Alpari (UK)

[Alpari UK]

Craig Erlam talks about the BoE and ECB meetings, the Spanish and Italian bond auction and the Chinese trade balance data. He then takes a look at the AUDUSD chart.



Forex research: Global markets daily

[Alpari UK]

Chinese inflation jumps on higher food prices

Today’s UK opening call provides an update on:
• Chinese inflation highest since May;
• More positive data expected for UK manufacturing sector;
• NIESR offer first estimate of UK fourth quarter GDP;
• EUR/USD, GBP/USD, USD/JPY & AUD/USD.

Inflation in China jumped to 2.5% in December as poor weather pushed food prices significantly higher. While the figure remains well below the inflation target of 4%, it has raised concerns that it could lead to a tightening of monetary policy in the first half of this year.

The loosening of monetary policy appears to have been largely responsible for the improvement witnessed in the economy in the fourth quarter. Data released next week is expected to show the economy grew by around 7.8% in the last quarter, bucking the trend of seven consecutive quarters of slowing growth.

As with the impressive trade balance figure yesterday, the figure appears to have had minimal impact on the European markets, with futures pointing to a higher open in the major indices. However this could still be in reaction to ECB President Mario Draghi's positive assessment of the eurozone in recent months and optimistic outlook from the end of this year.

Last week, the UK manufacturing PMI surprised the markets with a much improved growth figure following seven months of contraction. The improvement in the data is expected to continue today with the manufacturing production figure for November expected to show a 0.6% increase from a month earlier.

While this would be a positive figure, it’s far too early to get carried away with it given that the UK economy is still expected to contract in the fourth quarter and growth next year is expected to be minimal.

The first estimate of the UK’s fourth quarter GDP will be released this morning. The NIESR GDP estimate is expected to show that the economy contracted in the final quarter of the year, however it is likely to be largely ignored given the inaccuracy of previous readings when compared to the first official GDP estimate and the final figure.

In both cases, on average, the NIESR figure tends be wrong by roughly 0.3%. Therefore, any figure between -0.2% and 0.2% will probably be ignored whereas anything either side could give an accurate indication of whether the UK grew or contracted in the fourth quarter. This is when we are likely to see a significant reaction to the figure.

The euro is trading lower against the dollar today after making significant gains yesterday. The pair found resistance around 1.3275, which has previously been a strong level of resistance. We could see it pare some of these gains today, however the outlook for the pair still looks quite bullish. The next level of resistance for the pair should come around 1.33, followed by 1.3360.

Sterling is trading lower against the dollar this morning. The pair found support yesterday from the ascending trend line, dating back to June's lows. It has temporarily found resistance around 1.6165, however a break above here should prompt a move towards 1.6190, followed by 1.6250. The next real test for the pair will come around 1.63, where it has failed to close above since August 2011.

The dollar is trading higher against the yen this morning. The pair has found strong resistance though around 89.0, which has previously been a key level of both support and resistance. The pair still looks extremely bullish so we could see it break above here which should prompt a move towards 90.0, which is likely to be a key psychological level. The pair should first find resistance though around 89.60.

The Aussie dollar is trading higher against the greenback this morning. The pair closed above the descending trend line, dating back to July 2011, which is an extremely bullish signal for the pair. On the weekly chart, this is actually where the descending trend line crosses with an ascending trend line, dating back to May's lows. If it closes above here today...

Read the full report at Alpari News Room

[Alpari UK]

Craig Erlam talks about the Chinese inflation figure and what it means for its monetary policy, what to look for from the UK NIESR GDP estimate, today's corporate earnings and Japan's new stimulus program. He then takes a look at the USDJPY chart (3:55).



Forex research: Global markets daily

[Alpari UK]

Expectations remain low as major banks report this week

Today’s UK opening call provides an update on:

* Corporate earnings season to continue with major US banks reporting;
* Low earnings expectations inflate the stock market bubble;
* Key economic data due out of China and the US later this week;
* Significant improvement in eurozone industrial production data expected in November.

Attention remains on corporate earnings this week; in particular the banks with Goldman Sachs and JP Morgan among others due to report.

With earnings expectations so low for the fourth quarter, it’s difficult to see how the banks can disappoint. Earnings estimate have already dropped significantly in the past couple of weeks, which surely leaves any surprises firmly to the upside.

This again raises questions over the sustainability of the recent stock market rally. Over the past few earnings seasons, the bar has been lowered so much to accommodate the rally that all we’re doing is creating a huge bubble that is ready to blow. When this happens is likely to depend on how long we have until the next eurozone issue rears its ugly head.

There’s also a few key pieces of economic data to be released this week. The fourth quarter GDP figure for China should provide a boost to the markets on Friday, ending seven consecutive quarters of slowing growth, with a figure of 7.8%. A strong Chinese recovery will be essential if we’re going to see the other major economies improve this year, a scenario that at this point looks rather unlikely.

Another one to watch later this week will be the release of the US housing data. This data has improved significantly in recent months, which suggests that growth could pick up this year in the US, as long as Congress can agree on a deal at the end of February that doesn’t harm the recovery.

This morning, we have industrial production data out of Italy and the eurozone. A figure of...

Read the full report at Alpari News Room

[Alpari UK]

Craig Erlam talks about US corporate earnings, Chicago Fed president Charles Evans growth forecasts and Ben Bernanke's speech at the University of Michigan later today. He then takes a look at the EURUSD chart (2:55), with some key resistance levels approaching.



Forex research: Global markets daily

[Alpari UK]

UK inflation expected to make life difficult for the BoE


Today’s UK opening call provides an update on:
• Bernanke remains dovish despite inflation fears;
• House prices avoid falling for first time since June 2010;
• UK CPI expected to rise in December;
• EUR/USD, GBP/USD, USD/JPY & EUR/GBP.

Ben Bernanke maintained his dovish tone last night, when quizzed about the Fed’s loose monetary policy at the University of Michigan.

In a brief Q&A following his speech at the University of Michigan last night, Fed Chairman Ben Bernanke defended the central banks' aggressive monetary policy, playing down fears of future inflation issues and asset bubbles. The comments went some way to playing down fears that the Fed's loose monetary policy could come to an abrupt end, however there wasn't the reaction that we're used to seeing.

This could be because investors remain confident that the Fed will continue with the current policy as long as inflation remains under control. On the other hand, with Bernanke's second term set to end in January next year, it could be a case of the Bernanke effect beginning to fade in the markets. Unless Bernanke hints at a third term, we could see this more and more as the year goes on.

In the latest sign that the UK's Funding for Lending scheme is beginning to work, the RICS house price balance was flat in December for the first time in 30 months. The figure has been falling for six months now, with the latest figure well below expectations of an 8% drop. This is a very positive sign for the UK housing market, with house prices now expected to rise this year by 2%.

Higher energy bills are expected to have moved the UK CPI figure within touching distance of 3% in December, only four months after it fell to 2.2%. If it comes out as expected, it will leave the Bank of England’s Monetary Policy Committee between a rock and a hard place when they meet next month, with data released next week expected to show the UK contracted in the fourth quarter.

With a potential triple dip recession on the horizon, the MPC members will have their hands tied and will have to decide whether any additional asset purchases could help the economy avoid a third recession in four years. Not only this but they will have to agree on whether the inflation risk outweighs the benefits of a stimulus package, which based on previous meetings, looks unlikely.

It’s a bit light on the corporate earnings calendar again today, with the season getting in full swing on Wednesday with Bank of New York, Goldman Sachs, JP Morgan and Ebay all due to report.

There is a lot of economic data to get our teeth stuck into though. Over in the US, December's retail sales data will be released which is expected to show a small increase, while the PPI figure is expected to be less positive at -0.1%. On a more positive note, the empire state manufacturing index is expected to bounce back following a run of five months of negative figures in January, to show manufacturers are more optimistic than they were in the second half of last year.

The euro is trading lower against the dollar this morning. The pair has found resistance around 1.3380 from the 100 week simple moving average, where it has traded below since November 2011. If it break above here in the coming days it should find further resistance around 1.3490, the 50% retracement of the move from May 2011 highs to July 2012 lows. This is also last year's highs which suggests it will provide further resistance. Just above here as well is the 200 week simple moving average and with the oscillators suggesting the pair is overbought, this could be where we see a trend reversal.

Sterling is trading slightly higher against the dollar this morning after finding support earlier around 1.6060 from both the 50 and 100 day simple moving averages. It is also the 61.8% retracement of the move from Wednesday's lows to Friday's highs, which suggests it's going to be a key level of support.

The dollar is trading lower against the yen this morning. The pair appears to be finding resistance around 90.0, a key psychological level. If today's candle remains as it is, it would suggest the short term outlook for the pair is relatively bearish. The last two candles have formed a bearish engulfing pattern which would suggest we're going to see a pull back. This could come back as far as the 200 day simple moving average, around 85.0, to test it as a new level of support, before trading higher. The longer term outlook for the pair remains quite bullish.

The euro is trading lower against the dollar this morning, having found resistance yesterday from the top of the ascending channel. We should now see a pull back in the pair, which has become overbought on the daily chart in recent days, according to both the RSI and the stochastic. The next level of support for the pair is likely to come around 0.8265, followed by 0.8233, the 38.2% retracement of the move from this month's lows to highs.

Ahead of the open we expect to see ...

Read the full report at Alpari News Room

[Alpari UK]

Craig Erlam talks about Fed Chairman Ben Bernanke's speech last night, the US debt ceiling negotiations and what the UK inflation figure means for the BoE meeting next month. He then takes a look at GBP/USD charts (3:55).



Forex research: Global markets daily

[Alpari UK]

Earnings season continues with major banks reporting

Today's US opening call provides an update on:
• Major US banks to report earnings before the opening bell;
• Eurozone inflation expected to remain low at 2.2%;
• Germany may have to pay higher yields at its Bund auction today;
• US inflation expected to remain low in December.

Stock markets are expected to open higher in Europe this morning as major US banks prepare to report fourth quarter earnings.

A number of major banks, including Goldman Sachs and JP Morgan, are due to report before the opening bell in the US which is likely to create some early volatility in the markets. Both Goldman Sachs and JP Morgan have a knack of beating analysts forecasts with ease and with earnings expectations so low, we could see banks trading pushing indices higher today.

The release of the eurozone CPI figure this morning is expected to show inflation remained at 2.2% in December. While this is the lowest it has been since November 2010, it is still above the ECB's target of 2% and is therefore unlikely to lead to a rate cut in the short term.

A German Bund auction will take place today, 24 hours after it was confirmed that the country contracted in the fourth quarter of last year and faces falling into recession in the first three months of 2013. With the government still facing a potential downgrade that will see it stripped of its AAA rating, it will be interesting to see what kind of interest there will be in the auction.

In general, the Bund is still seen as a safe haven, however with much better yields on offer elsewhere and Germany's economy clearly not performing near its best, the country may be forced to pay more in order to keep interest in the auction up.

At the last auction in November, Germany had to pay 1.4% to sell its long term debt, however yields in the secondary market are now trading higher by around 0.1%, which means they may be forced to pay the highest yields since April 2012, when they paid 1.77% on average.

The US will release its inflation figure later on today, which is expected to be flat at 0%, with the core inflation figure at 0.2%. This remains low enough for the Fed to continue to purchase asset purchases for now, however the figure is going to be monitored closely in the coming months, with voting members already concerned about the impact of the QE3 program on future inflation.

The euro is trading lower against the dollar this morning. The pair has found support so far around 1.3275, where it had previously found resistance. We could now see the pair edge higher once again and attempt to break through the 100 week simple moving average, which acted as a key level of resistance earlier on this week.

Sterling is trading lower against the dollar for a fourth day. The pair found support yesterday from the 50 and 100 day simple moving averages, however there's clearly still a lot of sellers which is why we're seeing sustained pressure on the downside. The pair could now test the ascending trend line, dating back to June last year, which has proven to be a key level of support in the past. A break below here could prompt a substantial move lower, back towards 1.57.

The dollar is continuing to trade lower against the yen today. The pair is looking quite bearish in the short term, however the longer term outlook is still bullish. On the weekly chart, we currently have something that resembles a tweezer formation, which indicates a trend reversal. With more weakness expected towards the end of the week, this could end up looking more like a bearish engulfing pattern, also very bearish. If this happens, I expect to see a pull back in the pair, potentially back towards the 200 week moving average to test it as a new level of support.

The euro is trading flat against the pound this morning. The pair found resistance from the top of the ascending channel over the past couple of days so I expect to see it pull back slightly, with the 50 and 61.8 fib levels the most likely levels of support around 0.82 and 0.8175 respectively. From here I expect the pair to remain bullish.

Ahead of the open we expect to see...

Read the full report at Alpari News Room

[Alpari UK]

Craig Erlam talks about:
0:13 today's corporate earnings, in particular Goldman Sachs and JP Morgan
1:09 German Bund auction
2:34 US inflation figure and the impact on QE3
3:51 Eurogroup President Jean-Claude Juncker's comment on the damaging effects of a strong euro
5:44 CHARTS - outlook for EUR/USD pair



Forex research: Global markets daily

[Alpari UK]

Focus remains on banks today ahead of more earnings

Today’s UK opening call provides an update on:
• Banks looks to follow in the footsteps of Goldman Sachs and JP Morgan when they report today;
• Australian unemployment rises to 5.4% in December;
• Focus remains on the US this afternoon, with housing, manufacturing and jobs data due out.
• EUR/USD, GBP/USD, USD/JPY & EUR/GBP analysis.

It's all about the banks again today after Goldman Sachs and JP Morgan made a good account for themselves yesterday.

Both beat analysts forecasts, in Goldman Sachs case with ease, pushing share prices higher and raising hopes that it's going to be a strong earnings season for the financials. Next up today, we have plenty more banks hoping to follow in the footsteps of the two largest banks, with Bank of America, Blackrock, Citigroup and American Express all due to report.

All of the major banks today are expected to report improved earnings on a year earlier, however we've seen forecasts lowered in recent months, especially in the case of BoA, which has left the bar so low, they could crawl over it.

Australia's unemployment rate hit 5.4% in December, while November's was revised higher to 5.3%. The number of new people employed was't any better, completely missing expectations of a 2,300 rise to report a drop of 5,500. The data suggests that the rate cuts we've seen recently by the RBA are not having the desired effect and we may need to see more this year.

US economic data is going to be another focus today, with housing, manufacturing and jobs data all out this afternoon. The housing data has been strong over the last six months and is expected to have continued that way in December, with slightly higher building permits and housing starts than in November.

The key focus will be the Philly Fed manufacturing index after the Empire State figure in the week was much worse than expected. Forecasts are for a figure of around 7.1, however given the Empire State figure it wouldn't be a surprise to see a much smaller figure.

On the other hand, we saw a similar situation last month, however rather than falling short of expectations the Philly Fed figure was much higher so it's very difficult to accurately predict which way this one is going to go.

The euro is trading lower against the dollar today, however it has found support again around 1.3275. This has previously been a key level of support and resistance and could mark the end of the recent period of selling. If the pair does fail to break below here, we should see it edge higher, putting pressure once again on the 100 week simple moving average. A break through here should prompt a move towards 1.3490, the 50% retracement of the move from May 2011 highs to July 2012 lows. With the 200 week simple moving average just above here, this should provide strong resistance for the pair.

Sterling is trading lower against the dollar this morning. The pair broke below a key ascending trend line, dating back to June, which could prompt a move back towards 1.57. In the shorter term, the next key level of support for the pair should come around 1.59, from the 200 day simple moving average. From here we could see the pair retrace and test the ascending trend line as a new level of resistance, which would act as confirmation of the break.

The dollar is trading flat against the yen this morning having found support around 88.50. While it is still early in the session, today's candle is looking like a doji which could mean we're already going to see a reversal from the current down trend, with the pair targeting 90.0 once again. Alternatively if it continues to trade lower, it could fall back towards the 200 week simple moving average, around 85.0, to test it as a new level of support after breaking through here last week.

The euro is trading flat against the pound this morning. The pair looked like it was going to retrace earlier in the week after finding resistance from the top of the ascending channel. However, it didn't pull back very far before the euro bulls began pushing it higher once again. We could therefore see it test the top of the channel again in the coming sessions, although a break above still looks quite unlikely.

Ahead of the open we expect to see...

Read the full report at Alpari News Room

[Alpari UK]

Please be aware that due to Martin Luther King Day in the US on Monday, 21 January, and Tuesday, 22 January 2013, the trading hours for the following products will be affected:



________
Alexander Chadwick
Alpari (UK) Representative

[Alpari UK]

Craig Erlam talks:
0:17 Today's corporate earnings
1:46 Eurozone
2:13 Key US economic data this afternoon
3:47 CHARTS -- outlook for GBP/USD



Forex research: Global markets daily

[Alpari UK]

Stock markets boosted by better Chinese growth

Today's UK opening call provides an update on:
• Markets boosted by Chinese GDP data;
• This year may not be as strong for China as people hope;
• General Electric to report earnings before the opening bell;
• EUR/USD, GBP/USD, USD/JPY & EUR/GBP analysis.

Stock markets received a boost this morning after China grew more than expected in the fourth quarter of last year.

China ended a period of seven quarters of slowing growth in the last quarter, growing by 7.9%. The figure also beat forecasts with many expecting a growth figure of 7.8% so many are looking at this and thinking the worst is over in China, and that 2013 is going to be much better. I am not one of those people.

In the second half of this year, in particular, we have seen a lot of stimulus measures in China in a bid to boost the economy. We're unlikely to see a similar amount of stimulus throughout this year. On top of that, two of its largest export markets are expecting slower growth this year which will impact the country's output.

Finally while domestic consumption is improving, it's not reached a stage yet where it can support those kinds of growth levels. As a result, it's difficult to see at this stage how China's economy can continue to improve this year, I think it's more likely that we'll continue to see growth slowing, potentially hitting 7% this year.

We have some more corporate earnings today which are likely to receive a lot of attention. The biggest company to report is General Electric, who is expected to report earnings of $0.43 pre share, a slight improvement on last year. The company has a poor record of beating forecasts so this is unlikely again today.

There are also a couple more banks reporting today, with Morgan Stanley and State Street expected to announce better earnings than last year. Goldman Sachs and JP Morgan raised the bar on Wednesday, easily beating expectations, so we could see both of these trade lower even if they come in as expected.

There is very little economic data out today, with the main focus expected to be on UK retail sales for December, which are expected to increase by 0.2%, and the Preliminary UoM consumer sentiment figure in the US. This is expected to rise to 75.1 after the slight dip in December, probably brought on by the fiscal cliff.

The euro is trading flat against the dollar this morning. The pair made significant gains yesterday after finding strong support around 1.3275, a previous level of support and resistance. Today it appears to be finding resistance again from the 100 week simple moving average. A break above here should prompt a move towards 1.3490, the 50% retracement of the move from May 2011 highs to July 2012 lows. We could see a reversal here with the 200 week moving average just above providing further resistance.


Sterling is trading flat against the dollar this morning. The pair ended a second day below the long term ascending trend line, dating back to June, suggesting the outlook is quite bearish. We could see it continue to edge lower today as it falls back towards the 200 day moving average around 1.59. This should be the next key level of support for the pair. From here I expect to see it move back towards the trend line and test it as a new area of resistance, thus confirming the break.


The dollar is trading higher against the yen today after making significant gains yesterday. The pair is finding strong resistance around 90.0, a key psychological level for the pair. A break above here should prompt a substantial move higher in the coming weeks.


The euro is trading higher against the pound this morning after breaking above the ascending channel yesterday. The pair has been trading in the channel since the middle of last year so this is a significant breakout. This should now prompt a significant move higher for the pair in the coming weeks, with the next key level of resistance coming around 0.8420, the 50% retracement of the move from June 2011 highs to July 2012 lows.


Ahead of the open we expect to see...

Read the full report at Alpari News Room

[Alpari UK]

Craig Erlam talks about:
0:09 China's surprising growth figure;
1:53 UK retail sales that all but confirm Q4 contraction;
3:02 Today's corporate earnings;
3:48 CHARTS -- EUR/GBP analysis



Forex research: Global markets daily

[Alpari UK]

Juncker chairs his final Eurogroup meeting as Cyprus pushes for bailout

Today's UK opening call provides an update on:
• US markets closed for Martin Luther King Day;
• Bank of Japan begins its two day meeting;
• Cyprus on the agenda at today's Eurogroup meeting;
• Weidmann due to speak at the Deutsche Boerse reception.

We could see some choppy markets today, with trading volumes severely reduced as US markets shut in observance of Martin Luther King Day.

The holiday also brings a brief break from corporate earnings season, however this will pick up again on Tuesday when Google and IBM both report. Just as last week was huge for banks, similarly this week is going to be all about the tech companies with Apple and Microsoft also due to report later this week.

The Bank of Japan started its two day meeting today, which will be followed by a press conference tomorrow when an unlimited bond buying program and 2% inflation target is expected to be announced. While the announcement is expected, we should see the Japanese stock market rally shortly after, as well as the yen weaken even further.

Today's Eurogroup meeting is unlikely to be the exciting affair we have become accustomed to. It is Jean-Claude Juncker's final meeting as president of the eurogroup before Dutch Finance Minister Jeroen Dijsselbloem takes over the reigns. The main topic on the agenda is going to be Cyprus who are attempting, with little success, to get a bailout without entirely opening its books to its creditors.

Finally we'll hear from Bundesbank president Jens Weidmann later today, when he will speak at the Deutsche Boerse reception. Weidmann has long been against the OMT program announced by the ECB last year, as well as against any form of rate cut due to inflation concerns, however it's going to be interesting to see today whether his stance has been softened by the recent weakness in the German economy, which could fall into recession in the first quarter of this year.

The euro is trading higher against the dollar this morning. The pair entered a period of consolidation last week following a strong bullish move the week before. The resulting pennant formation is typically bullish which means we should see a breakout to the upside in the coming days. If we do, the pair could break through the 100 week simple moving average around 1.34, where it found strong resistance last week. This should prompt a move towards 1.3490, the 50% retracement of the move from May 2011 highs to July 2012 lows.


Sterling is trading higher against the dollar this morning. The recent substantial drop in the pair, following the break through the long term ascending trend line, has resulted in a major double top formation, dating back to August. As it stands, the neckline hasn't been broken and it looks unlikely that it will. Instead we could see the pair trade higher, tested the ascending trend line, dating back to June, as a new area of resistance. This would confirm the original break, prompting a move back towards 1.57.


The dollar ended last week slightly above 90.0 against the yen. It is trading lower again this morning though, which suggests we could see the pair pull back briefly before continuing its move higher. However, with the Bank of Japan expected to announce unlimited QE and a 2% inflation target tomorrow, the pair should remain bullish this week. The next target will be around 92.50, followed by 94.50.


The euro is trading slightly lower against the pound this morning. The pair has found resistance around 0.84 after breaking above the ascending channel it has traded in since July. It could edge lower now to test the top of the channel as a new area of support. This would act as confirmation of the break prompting a significant move higher.


Ahead of the open we expect to see...

Read the full report at Alpari News Room

[Alpari UK]

0:31 Corporate earnings this week including Apple on Wednesday;
1:35 Bank of Japan two day meeting;
2:16 CHART -- USD/JPY analysis;
4:02 CHART -- EUR/JPY analysis.



Forex research: Global markets daily

[Alpari UK]

BoJ targets 2% inflation through unlimited asset purchases

Today's UK opening call provides an update on:
• Corporate earnings season resumes with reporting before the opening bell;
• Bank of Japan announces open ended easing with a 2% inflation target;
• ZEW figures expected to point to improved sentiment in the eurozone;
• Draghi due to speak in Frankfurt later;
• EUR/USD, GBP/USD, USD/JPY & EUR/GBP analysis.

Trading volumes are expected to pick up today as traders return to their desks in the US following Martin Luther King Day.

Corporate earnings season also continues today with some major S&P 500 companies due to report, including Verizon Communications and Johnson & Johnson before the opening bell. Verizon is expected to announce earnings similar to a year ago, at around $0.51 per share, while Johnson & Johnson is expected to announce slightly improved earnings of $1.17 per share.

Both companies tend to report better-than-expected earnings about half the time, so a higher figure today should see a positive reaction in the stocks shortly after the open in the US.

With Apple to report tomorrow, people will be looking in particular at the number of iPhone 5 activations in the fourth quarter. Reports have suggested sales haven't been great for the new iPhone, so this information could give us an idea of the figures we can expect tomorrow.

We saw a classic case of buying the rumour, selling the news over night as the Nikkei 225 fell shortly after the Bank of Japan press conference. As expected, the central bank announced open ended asset purchases in a bid to hit the new inflation target of 2%.

This had clearly been completely priced into the markets. While the initial reaction was very positive, it was quickly followed by a wave of profit taking which resulted in the Japanese index ending the session lower and the yen higher on the day.

There's plenty of economic data out today, especially in Europe, starting with the public sector net borrowing figure in the UK. If the government is going to come close to hitting its deficit targets for the year in order to give its deficit reduction plan any credibility at all, we're going to have to see an improvement here from last month. A figure of £13.4 billion is expected here, only slightly down from November.

This will be followed by the ZEW economic sentiment figures for both Germany and the eurozone. Both figures are expected to show a significant improvement in the outlook among institutional investors and analysts, which is no surprise given the strides made at the end of the year in the euro area.

However no one is getting ahead of themselves here, things can quickly turn around as seen by the volatility in the previous numbers. Therefore I don't expect to see a huge reaction to these figures today.

Finally we'll hear from ECB President Mario Draghi later when he speaks at the New Year's Reception of the Industrieund Handelskammer in Frankfurt. I expect Draghi to receive a lot of questions on the ECB's monetary policy, in particular, whether the recent rally in the euro and the contraction in Germany in the fourth quarter have increased the chances of a rate cut in the coming months.

The euro is trading higher against the dollar this morning. The pair has been trading in a pennant formation for a few days and is due a breakout. This tends to come on the upside given that the period of consolidation came following a bullish move, however the 100 week simple moving average is currently providing significant resistance. A break through here could prompt a move towards 1.35, where the pair should find further resistance from the 200 week simple moving average.


Sterling is trading higher against the dollar this morning. The pair has found support again around 1.5825, from the neckline of the major double top which has formed over the past five months. A break below here would prompt a significant move lower, however this doesn't look likely to happen. Instead we could see the pair trade higher and test the ascending trend line that it broke below last week, dating back to June's lows, as a new area of resistance, which would confirm the original break.


The dollar is trading lower against the yen following the BoJ press conference. Initially the yen weakened a traded briefly above 90.0, however as traders locked in profits the pair fell and is now lower on the day. The weekly chart is looking quite bearish at the moment, with the last two candles forming a bearish engulfing pattern. This suggests we may see a pull back in the pair in the coming weeks, which is long over due according to the RSI and stochastic, both of which suggest the pair is extremely overbought.


The euro is trading higher against the pound this morning. The pair broke above the ascending trend line last week, which suggests the pair is extremely bullish at the moment. It is currently finding resistance around 0.8420, the 50% retracement of the move from June 2011 highs to July 2012 lows. This could prompt a pull back, with the pair testing the top of the channel as a new level of support. If it does, the next target for the pair will be 0.8575, the 61.8% retracement of the same move.


Ahead of the open we expect to see...

Read the full report at Alpari News Room

[Alpari UK]

0:08 Bank of Japan's new open-ended asset purchase program and 2% inflation target
1:12 Eurozone and German ZEW economic sentiment figures
2:27 Today's corporate earnings releases
3:10 CHART -- USD/JPY analysis
3:37 CHART -- EUR/JPY analysis



Forex research: Global markets daily

[Alpari UK]

UK in focus this morning as BoE minutes and jobs data released

Today’s UK opening call provides an update on:
• MPC minutes expected to show unanimous vote against monetary stimulus;
• UK unemployment expected to remain unchanged at 7.8%;
• World Economic Forum kicks off in Davos;
• Apple to report after the close in the US;
• EUR/USD, GBP/USD, USD/JPY & EUR/GBP analysis.

The minutes from the Bank of England meeting earlier this month will be released at 9.30am and are expected to show a unanimous vote against any asset purchases or a rate cut. The vote next month is unlikely to be this straightforward with data released Friday expected to show the UK contracted in the fourth quarter, raising the risk of a third recession in four years.

One thing we could get from the minutes is whether any members were leaning towards further stimulus in the January meeting. This would raise the probability of further stimulus next month and could push the pound lower against the other major currencies, while further supporting the FTSE 100.

The UK jobs data is unlikely to affect the MPC members decision next month, with the unemployment rate expected to remain at 7.8%, while jobless claims are expected to rise by only 300.

The World Economic Forum begins in Davos tonight, which is usually attended by a mix of successful businessmen, politicians and central bankers. In recent years it has been a great opportunity to get some insight into what we can expect next in the eurozone, however with things currently much more calm, it’s likely to produce little in terms of market moving bombshells.

There's likely to be a lot of attention of Apple today, with the company due to report fourth quarter earnings after the close in the US. Apple has a significant weighting in the major US indices, making up 10% of the NASDAQ and just under 4% of the S&P 500, so any shocks in these earnings are likely to impact both indices significantly.

The company has had a disappointing quarter all in all, which has seen its share price drop significantly to around $500. This has been driven by much lower iPhone 5 sales, as confirmed by Verizon yesterday who confirmed they had activated a lot less of the new iPhone than we're used to seeing.

We could therefore see disappointing results here which should put a lot of pressure on the Apple stock and therefore the indices. The only question now is, are people's expectations for earnings so low that there's only really room for a surprise to the upside, or are today's results going to confirm what people fear, that the stock became very over priced and the products no longer have the attraction they once did.

The euro is trading slightly lower against the dollar this morning. The pair is still trading in a pennant formation, although a breakout is due at some point in the next couple of days. This tends to come on the upside, with pennants usually representing a period of consolidation before the continuation of the original move, which means we're likely to see more pressure on the 100 week simple moving average before the end of the week. So far this has proven to be a significant level of resistance for the pair.


Sterling is trading slightly lower against the dollar this morning. The pair found support again yesterday around 1.58, from the neckline of the double top which has formed over the last four and a half months. A break below the neckline could prompt a move back towards 1.5350, however that looks unlikely at the moment. Instead we may see it trade higher and test the ascending trend line, dating back to June's lows, as a new area of resistance after breaking below here last week.


The dollar is trading lower against the yen for a third session. The pair is likely to continue to edge lower in the coming days as traders take profits following the significant move higher over the last four months. On the weekly chart, the last two candles have formed a bearish engulfing pattern which supports a continuation of the recent bearish move. We could see it fall as low as 85.0, before finding support from the 200 week simple moving average, which the pair recently broke above for the first time since December 2007. This would act as confirmation of the original break above here.


The euro is trading flat against the pound this morning. The pair broke above the ascending channel, dating back to July, last week prompting a significant move higher. It has since found resistance though around 0.8420, the 50% retracement of the move from June 2011 highs to July 2012 lows. We may now see it come back to test the top of the channel as a new level of support before continuing its move higher.


Ahead of the open we expect to see...

Read the full report at Alpari News Room

[Alpari UK]

0:09 BoE minutes released this morning;
1:33 UK unemployment and jobless claim figures;
2:11 Apple fourth quarter earnings;
3:03 Congress deal on the debt ceiling;
3:52 CHART - GPD/USD analysis.



Forex research: Global markets daily