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353

[B]JP Morgan kicks off earnings season for the banks[/B]

Today’s US opening call provides an update on:

[ul]
[li]JP Morgan and Wells Fargo kick off earnings season;
[/li][li]US retail sales and consumer spending in focus;
[/li][li]Eurogroup meeting watched closely.
[/li][/ul]
JP Morgan and Wells Fargo kick off the corporate earnings season this morning for the major banks, with another strong quarter expected.

US banks are expected to be one of the strongest performing sectors in the current earnings season, although they may not necessarily be quite as strong as the last few quarters. That being said, JP Morgan has a history of easily beating earnings forecasts so I expect a strong start today.

One thing to be aware of with JP Morgan in particular is its tendency to easily beat earnings expectations. What this usually means is people buy the stock in the week leading up to the earnings (currently trading up more than 5% this week) and then sell shortly after.

Also in the US today, we have some major economic data releases, most notably retail sales in March. These are expected to be slightly weaker than what we saw in February, at 0%. This could act as further confirmation of the slowdown in the US, with consumer spending making up a large part of GDP.

We could get further confirmation of the slowdown shortly after when the UoM consumer sentiment figure is released for April. Only a small pullback is expected to 78.5 this month, although I wouldn’t be surprised to see this miss based on the figures we’ve had out the US in the last week, especially if we see another miss in March retail sales.

A lot of attention will also be on the eurozone, with finance ministers meeting to discuss a number of issues including the Cypriot bailout and the release of bailout payments to Greece and Ireland. Also on the agenda will be the ESM and how the eurozone plans to move towards forming a banking union.

These meetings don’t usually produce much in terms of market moving announcements, although they’re always worth keeping an eye on because when they do, the moves tend to be significant. A prime example of this was the Cypriot bailout announcement last month.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

354

Forex research: Global markets daily

355

[B]Corporate earnings season continues with Citigroup[/B]

Today’s UK opening call provides an update on:

• Corporate earnings season continues with Citigroup;
• Manufacturing expected to slow in March in the US;
• Chinese growth falls back to 7.7%;
• Industrial production falls in China on the back of lower fixed asset investment.

Corporate earnings season will be in focus again this week, starting with Citigroup on Monday, who is expected to announce slightly better earnings than the same quarter a year ago.

JP Morgan and Wells Fargo kicked earnings season off for the banks on Friday, reporting higher earnings than expected and beating those from the same quarter in 2012. Revenues on the other hand were lower than last year, which suggests that banks, like other companies, are still struggling in the current economic environment but are managing to cover over the cracks with higher earnings driven by efficiency savings. This is clearly unsustainable so it will be interesting to see if companies get away with it again in this quarter.

Earnings season will start to get into full swing this week, with a number of high profile companies reporting, including Coca Cola, PepsiCo, Google, Microsoft and General Electric. First up though will be Citigroup, who is expected to announce earnings of $1.16 per share in the first quarter, compared with $0.95 a year earlier. Following misses from the two banks that reported on Friday, attention will also be on revenues here, although the company is expected to report a higher number than the first quarter of last year.

The economic calendar is looking pretty light on Monday, although this will pick up a little as the week goes on. The main economic release comes from the US this afternoon in the form of the empire state manufacturing index. Given the pull back in the majority of the data recently, it’s hardly surprising to see that we’re expecting a similar result here today. A figure of around 7.2 is expected, although I wouldn’t be surprised to see this, like many of the other releases, fall below expectations.

We’ve already had a long list of disappointing data out of China in the early hours of this morning, although this hasn’t stopped futures pointing to a higher open in most European stock indices. First quarter growth in China was much lower than the 8% figure that had been expected, coming in instead at 7.7%. This suggests that the improvement seen in the fourth quarter of last year was a one-off and we could be heading for slower growth this year as we saw for the majority of 2011 and 2012.

The upside to this though, is that slower growth figures would make it difficult for the PBOC to scale back its monetary stimulus as it could lead to renewed fears of a hard landing in China. I don’t see that happening at this stage, however one thing is clear from this data and that is that the recovery in China is nowhere near as strong as we thought it was. This is more than a little concerning for those hoping China would be able to lead the global recovery, especially given the slowdown which we’re now seeing in the US.

Other parts of the data were also a little concerning, such as the industrial production figure for March, which showed the lowest amount of growth since August. This reduction though may be driven by a drop in fixed asset investment, which fell back to 20.9% in March, compared with 21.2% in the first two months of the year and expectations of 21.3%.

[B]EURUSD[/B]

The euro is trading lower against the dollar this morning, after finding strong resistance earlier around 1.3113, the 38.2 fib level. We may see a bit of a pull back now over the next couple of days, following a pretty strong rally over the past week and a half. However, I still think there’s some more room to the upside here, with 1.3341, 61.8 fib level, still being the target. That’s if we’re going to see the completion of a head and shoulders formation over the coming months. The pair is currently finding support around 1.3065, if it continues to edge lower, it should find further support around 1.3050, 1.3035 and 1.30.

[B]GBPUSD[/B]

Sterling is looking quite bearish once again, following that brief move higher. The pair found resistance last week around 1.54 before edging lower. We could now see a continuation of the bearish move from the start of the year. The stochastic on the daily chart supports this, having crossed in overbought territory at the end of last week. The weekly chart also looks quite bearish, with last weeks candle forming a perfect doji. If the candle was red it would be even more bearish, however even as it is, it suggests the bullish move has run out of steam. If the pair does continue to push lower, then the next target will be 1.4830, last month’s lows, with a break below here prompting a move back towards 1.44. In the shorter term, the pair should find support around 1.5291, 1.5250, 1.52 and 1.5157.

[B]USDJPY[/B]

The pair filled last weekend’s gap overnight, before pushing higher early in the UK session. This could now be a sign that we’re going to see a continuation of the move higher, with 100.0 providing the next major level of resistance. The next phase of the rally is likely to be much slower than the last one, with the move towards 110.0 probably taking weeks, if not months, compared to the move from 92.70 to 100.0, which took a little over a week. If the pair continues to edge higher this morning, it should find resistance around 98.39, 98.58 and 99.10.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

356

0:09 Global markets lower on poor Chinese figures
2:57 Citigroup report first quarter earnings
4:12 US manufacturing data released this afternoon

Forex research: Global markets daily

357

[B]Inflation data shifts attention back to central banks[/B]

Today’s UK opening call provides an update on:

• UK inflation likely to remain unchanged at 2.8%;
• Another drop in eurozone inflation could prompt ECB rate cut;
• US inflation expected to fall, easing the pressure on the Fed to tighten monetary policy;
• Economic sentiment in the eurozone could fall well below expectations;
• US housing data forecasts point to another strong month in March;
• Surge in volatility expected as a number of big companies report first quarter earnings.

Central banks are going to be back in focus on Tuesday, with the release of inflation data from the UK, eurozone and US likely to spark fresh debate over monetary policy in the coming months.

In the UK, the Bank of England is unlikely to ease monetary policy before Mark Carney’s arrival on 1 July. However, with the voting so close at the last few meetings, this is far from guaranteed. As a result, March’s CPI figure will be watched closely, with a surprise drop prompting talk of increase in the asset purchase facility. With sterling already looking pretty weak again, this could prompt a move back towards 1.50 against the dollar.

The ECB is far more likely to vote in favour of more stimulus in the coming months, with inflation currently at near three year lows of 1.7%, according to the flash estimate earlier this month. If this is confirmed this morning, it could convince the ECB that more stimulus is necessary at the next meeting on 2 May. This would be very welcome in the euro area, which faces at least a few more quarters of recession, with recent data suggesting it’ll probably be longer.

In the US, inflation has remained low despite the very accommodative stance from the Federal Reserve. The CPI figure, released this afternoon, is expected to show inflation fell again in March to 1.7%. This should ease any concerns, for now, that the Fed will begin to tighten monetary policy. Especially when you consider the weakness seen in the other economic data in March, in particular the employment and consumer spending figures.

Also today, we have the release of the ZEW economic sentiment for the eurozone and Germany, both of which are expected to fall sharply back from the figures seen in March. These figures tend to be quite volatile at the best of times, so I would be very surprised if we don’t see figures here well below market expectations. Expectations for the German and eurozone figures are currently 42.0 and 31.5, respectively, which I think is far too conservative.

In the US later, we also have some housing data out for March. Housing starts are expected to be slightly improved at 0.93 million, while building permits are expected to fall back slightly to 0.94 million. Again, I think we’re setting ourselves up for disappointment here, with the poor weather conditions already being blamed for the drop in things like consumer spending. If that is the case then we should also see it reflected in today’s housing data.

Finally today, we have probably the biggest day so far in terms of corporate earnings, with quite a few major companies reporting first quarter profits. Goldman Sachs earnings should be watched very closely, following the strong earnings seen so far from JP Morgan, Wells Fargo and Citigroup. Other major earnings to keep an eye on today include Coca Cola, Johnson & Johnson and Yahoo. With all these major companies reporting earnings today, we could see a surge in volatility in the markets.

[B]EURUSD[/B]

The euro is trading higher again this morning, despite yesterday’s candle looking very bearish. Friday’s and Monday’s candles actually formed a bearish engulfing pattern, which usually marks the end of the uptrend. On top of that, the stochastic has crossed in overbought territory, another bearish indicator. So far this morning, the pair is finding resistance around the 50 day SMA, which suggest that this morning’s move is simply the euro paring some of yesterday’s losses and the pair is in fact back in a downtrend. If that’s the case then we may not see it complete the head and shoulders that was forming on the weekly chart. On the other hand, it could just be a temporary pull back, with the pair continuing it’s move towards 1.3341 later this week.

[B]GBPUSD[/B]

The pair has had a difficult start to the week, falling around 100 pips to end yesterday back below 1.53. This morning, it is finding resistance around this level, which is quite a bearish signal. The stochastic also crossed in overbought territory over the past couple of days, which again is quite bearish for the pair. If it continues to find resistance around 1.53, we could see further losses, with the pair finding support initially around 1.5260. That being said, on the 4-hour chart, the pair actually looks quite bullish, having bounced off the 38.2 fib level, while the stochastic crosses in oversold territory. If this is the case, we could see the pair move back towards last weeks highs of 1.5410, with it finding resistance along the way around 1.5340, 1.5362 and 1.5380.

[B]USDJPY[/B]

This pair is looking quite bullish this morning, having found support in the area between the 50 and the 61.8 fib levels. It also failed to close below 96.70, which was previously a major level of resistance. This again, is quite a bullish signal. We should now see the pair target 100.0 once again, with a break above here prompting a move towards 101.50. This will be a major level of resistance for the pair having previously been a big support level. In the shorter term, the pair should find resistance around 97.55, 98.20 and 98.58.

[B]AUDUSD[/B]

The aussie made huge losses against the greenback yesterday, before finding support around 1.0292, the 61.8 fib level. This morning, the aussie is paring some of those losses, but still appears pretty weak. It’s currently finding resistance around 1.0367, a previous level of support. If it breaks above here, it should prompt a move towards 1.0390, where it should find further resistance from the 200 day SMA. This was also previously a level of support for the pair. However, if the pair fails to break above the current resistance level, we could see a move back towards March lows of 1.0114. The stochastic on the weekly chart supports this bearish outlook, having crossed in overbought territory recently. For this to happen though, it will need to break below to 50 and 100 week SMAs which are currently providing support for the pair.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

358

[B]Gold finds some stability while markets respond to poor European data[/B]

Today’s US opening call provides an update on:

[ul]
[li]Gold begins to stabilise off the back of the worst sell-off in over three decades;
[/li][li]UK CPI remains at 2.8%, as markets contemplate the potential for further easing;
[/li][li]Both German and eurozone ZEW economic sentiment disappoint;
[/li][li]US looks forward to key housing and inflation data;
[/li][li]European stocks continue to fall, yet US stocks expected to lead higher;
[/li][/ul]

The headlines have been dominated by the downfall of gold since the loss of the crucial 1530 level on Friday. The cause of this highly significant loss have been attributed to a number of factors and conspiracy theories. Regardless of the initial catalyst, once this key support level broke, the precious metal has been in freefall, bringing about the most significant fall in price in over three decades. This morning we have seen the price of gold retrace somewhat and the markets are following closely to understand where this is merely a period of consolidation or a move to pull back to the levels of old. The inability of the typical safe-haven investment to retain value is a sure-fire boost to the equity markets as investors seek to find returns in a world of low bond yields and strong equity returns.

UK CPI came out as expected earlier, maintaining the 2.8% level for the second consecutive month. The CPI has a key role to play in the decision-making of the MPC with regards to further quantitative given the current inflation targeting imposed by the government and followed by the BoE. Subsequently, we are looking to see a reduction in this level to free up some room to manoeuvre on monetary loosening.

The German and Eurozone ZEW economic sentiment index figures were released earlier, with both plummeting below expectations. The German figure fell from 48.5 to 36.3, despite forecasters expecting a more moderate drop to 41.5. Similarly, the Eurozone figure fell from 33.4 to 24.9 despite expectations of a number closer to 31.5.

The US has a number of key releases today, with key inflation and housing data due out early into the US session. The building permits and housing starts are both due out simultaneously, with both expected to portray a similar picture of stability in the sector. Building permits are expected to remain at 0.94 million, while the housing starts are forecast to marginally increase from 0.92 million to 0.93 million. Meanwhile, the Core CPI rate is expected to remain at 0.2% in the other notable release of the day.

The European markets have continued to tumble for the third consecutive day off the back of alltime highs in almost all the major indices. However, this negativity has failed to spread across to the US markets, with the DJIA expected to open 44 points higher and the S&P500 up around 5 points.

[B]AUDCHF consolidates, yet further losses may be imminent[/B]

The Australian dollar has seen some significant losses over the past days off the back of the disappointing Chinese data early on Monday. Taking a look at the Australian dollar against the Swiss franc, we can see today’s appreciation may simply be a retracement in a bearish market and the break below key moving averages may serve to provide resistance to any move higher.

The recent fall in the pair saw a bounce off the 61.8 Fibonacci retracement level, pushing back above the key support and resistance level around 0.963, only to be rejected around the 50.0 retracement at 0.966. Most crucially, the 100 and 200 day moving averages provide key levels of resistance should we see further upside in the coming days.

The stochastic and CCI indicators are both currently in oversold territory and are likely to turn to the upside over the next two days, indicating a potential pullback towards the region of the 50.0 Fibonacci level and 100 day simple moving average.

I see it likely that we could see more upside momentum as a form of consolidation, however there is a clear downturn in sentiment against the Australian dollar as a result of China’s poor performance. Subsequently it is likely that this currency pair could fall lower towards the previous point of support around 0.945. That being said, the primary target would be the Fibonacci extension at 0.955.

[U][B]Read the full report at Alpari News Room[/B][/U]

359

0:09 What’s moving financial markets on Tuesday
1:01 CHART – Gold analysis
2:00 CHART – AUDUSD analysis
2:47 CHART – USDJPY analysis

Forex research: Global markets daily

360

[B]All eyes on the UK as BoE minutes released[/B]

Today’s UK opening call provides an update on:

• MPC voting to provide insight into future monetary policy;
• UK jobless claims expected to rise for first time since October;
• FOMC voting members Bullard and Rosengren speak later;
• Corporate earnings season continues with BoA and BNY.

All eyes will be on the UK this morning, when the Bank of England minutes from earlier this month will be released, along with unemployment figures for March.

We already know that the MPC voted against additional purchases earlier this month, however how the voting went should provide vital insight into what we can expect when they meet again on 9 May.

If the same six members voted against more purchases again in April, I think it’s safe to say we won’t see any further stimulus during Sir Mervyn King’s term as governor. On the other hand, if one more policy maker was convinced on the benefits of more stimulus, making the vote 5-4, then it’s anyone’s guess if we’ll see more purchases in May. That being said, I still think it’s going to be July at the earliest before we see any more stimulus from the BoE.

The final, and unlikely, scenario is that one, or more, of the members who previously voted in favour of additional purchases, changes their vote. We’ll probably see the pound rally if this happens, as that would all but kill any hopes of central bank stimulus before Mark Carney’s arrival in July.

The UK unemployment rate is expected to remain at 7.8% in February, while the number of new jobless claims are expected to rise by 500. This would represent the first increase in the number of jobless claims since October.

Over in the US later, the focus is going to be back on the Federal Reserve. The release of the Beige Book is always watched closely for signs that the economy is picking up, although recent data suggests that on this occasion it’s more likely to confirm the downturn.

We’ll also hear from two voting FOMC members, James Bullard and Eric Rosengren. While these comments will be watched closely for hawkish tones in relation to the Fed’s bond buying, we’re unlikely to see too much of a reaction to them in the markets, with investors appearing relatively assured that nothing is going to change any time soon. The disappointing economic data has also reassured the markets that no significant improvement has been seen in the labour market just yet.

Corporate earnings season has got off to a positive start so far. Results from Yahoo and Intel after the US close were not quite as strong as people had hoped, with ad revenues disappointing Yahoo investors and PC sales weighing on Intel revenues as people switch to tablets. However, it has still been a positive start to the earnings season, and investors will be hoping that continues today.

Before the opening bell, the focus will be back on the banks, with Bank of America and BNY Mellon both reporting first quarter earnings. Results from the banking sector have been pretty strong to this point so the pressure is certainly on both of these to keep the run going. Bank of America is expected to report much improved earnings compared to the same quarter a year ago, while BNY Mellon are expected to report a similar figure to last year.

[B]EURUSD[/B]

The euro surged higher yesterday, breaking through the 38.2 fib level that had previously acted as resistance. It also broke through both the 50 and 100 day SMAs with relative ease which is quite a bullish signal. It is currently finding resistance around 1.32, although I only expect this to be temporary. We could now see a brief pull back following such a strong move higher. If we do the pair should find support around 1.3140 and 1.3125. If the pair continues to edge higher, it should find further resistance around 1.3227, the 50 fib level. Given that the recent bullish move still only looks like a retracement of the longer term downtrend, dating back to the start of February, this could be a potential reversal point. If this level doesn’t hold, the pair should find further resistance around 1.3250, 1.33 and 1.3341, the 61.8 fib level.

[B]GBPUSD[/B]

Sterling pushed higher again yesterday, after finding strong support around 1.5260, a previous level of resistance.The pair formed a bullish engulfing pattern on the daily chart following a small downtrend, which suggests we could see further buying today. The next big resistance level for the pair will come around 1.54, followed by 1.5422, the 38.2 fib level. As with EURUSD, I think the recent buying is more a retracement of the longer term downtrend than an actual trend reversal so I’ll be keeping an eye on the fib levels for potential reversal points. This could come around 1.5360, given that the pair previously found support around this level, however if it pushes beyond here, the next potential reversal point that I’ll be watching is 1.56, the 50 fib level.

[B]USDJPY[/B]

The dollar is pushing higher again this morning after finding support around the 50 fib level over the past couple of days. The pair is looking quite bullish from here, with the next target being 100.0. This is supported by the recent inverse head and shoulders that formed on the 4-hour chart. A break above here should prompt a move towards 101.50, which was previously a major support level so should provide strong resistance. In the shorter term, the pair is currently finding resistance around 98.40 and should find further resistance around 98.58, 98.94 and 99.10.

[B]AUDUSD[/B]

The aussie is trading lower against the greenback this morning. The pair found resistance over the last couple of days around 1.04, from the 200 day SMA. Today, it’s finding support around 1.0350, where the 50 day SMA crosses the 50 fib level, which suggests we could still see more of a move to the upside in the coming days. That being said, we are seeing early signs of a head and shoulders formation on the daily chart which would be very bearish for the pair. If the pair breaks through the neckline of the head and shoulders, around 1.0275, then based on the size of the formation, we should see a pullback towards parity (1.00).

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

361

[B]Earnings season continues with more US banks reporting[/B]

Today’s US opening call provides an update on:

[ul]
[li]Bank of America and BNY Mellon the latest banks to report earnings;
[/li][li]eBay earnings to give insight into consumer sentiment;
[/li][li]Beige Book to provide information on the strength of the US economy.
[/li][/ul]
Corporate earnings season continues today, with more major US banks getting things underway before the open.

First quarter earnings have been largely strong so far, with many of the companies reporting beating earnings expectations. There have been some companies missing on revenues, despite beating on earnings, which has been a common occurrence for the past few quarters as companies make efficiency savings during difficult economic times.

It’s now down to Bank of America and BNY Mellon this morning to keep the positive start to earnings season going, with the former expected to easily beat earnings of USD0.03 per share, reported in the same quarter of last year. There’s been a trend of banks beating earnings expectations so far in this earnings season, so it will be interesting to see if meeting expectations will be enough to prevent a selloff in those reporting today.

We also have earnings from American Express and eBay after the close in the US. The latter should give an indication of consumer spending, with a rise suggesting that while consumers are spending, they are seeking out bargains as opposed to paying high street prices. It will also give an indication of whether more people are turning to the internet in general to purchase their goods.

There’s little in the way of US economic data out this afternoon, with the main release being the Fed’s Beige Book later in the session. The Beige Book is likely to confirm what we’ve seen over the past few weeks, that the US is experiencing early signs of a slowdown in the second quarter, just as we’ve seen in the last two years. We could see a positive reaction though if these fears turn out to be incorrect and the Fed view the disappointing March figures as a one off.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

362

[B]Verizon earnings to provide insight in iPhone sales[/B]

Today’s US opening call provides an update on:

[ul]
[li]eBay earnings beat analyst forecasts but fall short of whisper number;
[/li][li]Verizon earnings to give insight into Apple results;
[/li][li]UK retail sales fall less than expected.
[/li][/ul]
All eyes will be on the US again on Thursday, as first quarter earnings continue to dictate market sentiment.

Shares in eBay are expected to open lower today, despite reporting earnings slightly ahead of expectations at $0.63. One of the problems here was that although analysts had forecast earnings of $0.62 per share, the whisper number tends to be followed more closely by investors and this was $0.64. Therefore, earnings actually fell slightly short of expectations.

On top of this, the company missed on revenues and forecasts slightly lower second quarter earnings and revenues. The pull back in the shares is only likely to be temporary and is largely due to overly ambitious earnings expectations which probably has something to do with the huge rise in the share price over the last 12 months.

There are plenty of companies due to report again today, including PepsiCo, who’s results are expected to come in largely in line with expectations. That being said, we may see the company miss on revenues as we saw with Coca Cola earlier in the week.

A lot of focus this morning is going to be on Verizon earnings, or more specifically the conference call after. This will provide the first insight into Apple’s performance in the first quarter. Apple is due to report earnings next week, but the number of iPhones activated by Verizon, which is usually disclosed in the conference call, should provide crucial insight into iPhone sales in the first quarter. If iPhone activations fall below expectations, we could see Apple’s share price hit yet again, after it fell below $400 for the first time since December 2011 yesterday.

After the close the focus will be on the tech sector, with Google and Microsoft reporting. Google shares have been under pressure recently, as competitors seek to eat into the companies large market share in smartphones, where Google dominates the andoid market.

It’s been a quiet start to the day in Europe, with the only economic release being March retail sales out of the UK. This came out slightly better than expected at -0.7%, although core retail sales were worse than expected, causing the pound to tumble early in the session.

[B]EURUSD[/B]

The euro made substantial losses against the dollar on Wednesday, wiping out all of Tuesday’s gains. This left us with a pattern that closely resembles a tweezer top formation. Now, the tweezers aren’t perfect, with both candles having a small lower wick and the candle before the first tweezer being quite bearish. However, given that both bodies are almost identical in size and the upper wicks are the same length, they’re close enough as far as I’m concerned. This suggests the pair has turned quite bearish. So far today, it is trading higher, however it’s also finding resistance quite quickly from the 50 day SMA which could prompt a move lower. If this does mark the end of the move higher, it would leave the head and shoulders on the weekly chart a little rough around the edges, however again, I think it would still pass. Therefore, if the pair now closes below 1.2740 in the coming weeks, it will be a very bearish signal, prompting a move back towards 1.1750, based on the size of the formation.

[B]GBPUSD[/B]

The pair is looking quite bullish at the moment, having found support from the 50 day SMA over the past couple of days. Also, on the 4-hour chart, the stochastic has just crossed in oversold territory, which is a bullish signal. It is currently finding resistance around 1.5260, which also acted as a key level of resistance back in March and at the beginning of April. If it breaks above here then the next target will be last weeks highs of 1.5410, although the pair will probably find resistance along the way around 1.5270, 1.5291 and 1.5378. In the longer term, I still believe this pair is bearish and the uptrend we’re currently seeing is a retracement of the longer term downtrend, dating back to the start of the year. Therefore, the 50% retracement of the move from those highs to March lows, around 1.56, looks like the most likely target for the pair, before we see a continuation of the downtrend.

[B]USDJPY[/B]

The dollar is looking quite bullish again, following the pullback in the pair back to the 50 fib level. From here, the next clear target is 100.0, with a break above here prompting a move towards 101.50. This will prove to be a major level of resistance and could mark an end to the aggressive moves higher, with further gains from here taking longer to pan out. We appear to be seeing some consolidation in the pair over the past couple of days. However, the higher lows on the 4-hour chart clearly highlight that the pair is still in an uptrend, despite finding resistance around 98.35. This has led to the formation of an ascending triangle, which is a little unusual following a downtrend. Rather than being a period of consolidation before a continuation of the downtrend, I expect this to break on the upside, with the higher lows highlighting the fact that the number of sellers are falling, while the number of buyers are increasing. The next level of resistance will then come around 98.58, followed by 99.10.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

363

0:09 Earnings from eBay last night
1:05 How Verizon earnings could impact Apple
2:51 Today’s economic data

Forex research: Global markets daily

364

[B]Attention on Weidmann speech and earnings on Friday[/B]

Today’s UK opening call provides an update on:

• Focus on Jens Weidmann speech and US earnings on Friday;
• Weidmann comments watched very closely following recent dovish comments;
• McDonald’s, State Street and General Electric report earnings;
• Little expected from G20 meeting.

There’s very little in terms of economic data out this morning. Traders will have an eye on German PPI and the eurozone current account figures, however I think a lot of the attention is going to be on first quarter earnings in the US and Jens Weidmann’s speech in Washington DC.

Weidmann’s speach will be watched very closely following his comments earlier this week, when he hinted that there could be an ECB rate cut, should incoming data suggests it is warranted. Weidmann has long been a very hawkish member of the ECB, so it’s unsurprising that his comments prompted such a big reaction in the markets, in particular in the euro pairs.

If Weidmann claims these statements were misinterpreted during his speech in Washington, I think its safe to say that we’ll see the euro appreciate rapidly, given the original reaction to the comments. However, if Weidmann stands by his words, we could see further weakness in the euro on Friday.

There’s not quite as many companies reporting first quarter earnings this morning, however there’s still a few which should create some movement in the markets. Before the opening bell, we have earnings from McDonald’s, State Street and General Electric among others, which could again drive market sentiment on Friday. On top of that, we had better earnings from Microsoft and Google after yesterday’s close, so we could see a positive reaction in tech stocks today.

The G20 meeting is unlikely to create much activity in the markets on Friday. We’re probably going to see a very similar statement to the last, with the G20 committing to not using monetary policy to depreciate their respective currencies, while highlighting that they support Japan’s efforts to overcome deflation. What this essentially means is that Japan will continue to depreciate the yen in the short term, however their actions are being monitored closely.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

365

[B]Yen tumbles as G20 gives backing to Bank of Japan easing[/B]

Today’s UK opening call provides an update on:

• BoJ backed by G20 over ultra-loose monetary policy;
• Eurozone consumer confidence expected to worsen again in April;
• US existing home sales may disappoint in March;
• Caterpillar earnings watched for signs of global slowdown.

The Bank of Japan received backing from the G20 over the weekend for its massive bond buying program, that has reignited talks of global currency wars. The rapid weakening of the yen, as a direct result of the ultra-loose monetary policy, has led to suggestions that the BoJ would be warned about future easing which could prompt other central banks to act in order to limit the appreciation of their own currency.

Instead, the statement acknowledged that the program was intended to put an end to deflation boost domestic activity, which essentially means the central bank has been given the green light to further weaken the yen. This should now be enough to push the yen above 100.0 against the dollar, for the first time since April 2009, with the next big test coming at 101.50.

The economic calendar is looking pretty light again on Monday, and for the rest of the week for that matter. The first quarter GDP figures out of the UK and the US, released on Thursday and Friday respectively, will attract the most attention this week. Eurozone consumer confidence is likely to disappoint again in April. The ongoing issues in a number of countries, including Italy, Cyprus, Slovenia and France have already had a detrimental effect on the rest of the data, there’s no reason to believe why this will be different. Market expectations are currently for a figure around -23.95, although I would be very surprised if this didn’t disappoint.

Housing data in the US is going to be watched closely this week, with investors looking for further signs of slowing activity in the world’s largest economy. Existing home sales are expected to increase by 5.01 million in March, although again, I wouldn’t be surprised if this missed, with other economic data in March already falling short of market expectations.

With the economic calendar looking a little light this week, corporate earnings season is likely to drive market sentiment again. Despite the bar being set pretty low again in this earnings season, companies have once again really struggled to live up to expectations when it comes to revenues. Just as with the last few earnings seasons, companies have been able to draw attention away from revenues with higher earnings, which is a trend we’re seeing once again in the first quarter.

There are a number of major companies reporting first quarter earnings this week, including Apple, Amazon and Exxon Mobil. Today though, as with the economic calendar, it’s looking a little light on the earnings front. By far, the most closely watched earnings will come from Caterpillar, before the opening bell in the US.

Caterpillar earnings provide crucial insight into global economic activity, especially in China which recently fell well short of expectations when it released its growth figures for the first quarter. Strong earnings here could go some way to easing concerns about a slow down here, especially if it is combined with a positive outlook for the rest of the year.

[B]EURUSD[/B]

There’s been quite a lot of indecision in this pair over the last couple of weeks. The pair is currently stuck in a range between 1.30 and 1.32, and as it stands, a breakout doesn’t look very likely in the short term. This morning, the pair has found support from the 50 day SMA, which may prompt a move back towards 1.32 in the coming days. This is supported on the 4-hour chart, where the stochastic has recently crossed on oversold territory, which is a bullish signal. If we do see a move higher, the next levels of resistance should come around 1.31, 1.3130 and 1.3160.

[B]GBPUSD[/B]

Sterling is finding support again on Monday from the 50 day SMA. This has acted as support now for the last week, which suggests we could see another push higher in the pair. That being said, the pair is also finding resistance from the mid-point of the bollinger band on the daily chart, having broken below here on Friday. This is quite a bearish signal and is supported on the weekly chart by the bearish engulfing pattern. The stochastic on the weekly chart has also crossed in overbought territory, which suggests we could now see a move back towards 1.49, March’s lows. If we do see a move lower, the pair should find further support around 1.52, 1.5157, 1.51 and 1.5075.

[B]USDJPY[/B]

The dollar made substantial gains against the yen on Friday, on expectations that the G20 would come out in support of the BoJ’s aggressive easing. That’s exactly what they did, which has helped push the pair even higher again this morning, to within touching distance of 100.0. It’s only a matter of time now until we see this level broken, with 101.50 being the next major resistance level. It’s just a question now of whether we’ll see another pull back first. The gap from Friday’s close to last night’s open has already been filled so I don’t think we’ll see another retracement. Instead we could see some consolidation, before a break on the upside.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

366

[B]Caterpillar earnings in focus before the opening bell[/B]

Today’s US opening call provides an update on:

[ul]
[li]UK downgrade from Fitch overlooked as FTSE pushes higher;
[/li][li]G20 backs BoJ easing, prompting further yen weakening;
[/li][li]87-year old Napolitano re-elected for seven year term;
[/li][li]Earnings dominate again, starting with Caterpillar;
[/li][li]UK and US GDP releases key this week.
[/li][/ul]

Fitch’s decision to strip the UK of its triple A status on Friday has had absolutely no impact on the markets this morning, with FTSE currently trading higher by 0.7%.

Decisions by ratings agencies to downgrade countries rarely has an impact on the markets these days. However, given that this followed Moody’s decision to downgrade the UK back in February, it really is no surprise to see the markets overlook it when they reopened on Monday.

We’re seeing further weakness in the yen again this morning, after the G20 gave their blessing to the Bank of Japan’s aggressive monetary easing. It’s surely only a matter of time now before 100.0 is broken on USDJPY, which should then prompt a pretty rapid move towards 101.50.

Giorgio Napolitano has been re-elected for another seven year term as Italian President at the age of 87. Napolitano is the first President to ever be re-elected, in what was a desperate attempt to bring some stability to Italian politics, after the main parties failed to agree on a new President.

Market sentiment is going to be dominated by corporate earnings again this week, starting with Caterpillar, who will release first quarter results before the opening bell. Caterpillar is the world’s largest manufacturer of construction, mining and forestry equipment so the company’s results should provide additional insight into whether we’re actually seeing a slowdown in the second quarter or if it’s just a temporary blip.

The economic calendar is looking pretty light this week, and will therefore be largely overshadowed by earnings. The main focus will be on Thursday and Friday, when the UK and US, respectively, release first quarter GDP figures. Today, we have consumer confidence figures from the eurozone and existing home sales from the US, both of which are likely to disappoint if recent data is anything to go by.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

367

0:08 UK downgrade by Fitch
0:35 Corporate earnings, including Caterpillar
2:03 Today’s economic calendar
3:47 G20 support for BoJ stimulus

Forex research: Global markets daily

368

[B]UK borrowing and eurozone PMIs in focus on Tuesday[/B]

Today’s UK opening call provides an update on:

[ul]
[li]Chinese manufacturing activity stalls in April;
[/li][li]Eurozone manufacturing and services PMIs in focus this morning;
[/li][li]UK government borrowing to fall in March;
[/li][li]Corporate earnings to overshadow US data;
[/li][li]Apple headlines Tuesday’s corporate earnings.
[/li][/ul]

European indices are expected to open higher on Tuesday, despite another batch of disappointing data out of China over night.

Following some equally disappointing data last week that showed China growing at only 7.7% in the first quarter, the manufacturing PMI showed a slower pace of growth in April. This was driven by a drop in the number of new orders, with the biggest concern being the drop in new orders for export, driven by an ongoing slowdown in the global economy.

This suggests we will see further slowing in the second quarter and not only was forecasts for 8-8.5% growth far too ambitious in Q1, but 7.7% may already be looking out of reach for the second quarter. This means we may return to a period of slowing growth in China will prompted talk of a hard landing in China last year. On a positive note, this should all but end talk of monetary tightening in the country in the near future.

The focus is back on the eurozone this morning, with the release of the manufacturing and services PMIs. At the start of the year, we saw a major improvement in these figures, not just in Germany and the eurozone, but also Spain and Italy, which suggested we could see the region pull out of recession later in 2013. That’s all changed now, with only France showing signs of improvement in the last couple of months. Although, French figures could hardly get any worse.

Market expectations are for largely similar figures to those we saw in March, with only French data expected to improve slightly. I don’t expect to see any surprises here, with the eurozone benefiting from a period of post-Cypriot bailout calm. If anything, we could see slightly better figures, with both manufacturing and services returning close to pre-Cypriot bailout levels.

UK public sector net borrowing is expected to be £14 billion in March, down from £15.9 billion in the same month last year. If it comes in in line with expectations, it would represent a small drop in the governments spending for the last fiscal year. That being said, questions have been raised in respect to how the government has managed this small reduction in spending. A big cut in government departmental spending, combined with some creative accounting from the government, is thought to be largely responsible for sparing Chancellor George Osborne the embarrassment of seeing the deficit rise last year.

Over in the US, attention will once again be on corporate earnings season as it really gets into full swing. There are a couple of pieces of economic data being released, including the flash manufacturing PMI for April and new home sales in March, although neither of these are likely to have a major impact on the markets. A small pullback is expected in manufacturing, to 54.0, while a slight improvement in new home sales is expected, to 420,000.

Once again, we have a large number of major companies reporting first quarter earnings on Tuesday, although most will be overshadowed by Apple, who reports after the US close. Apple shares have plummeted since hitting highs around $700 last year and today could mark the turning point. If Apple beats earnings, or more importantly, offers an optimistic outlook for the next year based on new products and upgrades to the disappointing iPhone 5, we could see an end to the downward spiral witnessed in Apple’s share price.

We also have earnings today from a number of other top US companies, including AT&T, ARM Holdings, Delta and Du Pont. So far, the first quarter earnings season has followed the same pattern of the previous few, with earnings beating expectations and revenues coming in below par. As a result, I see no reason why these results will be any different.

Ahead of the open, we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

369

Today’s US opening call provides an update on:

[ul]
[li]Corporate earnings in focus on Tuesday, including Apple and AT&T;
[/li][li]Chinese manufacturing slows in April;
[/li][li]Worsening German data points to ECB rate cut;
[/li][li]UK government borrowing falls slightly in the last 12 months.
[/li][/ul]

It’s going to be all about the corporate earnings during the US session on Tuesday, with some major companies reporting before the open including Du Pont, US Airways and Delta Air Lines.

Even these though are likely to be overshadowed by earnings after the closing bell in the US, in particular from Apple, the second largest company in the S&P. Investors appear to have priced in poor earnings from Apple which could actually work to the companies advantage.

At the same time, there is going to be a lot of attention on things like margins in Apple’s earnings, with people opting to buy the iPhone 4 rather than the new iPhone 5. There will also be a lot of interest in the outlook for Apple, with the current share price reflecting the pessimism surrounding the company, compared to last year.

It’s been a bright start to the European session despite the economic data being far from strong. Chinese manufacturing grew at a much slower pace in April, compared to March, with exports in particular being hit. Exports to the eurozone and the US are continuing to drop, with a prolonged recession in the former and second quarter slowdown in the latter reducing demand.

The eurozone figures weren’t much better. French manufacturing and services PMIs both came out higher than expected, however the figures are still poor at 44.4 and 44.1, respectively. This is hardly something to celebrate. German figures on the other hand were both below expectations, with services actually falling into contraction territory for the first time since November.

This is now going to prompt talk again of an ECB rate cut, given that Bundesbank head, Jens Weidmann, conceded recently that a rate cut would be considered if we see further worsening in the economic data.

UK government borrowing fell slightly in the last fiscal year, thanks to some creative accounting from the government. Shifting some payments into the current fiscal year and implementing some last ditch departmental savings spared the Chancellor the embarrassment of reporting higher borrowing than the previous fiscal year. Unfortunately for George Osborne, no one has been fooled.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

370

0:09 Eurozone economic data
1:31 UK debt figures
3:01 Chinese economic data
3:55 US corporate earnings and economic data

Forex research: Global markets daily

371

[B]Earnings in focus on Wednesday as Apple disappoints[/B]

Today’s UK opening call provides an update on:

• Earnings under the spotlight again on Wednesday;
• Apple beats earnings expectations but lower margins weigh on share price in after-hours trading;
• Boeing results watched closely following 787 Dreamliner issues;
• German Ifo business climate figure could surprise this morning;
• German and Italian auctions followed closely.

We’re approaching the half way point of the first quarter corporate earnings season and while some of the biggest companies have now reported, there’s still plenty still to go, including Procter & Gamble, Qualcomm and Boeing on Wednesday.

Earnings have been relatively positive so far, which has helped support the stock market rally. As with the previous quarters, revenues have fallen, although these are continuing to be overlooked. I expect to see similar results again today. We have some major companies reporting once again on Wednesday, so the results of these are likely to drive market sentiment once again.

Apple results after the closing bell on Tuesday gave investors little to be optimistic about, especially in the second quarter. The company may have beat earnings estimates, which were lower than a year ago, while returning $50 billion to shareholders as part of a share buyback and increasing the dividend, however this wasn’t enough to distract investors from the things that matter. Gross margins were down again in the first quarter, at 37.5%, while margin forecasts fell further for the current quarter to 36%-37%. Both of these fell below market expectations, which has led Apple shares to trade lower in after-hours trading despite an initial move higher.

Boeing results are going to be of particular interest on Wednesday, given the problems that the company has had with its 787 Dreamliners in the first quarter. The issues with the batteries are close to being resolved, so now it’s just a case of what impact the issues had on the company’s earnings in the first quarter and how they’re expected to impact future profits. There’s been a lot of talk recently about compensation for those companies that have been impacted by the battery issues, which should make the conference call afterwards all the more interesting. This is probably what will create the most movement in the company’s share price.

There’s going to be very few talking points on Wednesday, in respect to the economic calendar. The main economic release in the eurozone will be the German Ifo business climate figure for April. This is expected to pull back slightly to 106.2, but based on the disappointing manufacturing and services figures seen on Tuesday, I will be very surprised if this doesn’t fall short of expectations at around 105.0. Italian retail sales will also be released and are expected to increase by 0.4%, although this is very unlikely to have much of an impact on the financial markets.

There are a couple of debt auctions in the eurozone as well, in Germany and Italy. Usually this would be seen as a key test of risk appetite in the markets, however this may not be the case at the moment. Last week, Germany sold 10-year debt at record low yields of 1.28%, while European stock markets yesterday soared following a very successful Spanish debt auction that saw borrowing costs tumble. This may be due to the huge amounts of liquidity currently in the financial markets, as central banks resort to quantitative easing in a bid to stimulate the economy. However, the auctions will still be watched closely for signs that the markets are losing confidence in the countries.

Finally, US durable goods orders will be released and are expected to show a 2.8% drop in March. These figures can be quite volatile, so I don’t expect to see too much of a negative reaction to this, especially with earnings largely overshadowing the economic data.

[B]EURUSD[/B]

We’ve seen a gradual pull back in this pair over the past week or so, since it failed to break above 1.32. I now expect to see it push on again, having found support where the 100 day SMA crosses the 50 fib level. You can see a very clear bounce at the 50 fib level, which suggests there was plenty of buyers here. This is also the 200-period SMA on the 4-hour chart which will have provided additional support. The next target for the pair will now be last week’s highs of 1.32, although it should find resistance along the way, around 1.3014, 1.3083 and 1.3128.

[B]GBPUSD[/B]

Cable appears to have lost any kind of direction the past week or so, resulting in it trading sideways. I mentioned last week that the pair is looking a little bearish if anything, following the bearish engulfing pattern on the weekly chart and that still looks to be the case. At the moment though, it appears to be struggling to break below a major support level around 1.5230, which was previously a key level of resistance. Adding to this is the 50 day SMA, which has been propping up the pair for more than a week now. If we see a break below here then I expect to see another move back towards 1.4830, however if it holds, it may suggest that the retracement hasn’t yet been completed, with 1.56, the 50 fib level, being the next clear target.

[B]USDJPY[/B]

We’re seeing continued pressure on the 100.0 level in this pair, with the move higher having failed now on two occasions. It’s going to take a big push to move above here, but once it does, the next move to 101.50 should be pretty rapid. Once again yesterday, we saw the dollar find support around the 50 fib level before pushing higher which suggests we could see another attempt to break 100.0 in the coming days. Although, we could see another couple of small retracements before then.

Ahead of the open, we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]

372

[B]European indices higher despite poor German figures[/B]

Today’s US opening call provides an update on:

[ul]
[li]Corporate earnings takes centre stage with Procter & Gamble, Qualcomm and Boeing reporting;
[/li][li]Apple beat earnings forecasts but fall short on gross margins;
[/li][li]European stocks jump on poor German Ifo figures.
[/li][/ul]

US indices are expected to open higher on Wednesday, with corporate earnings continuing to come in above market expectations.

It’s been another good corporate earnings season, in terms of companies beating expectations on earnings. Revenues are continuing to fall short, however investors appear to be willing to turn a blind eye to this as they have in previous quarters.

Today we have two companies reporting from the DJIA, which should draw some attention. Procter & Gamble are a major component of both the Dow and the S&P 500, so naturally these results will be watched closely. Attracting more attention will be Boeing earnings, given the issues with the 787 Dreamliner over the past few months. Analysts will not only be looking the impact on first quarter earnings, but also the impact on future earnings as well with some airlines looking for compensation as a result of the planes being grounded.

Apple earnings creating some volatility in the stock in after-hours trading. The company beat market expectations on earnings, while announcing an increase in the dividend and a share buyback in order to return $50 billion to shareholders. This pushed the stock up as much as 6% shortly after the release.

Unfortunately, the rally didn’t last with the company’s gross margins and forecasts weighing on sentiment. Apple is now expected to open lower on Wednesday. Margins are a major concern for investors, with first quarter results showing a second drop below 40%, and second quarter margins expected between 36%-37%, below analysts’ forecasts. The company, in keeping with tradition, also didn’t provide any hints about future product releases which could have given investors something to get excited about.

This morning there’s been very little movement in the markets, with the only bit of volatility coming shortly after the release of the German Ifo business climate figure. This came in well below market expectations at 104.4, although this should not be surprising given the other data seen out of the eurozone recently.

Immediately after the release, we actually saw European stocks rally, which is something we should become accustomed to following Jens Weidmann’s comments last week. In suggesting that we could see a rate cut if we see a further deterioration in the economic data, he has now prompted the market to buy on weak data and sell on good, similar to what we saw at the end of 2012 before the Fed announced QE3. The impact was only temporary though, with the market quickly correcting itself. This is a clear sign that the market really isn’t interested in economic data at the moment, with earnings instead driving the markets.

Ahead of the open we expect to see…

[U][B]Read the full report at Alpari News Room[/B][/U]