do just that.
Asia & Oceania
A somewhat quiet week in Asia, where the main event will come in the form of the HSBC manufacturing PMI figure out of China, alongside a Japanese trade data release earlier in the week. The HSBC manufacturing PMI figure has provided one of the key leading indicators of economic health within the Chinese region, given it’s focus upon smaller firms which will typically feel any downturn most keenly. However, with the worst seemingly over, this figure has really lost it’s edge and thus I don’t expect too much market movement unless we see a major shock. Markets are expecting a figure marginally lower than the 51.7 number last month.
On Wednesday, the Japanese trade balance will provide the latest look at how the economy is faring following the establishment of both a higher sales tax and inflation rate. Logically this would typically make exports more expensive and thus less competitive. However, with the value of the yen significantly devalued in recent years, this has brought Japanese exporters a little more respite. That being said, ever since April’s sales tax hike we have seen a downward trajectory for exports and this is expected to continue apace.
Finally, in Australia a quiet week sees markets focus largely upon the release of minutes from the RBA on Tuesday. Unfortunately this is highly unlikely to bring any sort of market movement, given that the RBA has explicitly said that they plan to make no changes to the interest rate for some time now. Thus whilst it is certainly worth noting that this event is happening and there is a possibility of some market movement, I do not expect much at all.
A mixed week ahead, as markets attempt to focus back on the fundamentals rather than continuous geopolitical fears which have been resurfacing one after another. Whilst this week is certainly not the showstopper that we have seen earlier in the month when the majority of central economic figures are provided, the release of BoE and Fed minutes along with Jackson Hole speeches means that there is a great chance to see significant volatility. Meanwhile, the release of a whole raft of PMI figures out of the eurozone gives a chance to make up for hugely disappointing GDP figures which have brought about the threat of yet another recession.
A somewhat quiet week in Asia means that the main event of note comes on Thursday when the HSBC manufacturing PMI figure is released in China. Meanwhile, the Japanese focus will be aimed towards the trade balance data on Wednesday. Finally, in Australia the release of RBA minutes completes a week that could see a major role in retrospective central bank releases especially given the existence of the Jackson Hole Symposium towards the end of the week.
Also be on the lookout for any progression of the Ukraine story, where ‘humanitarian aid’ from Russia certainly has the potential to flare up the situation once more. Finally, be aware of anything within the Middle East regarding Gaza or Iraq.
US
The US is once again going to be central this week, with the Fed outlook taking central stage for the most part. The release of FOMC minutes on Wednesday has the ability to provide a major move in the markets, yet it is the Jackson Hole Symposium which really can steal the show. This annual meeting brings together central bankers, academics, finance ministers and financiers from around the world to discuss the topics of the day, which on this occasion is titled “Re-Evaluating Labor Market Dynamics.” From a US standpoint, the major keynote speech comes on Thursday when Janet Yellen takes the stand. This meeting has been the stage upon which Janet Yellen’s predecessor sought to announce two separate rounds of bond buying to the markets. However, it remains to be seen if Yellen sees this meeting in quite the same light as Bernanke. The stage is certainly set to do so given Yellen’s unwillingness to provide any stable timeframe for interest rate hikes, instead sticking to the line that they will rise “a considerable time” after asset purchases end. This is certainly a subjective phrase and thus should we hear anything more concrete at this meeting, it has the potential to send the markets wild. Remember that whilst we are hoping to see Yellen announce something earth shattering, there is a high likeliness that in practice we are more likely to have to interpret a more detailed view on the labour market and relate that view upon what it could mean for rates going forward.
Prior to this meeting, the release of minutes from the last FOMC meeting are due on Wednesday, with people looking out for any signs that the tide is changing with regards to when we should see rates rise. There are already some members that feel the “considerable time” has already been used up and thus that the Fed should start moving soon on rates. With that in mind, I will be on the lookout for any members who have moved towards a more hawkish stance which is certainly a process which will happen increasingly over the coming months.
UK
A fairly quiet week ahead in the UK, where the release of retail sales and BoE minutes make up the only economic releases which have any likeliness of moving the markets. This is despite the release of CPI data, which I believe is highly unlikely to provide much volatility given its proximity to the much sought after 2% target.
The release of BoE minutes provide a clearer view of what specific outlooks are within the MPC with regards to a possible rate hike. The inflation report earlier this month provided us with further clarification with this respect, where Mark Carney said that rates would be expected to rise in 2015. This was largely expected, however, it will be interesting to see the views of other members and thus be on the lookout for any members fighting against the tide. The most notable of any such move would be to vote for a rate hike, yet the expectation is that all 9 members will continue to vote against such a move.
Thursday’s retail sales release provides a great insight into the behaviour of consumers within the UK at a time when the economy is booming out of the downturn that has plagued the global economy for the past 6 years. A strong consumer base is absolutely key to growing domestic demand of services in the economy and thus Thursday’s figure is well worth watching out for. Markets are expecting to see the figure pick up to around 0.4% from the 0.1% seen last month. Historically, this figure has the propensity to oscillate around from positive to negative growth throughout the year and thus it would be a good sign to see a second consecutive month of positive growth in this measure.
Eurozone
A somewhat patchy week for the eurozone ahead, where the release of various PMI figures on Thursday will be the only major economic data release of note, with the focus turning to the speech from Mario Draghi at Jackson Hole on Friday. Thursday’s PMI releases provide the major eurozone economies an opportunity to turn things around following the hugely disappointing GDP figures which saw Germany fall into negative growth, where the French and eurozone economies both stagnated with 0% quarter on quarter growth. Unfortunately this comes prior to even really feeling the effects of the Russian sanctions which have been imposed from both sides. With Russia making up a significant proportion of eurozone demand, there is a high likeliness of another poor growth figure in Q3. However, this will likely be reflected ahead of time through poor PMI figures given that they are a leading indicator. Thus look out for any deterioration in this figure to give a better idea of how the sectors are faring in the eurozone. On the face of it, pretty much all of the figures are expected to fall, apart from the French manufacturing figure, yet with that set to remain within contraction, the future looks pretty bleak in the eurozone.
On Friday, ECB President Mario Draghi is set to provide his keynote speech at the Jackson Hole Symposium where markets are hoping for gain further insights into his outlook for employment and monetary policy. With eurozone inflation continuing to flirt with the idea of deflation, the markets have been waiting to see one of two things. Either the recent range of measures imposed by Draghi (TLTRO’s, negative deposit rates and an end to the sterilisation of bond purchases) will kick in, bringing the inflation rate higher to alleviate pressure upon the ECB Otherwise Mario Draghi will have to finally step up to the plate and implement an asset purchase programme. It feels unlikely at the moment and thus the emphasis is likely to be upon improvements in the jobs market and how he expects those new measures to impact the eurozone. However, watch out for any hints that he would be willing to take the further steps if needed and what would be a threshold to do just that.
Asia & Oceania
A somewhat quiet week in Asia, where the main event will come in the form of the HSBC manufacturing PMI figure out of China, alongside a Japanese trade data release earlier in the week. The HSBC manufacturing PMI figure has provided one of the key leading indicators of economic health within the Chinese region, given it’s focus upon smaller firms which will typically feel any downturn most keenly. However, with the worst seemingly over, this figure has really lost it’s edge and thus I don’t expect too much market movement unless we see a major shock. Markets are expecting a figure marginally lower than the 51.7 number last month.
On Wednesday, the Japanese trade balance will provide the latest look at how the economy is faring following the establishment of both a higher sales tax and inflation rate. Logically this would typically make exports more expensive and thus less competitive. However, with the value of the yen significantly devalued in recent years, this has brought Japanese exporters a little more respite. That being said, ever since April’s sales tax hike we have seen a downward trajectory for exports and this is expected to continue apace.
Finally, in Australia a quiet week sees markets focus largely upon the release of minutes from the RBA on Tuesday. Unfortunately this is highly unlikely to bring any sort of market movement, given that the RBA has explicitly said that they plan to make no changes to the interest rate for some time now. Thus whilst it is certainly worth noting that this event is happening and there is a possibility of some market movement, I do not expect much at all.
Alpari UK
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UK Opening Call from Alpari UK on 18 August 2014
Europe off to a flyer as focus switches to central banks
• Central banks dominate proceedings this week;
• Yellen’s Jackson Hole key note speech may headline important week;
• Minutes from Fed and BoE, released Wednesday, another major event this week;
• European futures flying ahead of quiet session.
What could shape up to be a rather important week for the markets is set to get off to a quieter start on Monday. A lack of economic data is forcing investors to focus on the major events coming later in the week, particularly the release of the minutes from the Bank of England and Federal Reserve meetings, and the Jackson Hole symposium which will host Fed Chair Janet Yellen on Thursday and ECB President Mario Draghi on Friday.
While it’s difficult to pick a standout event from these, as all have great potential to create major waves in the markets, I would say Yellen’s key note speech on Thursday just about takes it. Despite its apparent openness, it feels like the Fed has chosen to keep its cards very close to its chest in recent months, as no central bank that is seeing such a strong recovery can possibly be as dovish on rates as the Fed is making out.
Yellen’s predecessor, Ben Bernanke, previously used his key note speech to hint at upcoming changes in monetary policy stance. While that doesn’t mean that Yellen will do the same, especially given that this year’s event is focused on the labour market, I would certainly not bet against it and I’m sure not many would which is why the markets will be very keen to hear what she has to say on Thursday. The timing of the first rate hike still appears to be priced in for the middle of next year, so I think any change in stance from Yellen will only be to bring that forward by a few months. She is clearly very cautious when it comes to this recovery and is unwilling to rush it and threaten to choke it off before it really gets going.
One thing I would say in relation to this though is that any change in policy that has been mentioned at previous events has been rumoured at ahead of the event. We haven’t heard anything on this occasion which may strongly suggest that Yellen is going to stick to the topic of the day and use the opportunity to drive home how much slack remains in the labour market, thereby delivering yet another very dovish speech.
With this in mind, the key event this week could turn out to be the release of the Fed minutes on Wednesday. Yellen may not be ready to contemplate rate hikes at this stage but the closer we get to the first one, the more chance we have of seeing dissenters among the policy makers which makes the voting far more interesting. The same goes for the BoE, where I expect the first vote in favour of a rate hike to be just around the corner, albeit probably note this week.
As mentioned earlier, there’s very little on offer from the economic calendar, with the only notable release being the Eurozone trade balance number. That isn’t stopping Europe getting off to a great start though, with the DAX seen opening more than 1% higher, while its other European counterparts are too far behind. Clearly these indices aren’t taking a lead from Asia overnight, where stocks traded relatively mixed following a similar session in the US on Friday.
Ahead of the open, the FTSE is seen 32 points higher, the CAC 35 points higher and the DAX 105 points higher.
Europe off to a flyer as focus switches to central banks
• Central banks dominate proceedings this week;
• Yellen’s Jackson Hole key note speech may headline important week;
• Minutes from Fed and BoE, released Wednesday, another major event this week;
• European futures flying ahead of quiet session.
What could shape up to be a rather important week for the markets is set to get off to a quieter start on Monday. A lack of economic data is forcing investors to focus on the major events coming later in the week, particularly the release of the minutes from the Bank of England and Federal Reserve meetings, and the Jackson Hole symposium which will host Fed Chair Janet Yellen on Thursday and ECB President Mario Draghi on Friday.
While it’s difficult to pick a standout event from these, as all have great potential to create major waves in the markets, I would say Yellen’s key note speech on Thursday just about takes it. Despite its apparent openness, it feels like the Fed has chosen to keep its cards very close to its chest in recent months, as no central bank that is seeing such a strong recovery can possibly be as dovish on rates as the Fed is making out.
Yellen’s predecessor, Ben Bernanke, previously used his key note speech to hint at upcoming changes in monetary policy stance. While that doesn’t mean that Yellen will do the same, especially given that this year’s event is focused on the labour market, I would certainly not bet against it and I’m sure not many would which is why the markets will be very keen to hear what she has to say on Thursday. The timing of the first rate hike still appears to be priced in for the middle of next year, so I think any change in stance from Yellen will only be to bring that forward by a few months. She is clearly very cautious when it comes to this recovery and is unwilling to rush it and threaten to choke it off before it really gets going.
One thing I would say in relation to this though is that any change in policy that has been mentioned at previous events has been rumoured at ahead of the event. We haven’t heard anything on this occasion which may strongly suggest that Yellen is going to stick to the topic of the day and use the opportunity to drive home how much slack remains in the labour market, thereby delivering yet another very dovish speech.
With this in mind, the key event this week could turn out to be the release of the Fed minutes on Wednesday. Yellen may not be ready to contemplate rate hikes at this stage but the closer we get to the first one, the more chance we have of seeing dissenters among the policy makers which makes the voting far more interesting. The same goes for the BoE, where I expect the first vote in favour of a rate hike to be just around the corner, albeit probably note this week.
As mentioned earlier, there’s very little on offer from the economic calendar, with the only notable release being the Eurozone trade balance number. That isn’t stopping Europe getting off to a great start though, with the DAX seen opening more than 1% higher, while its other European counterparts are too far behind. Clearly these indices aren’t taking a lead from Asia overnight, where stocks traded relatively mixed following a similar session in the US on Friday.
Ahead of the open, the FTSE is seen 32 points higher, the CAC 35 points higher and the DAX 105 points higher.
Alpari UK
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US Opening Call from Alpari UK on 18 August 2014
Markets higher on developments in Ukraine crisis
It may have been a quiet start to the week so far, but that’s not preventing stocks from making solid early gains as investors cheer the efforts being made to ease tensions between Ukraine and the Russian separatists.
It’s very early days yet but the meeting between the Ukrainian and Russian foreign ministers in Berlin was a promising start. The fact that both sides are showing a willingness to find a diplomatic solution to the crisis is a positive development, not just for Ukraine and Russia, but also Europe where the crisis has taken its toll on the economy.
This explains why the news has gone down much better in Europe than Asia or the US, where futures are also higher but not quite as much. If we can see a breakthrough in talks between the two countries, it would pave the way for sanctions to be lifted, giving Germany a fighting chance of avoiding recession in the current quarter.
As for the US, it’s just a lessening of geopolitical risk which markets will always applaud. The sanctions imposed by Russia are unlikely to impact the US economy too much, especially compared to Europe where confidence alone has been dented by the crisis.
The US session is looking very quiet today, with no major economic data scheduled for release. This will change as the week goes on with the minutes from the last Fed meeting being released on Wednesday and Fed Chair Janet Yellen giving the key note speech at Jackson Hole on Thursday. Yellen’s predecessor, Ben Bernanke, previously used this opportunity to hint at future changes to monetary policy and people will be watching very closely to see if the current Fed Chair does the same.
Ahead of the open, the S&P is expected to open 9 points higher, the Dow 84 points higher and the Nasdaq 19 points higher.
Markets higher on developments in Ukraine crisis
It may have been a quiet start to the week so far, but that’s not preventing stocks from making solid early gains as investors cheer the efforts being made to ease tensions between Ukraine and the Russian separatists.
It’s very early days yet but the meeting between the Ukrainian and Russian foreign ministers in Berlin was a promising start. The fact that both sides are showing a willingness to find a diplomatic solution to the crisis is a positive development, not just for Ukraine and Russia, but also Europe where the crisis has taken its toll on the economy.
This explains why the news has gone down much better in Europe than Asia or the US, where futures are also higher but not quite as much. If we can see a breakthrough in talks between the two countries, it would pave the way for sanctions to be lifted, giving Germany a fighting chance of avoiding recession in the current quarter.
As for the US, it’s just a lessening of geopolitical risk which markets will always applaud. The sanctions imposed by Russia are unlikely to impact the US economy too much, especially compared to Europe where confidence alone has been dented by the crisis.
The US session is looking very quiet today, with no major economic data scheduled for release. This will change as the week goes on with the minutes from the last Fed meeting being released on Wednesday and Fed Chair Janet Yellen giving the key note speech at Jackson Hole on Thursday. Yellen’s predecessor, Ben Bernanke, previously used this opportunity to hint at future changes to monetary policy and people will be watching very closely to see if the current Fed Chair does the same.
Ahead of the open, the S&P is expected to open 9 points higher, the Dow 84 points higher and the Nasdaq 19 points higher.
Alpari UK
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Daily Market Update - 18 August 2014 - Alpari UK
Geo-political fears ease as markets strengthen - 00:20
Ukraine set to allow Russian trucks to pass into the country - 00:41
RBA minutes set to dominate overnight - 02:08
A overlook of what to look for in Fed announcements - 02:45
Geo-political fears ease as markets strengthen - 00:20
Ukraine set to allow Russian trucks to pass into the country - 00:41
RBA minutes set to dominate overnight - 02:08
A overlook of what to look for in Fed announcements - 02:45
Alpari UK
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UK Opening Call from Alpari UK on 19 August 2014
Inflation data eyed ahead of BoE minutes release tomorrow
• Falling geopolitical risk provides another boost to risk appetite;
• Focus remains on central banks this week, particularly the Fed, BoE and ECB;
• UK inflation expected to ease off, giving the BoE more time to address slack and poor wage growth;
• US inflation and housing data come into focus this afternoon.
The markets look set for another bright start on Monday as stocks and other risk assets continue to benefit from a significant reduction in geopolitical risk. Negotiations between foreign ministers from Ukraine and Russia in Berlin appear to have made some progress in bringing an end to the crisis, while a 24 hour extension to the truce in Gaza and Israel and the regaining of the Mosul Dam by the Iraqi and Kurdish troops are all helping lift investor sentiment this week.
With geopolitical risk appearing to subside, investors are free to focus on other matters, which this week is likely to be the next moves from the Federal Reserve, the Bank of England and the ECB. Key note speeches at the Jackson Hole symposium from Fed Chairwoman Janet Yellen on Thursday and ECB President Mario Draghi on Friday will be picked apart for any small hints on the direction of monetary policy in the coming months, while the minutes from recent BoE and Fed meetings released on Wednesday will also be heavily analysed for any hidden messages.
These three major central banks are heading in very different directions right now, particularly the ECB when compared to the Fed and BoE. The ECB only recently announced a package of monetary stimulus aimed at stopping the rapid decline in inflation, which has now fallen to 0.4%, and helping to provide more accommodation for eurozone countries many of which are struggling to record any growth whatsoever. The Fed and the BoE on the other hand are dealing with far healthier economies and are instead waiting for the correct time to hike interest rates.
Inflation in these countries is currently below the 2% target set for both central banks allowing them to remain accommodative while addressing the problem of slack and poor wage growth in the economy. The Fed appears more willing to keep rates low for longer at this stage but as we all know, this can change very quickly. Both have inflation numbers for July being released today, although it is worth noting that CPI is not the Fed's preferred measure of inflation so the numbers should be taken with a pinch of salt.
UK inflation, as measured by the preferred CPI reading, is expected to fall slightly to 1.8% in July, with the core number, which excludes volatile items such as food and energy, is expected to fall to 1.9%. The former is the number the BoE focuses on most as this is what their mandate is measured against. Clearly, with the number still below the 2% target, the BoE still has time on its side and as long as we don't see a move above target in the coming months, any rate hike shouldn't come until the first quarter of next year.
US inflation, as measures by the CPI reading, is running very close to target which may soon increase the pressure on the Fed to hike interest rates earlier than it would like. That said, certain members have recently suggested that the Fed would allow inflation to run a little over target in an attempt to tackle the problem of slack in the economy, something I imagine Yellen would be very on board with. Also being released in the US today is building permits and housing starts for July, which given yesterday's reaction to housing data is certainly worth monitoring.
Ahead of the open, the FTSE is seen 15 points higher, the CAC 21 points higher and the DAX 38 points higher.
Inflation data eyed ahead of BoE minutes release tomorrow
• Falling geopolitical risk provides another boost to risk appetite;
• Focus remains on central banks this week, particularly the Fed, BoE and ECB;
• UK inflation expected to ease off, giving the BoE more time to address slack and poor wage growth;
• US inflation and housing data come into focus this afternoon.
The markets look set for another bright start on Monday as stocks and other risk assets continue to benefit from a significant reduction in geopolitical risk. Negotiations between foreign ministers from Ukraine and Russia in Berlin appear to have made some progress in bringing an end to the crisis, while a 24 hour extension to the truce in Gaza and Israel and the regaining of the Mosul Dam by the Iraqi and Kurdish troops are all helping lift investor sentiment this week.
With geopolitical risk appearing to subside, investors are free to focus on other matters, which this week is likely to be the next moves from the Federal Reserve, the Bank of England and the ECB. Key note speeches at the Jackson Hole symposium from Fed Chairwoman Janet Yellen on Thursday and ECB President Mario Draghi on Friday will be picked apart for any small hints on the direction of monetary policy in the coming months, while the minutes from recent BoE and Fed meetings released on Wednesday will also be heavily analysed for any hidden messages.
These three major central banks are heading in very different directions right now, particularly the ECB when compared to the Fed and BoE. The ECB only recently announced a package of monetary stimulus aimed at stopping the rapid decline in inflation, which has now fallen to 0.4%, and helping to provide more accommodation for eurozone countries many of which are struggling to record any growth whatsoever. The Fed and the BoE on the other hand are dealing with far healthier economies and are instead waiting for the correct time to hike interest rates.
Inflation in these countries is currently below the 2% target set for both central banks allowing them to remain accommodative while addressing the problem of slack and poor wage growth in the economy. The Fed appears more willing to keep rates low for longer at this stage but as we all know, this can change very quickly. Both have inflation numbers for July being released today, although it is worth noting that CPI is not the Fed's preferred measure of inflation so the numbers should be taken with a pinch of salt.
UK inflation, as measured by the preferred CPI reading, is expected to fall slightly to 1.8% in July, with the core number, which excludes volatile items such as food and energy, is expected to fall to 1.9%. The former is the number the BoE focuses on most as this is what their mandate is measured against. Clearly, with the number still below the 2% target, the BoE still has time on its side and as long as we don't see a move above target in the coming months, any rate hike shouldn't come until the first quarter of next year.
US inflation, as measures by the CPI reading, is running very close to target which may soon increase the pressure on the Fed to hike interest rates earlier than it would like. That said, certain members have recently suggested that the Fed would allow inflation to run a little over target in an attempt to tackle the problem of slack in the economy, something I imagine Yellen would be very on board with. Also being released in the US today is building permits and housing starts for July, which given yesterday's reaction to housing data is certainly worth monitoring.
Ahead of the open, the FTSE is seen 15 points higher, the CAC 21 points higher and the DAX 38 points higher.
Alpari UK
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US Opening Call from Alpari UK on 19 August 2014
US futures higher ahead of inflation data
• US futures higher on lower geopolitical risk and rate hike fears;
• BoE rate hike unlikely this year as inflation falls well below target;
• US inflation and housing data in focus.
US futures are edging higher again on Tuesday following a positive start to the week. The move reflects investors improved sentiment as geopolitical risk subsides and the prospect of premature central bank tightening fades.
Geopolitical risk has been a hot topic for the markets in recent months and many have pointed to this as a key reason behind the inability of equity indices to push on. While this is debateable, it is likely that these events have at least weighed on investor sentiment, particularly in Europe where sanctions are likely to have backfired on the uninspiring economic recovery.
Suddenly it seems that progress is being made on all fronts with Ukraine and Russia seeking a diplomatic solution the crisis, Israel and Hamas agreeing to extend the ceasefire in an attempt to find a longer term solution, and Israel and Kurdish troops regaining the Mosul Dam. All of the above are likely to be far from over and some may never truly end but it’s certainly a relief to see efforts being made to find some kind of solution.
On the central bank front the Bank of England is looking increasingly less likely to hike interest rates this year after CPI data for July showed inflation falling to 1.6%, which was below expectations of a fall to 1.8% and well below the banks 2% target. The drop was met with further selling in the pound as people appeared to push back their hike expectations into next year.
The Fed will be in focus next as the CPI inflation reading is also released for July. As with the BoE, the Fed is coming under pressure to hike interest rates as the economy recovers, but it also may be given some breathing space if inflation falls more than expected when it’s released later on today. One thing we should consider in all of this is that this is not the Fed’s preferred measure of inflation so this should just be taken as a warning sign of where inflation is potentially headed. You would expect to see a drop here to also be seen in the personal consumption expenditure price index, which is the measure the Fed uses to track inflation.
Also being released today is some housing data for July. Yesterday’s response to the NAHB housing market index would suggest that traders are tracking the housing data a little more closely. With that in mind, the building permits and housing starts data, released ahead of the open, could bring some volatility back to the markets.
Ahead of the opening bell, the S&P is seen 1 point higher, the Dow 25 points higher and the Nasdaq 4 points higher.
US futures higher ahead of inflation data
• US futures higher on lower geopolitical risk and rate hike fears;
• BoE rate hike unlikely this year as inflation falls well below target;
• US inflation and housing data in focus.
US futures are edging higher again on Tuesday following a positive start to the week. The move reflects investors improved sentiment as geopolitical risk subsides and the prospect of premature central bank tightening fades.
Geopolitical risk has been a hot topic for the markets in recent months and many have pointed to this as a key reason behind the inability of equity indices to push on. While this is debateable, it is likely that these events have at least weighed on investor sentiment, particularly in Europe where sanctions are likely to have backfired on the uninspiring economic recovery.
Suddenly it seems that progress is being made on all fronts with Ukraine and Russia seeking a diplomatic solution the crisis, Israel and Hamas agreeing to extend the ceasefire in an attempt to find a longer term solution, and Israel and Kurdish troops regaining the Mosul Dam. All of the above are likely to be far from over and some may never truly end but it’s certainly a relief to see efforts being made to find some kind of solution.
On the central bank front the Bank of England is looking increasingly less likely to hike interest rates this year after CPI data for July showed inflation falling to 1.6%, which was below expectations of a fall to 1.8% and well below the banks 2% target. The drop was met with further selling in the pound as people appeared to push back their hike expectations into next year.
The Fed will be in focus next as the CPI inflation reading is also released for July. As with the BoE, the Fed is coming under pressure to hike interest rates as the economy recovers, but it also may be given some breathing space if inflation falls more than expected when it’s released later on today. One thing we should consider in all of this is that this is not the Fed’s preferred measure of inflation so this should just be taken as a warning sign of where inflation is potentially headed. You would expect to see a drop here to also be seen in the personal consumption expenditure price index, which is the measure the Fed uses to track inflation.
Also being released today is some housing data for July. Yesterday’s response to the NAHB housing market index would suggest that traders are tracking the housing data a little more closely. With that in mind, the building permits and housing starts data, released ahead of the open, could bring some volatility back to the markets.
Ahead of the opening bell, the S&P is seen 1 point higher, the Dow 25 points higher and the Nasdaq 4 points higher.
Alpari UK
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UK Opening Call from Alpari UK on 20 August 2014
Profit taking seen ahead of the BoE and Fed minutes
• Profit taking seen ahead of the BoE and Fed minutes;
• BoE minutes may show more disagreement on rates that voting suggests;
• Geopolitical risk just background noise at the minute, but this may change.
We appear to be seeing a little bit of profit taking ahead of the European open on Wednesday, as indices point to a slightly lower open following what has been quite a bright start to the week.
Despite seeing another strong session in the US on Tuesday, Asian markets struggled for direction overnight in a sign that a little caution is creeping in as we approach the release of the minutes from the recent Bank of England and Federal Reserve meetings. It's getting more and more difficult to predict what these central banks are going to do by assessing the data alone, so these minutes could provide crucial insight into the timing of the first rate hike from both central banks.
With the votes on rates widely expected to be unanimously against a hike, the key thing in both cases will be whether there are any dissenting voices among the policy makers and if so, how many. This is the first step to voting in favour of a rate hike so the more dissenting voices there are, the earlier it would suggest the first rate hike will come.
The BoE minutes are likely to be the more hawkish of the two as it is expected to be the first to announce a 25 basis point rise in interest rates, although probably not until the first quarter of next year. Yesterday's CPI reading for July supports this view, with inflation currently standing well below target at 1.6%, allowing the BoE time to address the issue of slack and poor wage growth before considering the first rate hike.
BoE Governor Mark Carney has repeatedly sent mixed messages to the markets in recent months which may be a sign that policy makers are not as much in agreement as the voting may suggest. This should come up in the minutes and make for some interesting reading as investors try to determine exactly what this all means for the first rate hike. While another unanimous vote on rates is expected, should we see a vote in favour of a rise in interest rates, I'd expect to see some significant moves in UK markets, with the pound spiking higher following its recent period of weakness, and UK bonds getting hit quite hard. The FTSE may be less affected due to the global nature of the UK index.
The rest of the economic calendar is looking a little thin today, with eurozone construction output the only notable release. This leaves the two central bank minutes as the key events today. That said, we should never ignore the geopolitical events that continue to pose a risk to the markets. The end of the ceasefire between Israel and Gaza yesterday didn't really have much of a negative impact on markets but that doesn't mean further escalation here, or in Ukraine or Iraq, won't going forward.
European indices are pointing to a softer open this morning, with the FTSE expected lower by 12 points, the CAC lower by 6 points and the DAX lower by 11 points.
Profit taking seen ahead of the BoE and Fed minutes
• Profit taking seen ahead of the BoE and Fed minutes;
• BoE minutes may show more disagreement on rates that voting suggests;
• Geopolitical risk just background noise at the minute, but this may change.
We appear to be seeing a little bit of profit taking ahead of the European open on Wednesday, as indices point to a slightly lower open following what has been quite a bright start to the week.
Despite seeing another strong session in the US on Tuesday, Asian markets struggled for direction overnight in a sign that a little caution is creeping in as we approach the release of the minutes from the recent Bank of England and Federal Reserve meetings. It's getting more and more difficult to predict what these central banks are going to do by assessing the data alone, so these minutes could provide crucial insight into the timing of the first rate hike from both central banks.
With the votes on rates widely expected to be unanimously against a hike, the key thing in both cases will be whether there are any dissenting voices among the policy makers and if so, how many. This is the first step to voting in favour of a rate hike so the more dissenting voices there are, the earlier it would suggest the first rate hike will come.
The BoE minutes are likely to be the more hawkish of the two as it is expected to be the first to announce a 25 basis point rise in interest rates, although probably not until the first quarter of next year. Yesterday's CPI reading for July supports this view, with inflation currently standing well below target at 1.6%, allowing the BoE time to address the issue of slack and poor wage growth before considering the first rate hike.
BoE Governor Mark Carney has repeatedly sent mixed messages to the markets in recent months which may be a sign that policy makers are not as much in agreement as the voting may suggest. This should come up in the minutes and make for some interesting reading as investors try to determine exactly what this all means for the first rate hike. While another unanimous vote on rates is expected, should we see a vote in favour of a rise in interest rates, I'd expect to see some significant moves in UK markets, with the pound spiking higher following its recent period of weakness, and UK bonds getting hit quite hard. The FTSE may be less affected due to the global nature of the UK index.
The rest of the economic calendar is looking a little thin today, with eurozone construction output the only notable release. This leaves the two central bank minutes as the key events today. That said, we should never ignore the geopolitical events that continue to pose a risk to the markets. The end of the ceasefire between Israel and Gaza yesterday didn't really have much of a negative impact on markets but that doesn't mean further escalation here, or in Ukraine or Iraq, won't going forward.
European indices are pointing to a softer open this morning, with the FTSE expected lower by 12 points, the CAC lower by 6 points and the DAX lower by 11 points.
Alpari UK
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US Opening Call from Alpari UK on 20 August 2014
Caution seen ahead of FOMC minutes following MPC vote
• MPC votes 7-2 against a rise in interest rates;
• Rate hike still unlikely until next year as inflation falls to 1.6%;
• Two FOMC members may vote in favour of hike.
US futures are edging lower ahead of the release of the Fed minutes, which comes later on in the session. Ahead of the open, the S&P is seen 2 points lower, the Dow 19 points lower and the Nasdaq 4 points lower.
I imagine there’ll be a little more caution as we approach the release given the slightly surprising Bank of England vote on interest rates at the previous meeting. The minutes of that meeting was released this morning and showed two policy makers, Martin Weale and Ian McCafferty, voted in favour of a 25 basis point hike, taking the rate to 0.75%.
I say it was a surprise but both of these policy makers had become notably more hawkish in the last couple of months, making a vote on the hike more likely. I think many expected some dissenting voices at the meeting but not necessarily votes this early on. The response in the market would suggest that this doesn’t change much. Of the remaining members, one or two may be tempted to vote in favour this year based on recent comments but not enough to form a majority. Especially not following yesterday’s CPI number which showed inflation falling to 1.6% in July, which should be enough to convince most policy makers that a hike is not warranted at this time.
With members of the MPC now favouring a rate hike, it will be interesting to see if their US counterparts at the Federal Reserve do the same. We’ve already seen Charles plosser vote against keeping rates the same and he may soon be joined by other hawkish members, with Richard Fisher appearing the most likely to join him, based on recent comments.
While I don’t think that we’ll see a rate hike until the end of the first quarter of next year, at the earliest, given Chairwoman Janet Yellen’s very dovish stance, and the similar stance of most of the committee, two or three votes in favour of raising rates could cause quite a stir in the markets.
Caution seen ahead of FOMC minutes following MPC vote
• MPC votes 7-2 against a rise in interest rates;
• Rate hike still unlikely until next year as inflation falls to 1.6%;
• Two FOMC members may vote in favour of hike.
US futures are edging lower ahead of the release of the Fed minutes, which comes later on in the session. Ahead of the open, the S&P is seen 2 points lower, the Dow 19 points lower and the Nasdaq 4 points lower.
I imagine there’ll be a little more caution as we approach the release given the slightly surprising Bank of England vote on interest rates at the previous meeting. The minutes of that meeting was released this morning and showed two policy makers, Martin Weale and Ian McCafferty, voted in favour of a 25 basis point hike, taking the rate to 0.75%.
I say it was a surprise but both of these policy makers had become notably more hawkish in the last couple of months, making a vote on the hike more likely. I think many expected some dissenting voices at the meeting but not necessarily votes this early on. The response in the market would suggest that this doesn’t change much. Of the remaining members, one or two may be tempted to vote in favour this year based on recent comments but not enough to form a majority. Especially not following yesterday’s CPI number which showed inflation falling to 1.6% in July, which should be enough to convince most policy makers that a hike is not warranted at this time.
With members of the MPC now favouring a rate hike, it will be interesting to see if their US counterparts at the Federal Reserve do the same. We’ve already seen Charles plosser vote against keeping rates the same and he may soon be joined by other hawkish members, with Richard Fisher appearing the most likely to join him, based on recent comments.
While I don’t think that we’ll see a rate hike until the end of the first quarter of next year, at the earliest, given Chairwoman Janet Yellen’s very dovish stance, and the similar stance of most of the committee, two or three votes in favour of raising rates could cause quite a stir in the markets.
Alpari UK
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UK Opening Call from Alpari UK on 21 August 2014
Europe set for positive start ahead of latest PMI readings
• FOMC minutes more hawkish but markets end higher anyway;
• Eurozone PMIs expected to weaken further in August;
• Another good month expected for UK retail sales;
• Plenty of US data to come this afternoon.
European indices are set for a slightly positive open on Thursday ahead of the PMI readings from Europe, retail sales for the UK and a whole host of data from the US.
There is a feeling though that despite all this data coming out, the markets only really care about one thing and that’s Janet Yellen’s speech at Jackson Hole tomorrow. It’s a little surprising that European indices are pointing higher this morning, not to mention the fact that their US counterparts ended comfortably in the green yesterday, as the FOMC minutes from the last meeting had more of a hawkish tone than some expected.
We’re certainly seeing more emphasis on the pace of the recovery at these meetings and the minutes from the last meeting showed discussions around how to raise rates when the time comes. Of course, this doesn’t put the Fed on a par with the Bank of England which appears far closer to the first rate hike after two policy makers voted in favour yesterday, but we do appear to have reached the point where the hawks are beginning to speak up a little more. Maybe the markets are willing to overlook this as long as Chairwoman Yellen continues to offset these with some extremely dovish comments of her own.
We’ll hear exactly what she has to say tomorrow morning when she speaks on the labour market at Jackson Hole. There’s been a lot of speculation about Wall Streets absence this year with some suggesting that it may be the Fed’s way of avoiding the discussion of short term measures and instead focusing on the longer term strategy of the central bank. If that is the case then investors who are looking for a Bernanke-esque Jackson Hole performance are going to be very disappointed.
It’s also surprising that European markets aren’t feeling more of the impact from the weakness in the HSBC manufacturing PMI which fell to a three month low of 50.3 in August. Quite often, these Chinese figures can set the tone for the day but it appears that right now, investors are far more concerned with what the Fed is doing than how China is performing. As long as the country is on course for 7.5% growth, which it appears to be, then investors aren’t worried.
There will be a big focus on economic data today, everything from PMI readings and retail sales figures to jobless claims and housing data being released. We kick things off quite early on with the release of the manufacturing and services PMIs for the eurozone, which once again are not expected to be particularly good. Investors are desperate for signs that the region is going to take a turn for the better but it appears they’ll have to wait a little longer with the numbers expected to show a further decline in confidence in August.
The UK economy is looking in far better shape and retail sales numbers for July are expected to give further evidence of this. The numbers are expected to be a little softer on a year on year basis than what we’ve seen this year, but that’s not something we should be concerned about as it’s more reflective of where the economy was 12 months ago than where it is now. You have to remember that 18 months ago we were talking about a triple dip recession in the UK so the numbers were considerably worse. Compared to a month ago, sales are expected to have increased by 0.4%, which is more than good enough to keep investors happy.
Finally it’s over to the US, where we’ll get weekly jobless claims data, the latest manufacturing PMI reading, housing data and the July Philly Fed number, so there’s still plenty more to come on the economic calendar.
Ahead of the open on Thursday, the FTSE is seen 8 points higher, the CAC 5 points higher and the DAX 19 points higher.
Europe set for positive start ahead of latest PMI readings
• FOMC minutes more hawkish but markets end higher anyway;
• Eurozone PMIs expected to weaken further in August;
• Another good month expected for UK retail sales;
• Plenty of US data to come this afternoon.
European indices are set for a slightly positive open on Thursday ahead of the PMI readings from Europe, retail sales for the UK and a whole host of data from the US.
There is a feeling though that despite all this data coming out, the markets only really care about one thing and that’s Janet Yellen’s speech at Jackson Hole tomorrow. It’s a little surprising that European indices are pointing higher this morning, not to mention the fact that their US counterparts ended comfortably in the green yesterday, as the FOMC minutes from the last meeting had more of a hawkish tone than some expected.
We’re certainly seeing more emphasis on the pace of the recovery at these meetings and the minutes from the last meeting showed discussions around how to raise rates when the time comes. Of course, this doesn’t put the Fed on a par with the Bank of England which appears far closer to the first rate hike after two policy makers voted in favour yesterday, but we do appear to have reached the point where the hawks are beginning to speak up a little more. Maybe the markets are willing to overlook this as long as Chairwoman Yellen continues to offset these with some extremely dovish comments of her own.
We’ll hear exactly what she has to say tomorrow morning when she speaks on the labour market at Jackson Hole. There’s been a lot of speculation about Wall Streets absence this year with some suggesting that it may be the Fed’s way of avoiding the discussion of short term measures and instead focusing on the longer term strategy of the central bank. If that is the case then investors who are looking for a Bernanke-esque Jackson Hole performance are going to be very disappointed.
It’s also surprising that European markets aren’t feeling more of the impact from the weakness in the HSBC manufacturing PMI which fell to a three month low of 50.3 in August. Quite often, these Chinese figures can set the tone for the day but it appears that right now, investors are far more concerned with what the Fed is doing than how China is performing. As long as the country is on course for 7.5% growth, which it appears to be, then investors aren’t worried.
There will be a big focus on economic data today, everything from PMI readings and retail sales figures to jobless claims and housing data being released. We kick things off quite early on with the release of the manufacturing and services PMIs for the eurozone, which once again are not expected to be particularly good. Investors are desperate for signs that the region is going to take a turn for the better but it appears they’ll have to wait a little longer with the numbers expected to show a further decline in confidence in August.
The UK economy is looking in far better shape and retail sales numbers for July are expected to give further evidence of this. The numbers are expected to be a little softer on a year on year basis than what we’ve seen this year, but that’s not something we should be concerned about as it’s more reflective of where the economy was 12 months ago than where it is now. You have to remember that 18 months ago we were talking about a triple dip recession in the UK so the numbers were considerably worse. Compared to a month ago, sales are expected to have increased by 0.4%, which is more than good enough to keep investors happy.
Finally it’s over to the US, where we’ll get weekly jobless claims data, the latest manufacturing PMI reading, housing data and the July Philly Fed number, so there’s still plenty more to come on the economic calendar.
Ahead of the open on Thursday, the FTSE is seen 8 points higher, the CAC 5 points higher and the DAX 19 points higher.
Alpari UK
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US Opening Call from Alpari UK on 21 August 2014
Risk appetite not shaken by poor PMI readings
• European indices higher despite disappointing PMI figures;
• Oil prices tumble again on Chinese slowdown;
• Overall UK retail sales slow but the core number is what counts;
• Lots of US data to focus on today.
It’s already been a busy day in the markets for economic data, with Chinese and eurozone PMIs and UK retail sales figures being released, and now it’s over to the US where manufacturing, housing and jobs data will come into focus.
The data seen so far today hasn’t been great but that hasn’t affected investors’ appetite for risk, as European indices have continued their march higher. Even the FTSE which has a high exposure to China due to its heavy weighting in mining stocks is up more than 20 points on the day, while the CAC and DAX are faring even better.
This is despite a mixed bag of manufacturing and PMI readings, with both German numbers exceeding expectations along with the French services number. Although, this doesn’t really paint the whole picture; the German numbers may have been better than expected but they still experienced a decline from last month and the overall eurozone numbers were very disappointing. Maybe what we’re seeing here is another example of disappointing figures getting a positive response on hopes of more monetary stimulus, although as I’ve said previously, I believe this is very premature. I can’t imagine the ECB providing more stimulus until next year at the very earliest. And even then I doubt it would be quantitative easing.
Oil prices are tumbling again today following the HSBC manufacturing PMI from China. The number is just further evidence that China is facing an uphill task to maintain the kind of growth it has become accustomed to. We’ve already seen oil prices falling due to lower demand in China and Europe and clearly this number would suggest that demand is not got to pick up in the coming months.
UK retail sales rose by only 0.1% in July, which fell short of expectations, although the core number slightly exceeded expectations at 0.5%. Given how volatile the overall number can be, traders tend to pay more attention to the core number so won’t be overly concerned with the overall number.
There’s still plenty more data to come from the US today, including initial jobless claims which are expected to remain low at 300,000 in a further sign that the labour market recovery in the US remains strong. Also today we have the preliminary manufacturing PMI for August, which is expected to remain roughly in line with last month’s figure, and the CB leading indicator. This will be followed by existing home sales data which is expected to decline slightly to 5.01 million, the first since March, and finally the Philly Fed manufacturing index.
With so much data being released I expect to see some volatile markets today. The only question now is, how will traders respond to the data? With the Fed appearing slightly more hawkish in the minutes from the last meeting, will we enter into another phase of bad economic news is good for the markets and vice versa? Or have investors moved on from this and instead rewarding a strong economic recovery?
Ahead of the opening bell, the S&P is expected to open 4 points higher, the Dow 32 points higher and the Nasdaq 5 points higher.
Risk appetite not shaken by poor PMI readings
• European indices higher despite disappointing PMI figures;
• Oil prices tumble again on Chinese slowdown;
• Overall UK retail sales slow but the core number is what counts;
• Lots of US data to focus on today.
It’s already been a busy day in the markets for economic data, with Chinese and eurozone PMIs and UK retail sales figures being released, and now it’s over to the US where manufacturing, housing and jobs data will come into focus.
The data seen so far today hasn’t been great but that hasn’t affected investors’ appetite for risk, as European indices have continued their march higher. Even the FTSE which has a high exposure to China due to its heavy weighting in mining stocks is up more than 20 points on the day, while the CAC and DAX are faring even better.
This is despite a mixed bag of manufacturing and PMI readings, with both German numbers exceeding expectations along with the French services number. Although, this doesn’t really paint the whole picture; the German numbers may have been better than expected but they still experienced a decline from last month and the overall eurozone numbers were very disappointing. Maybe what we’re seeing here is another example of disappointing figures getting a positive response on hopes of more monetary stimulus, although as I’ve said previously, I believe this is very premature. I can’t imagine the ECB providing more stimulus until next year at the very earliest. And even then I doubt it would be quantitative easing.
Oil prices are tumbling again today following the HSBC manufacturing PMI from China. The number is just further evidence that China is facing an uphill task to maintain the kind of growth it has become accustomed to. We’ve already seen oil prices falling due to lower demand in China and Europe and clearly this number would suggest that demand is not got to pick up in the coming months.
UK retail sales rose by only 0.1% in July, which fell short of expectations, although the core number slightly exceeded expectations at 0.5%. Given how volatile the overall number can be, traders tend to pay more attention to the core number so won’t be overly concerned with the overall number.
There’s still plenty more data to come from the US today, including initial jobless claims which are expected to remain low at 300,000 in a further sign that the labour market recovery in the US remains strong. Also today we have the preliminary manufacturing PMI for August, which is expected to remain roughly in line with last month’s figure, and the CB leading indicator. This will be followed by existing home sales data which is expected to decline slightly to 5.01 million, the first since March, and finally the Philly Fed manufacturing index.
With so much data being released I expect to see some volatile markets today. The only question now is, how will traders respond to the data? With the Fed appearing slightly more hawkish in the minutes from the last meeting, will we enter into another phase of bad economic news is good for the markets and vice versa? Or have investors moved on from this and instead rewarding a strong economic recovery?
Ahead of the opening bell, the S&P is expected to open 4 points higher, the Dow 32 points higher and the Nasdaq 5 points higher.
Alpari UK
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UK Opening Call from Alpari UK on 22 August 2014
Yellen speech headlines quiet end to the week
• Yellen speech headlines quiet end to the week;
• Bernanke-esque hints should not be expected today;
• Draghi scheduled to speak but expectations of QE hints are low;
• No economic data today as the week comes to a quieter close.
European indices look set to open relatively unchanged on Friday, as investors ignore the lead coming from the US and Asia overnight and instead take the more cautious approach ahead of Janet Yellens speech at Jackson Hole.
The speech from the Fed Chairwoman had been singled out as the one event this week that has the potential to move the markets more than any other, which given that it comes in the same week as the Bank of England and FOMC minutes, is saying something. Responsibility for this lies at the feet of her predecessor, Ben Bernanke, who used this opportunity on a couple of occasions in recent years to drop strong hints that a new round of quantitative easing was around the corner, the announcement of which came shortly after.
With the US economy recovering at a strong pace and the number of new asset purchases likely to fall to zero in two months, many believe the first rate hike is not far away. Markets are currently pricing in the first hike for the middle of next year but many believe that the Fed may be forced to do it sooner as the data just keeps on improving.
Yellen does not appear to be one to give in to the pressure though, as seen in recent months by her determination to retain her very dovish tone regardless of the improvement in the economic data. While many people will be picking apart every word she says today for hints of an earlier rate hike, I don’t expect her to follow in the footsteps of Bernanke, instead once again offering very dovish comments and focusing on slack in the economy.
This will come as music to the ears of Jackson Hole’s first ever protestors who turned up to voice their concerns about what a rate hike would mean for the average American. It seems in Yellen they have someone who is very aware of the imbalances there still are in the recovery and these protests may further drive her to stand by her gut and insist that the Fed must remain accommodative well into next year.
ECB President Mario Draghi is also due to speak at this year’s symposium, although anyone hoping for a Bernanke-esque QE hint is likely to be very disappointed. While it’s not exactly out of character for Draghi to drop strong hints out of the blue – we all remember the “whatever it takes” speech – I just think it’s too soon to expect the ECB to make another bold move. They are going to be of the opinion that the previous package of stimulus measures is still feeding into the economy and therefore won’t be willing to even consider anything else, especially QE.
Aside from Jackson Hole, the markets are likely to have very little else to focus on. We’ve been treated to quite a data heavy week so far, but that has come to an abrupt end, with no economic due from Europe or the US today.
The FTSE is expected to open 3 points higher this morning, while the CAC is expected to open 1 points lower and the DAX unchanged.
Yellen speech headlines quiet end to the week
• Yellen speech headlines quiet end to the week;
• Bernanke-esque hints should not be expected today;
• Draghi scheduled to speak but expectations of QE hints are low;
• No economic data today as the week comes to a quieter close.
European indices look set to open relatively unchanged on Friday, as investors ignore the lead coming from the US and Asia overnight and instead take the more cautious approach ahead of Janet Yellens speech at Jackson Hole.
The speech from the Fed Chairwoman had been singled out as the one event this week that has the potential to move the markets more than any other, which given that it comes in the same week as the Bank of England and FOMC minutes, is saying something. Responsibility for this lies at the feet of her predecessor, Ben Bernanke, who used this opportunity on a couple of occasions in recent years to drop strong hints that a new round of quantitative easing was around the corner, the announcement of which came shortly after.
With the US economy recovering at a strong pace and the number of new asset purchases likely to fall to zero in two months, many believe the first rate hike is not far away. Markets are currently pricing in the first hike for the middle of next year but many believe that the Fed may be forced to do it sooner as the data just keeps on improving.
Yellen does not appear to be one to give in to the pressure though, as seen in recent months by her determination to retain her very dovish tone regardless of the improvement in the economic data. While many people will be picking apart every word she says today for hints of an earlier rate hike, I don’t expect her to follow in the footsteps of Bernanke, instead once again offering very dovish comments and focusing on slack in the economy.
This will come as music to the ears of Jackson Hole’s first ever protestors who turned up to voice their concerns about what a rate hike would mean for the average American. It seems in Yellen they have someone who is very aware of the imbalances there still are in the recovery and these protests may further drive her to stand by her gut and insist that the Fed must remain accommodative well into next year.
ECB President Mario Draghi is also due to speak at this year’s symposium, although anyone hoping for a Bernanke-esque QE hint is likely to be very disappointed. While it’s not exactly out of character for Draghi to drop strong hints out of the blue – we all remember the “whatever it takes” speech – I just think it’s too soon to expect the ECB to make another bold move. They are going to be of the opinion that the previous package of stimulus measures is still feeding into the economy and therefore won’t be willing to even consider anything else, especially QE.
Aside from Jackson Hole, the markets are likely to have very little else to focus on. We’ve been treated to quite a data heavy week so far, but that has come to an abrupt end, with no economic due from Europe or the US today.
The FTSE is expected to open 3 points higher this morning, while the CAC is expected to open 1 points lower and the DAX unchanged.
Alpari UK
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US Opening Call from Alpari UK on 22 August 2014
Traders cautious ahead of Yellen Jackson Hole speech
It appears that US indices are once again lacking any kind of momentum at the record high levels they find themselves back at. The S&P broke to new highs on Thursday for the first time in almost a month, following a brief correction that many feared was the beginning of the broader sell-off that so many have predicted this year.
The lack of momentum at this level may not necessarily be investors getting a cold feet though. Firstly, it’s natural to see some profit taking at a previous high, especially when it comes at the end of the week following a four day rally. More importantly, these levels have been reached the day before Janet Yellen’s key note speech a Jackson Hole, an event her predecessor Ben Bernanke often liked to drop a bombshell at.
Of course, this doesn’t automatically mean that Yellen will do the same. In fact, I think she will stick to the same dovish rhetoric that we’ve become accustomed to, focusing on slack in the economy rather than rate hikes. I’m sure this will please the group of protestors that have turned up to the event to protest against a rate hike. That said, investors are unlikely to take the risk so I expect to see more fence sitting as the day goes on.
We’ll also hear from Mario Draghi at Jackson Hole which could also shake things up in the markets. Again though, I don’t expect him to drop any bombshells as the ECB has only recently announced a new stimulus package and it will take time for it to feed into the economy. Draghi may give his usual spiel about the ECB being ready to act if necessary but I don’t expect investors to pay much attention to this.
Ahead of the opening bell on Wall Street, the S&P is expected to open 4 points lower, the Dow 35 points lower and the Nasdaq 8 points lower.
Traders cautious ahead of Yellen Jackson Hole speech
It appears that US indices are once again lacking any kind of momentum at the record high levels they find themselves back at. The S&P broke to new highs on Thursday for the first time in almost a month, following a brief correction that many feared was the beginning of the broader sell-off that so many have predicted this year.
The lack of momentum at this level may not necessarily be investors getting a cold feet though. Firstly, it’s natural to see some profit taking at a previous high, especially when it comes at the end of the week following a four day rally. More importantly, these levels have been reached the day before Janet Yellen’s key note speech a Jackson Hole, an event her predecessor Ben Bernanke often liked to drop a bombshell at.
Of course, this doesn’t automatically mean that Yellen will do the same. In fact, I think she will stick to the same dovish rhetoric that we’ve become accustomed to, focusing on slack in the economy rather than rate hikes. I’m sure this will please the group of protestors that have turned up to the event to protest against a rate hike. That said, investors are unlikely to take the risk so I expect to see more fence sitting as the day goes on.
We’ll also hear from Mario Draghi at Jackson Hole which could also shake things up in the markets. Again though, I don’t expect him to drop any bombshells as the ECB has only recently announced a new stimulus package and it will take time for it to feed into the economy. Draghi may give his usual spiel about the ECB being ready to act if necessary but I don’t expect investors to pay much attention to this.
Ahead of the opening bell on Wall Street, the S&P is expected to open 4 points lower, the Dow 35 points lower and the Nasdaq 8 points lower.
Alpari UK
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Webinar - 19 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
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
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Weekly market preview from Alpari UK – 25 August 2014
A largely quiet week ahead from an economic standpoint, as is typically the case for the last week of the month. That being said, there is always something moving the market and this week has a handful of events to watch out for. In the US, a GDP reading on Thursday will likely dominate market minds. In the eurozone, the CPI inflation reading has the potential to become the most important event of the week. Whereas, in Asia the lack of Chinese data means that consumer based Japanese readings will take precedent.
US
The US looks to have a handful of economic releases this week, which cannot exactly be said for many of the other regions. However, there are only a few of these which have the potential to actually make a tangible difference to the markets. With that in mind, the main ones I will be looking out for are the consumer confidence figure on Tuesday and GDP release on Thursday.
Tuesday’s consumer confidence figure is the first major release to keep an eye on, with many seeing a strong figure as something which could indicate forthcoming gains in retail sales and GDP figures. However, despite the importance of consumer confidence being undoubted, the markets are not always completely focused upon it as a driver of market volatility. That being said, with the US economy attributing around 70% of GDP to consumer spending it is clear that you can gain a good idea of exactly why this figure has the potential to really impact the Q3 growth figure. Market expectations point towards a fall from 90.9 to 89.1 however with two consecutive beats, this could be setup for yet another better than expected reading.
On Thursday, the second Q2 GDP estimate reading is released following a massive 4% reading last month. In general, we do not spend too much time worrying about revised figures, which is down to two reasons. Firstly, there is the feeling that unless the revision is particularly big, markets will disregard it and focus upon the initial message. Secondly, revisions are perceived to seldom move too far away from the first figure, thus meaning people will generally disregard such a announcement as being unlikely to move markets. However, should you track previous revisions, it becomes increasingly apparent that they have the ability to significantly differ from the initial release. For example, the initial Q1 figure came out at 0.1% growth, followed by a first revision of -1% and finally resting at -2.1%. That is a swing in either direction, with the first and final readings differing by -3.1%! Thus, be careful to watch out for this figure as a potential market mover, with market expectations pointing towards a marginal fall from 4.0% to 3.9%. However, as with Q1 revisions, there is the possibility of a much larger shift which could significantly move the markets.
UK
There are no major releases within the UK this week that have the ability to move the markets.
Eurozone
A somewhat busier week ahead in the eurozone, where the German ifo business climate, GFK consumer climate, CPI and unemployment rate figures look to dominate.
Firstly, the early part of the week looks to focus upon the recently beleaguered German economy, where Monday’s Ifo business climate figure and Wednesday’s GFK consumer climate figure take centre stage. In the past months, the typically strong German economy has been showing substantial weakness, personified perfectly by the fall into negative growth earlier this month. However, with Russian sanctions yet to take hold, I can only see this trend continuing and thus be on the look out for further deterioration of eurozone data points which could lead many to push for more action from Mario Draghi and the ECB.
On Friday, the most important release of the week comes in the form of the CPI inflation reading for August. This measure has been one of the most keenly watched indicators over the past six months, with the threat of deflation forcing Mario Draghi’s hand when he announced the likes of TLTRO’s and negative deposit rates back in June. Given that we have not seen any major effect of those measures, it is likely that Draghi will continue to wait for those policies to kick in. However, with every month that passes, the failure of those measures to raise inflation brings a heightened possibility of asset purchases from the ECB. This is exactly what everyone in the markets is looking towards as a potential driver of volatility and thus should we see yet another fall in inflation this month, it is likely that we would see some strength come into the European indices and weakness in the euro as people factor in a possible QE programme. Market expectations point towards exactly that, with a fall from 0.4% to 0.3% being speculated.
Finally, Friday’s unemployment rate figure is one of the other major data points that reflect upon the strength of the eurozone economy and can impact Mario Draghi’s decision-making. That being said, the jobs market within the single currency region has been somewhat underwhelming for some time now and thus unlike the UK and US, the labour market is not something which is majorly affecting monetary policy right now. With markets expecting the rate to remain at 11.5%, there is unlikely to be too much action with most focusing on the CPI figure.
Asia & Oceania
A quiet week in Asia, sees the focus land upon the Japan release of various consumer based data points on Friday. The most important of these two from a consumer point of view are the household spending and retail sales figures which provides a strong indication of the spending patterns in the country. Following the introduction of the sales tax hike in April, it has been crucial to track exactly what the spending patterns have been in the following months. With the potential of a second tax hike to be discussed around December, any pick up in these figures would surely have an impact upon future actions. Thus with both the retail sales and household spending numbers expected to move closer to 0%, be aware of how this could impact decision making going forward.
A largely quiet week ahead from an economic standpoint, as is typically the case for the last week of the month. That being said, there is always something moving the market and this week has a handful of events to watch out for. In the US, a GDP reading on Thursday will likely dominate market minds. In the eurozone, the CPI inflation reading has the potential to become the most important event of the week. Whereas, in Asia the lack of Chinese data means that consumer based Japanese readings will take precedent.
US
The US looks to have a handful of economic releases this week, which cannot exactly be said for many of the other regions. However, there are only a few of these which have the potential to actually make a tangible difference to the markets. With that in mind, the main ones I will be looking out for are the consumer confidence figure on Tuesday and GDP release on Thursday.
Tuesday’s consumer confidence figure is the first major release to keep an eye on, with many seeing a strong figure as something which could indicate forthcoming gains in retail sales and GDP figures. However, despite the importance of consumer confidence being undoubted, the markets are not always completely focused upon it as a driver of market volatility. That being said, with the US economy attributing around 70% of GDP to consumer spending it is clear that you can gain a good idea of exactly why this figure has the potential to really impact the Q3 growth figure. Market expectations point towards a fall from 90.9 to 89.1 however with two consecutive beats, this could be setup for yet another better than expected reading.
On Thursday, the second Q2 GDP estimate reading is released following a massive 4% reading last month. In general, we do not spend too much time worrying about revised figures, which is down to two reasons. Firstly, there is the feeling that unless the revision is particularly big, markets will disregard it and focus upon the initial message. Secondly, revisions are perceived to seldom move too far away from the first figure, thus meaning people will generally disregard such a announcement as being unlikely to move markets. However, should you track previous revisions, it becomes increasingly apparent that they have the ability to significantly differ from the initial release. For example, the initial Q1 figure came out at 0.1% growth, followed by a first revision of -1% and finally resting at -2.1%. That is a swing in either direction, with the first and final readings differing by -3.1%! Thus, be careful to watch out for this figure as a potential market mover, with market expectations pointing towards a marginal fall from 4.0% to 3.9%. However, as with Q1 revisions, there is the possibility of a much larger shift which could significantly move the markets.
UK
There are no major releases within the UK this week that have the ability to move the markets.
Eurozone
A somewhat busier week ahead in the eurozone, where the German ifo business climate, GFK consumer climate, CPI and unemployment rate figures look to dominate.
Firstly, the early part of the week looks to focus upon the recently beleaguered German economy, where Monday’s Ifo business climate figure and Wednesday’s GFK consumer climate figure take centre stage. In the past months, the typically strong German economy has been showing substantial weakness, personified perfectly by the fall into negative growth earlier this month. However, with Russian sanctions yet to take hold, I can only see this trend continuing and thus be on the look out for further deterioration of eurozone data points which could lead many to push for more action from Mario Draghi and the ECB.
On Friday, the most important release of the week comes in the form of the CPI inflation reading for August. This measure has been one of the most keenly watched indicators over the past six months, with the threat of deflation forcing Mario Draghi’s hand when he announced the likes of TLTRO’s and negative deposit rates back in June. Given that we have not seen any major effect of those measures, it is likely that Draghi will continue to wait for those policies to kick in. However, with every month that passes, the failure of those measures to raise inflation brings a heightened possibility of asset purchases from the ECB. This is exactly what everyone in the markets is looking towards as a potential driver of volatility and thus should we see yet another fall in inflation this month, it is likely that we would see some strength come into the European indices and weakness in the euro as people factor in a possible QE programme. Market expectations point towards exactly that, with a fall from 0.4% to 0.3% being speculated.
Finally, Friday’s unemployment rate figure is one of the other major data points that reflect upon the strength of the eurozone economy and can impact Mario Draghi’s decision-making. That being said, the jobs market within the single currency region has been somewhat underwhelming for some time now and thus unlike the UK and US, the labour market is not something which is majorly affecting monetary policy right now. With markets expecting the rate to remain at 11.5%, there is unlikely to be too much action with most focusing on the CPI figure.
Asia & Oceania
A quiet week in Asia, sees the focus land upon the Japan release of various consumer based data points on Friday. The most important of these two from a consumer point of view are the household spending and retail sales figures which provides a strong indication of the spending patterns in the country. Following the introduction of the sales tax hike in April, it has been crucial to track exactly what the spending patterns have been in the following months. With the potential of a second tax hike to be discussed around December, any pick up in these figures would surely have an impact upon future actions. Thus with both the retail sales and household spending numbers expected to move closer to 0%, be aware of how this could impact decision making going forward.
Alpari UK
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UK Opening Call from Alpari UK on 26 August 2014
Markets calm down following Draghi driven boost
• European market moderately pare yesterday’s gains
• Yellen unsurprisingly fails to deliver at Jackson Hole
• Mario Draghi dominates affairs, following dovish Jackson Hole speech
• Slow day for European data
European markets are expected to tread water today following a particularly strong start to the week yesterday. The unexpectedly dovish speech from Mario Draghi late on Friday caught the markets off-guard somewhat, meaning that we have only started seeing the effects in the early part of this week. This also impacted Asian shares, which enjoyed a strong session overnight due to the potential for further liquidity being pumped into the market by the ECB in the near future. European indices are expected to open marginally lower, with the FTSE100 -8, CAC -11 and DAX -25 points.
Today’s likely weak showing is as much to do with strength as it is to do with weakness. Given the substantial rise seen yesterday in Eurozone indices, there was always a possibility of seeing some of those gains pared back today. The root of all this optimism originated from a somewhat unexpected star of the Jackson Hole Symposium, which came to an end on Saturday. With the world’s eyes transfixed upon Janet Yellen, it was Draghi who delivered the message of real substance, leaving Yellen to natter on about why it is so hard to make the decisions she makes. That being said, it was never particularly likely that we were going to see that big Bernanke-esque market volatility driver given that central bankers like to announce all expansive monetary policy with a bang and tightening with a much more subtle hand. Should Yellen have sought to shock the markets with a specific date for interest rates to rise, this could have been the spark which began a major sell-off and just like with tapering, it is clear that a much more long-winded process which includes the careful management of expectations will almost certainly be the order of the day.
Unlike the FOMC and MPC, the ECB remains within an expansionary environment where historically high unemployment has been met with poor wage growth, almost non-existent GDP growth and ever weakening price growth which is threatening to bring deflation. This concoction of disappointing economic indicators place the Eurozone firmly within a place where further monetary policy is required and this is perhaps associated with the fact that Mario Draghi has so far failed to employ such drastic and expansive policies as his global counterparts. Unfortunately for him, the recovery we have seen in the likes of the UK and US has failed to drag the Eurozone with it and it is beginning to look like the time when we will finally see whether Draghi will do ‘whatever it takes’. Friday’s speech saw a more dovish Draghi than we had seen at the ECB press conference earlier this month and this gives us more emphasis as we approach the first week of the month where Draghi will once again take the stand. Let’s be clear, Draghi did not explicitly say that he was on the cusp of implementing a quantitative easing policy. However, it was his acknowledgement that with market inflation swap rates pricing price growth lower, this could be something that may also drag headline inflation lower and ultimately could bring the Eurozone back into deflation. In response to this Draghi says that the ECB remains willing to use all instruments to ensure price stability over the medium-term. Thus what this does do it set the ground for a potentially more loose monetary outlook for the ECB when they meet next week and with many of their tools already dispensed, Draghi has very few options left before QE becomes a very real possibility.
Today’s European session looks very light on economic data, following a weak start to the week which saw German business climate fall to the lowest level since July 2013. This weak German theme is expected to continue later on in the week when consumer climate, retail sales and CPI figures are all released for the eurozone’s biggest economy. However, for now the focus will likely be upon Mario Draghi’s comments and US data in the form of the core durable goods orders and CB consumer confidence figures released later today.
Markets calm down following Draghi driven boost
• European market moderately pare yesterday’s gains
• Yellen unsurprisingly fails to deliver at Jackson Hole
• Mario Draghi dominates affairs, following dovish Jackson Hole speech
• Slow day for European data
European markets are expected to tread water today following a particularly strong start to the week yesterday. The unexpectedly dovish speech from Mario Draghi late on Friday caught the markets off-guard somewhat, meaning that we have only started seeing the effects in the early part of this week. This also impacted Asian shares, which enjoyed a strong session overnight due to the potential for further liquidity being pumped into the market by the ECB in the near future. European indices are expected to open marginally lower, with the FTSE100 -8, CAC -11 and DAX -25 points.
Today’s likely weak showing is as much to do with strength as it is to do with weakness. Given the substantial rise seen yesterday in Eurozone indices, there was always a possibility of seeing some of those gains pared back today. The root of all this optimism originated from a somewhat unexpected star of the Jackson Hole Symposium, which came to an end on Saturday. With the world’s eyes transfixed upon Janet Yellen, it was Draghi who delivered the message of real substance, leaving Yellen to natter on about why it is so hard to make the decisions she makes. That being said, it was never particularly likely that we were going to see that big Bernanke-esque market volatility driver given that central bankers like to announce all expansive monetary policy with a bang and tightening with a much more subtle hand. Should Yellen have sought to shock the markets with a specific date for interest rates to rise, this could have been the spark which began a major sell-off and just like with tapering, it is clear that a much more long-winded process which includes the careful management of expectations will almost certainly be the order of the day.
Unlike the FOMC and MPC, the ECB remains within an expansionary environment where historically high unemployment has been met with poor wage growth, almost non-existent GDP growth and ever weakening price growth which is threatening to bring deflation. This concoction of disappointing economic indicators place the Eurozone firmly within a place where further monetary policy is required and this is perhaps associated with the fact that Mario Draghi has so far failed to employ such drastic and expansive policies as his global counterparts. Unfortunately for him, the recovery we have seen in the likes of the UK and US has failed to drag the Eurozone with it and it is beginning to look like the time when we will finally see whether Draghi will do ‘whatever it takes’. Friday’s speech saw a more dovish Draghi than we had seen at the ECB press conference earlier this month and this gives us more emphasis as we approach the first week of the month where Draghi will once again take the stand. Let’s be clear, Draghi did not explicitly say that he was on the cusp of implementing a quantitative easing policy. However, it was his acknowledgement that with market inflation swap rates pricing price growth lower, this could be something that may also drag headline inflation lower and ultimately could bring the Eurozone back into deflation. In response to this Draghi says that the ECB remains willing to use all instruments to ensure price stability over the medium-term. Thus what this does do it set the ground for a potentially more loose monetary outlook for the ECB when they meet next week and with many of their tools already dispensed, Draghi has very few options left before QE becomes a very real possibility.
Today’s European session looks very light on economic data, following a weak start to the week which saw German business climate fall to the lowest level since July 2013. This weak German theme is expected to continue later on in the week when consumer climate, retail sales and CPI figures are all released for the eurozone’s biggest economy. However, for now the focus will likely be upon Mario Draghi’s comments and US data in the form of the core durable goods orders and CB consumer confidence figures released later today.