Forex research

[Alpari UK]

US Opening Call from Alpari UK on 23 September 2014

Weak PMIs and attack on IS leave markets in the red

• Chinese manufacturing PMI fails to boost markets
• Eurozone PMIs continue to disappoint
• Coalition forces attack ‘Islamic State’ positions in Syria for the first time
• FOMC speeches dominate US session.

European and Asian markets are continuing the negative start to the week, posting further losses following a raft of poor eurozone PMI releases this morning. This comes despite a strong Chinese manufacturing PMI figure overnight, which managed to keep only the Shanghai composite above water. Meanwhile, the shelling of ISIS positions saw the first of many coalition military operations against the militant group within Syria. US markets are expected to follow European indices lower, with futures pointing towards the S&P500 -7, Dow – 43 and Nasdaq -17 points on the US open.

Today is clearly dominated by the release of various PMI figures across China, the Eurozone and US. Measuring the outlook of purchase managers within specific industries in relation to business conditions such as employment, demand and prices, the PMI figures typically provide markets with an idea of exactly where production, exports and jobs figures are going to move in the coming weeks and months.

The Chinese HSBC manufacturing PMI release overnight has been absolutely key in determining the degree of weakness within the manufacturing sector during the H1 slowdown this year, given the focus upon SME’s (small to medium sized enterprises). However, despite the clear influence of this figure, today’s strong reading made little impact upon the Asian markets, with the Shanghai representing the only market to post a gain. This inability to respond positively to strong data out of China shows an innate weakness within the markets, and geared us up towards the release eurozone figures which were expected to follow the pattern of weak figures seen in recent months.

True to form, the figures out of the Eurozone came in to the downside yet again, with the only main boost coming in the form of the French manufacturing sector, which managed to rise from 46.9 to 48.8. However, with the French manufacturing and services sectors now both contracting, there is little to shout about across the Atlantic. German manufacturing appears to be following suit, with the current level standing a mere 0.4 away from contraction (50.3). Ultimately, the Eurozone is in a mess, with inflation, growth, jobs and industry all weak. This is music to the ears of Vladimir Putin whose actions have driven the imposition of sanctions from the likes of Germany and France. However, with those measures showing little signs of easing due to ongoing Ukrainian conflict, there is clearly an underlying threat to Eurozone growth and it is something that will have to be addressed sooner rather than later. Mario Draghi has taken various steps, which have failed to make a significant impact as yet, however as seen in his Jackson Hole speech, the feeling is that this could be a problem which has both fiscal and monetary solutions and it will be interesting to see whether the emphasis will shift towards greater spending from the likes of France and Germany.

Overnight, the US was joined by their ‘coalition partners’ in attacking a number of ISIS positions in Syria. This represents both the first attack upon the ‘Islamic State’ within Syria (without the permission of Assad), along with the first attack of Middle Eastern countries upon the terrorist group. Of the coalition partners involved, military jets from Bahrain, Saudi Arabia, Jordan and the UAE were all cited as being involved in today’s attack. This is a major step given the importance of involvement from forces in the region and to some extent will appease the fears of many within the US that this will be another war which will be seen down the line as the US against Islam or the Middle East. The threat of ISIS is clearly as relevant to those within the Middle East as it is to the US and a global effort to avoid the genocide, beheadings and slavery that has been commonplace under the groups expansion is clearly something which is going to be one of the biggest global challenges this decade. That being said, the escalation of the conflict will of course raise questions over the risk appetite of many within the markets, who are no doubt worried about a major war which appears to be unfolding. As such, gold and Oil have seen a round of buying this morning, with global indices selling off. However, the moderate degree to which such moves have occurred shows that there is a degree of inevitability to today’s announcement.

The US session looks somewhat more quiet from an economic data point of view, with markets generally focusing upon speeches from two FOMC members, Powell and Kocherlakota. The FOMC has been in spotlight over the past 24 hours, with yesterday’s announcement that the Philidelphia Fed President William Plosser will retire in March 2015. This is a major shift, with Plosser representing the most hawkish and vocal dissenter of the committee. However, with regards to today’s speeches, the interest will largely be geared towards Jerome Powell, given the fact that Narayana Kocherlakota already spoke overnight and will thus be likely to repeat much of the same comments. Kocherlakota cited low inflation as an ongoing worry and thus there is the chance that monetary policy will remain accommodative for a longer time than desired, simply to help raise the rate of price growth. It will be interesting to see if Powell will tread a similar path and given the typical method of committee members preparing the ground for any changes in policy from the governor through their public views, it is likely we will see an estimate of when rates will rise from a member well ahead of Yellen herself.

 

[Alpari UK]

Daily Market Update - 23 September 2014 - Alpari UK

 

[Alpari UK]

UK Opening Call from Alpari UK on 24 September 2014

German survey could provide more eurozone negativity

• Long term conflict in Middle East impacts market sentiment
• New Zealand trade balance improves
• German survey could provide yet more bad news for the eurozone

Global markets continue to move lower for a third day today, as the threat of a drawn out campaign against the ‘Islamic State’ becomes ever more likely. Overnight trade data out of New Zealand provided markets with a more buoyant outlook and which could lead to further interest rate hikes. A quiet European session sees a focus upon the German business climate which is expected to see further weakness. All of this means that we are looking for a lower open for European markets, with the FTSE100 -21, CAC -1, and DAX -10 points in the futures markets.

Yesterday saw the beginning of a new era, as the US was joined by a handful of Arabic nations in attacking ISIS positions in Syria. Whilst many have seen this as a positive, given the importance of Middle Eastern involvement, the true impact upon the market is one of risk aversion. An announcement from the Pentagon warned of a sustained campaign that could last years and thus the new norm has been born where habitual attacks upon positions in the Middle East are now expected to be a common recurrence. For now, this is not too major, yet the call for boots on the ground has already been touted by the likes of Tony Blair and Iran, which while currently forming the minority opinion, are likely to be correct should there be any sort of willpower to fully eradicate the ‘Islamic State’ down the line. As this conflict develops, the ability to find members and positions of the group will no doubt become more difficult and as yesterday’s bombings show, the publicity attached to aerial attacks will always focus upon the deaths of civilians and children, as Israel very well knows. It is a PR nightmare and given the success ISIS have had in utilising social media to their advantage, I have no doubt that the civilian death toll in Syria and Iraq will be both public and embellished. However, the involvement of those Arabic nations means that there can be greater confidence that the conflict is not seen as the US vs Islam.

New Zealand saw their trade deficit almost cut in half, as imports sharply fell, whilst export saw a lower than expected drop in August. This came despite the fall in dairy prices, meaning that we could be seeing increased demand from abroad owing to the new reduced price for milk powder and alike. The New Zealand dollar some upside off the back of this result and with the RBNZ currently trying gauge when the next interest rate hike should be, todays numbers will no doubt be a positive which could push the country towards yet another shift in the coming months.

A quiet European session sees markets focus upon the release of the German IFO business climate survey, due out in the morning. Confidence in the German economy has been somewhat hard to come by in recent months, with Russian sanctions hitting business interests, growth falling to -0.2% for Q3, manufacturing nearing contraction and exports suffering. These developments have been reflected in recent months by this survey, which has seen a peak of 111.2 pull back to 106.3 last month. Expectations are for yet another fall, towards 105.7 which would represent the lowest level since December 2012. With European markets already reeling from a raft of PMI figures yesterday which saw French services and manufacturing in contraction, whilst German manufacturing gets ever closer, the release of yet further negative data this morning could compound the weakness seen overnight and lead to a third day of losses in Europe.

 

[Alpari UK]

US Opening Call from Alpari UK on 24 September 2014

Weak German survey points to the need for stimulus

• Coalition attack on IS important to draw together common interests
• German IFO survey falls to lowest level since April 2013
• Death cross in the Russell 2000 points to potential weakness.

US markets are expected to open flat, as the selloff that has personified the first half of this week is finally looking to ease somewhat. The risk-off sentiment driven by US and Arabic raids in Syria are easing somewhat and a moderate response to yet further poor figures out of Germany point to a market which may be oversold. However, with many in the markets pointing to a death cross in the Small cap Russell 2000, many are wondering whether the technical are pointing towards further losses to come. US futures are pointing towards a mixed open, with the S&P500 and Nasdaq looking flat, whilst the DJIA is expected to open +2 points.


Yesterdays news that the US has launched attacks upon Islamic State targets in Syria did not come as much of a surprise. However, with the involvement of five Arabic states, this marked the first time in 23 years that the US has been joined by any Arab allies in any such military operation. The threat is certainly known, yet the extent of the coalition that has been put together by John Kerry was yet to be exposed. Today the UK woke up to an announcement from David Cameron that the UK is also not in a position to stand by without taking a military presence in this affair too. However, probably the most important element of the attacks so far is the involvement of Saudi Arabia, which is a Sunni muslim Kindom with traditional values. The purpose of Kerry requiring the Iraq government to forge a new coalition which represents both Sunni, Shiite and Kurdish interests is to reflect the fact that this is not a war against Sunni muslims, but instead the warped ideology of the Islamic State itself. Thus with Saudi Arabia becoming part of this coalition, there is a feeling that it adds credence to the idea of a coalition of not only nations and religions, but also a coalition of Kurds, Sunni and Shiite forces which is absolutely key. From a market standpoint, the interest really extends to how long and to what extent such a conflict is likely to last for. The Pentagon’s decision to cite a timeline in years shows that no one expects this to be a quick fix and as such there has been worries as reflected in lower equity prices and higher gold prices.

The European session has been dominated once more by disappointing figures out of Germany, following the close shave which saw the crucial German manufacturing PMI fall to 50.3. Today it was the turn of the German IFO business climate survey, which fell to the lowest level since April 2013 (104.7) and represented a fifth consecutive fall in this measure. This negative outlook is likely to be largely affected by Russian sanctions and has led to IFO commenting that the “Germany economy is no longer running smoothly”. Ultimately today’s release adds yet more pressure upon both the ECB and German government to act in tandem. Mario Draghi is no doubt moving closer towards a potential shift to implement QE with each measure that fails to generate growth of inflation and output. However, there is also a case to answer for the Angela Merkel who must surely start looking to release the fiscal handbrake and start spending to generate greater growth for the greater good of the Eurozone as a whole. With a report by Allianz highlighting that the low ECB rates tend to redistribute wealth from Germany to the periphery, it is surely only a matter of time until internal action is sought as the priority rather than relying upon Draghi et al.

The technical analysts amongst us have been watching the Russell 2000 carefully this week, as a ‘death cross’ has appeared for the first time since Q3 2011. Now this move of the 50 day simple moving average (SMA) below the 200 SMA can be seen by many as a strong sign of weakness in the markets. Furthermore, with the Russell 2000 often seen as a leading indicator of what is going to happen down the line in the major US indices, this is certainly something people are thinking could signal worry for the likes of the S&P500. However, the trend is your friend and with a long term primary uptrend still in play, there would be more indicators needed to gain any confidence of a major sell-off in the markets.

The US session is looking somewhat quiet with the new home sales data representing the only major data point to watch out for. Monday’s poor existing home sales release showed a potential weakness in the market over August and as such I am cautious about some of the bullish estimates in the markets. Also be on the lookout for the speech from Fed FOMC member Loretta Mester who is due to discuss monetary policy and her economic outlook in Cleveland later today.

 

[Alpari UK]

- Markets lower as risk of risk aversion and profit taking dominates
- Coalition strikes on IS positions dominate markets
- German IFO figures tumble

 

[Alpari UK]

UK Opening Call from Alpari UK on 25 September 2014

Strong US session pushes Europe higher

• Strong US housing data strengthens markets resolve
• Dovish Fed speaker provides further boost
• Quiet European session likely to see light trading

This week is beginning to looks like a tale of two halves, with yesterday witnessing substantial gains across both US and Asian indices which are now expected to carry on through to the European market today. Driven by an outstanding housing release late into the US session, easing fears that resulted from a poor existing home sales figure on Monday. With European markets virtually bereft of any notable data or economic release today, it is likely that they will follow the lead of the US and Asian markets higher. Futures point towards a positive open, with the FTSE100 +1, CAC +3 and DAX +5 points.

Yesterday’s new home sales figure took markets by surprise, punching the 500k mark to reach the joint highest figure since late 2008. Coming off the back of a period of housing sector weakness, as personified by Monday’s weak existing home sales figure, it looked like we could be in for yet another disappointment, yet in catching the markets by surprise, we have seen a strong bounce across the US indices, which has subsequently fed into the Asian markets, with the Nikkei225 in particular erasing much of the week’s losses.

Meanwhile, Chicago Fed President Charles Evans struck a particularly dovish tone yesterday, discussing how he believes that the FOMC should delay raising rates until sufficient momentum is in place. Evans called for the Fed to be exceptionally patient in their quest to remove it’s monetary stimulus, which was music to the ears of the markets, with the likes of the S&P500 following up on gains seen earlier in the session. This speech reflects to differing opinions within the Fed committee, where concurrent comments from Cleveland Fed Loretta Mester focused more upon changing the current forward guidance towards something which was data driven and could account for both longer and shorter period of time before rates rise. Ultimately, any change from the top will always be expressed in one form or another by members of the committee, the difficulty is deciphering which of the members will get their own way. For the most part it is about finding the consensus and in a week full of Fed speeches, a clear theme of thought hasn’t yet emerged which means we could see yet more indecision at the next FOMC meeting.

The European session is looking completely bare of any major event to move the markets and for the most part, people will be following the bullish gains of yesterday in the US and Asia. Given the impending week ahead, which features the likes of the US jobs report, Eurozone CPI and the latest ECB meeting, it is likely that any moves are going to be tentative as people position themselves lightly ahead of such a key week.

 

[Alpari UK]

US Opening Call from Alpari UK on 25 September 2014

Bullish momentum wanes as markets remain indecisive

• Home sales figures provide boost, yet it may not last
• Mario Draghi touts further dovish rhetoric
• US session looking towards durable goods and unemployment figures

US markets are looking a little less optimistic today, following a strong rebound to the upside off the back of yesterday’s impressive housing data. The existence of major fundamental risks next week means that there is some caution ahead with many unsure of the direction that markets should be heading. Dovish tones from ECB governor Mario Draghi have set the European markets alight, yet it remains to be seen whether this can translate to the US indices. US markets are expected to open lower, with the S&P500 -2, DJIA -2 and Nasdaq -3 points.

Yesterday’s massive existing home sales figure provided a major boost to the markets, as it posted the joint highest level of sales since late 2008. Whilst this caused the unwinding of much of the initial losses we have seen in the first half of this week, markets have regained their somewhat cautious approach today and appear to be looking at a moderately negative open. The downturn in the housing sector has been indicative of this whole crisis since 2008 and for many, the feeling of a booming housing market is one which fills people with confidence that things are finally better in relation to their personal finances. For this reason, it makes sense that figures such as these provide a major boost to confidence, yet it should be noted that given the disappointing new home sales number on Monday, the picture is still relatively murky and far from one sided.

The release of an interview from Mario Draghi in Lithuania today has caused somewhat of a stir within the markets, with the ECB chief hammering home the notion that they stand ready to act with unconventional measures should need be. For the most part I see this as a show to the markets to keep the good feeling going whilst putting further downward pressure upon the euro. I have no doubt that should we continue to see poor takeup from the TLTROs, along with negative movement in CPI and growth, then Draghi would consider a full asset purchase scheme. However, with the implementation of an ABS [purchase programme, I highly doubt that we are going to see anything at this or the next meeting from the ECB. It is really a win-win situation for Draghi as positive dovish rhetoric can provide a strong indices and weak euro environment until we see a move either way in inflation at which point we will either see further stimulus or else a recovery in the region, both of which should be good for the markets. Ongoing weakness in the likes of Germany have really been compounded recently and show that the central powerhouse of the Eurozone might have more than just a cold. For this reason, I believe that both Mario Draghi and Angela Merkel are aware of the need to act decisively should we see yet further downside. With any monetary policy scheme that doesn’t include the words ‘asset’ and ‘purchase’ looking particularly defunct and blunt, it is clearly time for each country to start looking at raising investment and fiscal expansion could be just as important as action from the ECB. The feeling is that should we see QE implemented, then it would be something that would last for a long time and thus I am sure Draghi would prefer not to embark on such a move unless absolutely necessary. Thus the onus is really on Merkel as much as Draghi right now.

The US session is largely expected to be geared towards the release of durable goods and unemployment claims figures later today. The most notable of these will likely be the durable goods figure which is expected to absolutely tank following the largest monthly rise in well over a decade last month. This month is expected to come back with a bang, with the surge in orders taken by Boeing that were responsible for the massive July figure meaning that this month will see a majorly negative figure. Estimates are looking at something between 15-20%, yet it will be hard to tell with any degree of accuracy exactly where this month’s figure will land. The fact that we are seeing such volatility in this figure is a damning indictment as to the reliability of it to properly gauge any of the other lesser durable goods orders and for that reason people will be looking carefully at the core durable goods figure to check for the rest of the sector, with aircraft orders stripped out. In which case we are expecting a move back into positive territory from -0.7% to 0.7%.

 

[Alpari UK]

Daily Market Update - 25 September 2014 - Alpari UK

Markets mixed as indecision strikes - 00:09
US existing home sales figure boosted global markets yesterday and overnight - 02:29
Durable good and unemployment claims figures key to the US session - 04:15

Research analyst Joshua Mahony discusses the somewhat mixed markets in play today. He mentions the impact yesterdays existing home sales figure had upon bullish sentiment and what he expects for the rest of the day.

 

[Alpari UK]

UK Opening Call from Alpari UK on 26 September 2014

Japanese CPI falls once more, prompting calls for BoJ action

• Yesterday’s sell-off driven by geo-political fears
• Japanese CPI falls yet again
• German consumer confidence likely to tumble once more

European markets are expected to open mixed as they try to determine whether the follow the US and Asian indices lower following the largest one-day decline in the Dow since 31 July. Driven primarily by rumours out of both Russia and Iraq, those losses could be brushed off or highly relevant, depending on what you believe. However, with Japanese CPI pulling back, a German consumer confidence survey expecting to fall, and the UK likely to announce their willingness to act in Iraq, there is little to be positive about today. European markets are expected to open mixed, with the FTSE100 +2, CAC +3 and DAX -14 points.

Yesterday saw a somewhat hum-drum trading environment lead to the deterioration across global indices, from Europe to the US and subsequently Asia. In part this selling came as a response to two major pieces of geopolitical news, as a potential ISIS attack in the West was accompanied by rumours of a drastic piece of legislation that is being drawn up in Russia. Firstly, the Iraqi PM Haider al-Abadi warned of an impending ISIS plan to attack both the Paris and New York transit systems, throwing the possibility of another 9/11 style attack back onto the table. Secondly, rumours emanating from Russia suggested that there could be plans afoot for a move towards allowing the seizure of foreign assets, which would no doubt throw those closely tied European economies back into recession in the not so distant future. This move would serve to cripple both European business but also would throw Russia back to the cold-war style era where all foreign investment that was able to would pull out and leave the economy to be isolationist once more.

The release of the August CPI reading out of Japan didn’t make for pleasant reading for many, with the headline measure of inflation pulling back for the third month in a row, prompting immediate calls for increased stimulus from the BoJ. The election of Shinzo Abe came amid a core principle that he would end the incessant deflation that has plagued Japan for decades, and return it to a 2% inflation environment by Spring next year. Whilst he has fulfilled the first of these mandates, the second is becoming increasingly elusive and thus the time could be arriving for a move in monetary policy to achieve the final piece of the jigsaw. Stripping out the 2% rise that was attributed to the sales tax hike in April, the subsequent figure of 1.3% is the lowest level since October 2013 and proves that the recent trend is no short term phenomenon. The BoJ will have to act, and act soon should they wish to get price growth back on target towards 2%.

Today we expect to hear from the UK government where the official request from the Iraqi government to provide military assistance in their fight against the ‘Islamic State’ means that we are almost certain to see the commons vote in favour of British involvement in yet another Iraqi war. For the most part this seems unavoidable, with the UK estimated to represent the second highest source of European fighters that have joined the ranks of ISIS, behind France. The role of ‘Jihadi John’ in engaging Western nations against the terrorist group comes as a stark reminder that this is an international group that is being targeted, where radicalised people from around the world have joined the ranks and hold senior positions which could pose an existential threat to lives both home and abroad. Nevertheless, the involvement of the UK in Iraq can be seen as both inevitable yet far from ideal, with markets responding to any major development in the fight against ISIS as a cue to risk off trading, which can perpetuate the losses seen in the indices so far this week.

The release of a German consumer confidence survey this morning is expected to pile further pressure upon Angela Merkel and Mario Draghi following a shocking week for the German economy which saw the manufacturing PMI approach contraction, the business climate survey post the lowest level since April 2013, and a threat that Russia may seize foreign assets. Estimates for today’s survey are conservative, yet given the trend we have been seeing I believe we will see a more protracted move lower to reflect the poor growth, jobs and inflation environment within Europe’s biggest economy.

 

[Alpari UK]

US Opening Call from Alpari UK on 26 September 2014

US GDP figure expected to highlight booming economy

• US markets hoping to pare losses driven by ISIS, Russia and Apple
• German confidence tumbles, pointing towards a worrying future for the Eurozone
• US GDP set to dominate the US session.

US markets are hoping to stabilise somewhat today following one of the worst days in the markets for months. Driven by a mix of risk-off announcements, coupled with plunging Apple stock prices, today is likely to be focused upon paring much of those losses as we gear up for a major week ahead in the markets. The release of German consumer confidence figures earlier today saw further downside for a region in crisis as a result of weak growth, production and demand. Meanwhile, the US focus will largely be geared towards the final GDP release of Q2 which is expected to continue the positive economic theme with an upward revision. US markets are expected to open higher with the S&P500 +4, Nasdaq +10 and Dow +48 points.

Yesterday saw a hugely significant sell-off in equity markets, as the threat of an ISIS attack in Paris and New York was compounded by rumours of an asset freeze being implemented by Russia in response to US and European sanctions, finally impacted by a major selloff in Apple stock. The announcement by the current Iraqi PM that ISIS captives had admitted to plans for attacks on both the New York and Paris Metros heightened fears of another 9/11 style attack. This of course drove risk aversion as markets considered the impact that it would have to resk sentiment in the markets should it occur. Alongside this, the potential for an asset freeze in Russia provided a massive threat to European assets abroad and at a time when growth is hard to come by for Eurozone countries, such a move would almost certainly move the economy towards yet another recession. Finally, the announcement from Apple that they were pulling the latest iOS version, with consumers complaining of losing connection and fingerprint functionality. Coming just days after the new iPhone drew complaints of bending phones, it has not been the best week for the biggest US tech company and this was reflected in the markets as a fall of almost 4%, dragging the S&P500 and Nasdaq lower.

The European session has been dominated by the release of German consumer confidence figures which followed trend by moving lower, posting the lowest number since January. The impact of propping up a perennially weak Eurozone, accompanied by weak economies with low growth, employment and high debt has clearly taken it’s toll on the German powerhouse, with the imposition of Russian sanctions adding to an already weak economy. The fall in the manufacturing PMI seen earlier this week showed that soon we could be seeing a Germany with both shrinking manufacturing and output; a harrowing thought for those within the Eurozone. For after all these years of bailing out peripheral nations, who is going to back up Germany in their hour of need? Most believe that job will fall to the ECB, yet the blunt impact of Mario Draghi’s measures so far point to the need for something different. Clearly until we see some sort of drastic measure implemented, monetary of fiscal, there is going to be trouble in the Eurozone and this is a problem for the global economy due to their role as a major source of demand and job creation. Until then, I believe we could see yet more disappointing figures out of Germany and the Eurozone as a whole.

The US markets are gearing up towards the final session of the week which is likely to be dominated by the release of the final Q2 GDP figure. In line with the greater trend of a strengthening US economy, the markets expect to see an upward revision to 4.6% from the 4.2% preliminary figure. Coming at a time when markets are looking for signs of strengths or weakness that could influence FOMC thinking with regards to interest rate hikes, this could come as an indication of further hawkishness from the Fed. That being said, with the Q3 figure just around the corner, it is important to remember that this is a somewhat dated figure and thus the impact could be muted by that fact.

 

[Alpari UK]

Daily Market Update - 26 September 2014 - Alpari UK

 

[Vinayak1000]

USD/JPY rises near 6-year peak, U.S. data ahead

The U.S. dollar rose against the yen on Friday, to trade close to six-year highs as expectations for an ealry rate hike by the Federal Reserve continued to support the greenback and investors eyed upcoming U.S. economic growth data.


USD/JPY hit 109.16 during European afternoon trade, the session high; the pair subsequently consolidated at 109.11, rising 0.35%.



Read more: http://www.nasdaq.com/article/forex...ear-peak-us-data-ahead-cm395583#ixzz3ERp7oyhP

 

[Alpari UK]

Weekly market preview from Alpari UK on 29 September 2014

The first week of the month means one thing, and that is the return of fundamental risk driven by notable data and central bank releases. In the US, we are expecting to see the week dominated by employment data, starting with the ADP figure, culminating in Fridays unemployment rate and non-farm payrolls number. Meanwhile, the UK will be on the lookout for the monthly fill of PMI releases, which peaks at Friday with the services PMI figure. Looking across at the eurozone, the theme will be one of inflation and potential ECB action as Tuesday's CPI figure precedes Thursday's massive ECB monetary policy announcement from Mario Draghi.

In Asia, both China and Japan have a substantial amount of figures to be on the look out for. China is going to be geared mainly towards manufacturing PMI figures, with Tuesday's final HSBC number leading to the headline manufacturing PMI release on Wednesday. Over in Japan, the release of retail sales, household spending and average earnings figures will provide us with an idea of exactly how well the economy is recovering following the sales tax hike. A similar story in Australia, where retail sales can provide an idea of how domestic consumption is developing as they seek to reposition the economy away from export reliance.

US

The return of jobs week is always welcome in the markets as a source of major volatility, with the release of employment data leading to renewed or revised outlooks for FOMC monetary policy action (or inaction). Given that there are such key jobs releases throughout the week, it means that there is a tendency to ignore some of the other lesser figures, with the main events to watch out for being the ADP non-farm payrolls, unemployment rate and headline non-farm payrolls figures.

The ADP non-farm payrolls figure on Wednesday will provide the first opportunity to gauge the conditions of the jobs market in September. There is an ongoing discussion over the validity of this release as an indicator of where we could see the headline figure come in, which in general has been a tenuous correlation at best. However, despite this fact, it is certainly well worth watching out for this figure as it still a valid and notable reading of how employment conditions are within the economy. With the FOMC moving closer towards an interest rate hike, members have begun speaking out to express their belief with regards to whether the economy is ready to that first shift. The employment data is absolutely key in that decision and thus this ADP figure along with Friday's jobs report will be the type of data points that the Fed will be watching closely.

Friday brings out the big guns, with the jobs report representing the most reliable source of volatility out of any data releases. The non-farm payrolls and unemployment rate figures have always dominated the jobs report as the two main figures. However, it is well worth watching out for the measures that provide more information regarding the quality of the employment environment such as the participation rate, average earnings and the average weekly hours worked. With the FOMC focusing more on reducing the 'slack' or 'spare capacity' within the economy, this will be denoted by an economy where people work more hours, for more money and where fewer people are voluntarily outside of the labour force. Despite this, the initial reaction within the markets is typically in response to the unemployment rate and non-farm payrolls figures.

The non-farm payrolls figure is expected to rise back above the 200k month after tanking to 142k last month. With such a poor number last month, be on the lookout for any positive revision which I would not be surprised to see. Meanwhile, the unemployment rate is expected to remain steady at 6.1%.

UK

The first week of the month usually means that the UK economy will be looking out for three major PMI figures to give a solid understanding of where the manufacturing, construction and services sectors are currently positioned. The first of these is Wednesday's manufacturing PMI figure, which is expected to remain at 52.5. Despite pulling back somewhat in the past two months, the manufacturing sector has been resilient over the past year, remaining well above the 50 mark since April 2013. Thus a steady figure would not necessarily be such a bad thing.

The construction PMI, due on Thursday is also a very positive story, with 2014 representing a boom in the sector which saw house prices rise back to pre-crisis levels in many areas. This has been reflected in the PMI figures, with the latest reading of 64.0 representing the second highest reading since the crises began in 2007. It is worth noting that the construction sector is likely to weaken somewhat from a new homes standpoint once interest rates start to rise in 2015. However, with many of the new homeowners likely to start refurbishing their properties, I expect to see further strength in the construction sector going forward. That being said, with such lofty levels in the figure, it is only a matter of time until the slowdown in the market is reflected and thus this months estimated fall from 64.0 to 63.3 would not come as a surprise.

Finally, the release of the services PMI on Friday is likely to draw the most attention given that the sector accounts for two thirds of the UK GDP. The growth and strength of the UK's world beating services sector can therefore be held responsible for much of the performance that has led to many expecting the UK to lead the western world out of this downturn. Therefore, it is imperative that it continues to perform and grow strongly. However, with markets expecting a sizable reduction from 60.5 to 59.0, this could be the biggest drop in 2014. Either way, be aware of this figure as a potential source of volatility due to the impact the services sector can and does have upon UK growth.

Eurozone

A major week ahead for the eurozone, where the release of inflation data on Tuesday makes way for the October meeting at the ECB. The CPI measure of inflation has been the thorn in the side of the ECB since it began to tumble a year ago and unfortunately this trend has continued apace up until this day. Mario Draghi's attempts to reignite price growth has failed miserably in the past 6 months and this has led to continued calls for asset purchases by those within the markets. However, with the TLTRO's and ABS programmes coming into play, there is a hope that gradually we will start to see some upside in this measure, which could give Mario Draghi a breather. However, markets do not expect this to come on Tuesday, with estimates pointing towards the number remaining around the 5 year low of 0.3%. It is worthwhile noting that Mario Draghi will also be on the lookout for the core CPI figure as much as the headline number, given that it strips out factors such as energy, food, alcohol and tobacco prices. Certainly for the likes of energy prices, a change in monetary policy will make precious little difference to the change in price growth and thus it does make sense to discount if from the data. Currently standing at 0.9%, the markets are estimating this to also remain steady. However, a move in either figure could either put pressure or alleviate pressure upon the ECB to take further action.

On Thursday, the ECB will meet again for their monthly monetary policy decision. For the most part this is going to be determined by two things; eurozone data for the month and the current state of ECB monetary policy. Bearing this in mind, it is clear that from a data standpoint there is a need for further stimulus, with eurozone, French and German GDP at or below 0%, PMI figures at or close to contraction, whilst unemployment remains at 11.5% which is almost double that of the US. However, from a policy standpoint, I believe there is little chance of a shift this month, given Mario Draghi's recent implementation of the ABS and TLTRO schemes. It is clear that Mario Draghi is willing to act if necessary yet to make two major moves in two consecutive months would be highly unlikely as it removes the ability to properly monitor the impact of those previous actions. However, while I expect policy to remain, I will be watching the statement and Q&A session closely, where Draghi will be expected to continue talk of the ECB being willing to act if necessary.

Asia & Oceania

The Chinese week will be geared predominantly towards the release of two manufacturing PMI figures, as the final HSBC number on Tuesday is followed by the headline manufacturing PMI figure on Wednesday. Tuesday's HSBC manufacturing PMI provides an idea of how the small and medium sized businesses are performing at a time when the slowdown that has dominated the first half of the year appears to be coming to an end. This is a final figure and thus there is less expectations for either a surprise or any major market movement, especially given that markets have estimated the number to remain at 50.5. However, the headline manufacturing PMI figure is a different matter, with markets keenly watching for any move given that this is the first and final figure for September. The release of disappointing fixed asset investment, industrial production and retail sales number have highlighted underlying weaknesses within the Chinese economy and thus there is a need for this week's figures to provide a boost. With the headline figure also expected to remain steady, there is the opportunity for a surprise in either direction this week.

In Japan, Monday brings about the release of a handful of consumer based figures, with household spending and retail sales in particular providing an idea of where the economy is moving following the April sales tax hike. Rumours have persisted of another tax hike in early 2015, and thus the recovery of consumer spending within Japan is going to be key to understanding the future actions of Shinzo Abe. Market estimates are somewhat mixed, pointing towards a mild improvement in household spending to -3.5% from -5.9%, whilst retail sales are forecast to fall from 0.6% to 0.4%. However, I will be looking out for some sort of convergence in trend between the two to be able to really move the markets.

Finally, in Australia, the release of retail sales figures will provide us with an idea of how successful the shift towards domestic consumption has been. Coming off the back of a downturn, driven largely by the slowdown in China, Tony Abbot's appointment as Prime Minister was on the back of a pledge to bring the economy back from the brink by realigning towards domestic consumption and away from the export led model of old. This was never going to be easy, simply due to the strength and size of their commodity industry which will always draw resources and labour. However, for domestic consumption to truly support the economy, we would have to see substantial growth and thus the likes of retail sales data will be key. Markets expect the figure to remain steady at 0.4% in August.

 

[Alpari UK]

UK Opening Call from Alpari UK on 29 September 2014

European markets are set for an incredibly busy week as we see the first week of the new month. Last week’s economic calendar and news flow saw a return to the norm with fears over the ECB and Eurozone recovery, as well as Chinese growth fears return to the markets after being somewhat forgotten during the Scottish referendum. The major announcements of the week will happen later in the week so for the early part it will be a case of waiting and speculating over the major announcements. However this doesn’t mean that the early part of the week is without its data, in fact today’s session sees a whole host of economic data released throughout Europe and the US. Ahead of the open this morning we expect to see the FTSE open lower by 2 points while the German DAX looks set to open lower by 26.

The story overnight is yet again the strength of the US dollar as Asian markets fell led by a thrashing in Hong Kong. The strength of the US dollar is forcing investor to move away from a lot of the stock market assets and put it into the greenback. With a potential rate hike becoming more likely and the data showing constant improvement it’s no surprise we are seeing the positive move and nowhere is this more apparent than in USDJPY. However if anything is going to shift investor opinion about the dollar it could well be this week as the data is incredibly heavy. This afternoon we will get the release of the personal consumption numbers as well as pending home sales figures. Investors will be yet again looking for any kind of positive number that could force Janet Yellen’s hand into an earlier rate hike.

The timelines on the movement of rates still looks to be fairly long with no change in language in last months fed meeting. However the better the economic readings the better the more pressure is heaped on Janet Yellen. There seems to be an obsession in the market with pushing rates higher. With a movement in rates seen as a move back to normality after years of hardship. However I would ask the question do we need to raise rates? With the economic data looking so good, and the electorate only just starting to feel the benefit of these lagging indicators, a movement in rates too soon could well undo all of the hard work it has taken to get back to the place we are right now.

As the week moves on the data will increase with its importance. Tomorrow sees the UK GDP take centre stage before traders start to position themselves ahead of Thursday’s ECB rate decision and Friday’s non farm payroll data. Mario Draghi and the ECB’s rate decision is arguably the biggest bit of data of the week as it could be the time we get a full blown asset purchasing plan for the Eurozone. We have seen a number of measures thrown at the eurozones ultra low inflation and low growth issues but so far nothing has worked. It could well be that the last option Mario Draghi has is full blown QE starting potentially the month the US finally finished their plan.

 

[Alpari UK]

US Opening Call from Alpari UK on 29 September 2014

Markets selloff as we enter key week

• Market selloff continues as markets look towards key week;
• Spanish CPI leads thoughts to tomorrows headline CPI reading;
• US pending home sales figure released later today.

US markets look set to run into further downside today following a disappointing start to the week in Asia and Europe. With the busiest week of the month ahead of us, today marks a rather slow start, where many will begin positioning themselves ahead of the potential volatility due later on in the week. The US markets are expected to open lower, with the S&P500 -6, Nasdaq -14 and DJIA -63 points.

Today’s selloff is widely consistent with the wider trend of selling that has been in place over the past week. Weakness within European indices have uncharacteristically led their US counterparts, with the FTSE100 tumbling over three weeks ago, yet this has only recently been reflected just over a week ago in the likes of the S&P500 and Dow. Much of this is no doubt in relation to the threat of devolution that has hit the European project, with the Scottish independence vote now being followed by the same thing in Catalonia. However, within the US, the feeling is more that we are moving ever closer towards the moment where the Fed finally announce a timeline for interest rate hikes, which is only a matter of time. The increasing noises from the FOMC has been one of inevitability in terms of interest rate hikes and whilst Janet Yellen remains tentative to provide an official change of outlook from the Fed, this appears to be a matter of time. Last month saw the worst non-farm payrolls figure in 7 months, allowing Yellen a little more leeway to keep rate low, however with the US jobs report due on Friday, this could be called back into question before long should we see the 200k+ number expected by the markets.

Today’s European session held little for the markets, as the release of the Spanish CPI figure released some of the pressure upon Mario Draghi, rising to -0.5% to -0.2%. However, this and the German figure due later today, are really the precursor for tomorrows Eurozone CPI figure. Mario Draghi will certainly be hoping that Eurozone CPI will finally start showing some signs of resurgence after a year of incessant downside for prices in the single currency region. However, signs so far have given Draghi little comfort, pushing him into continuously reconsidering how accommodative the ECB should be. Last month’s decision to introduce an ABS scheme is a QE-lite of sorts and thus further action remains unlikely this month, yet the movement of the Eurozone CPI figure is sure to be absolutely key in determining whether markets expect to finally see the fully blown asset purchase scheme introduced.

Today’s US session also looks relatively light on major economic releases, with the main event of note coming in the form of the pending home sales number. Last week saw a real mixed bag from the US housing sector where a weak existing home sales number on Monday made way for a six-year high new home sales number on Wednesday which sparked markets back into life. With that in mind, today’s pending home sales number will give us an idea of where next month’s number could be and thus markets will be watching very closely at today’s figure. Market estimates point towards a fall back into negative territory with a number closer to -0.4%.

 

[Alpari UK]

Daily Market Update - 29 September 2014 - Alpari UK

 

[Alpari UK]

UK Opening call from Alpari UK on 30 September 2014

Today sees the start of the big announcements of the week as a whole host of economic releases are scheduled for this morning. With markets hit overnight in Asia by yet more unrest in Hong Kong and US and European markets failing to post any gains yesterday we could well need some positive numbers out of this morning’s releases to kick start trading and halt the slide we have seen on the major markets over the last few days. Ahead of the open we expect to see the FTSE100 open flat with the German DAX lower by 10 points.

It will be Europe and the UK that dominate first thing this morning with retail sales and unemployment figures out of Germany that kick us off. Numbers from Europe’s biggest economy have been poor of late and a turnaround in fortunes would be greatly appreciated by Mario Draghi, especially in a week were the ECB could potentially add a full program of QE to tackle the mess that is the European economy. Of course unemployment is an important number however retail sales this morning will give us an indication into the behavioural patterns of the electorate in Germany and will tell us exactly what Germans are spending their money on, if anything when they put their hands in their pockets.

At 0930 BST we get another chance to look at Q2 GDP out of the UK. Mark Carney and the BoE have already mentioned a number of times that the growth situation in the UK is not one that is a concern and if today’s numbers are correct we can see why. The revised reading of Q2 GDp is expected to show that growth was actually a little bigger than first expected at 3.2%. This yet again highlights the stance of the government and BoE, and will leave them to focus, like many other central banks on tier obsession with hiking interest rates and as has been previously stated it is the average earnings figure that is causing the biggest concern here.

With the ECB set to announce further measures to tackle the ultra low inflation problem in the Eurozone, it seems fairly apt that we should get both readings in the same week. So at 1000 BST this morning we will get the CPI reading for the Eurozone. Its safe to say that previous efforts by Mario Draghi and the ECB have failed to tackle the problem. Inflation remains incredibly low on a YoY and MoM basis, and today’s reading is like to show that the number has fallen once again on a monthly basis this time to 0.3%. The question all investors are asking is are the new measures been talked about by the ECB going to be the answer. Over the past 12 months we have seen more or less every tool in the central bankers arsenal thrown at this problem but to no avail. Negative interest rates have made no impression while the pick up for TLTRO’s has been poor. It seems the hopes of the Eurozone now rest solely on a full round of government bond buying, a program that the US are set to finish next month. It no uncertain terms the Eurozone is a mess and it could well be that this week highlights just how big that mess actually is, and just how much new money is going to have to be printed to drag it out of the mire.

 

[Alpari UK]

US Opening call from Alpari UK on 30 September 2014

Weak eurozone CPI pushes raghi back into a corner

• Poor CPI readings provide upside to indices, yet weakens the euro further;
• CPI and German unemployment change figures put yet further pressure upon Mario Draghi;
• Consumer confidence figure to dominate US session as volatility is expected to rise this week.

US markets are hoping for a positive start to the day, where weakened Eurozone CPI has put further pressure upon Mario Draghi to introduce yet further Easing at the ECB. The continuation of a worsening Eurozone is the polar opposite from the UK, where GDP pushed yet higher this morning. In a day dominated by the European data releases, a theme of Eurozone weakness and UK strength dominates a provides a bullish theme to the markets. As such, the US markets are expected to open lower, with the S&P500 -7, DJIA -54 and Nasdaq -16 points.


The euro came in for a bashing again this morning, as inflation pushed further to the downside, increasing the validity of calls for the introduction of a fully blown asset purchase scheme by the ECB. Mario Draghi has been fighting against the plummeting rate of CPI, which has been falling since the beginning of 2012 when it peaked out at 3%. Today’s fall to 0.3% was thus far from unexpected, however the continuation of this downward trend in prices makes for worrying reading and proves to the markets that all the measures introduced so far have been completely ineffective at bringing about price stability or higher growth within the region. Perhaps the most worrying thing about today’s release was the unexpected fall in core CPI from 0.9% to 0.7%, which underlined that the weakness in price growth is not solely an issue which can be explained away by factors such as food and energy, which are largely unaffected by monetary policy decisions at the ECB. Representing the lowest level seen since the financial crash of 2007, this core CPI reading is sure to worry Mario Draghi and could push forward the potential of a QE programme in the near future.

Today’s weak Eurozone CPI reading was also accompanied by a disappointing German unemployment change figure, which saw 13k more people in unemployment, representing the second consecutive month of increased unemployment in the German economy. Overall this continued weakness in Germany, accompanied by an incessantly falling inflation rate means that Mario Draghi is being pushed into a corner to find the solution, and fast. However, despite some calls for the introduction of a fully blown asset purchase scheme later this week, it is highly unlikely with Thursday’s meeting likely to focus upon the intricacies of the ABS scheme that was announced last month.

US markets will be looking forward to a somewhat calm day in the markets from an economic standpoint, where the consumer confidence figure represents the only major release of note. With an economy that is 70% driven by domestic consumption, confidence is a leading indicator of where spending is likely to be in the US for September. Today is really the beginning of the week in a way, where we begin to start seeing really major market moving events come on a daily basis. With this in mind, there is likely to be an element of risk aversion take hold given the likely volatility that could become a regular feature of the markets for the remainder of the week.

 

[Alpari UK]

Daily Market Update - 30 September 2014 - Alpari UK

 

[Alpari UK]

Daily Market Update - 1 October 2014 - Alpari UK

https://www.youtube.com/watch?v=cy7VPv0d6A8&list=UUpnhW5tgmxcQWzcrx_Y6zKg