Forex research: Global markets daily
[B]Europe expected to open lower as fiscal cliff talks turn sour[/B]
Today’s UK opening call provides an update on:
* Europe expected to open lower as negotiations over fiscal cliff turn sour;
* Draghi due to speak at the French Treasury this morning;
* French and German data not expected to bode well for recession hit eurozone;
* Eurozone unemployment expected to creep higher once again.
Talks in the US over how to avoid the fiscal cliff have begun, as has the political bickering that is likely to drag them out all the way to the 1 January deadline.
European stock markets are expected to open slightly lower this morning as discussions once again turned sour between the two major parties. Early indications suggest the parties are far from in agreement in many areas, which was confirmed by House Speaker John Boehner who claimed no substantive progress had been made.
Mario Draghi is due to speak at the French Treasury this morning which is likely to attract a lot of attention, coming only days after the Greek deal was signed off. People are going to be looking for more clarity on the deal which will see Greece receive further funding and cut its debt to significantly less than 110% of GDP by 2022.
These deals have a knack of looking like the real deal to begin with but once picked apart, are far from sufficient. We have already seen that the IMF involvement is conditional on Greece completing a bond buyback, which shouldn’t be an issue as long as they can access the funds, however it will be interesting to see if Mr Draghi reveals any other holes in the deal.
There’s plenty of economic data for the markets to get their teeth into today starting in the eurozone with the German retail sales. Germany has continued to experience slowing growth in recent months and October’s retail sales are expected to tell much the same story. A drop of 0.3% is expected, the fourth negative figure in the last six months, while September’s figure has already been revised significantly lower to 0.8% from 1.5% originally.
French consumer spending is not expected to paint a much better picture, with a drop of 0.1% expected for October, following a slight improvement the month before. This does not bode well for the eurozone, which is heavily reliant on its two strongest economies to drag it out of recession in 2013, something that at this moment looks highly unlikely.
The eurozone jobless rate isn’t expected to throw up any surprises later on this morning, creeping higher to 11.7% in October. On a more positive note though…
Craig Erlam talks about the fiscal cliff negotiations and today’s economic data then takes a look at the charts.
Forex research: Global markets daily
[B]European markets higher on improved Chinese manufacturing[/B]
Today’s UK opening call provides an update on:
* European stocks markets higher on improving Chinese manufacturing data;
* Greece to announce bond buyback plans;
* Lower trading volumes expected as fiscal cliff talks continue;
* Jobs report on Friday unlikely to have usual impact.
* Manufacturing figures in Europe expected to show further contraction.
European stock markets are expected to open around a quarter of a percentage point higher this morning.
Chinese manufacturing has shown signs of slowing this year, with both the HSBC and official PMI’s contracting on numerous occasions. Both appear to be in the recovery phase now which is extremely positive for the markets, with the global economy reliant on a strong China to drive the recovery.
The official figure released on Saturday showed the fastest rate of growth in the Chinese manufacturing sector since April, while this morning’s HSBC showed the fastest rate of growth since September last year. On top if this, both October figures were revised higher further suggesting that the Chinese economy will finish the year strongly.
Greece will announce details of its bond buyback today, the completion of which will meet the conditions set by the IMF for the country to receive the next tranche of its bailout on 13 December. We could see a small reaction to this in the European markets, however it has mostly been priced in and focus is mainly on the US now as we approach the fiscal cliff.
Stock markets are likely to see lower volumes this week as fiscal cliff talks continue between the president and congress. As it stands, minimal progress has been made in negotiations with both parties refusing to budge on tax and spending issues. This looks set to continue this week unless we see a genuine attempt by both parties to come to an agreement on how to avoid the damaging combination of $600 billion of tax hikes and spending cuts, due to begin on 1 January.
Even the jobs report at the end of the week is expected to have a mush smaller market impact than usual. Investors are very aware that the labour market is improving a gradual pace and on top of this, the figures are likely to be distorted by…
Craig Erlam talks about the manufacturing PMI’s released so far today and the eurogroup meeting. He then takes a look at the currency charts.
Forex research: Global markets daily
Have been using Alpari Uk for past 3 years, so far no complaint :53:
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Dec 3, 6pm to 7pm GMT
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Dec 7, 6pm to 7pm GMT
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Dec 10, 6pm to 7pm GMT
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Dec 14, 6pm to 7pm GMT
If you are not able to attend the webinar, can just go to their website to see the video after that.
Europe expected to open lower on fiscal cliff fears
Today’s UK opening call provides an update on:
* Stock markets lower on fiscal cliff concerns as White House quickly rejects Republican plan on raising taxes;
* Obama takes to Twitter to raise support and put pressure on Congress;
* RBA cuts cash rate by 25 basis points;
* Spanish unemployment expected to continue to rise.
Stock markets are trading lower this morning as concerns continue to grow that fiscal cliff discussions are not progressing as expected.
So far there has been a lot of public political bickering between the Democrats and the Republicans with each blaming the other for a lack of progress so far. Last night it was Obama’s turn to point the finger at the Republicans after the White House rejected a plan that suggested increasing tax revenues through closing special-interest loopholes and deductions.
The plan would seek to raise $800 billion dollars however it was rejected as it did not highlight which loopholes and deductions should be closed.
A complete lack of cooperation by both parties in these negotiations is now prompting many to consider something that seemed inconceivable only a couple of months ago, what if we just go over the cliff? This would of course be terrible news for the markets and would see them fall well back from their recent highs, however the impact on the economy may not be as bad as first thought.
The biggest concern being the tax hikes, which make up the bulk of the $600 billion, could be renegotiated after the 1 January deadline. It is likely to be much easier to come to an agreement on tax cuts for a large chunk of Americans that takes hikes for some. On the flip side of this though, the uncertainty for businesses could prompt further redundancies and a lack of investment which would have a negative effect on the jobless rate and economy as a whole.
It may be too early to consider this as a realistic possibility though. While there may be other ways around it, there’s no doubt the overall effects would be negative for the US economy at a time of moderate recovery. That’s why Barack Obama took to Twitter last night in a bid to answer people’s questions on the fiscal cliff and put pressure on Congress to come to an agreement.
The Reserve Bank of Australia cut its cash rate over night by 25 basis points to 3%, as expected. The move, which was originally expected last month, highlights the central banks concerns that a slowing global economy, falling commodity prices and a strong Aussie dollar are dragging on the Australian economy.
However…
Craig Erlam talks about the meeting of the EU finance ministers, the fiscal cliff and the RBA’s decision to cut interest rates. He then takes a look at the currency charts.
Forex research: Global markets daily
Today’s UK opening call provides an update on:
* George Osborne to deliver half-yearly budget statement which will include more austerity;
* Services PMI in the eurozone expected to show strong contraction in November;
* Improved Spanish bond yields to be reflected in sale of 10-year debt.
Stock markets are expected to open higher this morning ahead of George Osborne’s Autumn forecast statement.
The UK Chancellor is expected to announce that the country is on course to miss its deficit reduction targets this year. This is likely to see the austerity program extended by an extra year to 2018 which is going to be extremely unpopular given the lack of growth already being observed, having only just come out of double dip recession.
Osborne is expected to offset the spending cuts and tax increases with £5 billion of fresh spending on schools and transport which will not come from further borrowing. While this could help, it is likely to be overlooked with people focusing on the fact that their incomes are going to be squeezed for another 12 months if current forecasts are accurate, although it is likely to be even longer.
This morning, services PMI’s will be released out of the eurozone and the UK and are unlikely to make for pleasant reading for the former. Just as we saw earlier in the week, figures in the mid 40′s are expected in the eurozone, with Spain even worse following the harsh austerity we have seen there this year.
In the UK, we should see a slight improvement in the services sector which has been surprisingly resilient in recent years, having only slipped into contraction territory on one occasion in the last three and a half years. November’s figure is expected to be around 51.1.
Spanish bond yields have shown significant improvement in recent months and are currently trading with yields just above 5% on the secondary market. Today will be a big test of sentiment when the country sells up to €4.5 billion of three, seven and ten year debt as part of its funding for 2013, having already completed its funding needs for this year.
The euro is trading higher against the dollar this morning. The pair found strong resistance around 1.31 yesterday from the descending trend line dating back to the middle of September. It has broken above here already this morning which suggests…
[B]BoE expected to keep rates and QE on hold as ECB lowers growth forecasts[/B]
Today’s UK opening call provides an update on:
* Stock markets to open higher on positive Obama comments;
* BoE likely to keep rates and asset purchases on hold;
* ECB growth forecasts expected to be revised lower, with rates kept on hold;
* Spain back in the spotlight following an unsuccessful debt auction.
Stock markets are expected to open higher this morning after Barack Obama raised hopes of a speedy resolution to the fiscal cliff negotiations.
Obama claimed yesterday that a deal on the cliff could be done within a week as long as Republicans accept the expiration of Bush-era tax cuts on the top 2%, a move that would raise $800 billion over the next 10 years. The market reaction to this was positive but it may just be another case of getting ahead of ourselves, Republicans don’t look close to accepting these tax hikes.
The BoE will hold its monthly meeting this morning, however nothing is expected to change again this month. The most recent round of asset purchases expired last month and the MPC members were unable to agree on whether further purchases would be of benefit to the economy.
The same is expected again today, with further stimulus not expected until the first quarter of 2013, despite lowered growth forecasts yesterday from the OBR and expectations that the UK could contract in the fourth quarter. The interest rate is also expected to remain at 0.5%, having not been changed since March 2009.
The ECB meeting is unlikely to be much different, with interest rates again expected to remain unchanged. This is despite the eurozone falling into recession in the third quarter and inflation dropping to its lowest level last month since January 2011.
Mario Draghi is expected to announce revisions to the ECB’s previous growth forecasts, something we have become accustomed to in recent years and no longer has the wow factor that it once did. We could also hear more about the Greek deal that has going some way to convincing the markets that the worst of the crisis is behind us.
However, just as we’ve seen in the past few years, rather than being satisfied with the Greek deal, the markets have simply put…
[B]Europe expected to open higher ahead of US jobs report[/B]
Today’s UK opening call provides an update on:
* Mario Draghi hints at rate cut in the new year;
* White House and Republicans hint at new talks on fiscal cliff;
* US jobs report takes centre stage today, however it may not have its usual impact on the markets;
* Poor manufacturing figures expected in UK and Germany.
Stock markets are expected to open higher in Europe this morning after Mario Draghi yesterday hinted at a rate cut in the new year.
Draghi claimed that a rate cut was extensively discussed which was taken to mean that more members are coming round to the idea. In reality, a rate cut doesn’t look likely at the moment with inflation still above 2%. On top of that Draghi also claimed that he didn’t want to do anything that may encourage countries to take their foot off the gas as they carry out the much needed austerity and reforms to improve competitiveness.
There were also positive comments out of the US with the White House and Republicans suggesting that talks have resumed to try and find an acceptable resolution to the fiscal cliff for both parties. This suggests that both are finally willing to negotiate after Treasury Secretary Tim Geithner made it perfectly clear that there would be no deal without the top 2% seeing their taxes raised. If comments from Obama this week are therefore true, that a deal could be done within a week once the tax hike is agreed, we could now see a deal well before the end of the year, although I remain pessimistic.
Looking ahead to today and there is plenty of economic data for traders to get their teeth into. However, it is the first Friday of the month which means the US jobs report will steal the show. Usually, other economic data is largely overlooked when the jobs report is due.
Today may be a rare occasion though when even the jobs report is overlooked. Regardless of how strong or weak the non-farm payroll and unemployment figures are, the fiscal cliff negotiations are the sole event that’s going to determine the strength of the US economy over the next couple of years.
In Europe this morning we do have a few pieces of economic data out starting with the UK manufacturing production figure for October. It is expected to show a 0.2% drop in the total value of output which given the performance of UK manufacturing in recent years isn’t going to come as a surprise.
The more concerning figure will be the German industrial output, which is expected to…
Craig Erlam talks about the jobs report this afternoon in the US, the Bundesbank’s revised growth forecast for Germany, the ECB’s revised growth forecast for the euro area and the recent troubles in Italy. Finally he takes a look at the eurodollar and cable charts.
Forex research: Global markets daily
[B]Italy at risk of moving backwards as Berlusconi runs for office[/B]
Today’s UK opening call provides an update on:
* Italy’s FTSE MIB expected to start the week lower as Monti calls it a day;
* Berlusconi announces plans to run for office;
* Chinese inflation data opens the door to further easing;
* Eurozone economic data expected to show moderate improvement.
Most European stock indices are expected to open higher this morning, while Italy’s FTSE MIB reflects concerns over Monti decision to resign at the end of the year.
The Italian stock index is expected to open lower by around 0.5% after Mario Monti announced his decision to resign once the 2013 budget has been passed in parliament. The decision means there will probably be an early election in February, which the markets are unlikely to respond positively to given that much of Italy’s new credibility is down to the work done by Monti’s technocrat government.
On top of this, Silvio Berlusconi’s decision to run for office has threatened to send Italy backwards. It was during his time in office that the country came to the brink of a full sovereign bailout that the other eurozone countries may not have been able to fund.
At this moment in time a Berlusconi victory looks very unlikely however we’ll still probably see the uncertainty reflected in rising Italian bond yields this morning. The yield on 10-year debt fell to around 4.5% last week, more than 3% lower than what they were when Berlusconi resigned only a year ago.
Other European markets are still expected to open higher though as data released over the weekend showed Chinese inflation rose to only 2% in November. This figure leaves plenty of room for further easing by both the new ruling party, who hinted at further accomodative policies recently, and the PBOC who’s recent monetary policy appears to have temporarily put an end to the slowing growth.
Chinese industrial output increased by 10.1% in November from a year earlier. This is the largest year on year increase we’ve seen in output since March, which suggests that the economy is beginning to grow at a faster pace again following seven quarters of slowing growth.
It is going to be a relatively slow start to the week, with very few pieces of economic data due to be released. This morning we have industrial production figures for October from the eurozone, which are expected to…
Craig Erlam talks about the decision by Mario Monti over the weekend to resign following the loss of support from the PDL. He then takes a look at the currency charts.
Forex research: Global markets daily
[B]Euro finance ministers meet to discuss Greek buyback[/B]
Today’s UK opening call provides an update on:
* European markets make small recovery following initial shock yesterday;
* Finance ministers meeting to discuss Greek buyback;
* US stocks higher yesterday on hopes of a deal on the fiscal cliff;
* Economic sentiment in Germany and the eurozone expected to show improvement.
European stock markets are expected to open higher this morning as the panic surrounding Mario Monti’s resignation begins to subside.
European shares made a small recovery yesterday following the initial shock from Mario Monti’s resignation. The losses were felt hardest in Italy with the FTSE MIB closing more than 2% down on the day, while yields on Italian debt also rose significantly. Spain also felt the pain of the decision with its own economy seen as heavily exposed to Italy’s, although it is much less exposed than it has been in the past.
The eurozone finance ministers are expected to have a brief conference call today to discuss the Greek buyback. Given that Greece was only looking to buy back another €3 – €4 billion of debt at a deep discount yesterday, in order to meet the conditions set by the IMF, the call should be very straightforward.
It also means that the next tranche of Greece’s bailout should be released at the EU summit at the end of the week, reducing fears of a Greek exit for now at least.
Over in the US, fiscal cliff talks finally appear to be progressing. While no details have been released regarding Obama’s meeting with Boehner on Sunday, the fact that they have finally met face to face suggests they are finally willing to negotiate. Both met again yesterday, prompting US stocks to trade higher on hopes of a deal before the deadline on 1 January.
It is expected to be another quiet day on the economic data front. The German ZEW economic sentiment figure is expected at around -11.4, which means that while analysts and institutional investors remain pessimistic about the next six months, they are less pessimistic than they have been since May this year. This is a move in the direction, however it is still a desperately poor figure from the eurozone’s strongest economy.
The euro is trading higher against the dollar this morning. The pair has currently found resistance around…
Craig Erlam talks about the economic data out of the UK this morning and the pending announcement affecting Spain. He discusses the impact of these on the forex, equities and bond markets.
Craig Erlam talks about the fiscal cliff negotiations in the US, the reaction to Monti’s resignation and today’s eurogroup meeting. He then takes a look at the EUR/USD chart and highlights some key levels to look out for.
Forex research: Global markets daily
[B]EU finance ministers continue talks on banking supervisor[/B]
Today’s UK opening call provides an update on:
* Fiscal cliff negotiations continue to make progress;
* EU finance ministers meet to reach an agreement on a euro area banking supervisor;
* UK unemployment rate expected to edge higher to 7.9%;
* Fed expected to announce new asset purchases to replace Operation Twist.
European stock markets are expected to open higher this morning as gradual progress is made in fiscal cliff negotiations.
Barack Obama and John Boehner discussed the fiscal cliff for a third day yesterday, which has strongly suggested that both a finally ready to begin serious negotiations. Both still appear far from an agreement on areas such as entitlement spending and tax reforms, however the fact that we’re now getting offers and counter offers means there is progress being made.
Unless we see a breakdown in these talks, it suggests that a deal by year end is very likely now. However this is not likely to include a deal on raising the debt ceiling which will probably spill over into the start of next year. Irrespective of this, the talks are positive at the moment and as long as this continues, the stock market is likely to continue to rise, at least until year end.
EU finance ministers will meet again today to reopen discussions on how to create a banking supervisor for the euro area, with a number of issues currently standing in the way. The finance ministers failed to come to an agreement last week for a number of reasons, raising questions on whether that will change today.
If a framework is put in place today, which can then be discussed at the EU summit tomorrow, we should see a relatively positive reaction in the European markets, with the creation of a banking supervisor seen as the first step towards a banking union in the eurozone.
Unemployment in the UK is expected to have risen to 7.9% in October, only a slight increase on the month before, while the number of jobless claims in expected to have risen by 5,900. This is unlikely to have any impact on the markets as we’ve seen a significant improvement in both of these numbers in recent months so a small setback was always expected.
A lot of attention today is going to be on the Fed’s monthly meeting this afternoon. The Fed’s policies have driven market sentiment for a number of months now and they look likely to do the same again. Much of the rally over the summer was purely based on speculation of a third quantitative easing package from the Fed.
Operation Twist is due to expire this month which would reduce the long term asset purchases by the Fed by around $45 billion. Given the minor improvement in the economy since the Fed announced QE3, it is widely expected that…
Craig Erlam talks about the Fed meeting this evening, Operation Twist and the EU finance ministers meeting today. He then takes a look at the EURUSD chart.
Forex research: Global markets daily