Covering the latest forex news for the global currency markets in real time: currencies, indicators, central banks, stocks, gold and oil.
Everyone look at this EURUSD indicator level!!!
I got them from fxpremiere group and they work very well EURUSD and USDCHF comdol pairs that work in opposites. So a SELL EURUSD is a BUY USDCHF!!! look at this.
[B]European data in focus as chaotic week draws to a close[/B]
Today’s UK opening call provides an update on:
[ul]
[li]German consumer confidence seen remaining at six year highs;
[/li][li]UK third quarter growth expected to be confirmed at 0.8%;
[/li][li]US annualised third quarter growth expected to remain unchanged at 3.6%;
[/li][li]Beware of triple witching today.
[/li][/ul]
With the big “will they or won’t they” FOMC meeting now behind us, markets are expected to be much quieter in the lead up to Christmas, with trading volumes significantly reduced and the economic calendar looking very thin.
There’s still a few economic announcements today worth keeping an eye on, although a couple of them are final revisions to previous releases which tends to reduce the impact they have on the markets. First up is the German Gfk consumer confidence survey, which is expected to remain at six year highs of 7.4.
Big efforts are currently being made in Germany to increase consumer spending, in the hope that it will lead to the country importing more goods from other eurozone countries and aid in their recoveries. One example of this will be the increase in the minimum wage, which will both help other countries become more competitive with Germany while also giving Germans more cash to spend, hopefully on imported goods from Greece or Spain etc.
This rising consumer confidence that we’re seeing is hopefully a sign that these efforts are working and the rebalancing of the eurozone is finally underway. Going forward we will hopefully see this reflected more in trade balance figures, with Germany’s trade surplus, which is currently at record highs, falling which will hopefully then bring down the trade deficits of other eurozone members.
The final revision for UK GDP is expected to confirm that the country grew by 0.8% in the third quarter, leaving it on course to record the strongest growth of any of the major Western economies this year. This is quite unbelievable when you consider that it was only this year that the country was in crisis and at risk of falling into a triple dip recession.
Not only did that never materialise, but the double dip has now been revised away and people are more focused on when the Bank of England will raise interest rates, rather than what it will do to stop another downturn. If this momentum can be carried into 2014, it could be a very good year for the UK.
Next up we have the final revision of the US third quarter GDP figure. On an annualised basis, this is expected to remain at 3.6% following the upward revision a couple of weeks ago, that undoubtedly contributed to the FOMC’s decision on Wednesday to reduce its asset buying program by $10 billion. In fact, Fed Chairman Ben Bernanke highlighted this, alongside improvements in the labour market as one of the reasons for the taper.
Finally, we have the preliminary reading of the eurozone consumer confidence figure for December. This is expected to remain deep in contraction territory at -15.4, highlighting the huge pessimism among consumers in the eurozone still. That said, we are still seeing gradual improvements here in the long term which is still a positive development. The eurozone crisis is still got a long way to go and the recovery is going to be very gradual, so this data is actually very consistent with expectations.
One more thing worth noting is that today is one of the four occasions in the year when we have a triple witching. What this means is that contracts for stock index futures, stock index options and stock options all expire today. This can create a surge in volatility, particularly towards the end of the day.
Ahead of the open we expect to see the FTSE up 22 points, the CAC up 21 points and the DAX up 34 points.
[B]US GDP in focus as stocks look to end on a high[/B]
Today’s US opening call provides an update on:
[ul]
[li]Stocks look to continue strong week;
[/li][li]Trading volumes likely to fall significantly next week;
[/li][li]US GDP and eurozone consumer confidence figures released today.
[/li][/ul]
It’s been a surprisingly good week for stocks, under the circumstances, and it looks set to continue today with futures pointing to a higher open on Wall Street.
Wednesday’s decision by the FOMC to reduce its monthly asset purchases came as a shock to many, with surveys beforehand showing up to 90% of people anticipating no taper. Considering previous reactions to the possibility of tapering, many would have expected the response to be negative.
However, the commitment from the Fed to maintain low interest rates until unemployment falls well below 6.5% completely offset the disappointment from the taper, and was clearly seen by investors as preferential to it. While the threshold wasn’t technically moved, it clearly has been in the minds of the FOMC which has provided comfort to investors.
These gains may continue in the coming weeks, although with the holiday season now upon us, trading volumes will be significantly reduced. The economic calendar will also provide less direction for the markets, making any significant moves unlikely.
The only noteworthy economic release on Friday will be the final revision to the third quarter US GDP figure, which is expected to remain unchanged at 3.6%, on an annualised basis. Any upward revision to this will just be further evidence that the US is recovering well and the FOMC was correct to scale back its asset purchases.
Also being released today will be the eurozone consumer confidence figure, which is expected to remain at -15. While this is still deep in negative territory, highlighting how pessimistic consumers still are, it’s still far better than it was earlier this year. Clearly there is still a long way to go with the eurozone recovery, but it is headed in the right direction, and that is the important thing.
Ahead of the open we expect to see the S&P up 2 points, Dow up 19 points and the NASDAQ up 5 points.
[B]Markets set for quiet session on Christmas Eve[/B]
With it being Christmas Eve, we will obviously get the usual lack of volume, with trading floors emptying out at midday with people looking to brave the horrendous weather conditions to get home to their families. However with US markets still trading, and some economic data coming out there is as always still something for traders to focus on.
Forex markets will be looking to carry on with the movements from yesterday as the Yen yet again comes into focus. All eyes are going to focus on US data though as durable goods and housing data is released. USDJPY will be looking for something to boost it to test yesterdays highs at 104.40. something with a little more gusto could well see highs from last Friday (a measly 20 pips) given a test.
With a range today of 20 pips its not looking too much more exciting for EURUSD. A positive target today for the pair is that of yesterday’s highs at 1.3715, while we are currently sitting on support of the last few days at 1.3670.
GBPUSD has seen a little more movement this morning with the bulls coming back in and pushing cable back above today’s major support at 1.6360, with the a move now open up and US numbers expected later today thenw e could be looking at targets at support of 1.6375 and more likely 1.6390. However we have to be careful with anything to do with US data at the moment and that is only cause it has been so positive. Low volume can sometimes breed volatility and we could well see that is today’s US data continues its recent positive path of very strong readings.
European stock markets headed for a fifth straight day of gains in thin holiday trade on Tuesday, as investors waited for durable-goods orders data from the U.S. The Stoxx Europe 600 index climbed 0.2% to 323.90, after closing at the highest level since early December on Monday. Several country-specific indexes were closed for the Christmas holidays, including Germany’s DAX 30 index , while most others were scheduled to close after lunch. The U.K.’s FTSE 100 index rose 0.3% to 6,699.38 and France’s CAC 40 index added 0.2% to 4,222.93. Shares of Segro PLC rose 0.3% in London after the property investment firm said it completed the disposal of the Neckermann site for 46 million euros ($63 million). Oil firms were also higher, with shares of BP PLC up 0.7% and BG Group PLC 0.8% higher.
ASIA: MARKETS - Japanese shares hit a six-year high Tuesday, helped by a weaker yen and propelled steadily upward as investors looked to developed Asia for returns, indicating growing faith in Japan’s reform agenda. The Nikkei Average was 0.7% higher following a national holiday Monday, bringing its year-to-date gains to 53.8% and making it by far Asia’s top performer. The gains followed another strong performance in U.S. stocks, which advanced for the fourth-straight session, with the Dow Jones Industrial Average closing at a record high for the 48th time this year. Chinese stocks traded higher for a second consecutive day, cementing a recovery from over two weeks of losses despite a stubborn cash crunch that has led interbank lending rates to hit a six-month high, starving the system of liquidity. The stresses began to ease Tuesday, with the benchmark seven-day repurchase agreement rate down to 5.5% from 8.94% Monday, releasing cheaper cash into the financial system and buoying markets. The mainland’s Shanghai Composite Index managed to achieve gains of 0.7% by the middle of the day. Hong Kong’s Hang Seng Index gained 1.1%. Shares in Australia gained for a fourth-straight session, with the S&P/ASX 200. After a slow start, Korea’s Kospi rose 0.4%. New Zealand’s benchmark index was a strong performer for a second day running, rising 1% to a three-week high. Markets in Australia, New Zealand, Singapore and Hong Kong were all due to close early Tuesday, to break for the Christmas holiday.
00:14 - Markets continue Santa rally
00:30 - Japanese inflation shows positive movement towards 2% target
02:57 - Obama signs off budget deal which reduces the chances of a January shutdown
03:58 - US 10y bond yields hit 3% for first time since 2011.
For further news and analysis, check out the Alpari newsroom at
Alpari Newsroom | Live Daily Forex News | Giving you expert market analysis
[B]Santa rally in full swing as we approach the end of the year[/B]
Today’s UK opening call provides an update on:
[ul]
[li]Santa rally in full swing as we approach the end of the year;
[/li][li]Another quiet week expected in the markets;
[/li][li]Rise in UK house prices showing no signs of slowing;
[/li][li]US session also expected to be relatively quiet.
[/li][/ul]
The rally once again saw the Dow, S&P and DAX posting record highs while the FTSE continued to edge ever closer to a record high of its own. We should be a little careful though as these gains have come at a time when trading volumes have dropped significantly, owing to the festive period, which can sometimes be followed by sharp reversals as volumes pick up again.
That said, January has historically been a good month for equity markets, particularly in recent years, so this aggressive rally may just be in anticipation of this trend continuing. In fact, many believe that the Santa rally is just this, investors being proactive in anticipation of the “January effect”, as opposed to it being down to Christmas bonuses being invested into the markets, or a more positive feeling generally among investors, as others would suggest.
As for today, European indices are seen opening relatively pretty much in line with Friday’s closing levels. Trading volumes are expected to remain low for most of this week, if not all of it, with another bank holiday coming on Wednesday. Volumes on Monday and Tuesday should be particularly low, as traders extend their holiday’s from last week through to the end of the year.
Not helping these lower trading volumes is the fact that the economic calendar is looking so thin. We have a few low impact releases this morning, starting with UK Nationwide house prices for December. This is expected to show house prices up 0.7% compared with November and 7.1% compared with the same month last year. This is fairly consistent with recent data which suggests the recovery in the housing market is showing no signs of slowing.
It’s still a little early to say whether this is something we should be concerned about. Some suggest we’re simply creating another housing bubble in order to get the economy moving again and distract away from the longer term issues that still face the country. On the other hand, a short term boost in the housing market, as long as that is all it is, could be what the economy needs in order to give consumers the confidence to spend again which will hopefully lead to more hiring and investment from businesses.
Also being released this morning we have the Spanish retail sales for November and the Italian business confidence figure, which is expected to rise to 99 from 98.1 in November. After this it’s over to the US, where we’re expecting a similarly quiet session. The economic calendar here is also looking very light, with the only notable release being the November pending home sales figure, which is expected to show a monthly increase of 1%.
Ahead of the open we expect to see the FTSE down 7 points, the CAC down 2 points and the DAX flat.
[B]US economic data in focus on Monday[/B]
Today’s US opening call provides an update on:
[ul]
[li]Lower trading volumes continue this week;
[/li][li]US pending home sales the highlight of today;
[/li][li]Manufacturing data also eyed;
[/li][li]No reason to doubt that the January effect will continue to guide markets higher.
[/li][/ul]
It’s been a very quiet start to the week so far, which is hardly surprising given the time of year.
As we tend to see around this time, trading volumes have been very low and this is likely to continue into year end, with many traders extending their holidays a couple of extra days. This isn’t helped by the lack of catalysts in the markets around this time of year, with the economic calendar looking very light and corporate earnings season not starting for a couple more weeks.
There is a couple of pieces of data being released in the US on Monday, although both are unlikely to have much of an impact on the markets. The first is the pending home sales figure for November, which is expected to show a 1% month on month increase.
This would be very positive for the US as it would bring an end to the five consecutive months of falling sales, which came following the rise in mortgage rates in the middle of this year. That said, this may only be a slight blip in the data with rates expected to rise further next year as the Fed brings an and to its quantitative easing program. It will be interesting to see how home buyers respond to these changes in rates, with some potentially being deterred, while others may try and get in early before they rise further.
The other notable release will be the Dallas Fed manufacturing business index, which has fallen quite significantly in the last months. The manufacturing sector is expected to be one of the better performing in 2014, as consumer spending picks up with the improving economy and the global recovery gathers momentum. This could begin to be reflected as early as the December figure, which is released shortly after the opening bell.
Aside from this things will be very quiet. That said, this didn’t stop indices hitting record highs on numerous occasions last week, with the S&P and Down doing this on numerous occasions. I see no reason why this won’t continue today as the Santa rally continues into the final couple of trading sessions of the year.
January has historically been a good year for the markets, particularly in the last couple of years, which is what many see as the main reason for the Santa rally. It will be interesting to see if we’ll see the same in 2014 in the face of Fed tapering. I imagine this will bring added importance to corporate earnings which have been somewhat overlooked thanks to the Fed’s loose monetary policy. The last week in the markets has left little reason to doubt that the January effect will arrive in the markets in full force.
Ahead of the open we expect to see the S&P up 2 points, Dow up 16 points and the NASDAQ flat.
[B]Quiet session expected ahead of New Year bank holiday[/B]
Today’s UK opening call provides an update on:
[ul]
[li]Very quiet day expected on Tuesday;
[/li][li]Record highs still being hit in indices despite low trading volumes;
[/li][li]No economic data being released in Europe.
[/li][/ul]
It’s going to be another very quiet day in the financial markets on Tuesday, with many European markets only opening for a half day while Germany’s DAX is closed all day, due to a bank holiday in the country.
Trading volumes have already been extremely low over the last week or so, which is not unusual around this time of year. However, with many exchanges closing early and others not opening at all, they should be even lower today. That said, lower trading volumes do not mean we don’t get any significant moves in the market, as seen in equity markets across Europe and the US, where the DAX, Dow and S&P have repeatedly hit record highs, while the FTSE in the UK is not far off its own.
Clearly, the FOMC’s decision to begin scaling back its quantitative easing program a couple of weeks ago is still providing investors with the confidence to buy into the rally. There were concerns that even a small reduction in purchases would bring an end to the bull run in equities, but it would appear that investors are more concerned with interest rates than purchases, which the Fed claimed would remain at record lows until well after the 6.5% unemployment threshold is reached.
With this concern now out the way, for now at least, investors can begin to focus on the fundamentals again, rather than what the Fed is doing. That said, this is a lot easier when we have economic data being released or companies reporting earnings, something that is severely lacking again today.
In Europe, we have no significant pieces of data being released, while the US offers only slightly more, with the release of the Chicago PMI, which is expected to fall slightly to 61, and the December consumer confidence figure, which is expected to rise to 76 from 70.4.
Things should pick up a lot on Thursday, and much more again next week, as traders return from their festive breaks and immerse themselves in the markets again ahead of what is likely to be a very interesting year. Thursday also brings with it a raft of economic releases, starting with manufacturing surveys from all across Europe.
Ahead of the open we expect to see the FTSE down 3 points and the CAC flat.
[B]Chicago PMI and consumer confidence key today[/B]
Today’s US opening call provides an update on:
[ul]
[li]Another quiet session expected;
[/li][li]Investors have little to focus on with monetary and fiscal issues apparently in order;
[/li][li]Many European markets closing before the opening bell in the US;
[/li][li]Chicago PMI and consumer confidence key today.
[/li][/ul]
It’s going to be another very quiet day in the financial markets on Tuesday, with trading volumes remaining at very low levels and traders looking forward to things picking up later this week and next.
It’s not unusual for trading volumes to take a hit at this time of year, as traders spend time with their families instead of in front of their desk. There’s also a severe lack of catalysts for the markets, with the economic calendar offering us very little and the start of corporate earnings season just under a couple of weeks away.
Last year investors still had the fiscal cliff to worry about, which was really driving market sentiment at the time, but that is not the case this year. This time around the US appears to have got its fiscal house in order with plenty of time to spare, to the relief of the markets and the ratings agencies. Maybe those in Congress are finally learning from the mistakes of the past.
The Fed has also played its part in all of this, removing a huge amount of uncertainty from the markets last week when it announced its first reduction in asset purchases, from $85 billion to $75 billion. At the same time it laid out its plans for bringing the quantitative easing program to an end altogether later on in 2014, providing the transparency and certainty that investors have long sought after. Although I’m sure confusion will arise again throughout next year as mixed messages are sent and investors misinterpret those that are clear, as we saw repeatedly this year.
With all this in mind, there’s very little left to drive the markets today. What’s more, the German DAX is closed all day today, London stock markets close before the US open and many of the other European markets are only open for part of the day. This is hardly going to help those trading volumes.
For those still involved, there are a couple of economic figures being released that could be of interest. The Chicago PMI, a measure of business conditions, will be released shortly after the opening bell on Wall Street. This is expected to fall slightly from 63 to 61.
Following this is the release of the December consumer confidence figure, which is expected to rise to 76 from 70.4 in November. Given how important the consumer is to the US economy, this figure will probably be followed closely for signs of improvement as we head into what is going to be a huge year for the US.
Ahead of the open we expect to see the S&P flat, Dow down 3 points and the NASDAQ up 2 points.
[B]Chinese manufacturing data gets 2014 off to a bad start[/B]
Today’s UK opening call provides an update on:
[ul]
[li]Trading volumes to pick up on Thursday as traders return following the festive break;
[/li][li]Economic calendar offers more catalysts for the markets;
[/li][li]Manufacturing PMIs key today;
[/li][li]Asian markets lower as manufacturing growth in China slows.
[/li][/ul]
It’s been a very quiet couple of weeks in the financial markets, but things should start to pick up on Thursday as traders start to return to their desks following the festive break.
Things won’t return to normal entirely until Monday, with a large number of traders likely to extend their holidays until the end of this week rather than return for a couple of days before the weekend. That said, we should see a substantial increase in trading volumes compared to what we’ve seen so far this week and last.
This will be helped by a significant increase in the number of economic releases on Thursday, with the calendar so far this week offering little direction for the markets. Things get underway this morning with the release of the December manufacturing PMIs for many of the eurozone countries, as well as the regions as a whole.
For Germany, France and the eurozone, this is a revised reading which will affect just how big an impact it will have on the markets. If the numbers are in line with the preliminary readings, the reaction will most likely be muted. However, any significant revision should prompt a response in the markets.
The readings from the other countries, such as Spain and Italy, have historically been low impact events but I still think they’re worth keeping an eye on. These economies are still very fragile and any downturns could drag other countries down too, pulling the eurozone as a whole back into recession. Early indications of this should come from these PMIs.
The UK manufacturing PMI figure is expected to remain at the recent high levels, higher than the US and any country in the eurozone, in December. It is expected to fall slightly to 58, from 58.4 in November, but this is still comfortably in growth territory and suggests the impressive recovery seen in 2013 will carry on into 2014.
Over in the US later we also have a couple of important pieces of economic data being released. First up we have the initial jobless claims figure, which is expected to be roughly in line with last week’s reading at 334,000. This will be followed by two manufacturing PMI readings, the Markit and the ISM, which are expected at 54.4 and 57, respectively. The Markit figure is a revised reading so any response in the markets should only come if we see a significant revision.
Asian stocks suffered slightly over night after the release of the two Chinese manufacturing PMIs showed activity slowing in the world’s second largest economy. The official PMI, released on Wednesday, and the HSBC PMI fell to 51 and 50.5, respectively, in December. Both of these figures are still above 50, indicating growth, but if we continue to see declines here, people are going to start to worry about whether China can maintain such high growth rates in 2014. Last year, only a targeted stimulus program from the government prevented growth falling below 7%, these figures suggest similar efforts may be needed in 2014.
[B]Attention turns to US jobless claims and manufacturing PMIs[/B]
Today’s US opening call provides an update on:
• Chinese manufacturing data gets 2014 off to a bad start;
• European manufacturing PMIs mixed;
• Focus now turns to US jobless claims and manufacturing data.
With the festive period now behind us, it’s time to pick up where we left off a couple of weeks ago, focusing on the fundamentals now that the Fed has made its tapering intentions perfectly clear.
Corporate earnings season doesn’t start for another week, leaving us with only the economic data to drive market sentiment, and so far that has been relatively mixed. Things got off to a fairly bad start yesterday, with the release of the official Chinese manufacturing PMI, which fell to 51 in December, from 51.4 the month before.
This slowdown in manufacturing growth was confirmed during the Asian session over night, when the HSBC manufacturing PMI fell to 50.5 from 50.8 in November. This is the more concerning figure as it focuses more on the small to medium sized privately owned manufacturing firms and therefore provides a more accurate overview of activity in the country.
Both figures are still above 50, the level that separates growth from contraction, so there’s nothing to panic about at this stage. However, it does highlight the fact that China faces an uphill task in maintaining these very high levels of growth in the coming years.
The figures in Europe weren’t much better, with Germany, Italy and Spain all exceeding expectations, while France and the UK both fell short. The French figure is the most concerning of these, having fallen to 47 from 48.4 in November, now deep in contraction territory and showing no signs of reversing the trend.
European indices are trading lower this morning, following the release of all this data, although I don’t think this is necessarily driven by the data itself. This obviously hasn’t helped, but I think the losses being seen this morning are more likely due to traders locking in profits following a strong festive period, with the move being exaggerated by the increase in trading volumes.
We could see a similar scenario following the opening bell on Wall Street on Thursday. There is a little more data for investors to take on board, but I don’t expect it to have a huge impact on the markets. First up we have the initial jobless claims figure, which is expected to fall slightly to 334,000 from 338,000 last week.
Then the focus will turn to the two pieces of manufacturing data, the Markit PMI and ISM PMI, with only the latter being an initial reading. Many see the manufacturing sector as being key to the continuation of the US recovery in 2014, so these figures will be monitored very closely.
Markets lower following ‘Santa rally’ 00:23
Chinese manufacturing PMI comes in lower 00:47
Spanish manufacturing pushes back into expansion unexpectedly 01:15
UK manufacturing expansion slows, yet remains strong 02:33
Markets lower following ‘Santa rally’ 00:23
Chinese manufacturing PMI comes in lower 00:47
Spanish manufacturing pushes back into expansion unexpectedly 01:15
UK manufacturing expansion slows, yet remains strong 02:33
[B]European futures track US and Asia lower[/B]
Today’s UK opening call provides an update on:
[ul]
[li]European futures track US and Asia lower;
[/li][li]Disappointing data prompts first negative start to the year since 2008;
[/li][li]UK construction PMI eyed for signs that the recovery will continue into 2014;
[/li][li]Fed speeches key later on today.
[/li][/ul]
The negative start to the year looks set to continue on Friday, with index futures pointing to a lower open across the board in Europe after losses were recorded in both the US and Asia over night.
I don’t think these losses are anything to be concerned about, despite it being the first time since 2008 that we’ve seen a negative first trading day of the year. This just appears to be a little bit of profit taking after indices in the US ended 2013 at record highs. I still believe January is going to be another good month for the markets, we’ve just had a bit of a rocky start.
We’ve seen the Santa rally play out nicely in the final week of 2013, despite the Fed tapering against market expectations. I’d be surprised if the January effect didn’t prompt further gains this month.
The economic data over the last couple of days hasn’t exactly helped matters, with PMI readings in China, in particular, being a slight cause for concern. Both the official and the HSBC manufacturing PMIs fell in December, and the trend continued over night with the non-manufacturing PMI slipping to 54.6 from 56 in November.
This is probably nothing to be too concerned about right now as all the figures are still above the 50 level, that separates growth from contraction. That said, it’s not going to prompt a positive response in the markets either, with investors looking at this as a possible warning sign that the country is facing another tough year when it comes to maintaining the high growth rates.
There’s very little economic data being released on Friday that will have any significant impact on the markets. We may get a response to the release of the UK construction PMI, as this should provide early insight into whether the impressive recovery in the country in the second half of 2013 can continue into this year.
The PMI readings have been very encouraging for a number of months now and many view construction as one of the most important areas, as it was the one that was hit particularly hard following the downturn in 2008. If we can get another reading around the level seen last month, it will be viewed as a sign that the recovery is still gathering pace. The fear is that these figures start to drop off, as I’m not convinced that the recovery is strong enough at the stage to take even a temporary drop in confidence. It is hugely important that the UK recovery continues to gather momentum because at the moment, the recovery is being driven by consumers. If confidence takes a hit, we could find ourselves back at square one.
Later on the focus will be back on the Federal Reserve, with no notable pieces of data being released. We have a few Fed members scheduled to speak today, including outgoing Chairman Ben Bernanke. Given that the Fed only announced its first taper a couple of weeks ago, I’m not expecting anything out of the ordinary here, just confirmation that they will continue to monitor the data and reduce the pace of purchases as the economy improves.
Ahead of the open we expect to see the FTSE down 19 points, the CAC down 15 points and the DAX down 48 points.
[B]Market higher as pullback proves shortlived[/B]
Today’s US opening call provides an update on:
[ul]
[li]Indices begin to pick up following new year sell-off
[/li][li]UK construction growth begins to slow
[/li][li]Quiet US session dominated by Fed speakers.
[/li][/ul]
The global indices are beginning to move higher for the first time in 2014 today, following an signs within the futures markets that the European markets were likely to open lower after yesterdays somewhat damp squib. The fact that the return of significant volumes has coincided with an initial pullback is not surprising, coming off the back of such a strong festive period which saw the S&P500 reach an all-time high of 1842. However, it now appears that the positivity is returning to markets on the day that marks the 30th anniversary of the FTSE100. The clear willingness of the trading community to brush off the taper seen back in December to push yet higher gives us a clear indication that significant strength remains and this has led many to believe Q1 2014 could provide another bullish period following a strong H2 in 2013.
The first week of each month is typically the busiest, with the release of key PMI data, central bank meetings and a string of highly significant US employment figures. However, given the shortened week driven by new year bank holidays, the majority of these will have to wait until next week. Thus on a day within which many would expect to be bracing themselves for the latest US non-farm payrolls figure, we are actually expecting a largely quiet US session where speeches from a number of Fed members is likely to dominate.
Earlier this morning, the UK construction PMI provided indication that industry has been showing signs of slowing growth following yesterday’s disappointing manufacturing figure. Fortunately the construction figure was somewhat less of a shock, actually coming a little higher than expected at 62.1. This comes off the back of the a reading of 62.6, which was the highest level of construction growth since the financial crisis took hold back in August 2007.
This comes on the day that the Nationwide bank announced December as representing the highest monthly rise in UK house prices since Mid-2009. Amid talk of another housing bubble in the UK, the recent implementation of the government’s ‘help to buy’ scheme seems to provide a feeling of invincibility for house prices and will likely mean the current upward trend is likely to continue apace for some time yet. Thus as long as the banks are lending and the demand remains high, it is likely that the construction sector will enjoy a particularly strong 2014 in the UK.
Looking ahead to the US session, the most likely source of possible volatility comes in the form of three speeches at the American Economic Association from FOMC members Plosser, Stein and outgoing chair Ben Bernanke. Of the three, the comments from Stein and Bernanke are likely to carry most weight given that they are both voting members. Following on from the decision to taper asset purchases back in December, the FOMC will be due to decide whether to cut back further later this month. Thus markets will be looking for any signs as to whether the committee could take additional action at what is Ben Bernanke’s final meeting as chair.
US market are expecte to open higher, with the S&P500 +2 and DJIA +18 points.
Indices higher after negative start to the year - 00:14
UK construction PMI exceeds expectations - 02:25
Good news keeps coming for Spain - 03:12