Forex research

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1662

[B]Europe seen higher as energy stocks lifted by oil rebound[/B]

• Rebound in oil prices provide a boost ahead of the European open;
• Technical’s point to further gains in oil but fundamentals suggest otherwise;
• US data to provide interest later with no notable data coming from Europe;
• US earnings also in focus, JP Morgan and Wells Fargo disappoint on Wednesday.

Europe looks set for a much more positive open on Thursday, as a rebound in oil prices over the last couple of days provides some reprieve for energy stocks and other sectors continue to be supported by expectations that the ECB will announce its own version of quantitative easing this time next week.

Oil has played such an important role in the markets over the last six months and that is unlikely to change any time soon. The rebound is prices over the last couple of days from the lows hit early on in the session on Tuesday is expected to benefit energy stocks greatly today, as they did overnight in Asia.

The sudden interest in oil has been driven by short covering, with the Brent February contract approaching expiry and the US crude contract expiring. This would suggest that any upside in crude is only temporary despite the technical’s suggesting otherwise. Yesterday’s failure to make new lows, despite some selling pressure earlier in the session followed by a close above Tuesday’s high in WTI and not far from it in Brent - creating a morning star formation in both - is a fairly bullish sign from a technical standpoint.

With the fundamentals remaining weak and contract expiry’s being attributed to the buying, I would be reluctant to act on this at the moment though and would instead like to see further confirmation over the next couple of days. This could come from as much as a weekly close above last week’s open, if I’m being greedy, but at the very least I’d like to see Thursday and Friday’s highs from last week broken. These tend to be providing some resistance in WTI which does not suggest there’s more upside to come.

Once again today, the European session is looking a little quiet with any economic data that is due out unlikely to move the markets very much, if at all. We’ll have to wait for the US data later on for that and even then, we don’t exactly have it in abundance. Weekly jobless claims, the empire state and Philly Fed manufacturing indices may be of interest to the markets, but ultimately I think the biggest moves are likely to continue to be driven by movements in commodities, particularly oil.

That said, we can’t ignore corporate earnings, which unofficially got under way on Monday with Alcoa’s result. JP Morgan and Wells Fargo got things going for the banks yesterday and neither were well received by investors, particularly JP’s after they reported a decline in fourth quarter profit. Today we’ll get results from Citigroup, Bank of America, Blackrock and Intel.

The FTSE is expected to open 83 points higher, the CAC 61 points higher and the DAX 140 points higher.

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

1663

The Swiss national bank has acted to end the currency floor, while moving the central bank interest rate into negative territory at -0.75%. This morning the move has taken the entire market by surprise and has led to wide spread selling on both EURCHF and USDCHF currency pairs. EURCHF has seen the market move to as low as 0.8500 from a high at the start of the day at 1.20, USDCHF was a similar story falling from an opening on the day of 1.0188 to trade as low as 0.7406. The move will be one of shock to the markets as the SNB has maintained its 1.20 EURCHF currency floor for a number of years. With pressures mounting over the depreciation of the Euro and the strength of the US dollar the national bank has felt under pressure to at least amend the currency floor. However today’s move has not only seen this unpopular currency floor removed but has seen the interest rate cut by 50bp to -0.75%.

The reaction to this is likely to wide reaching and cause a huge issue in terms of not just currency markets but equity markets as well. With many clients struggling to close positions and banks struggling to offer prices due to the high volatility and demand. Many had been expecting the SNB to raise the currency floor but to remove it totally has taken everyone by surprise. There has been a clear attempt to soften the blow on the currency by cutting the interest rate however this seems to have only led to spark yet more volatility and moves on the CHF based currency pairs. Today’s announcement has let investors decide just where the Swiss Franc should be valued without central bank intervention and it very much seems that around 1.05 for EURCHF and 0.90 for USDCHF are the levels that investors now feel is a better representation of the Swiss currency. However of course we cannot rule out yet more surprise and big moves throughout the trading session.

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

1664

It’s been an extremely turbulent day in the financial markets after the Swiss National Bank (SNB) removed the 1.20 floor on the EURCHF pair sending it spiralling lower. Market Analyst Craig Erlam provides an update on the event that rocked the markets on Thursday and why he believes the SNB dramatically changed its stance.

1665

The dust appears to have settled in the markets following the surprise announcement earlier from the SNB that it has decided to remove the EURCHF floor which had stood at 1.20 for three years. The initial market reaction to the removal of the floor was extreme, with the euro falling more than 28% to 0.8636 against the Swiss Franc before recovering to trade just above 1.04 late afternoon. While the removal of the floor only directly impacts EURCHF, the impact was felt everywhere with USDCHF falling to a more than three year low, down more than 27% at its lows. Even none swissy pairs felt the moves, with the euro taking a big hit as the announcement means the SNB will no longer support the currency.

In Europe we saw a lot volatility in stock markets as well, with the initial moves being massive irrational swings in either direction as traders tried to come to grips with what the removal of the floor actually means. Once prices stabilised, we saw a steady rally in Europe as people began to speculate on why the SNB would suddenly remove the floor. One explanation could be that the ECB has warned the SNB of an impending large quantitative easing package – with many expecting the announcement next week when the central bank meets – and they have concluded that they are unable or unwilling to take on the fight. This would explain the interest in eurozone equities this afternoon, not to mention the sudden change of policy from the SNB as well as

Of course, this is just speculation at this stage and if this is the case it has been horrendously handled by all concerned. SNB Chairman Thomas Jordan didn’t help to dispel these rumours when he refused to confirm when asked if there had been contact with other central banks. He also didn’t cover himself in glory when claiming that it was not a panic decision but a well thought out one. Given that only a few days ago it was claimed that the floor was the cornerstone of its monetary policy, this is extremely difficult to believe.

I’m sure this isn’t the last we’ll hear on the subject and the SNB are going to be heavily scrutinised in the coming weeks for what appears to be a horribly irresponsible move on their part. For year’s central banks have tried to avoid days like today by being transparent and making moves like this over time while drip feeding their intentions to the markets. The SNB have shown themselves to be amateurs today and there is many people that will suffer considerably as a result.

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

1666

[B]Focus turns to US and eurozone inflation after SNB shock[/B]

Good morning,

It’s been quite an eventful 24 hours, particularly in the forex markets, after the SNB yesterday decided to announce a massive change in monetary policy without prior warnings or hints, sending the Swiss Franc sky rocketing higher and creating turmoil in the markets.

While central banks are under no obligation to drip feed such massive changes in policy to the markets, there have been big attempts made to do so in recent years so as to avoid the kind of volatility we saw in the currency markets yesterday. It appears the SNB did not get that memo and when the announcement that the 1.20 floor was being removed in EURCHF was made, some fx markets went into meltdown.

The move by the SNB generated a lot of questions regarding what motivated such an irresponsible and abrupt move given that only a few days before the central bank had referred to the 1.20 floor as the “cornerstone” of its monetary policy. SNB Chairman tried to convince us all that the decision was well thought out but I’m sure many would agree that unless under exceptional circumstances, a well thought out decision of this magnitude should take longer than 48 hours.

Which begs the question, what caused the sudden u-turn by the SNB that prevented them from carrying out the move in a more gradual and responsible manner. The only explanation I can come up with is that the move relates to the upcoming ECB press conference in which Mario Draghi is expected to announce a new bond buying program, one that the markets now believe will be much larger than initially thought based on the actions of the SNB.

If the SNB had prior warning of this, and this is just purely speculation, it may have decided that the floor would be extremely difficult to defend given its level of reserves and therefore opted to declare defeat. If this is the case then that again begs the question of why the SNB and ECB didn’t think this through and do it in such a way that this could have been avoided. These people are meant to be the experts and yet they have acted in such a way that caused significant harm to the markets, something most people could have predicted would happen.

While the markets have stabilised a little, the damage caused could have a longer term impact on the markets. It will be interesting to see in the coming weeks what this does to liquidity and volumes in the forex markets, with many predicting that this may do significant damage for the foreseeable future.

Moving on from the idiotic actions of the SNB, we do have other things to focus on today, with key inflation figures being released for the eurozone and the US, two countries who’s monetary policies could not be headed more in different directions. While the ECB is hoping to launch its first quantitative easing program, a little over six years after the Fed did the same thing, the Fed is looking to raise interest rates in the middle of this year as the economic recovery gathers pace and the country closes in on what the central bank deems full employment.

The final eurozone CPI reading for December is expected to confirm that the region fell into deflation for the first time since October 2009, making it incredibly likely, especially after yesterday’s events, that the ECB will announce its QE program next week. In the US, we’re also seeing oil prices have a disinflationary impact, although not even close to the same extent with the CPI seen falling to 0.7% from 1.3%, while the core reading is seen remaining at 1.7%. With rising wages seen bringing inflationary pressures, there is very little concern about the inflation outlook in the US and in fact, the Fed expects inflation to return to its 2% target, opening the door to that first rate hike.

The FTSE is expected to open 33 points lower, the CAC 23 points lower and the DAX 47 points lower.

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

1667

Hi I wanted to know if anyone knew of any charting software, that i can use to see how many times a particular product has gone up by lets say 20 points at a certain time for the past month?