Event - The "Atomic" August NFP - What to expect?

Ladies and Gentlemen,

Today at 13.30 BST we have a plethora of data from the US, as we are all aware the Fed is “Data Dependent”.

13.30     Non-Farm Payrolls          

Average Hourly earnings

Unemployment Rate

Labor Force participant rate

The Non-Farm Payroll number will be where we look first. The market consensus is 225k. The barometer appears to be 200k with a weaker number suggesting that a rate rise in September will be off the table, whilst a strong number will make the voting members of the Federal Reserve do some soul searching.

Fed Funds has 19 basis points priced into the September Contract, 32 basis points priced in December Contract and a year from now it has 70 basis points,will this change?

The minutes of the last meeting teased the market with the word ‘some’, stating that the FED would like to see “some improvements” in data before raising rates

Dennis Lockhart, the Atlanta Fed President, a dove, said that it would take a significant deterioration in the data not to move in September.

We eagerly await the data dependent sequence…

Good Luck

Anish S. Lal @anish8fx

FX & Precious Metals, Atom8 Financial Services LLP

2nd Floor, Centenary House, Palliser Road, London W14 9EQ, UK

T: +44(0)20 3405 3910 | M: +44 (0)7983701816 | anish.lal@atom8.com | www.atom8.com

Bank of England's Super Thursday

Ladies and Gentlemen,

If you look at the list of data being released tomorrow in the UK, you will see why the media are referring to it as ‘Super GBP Thursday’.

09:00     New Car Registrations

09:30     Industrial Production

                Manufacturing Production

12:00     Bank of England Inflation Report and Minutes to the meeting

                Bank of England Bank rate (0.5%)

We get 3 data points from the BOE at midday, the minutes of its policy meeting, the quarterly inflation report forecast and the Interest rate decision, presently 0.5%.

Normally, these reports are on separate days.

 What should we be looking out for?

How the members of the MPC vote, the last 7 meetings have been 9-0. Are there any dissenters in the ranks?

Martin Weale confirmed he was one of two members that nearly voted for rate rise at the last meeting and JP Morgan have forecast a 6-3 vote.

Who are the other possible dissenters? Kristin Forbes said there will be a rate rise ‘in the not too distant future’.

However I take note from the BOE chief economist  Andrew Haldane ‘ For me the combination of a healing economy, very low price pressures and a wobbly world means there is no rush to move rates from where they are now’. It is important to remember that the BOE mandate is to deliver price stability and then support growth and employment.

It will a very interesting day as the market presently expects a rate rise in May of next year, if the hawks win then 1.5680 is the level to watch whilst a leaning towards the doves would see 1.5470 tested.

Good Luck

Anish S. Lal @anish8fx

FX & Precious Metals, Atom8 Financial Services LLP

2nd Floor, Centenary House, Palliser Road, London W14 9EQ, UK

T: +44(0)20 3405 3910 | M: +44 (0)7983701816 | anish.lal@atom8.com | www.atom8.com

Risk Warning

Trading on margin (spread betting, CFDs and FX) carries a high level of risk and may not be suitable for all investors.  The high degree of leverage can work against you as well as for you.  Before deciding to trade your live account, you should carefully consider your investment objectives, level of experience and risk appetite.  You could lose more than your initial investment and should not trade with funds you cannot afford to lose.  You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Is the Australian Economy losing its shine?

Is the Australian economy losing its shine? The flippant answer is look at their cricket team, not the dominant force they once were J

However the more considered answer is that the economic slide is partly due to circumstances beyond the government’s control.

Commodity prices have fallen, the Australian economy has been based around mining and commodities so a period of adjustment is to be expected.

Event Risk - RBA Announcement (4th August 05:30)

What impact will lower interest rates have and is this tool the answer?

Lower interest rates are fuelling ‘Asset Bubbles’.

This is a global story but the Sydney Housing market is the extreme, up a staggering 18.4% (yoy) whilst economic growth has not reached over 3%

So why reduce rates further?

The currency is 35% lower over 4 years surely this should help exporters however the jobless rate is still stuck around 6% and business confidence surveys are not at the level the government would like. A cut is the short term fix but there is a longer term issue.

The cash rate is at 2% and very few expect a cut to 1.75% (25 out of 28 economists polled by Bloomberg have rates on hold.)

We get the quarterly monetary policy statement on Friday the last two times the Reserve Bank Board members meet before this statement they cut 25 basis points

As the proverb goes being forewarned is forearmed.

Anish S. Lal @anish8fx

FX & Precious Metals, Atom8 Financial Services LLP

2nd Floor, Centenary House, Palliser Road, London W14 9EQ, UK

T: +44(0)20 3405 3910 | M: +44 (0)7983701816 | anish.lal@atom8.com | www.atom8.com

FED : Risk Event or Non-Risk Event?

Ladies and Gentlemen,

 Today the two day Federal Reserve meetings start. Chairwoman Janet Yellen is not holding a press conference and updated economic projections will not be released. This meeting is dismissed as a ‘non-event’, however the statement will be released at 19:00 BST and should be digested quickly just in case it is an ‘event’. Look out for the following:-

•       Rates on hold, the last rate hike was in 2006, a hint might be given by tweaking their description of the economy.

•           The Fed has a dual mandate, both employment and stable prices.  An upbeat assessment of the job market whilst energy prices have weakened could signal lift-off.

•           The last five Fed Policy Statements have been approved by a 10-0 vote, will this unanimity last forever? Jeffrey Lacker, Richmond Fed President, is seen as the possible dissenter

If this is a non-event we have to wait until September 17 for our next guidance

Good Luck

Anish S. Lal @anish8fx

FX & Precious Metals, Atom8 Financial Services LLP

2nd Floor, Centenary House, Palliser Road, London W14 9EQ, UK

T: +44(0)20 3405 3910 | M: +44 (0)7983701816 | anish.lal@atom8.com | www.atom8.com

Risk Warning

Trading on margin (spread betting, CFDs and FX) carries a high level of risk and may not be suitable for all investors.  The high degree of leverage can work against you as well as for you.  Before deciding to trade your live account, you should carefully consider your investment objectives, level of experience and risk appetite.  You could lose more than your initial investment and should not trade with funds you cannot afford to lose.  You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Will the markets gap for a third week in a row at market open?

Dear  Traders

Will the markets gap for a third week in a row at market open?

EU leaders have issued an ultimatum to the Greek government, ‘reach an agreement with your creditors or face crashing out of €uro’

Alexis Tspiras has made a three year proposal and it looks as if Germany are bowing to pressure to avoid a disastrous rupture to monetary union.

It is acknowledged that Greece’s public debt, 180% of GDP, can never be repaid and German Chancellor Angela Merkel said “a classic haircut” is out of question.

If you look at the FX option market, volatility has fallen, are investors missing the point that the GREXIT could happen this week end?

Below is the time line for the next 72 hours

Athens have formally submitted a request for a three year bailout. The two previous bail outs where submitted before the ESM (European Stability Mechanism) even existed. The European Commission in liaison with the ECB must evaluate this request in 24hours.

Saturday

Under the ESM treaty, the ESM’s board of governors (the Eurozone’s 19 finance ministers) decide whether formal negotiations should begin.

If there are grounds for progression the trio of bailout monitors – the ECB, the European Commission and IMF - will develop a ‘memorandum of understanding’. This title may be changed as it presently stands for the austerity measures that the Greek people are living under.

Sunday

If the Eurozone’s finance minister agree to commence bail out talks this summit may not be needed. However if no deal has been struck, leaders from all 28 EU countries will be summoned to Brussels to sort out the mess. There is a humanitarian relief programme that may be required for fuel, food and medicine.

Monday

If a deal has been approved by the finance ministers then parliamentary approval will be need before permission is officially granted

If no deal has been agreed then the ECB governing council will convene to withdraw the €89bn and the GREXIT will ensue

I hope this helps your understanding of the events. 

The Greek Drama reaches the final curtain, YES or NO?

Dear Traders 

This week end the Greek people get to decide whether or not to accept the bailout conditions proposed jointly by the European Commission(EC), the IMF and ECB on 25^th June 2015

Legal Validity

Today the Greece’s top administrative court, the Council of State, is due to rule on the legality of the referendum

The referendum may violate the country’s constitution by posing a question about public finances

The Question

Voters will be asked whether they approve the proposal made to Greece by the EU, the IMF and the ECB during the Eurogroup meeting on 25 June.

The proposal consists of two documents, titled Reforms for the completion of the Current Program and Beyond, and Preliminary Debt sustainability analysis.

The question will contain two choices stated as

·         Those citizens that reject the proposal of the three institutions vote 'No’ – not approved

·         Those citizens that agree with the proposal of the three institutions vote 'Yes' – approved

Alex Tsipras, the Prime Minister of Greece, recommends a ‘No’ vote

Although the consequence might be the exit of Greece from the Eurozone, there has been rhetoric that this could be used as a tool for Greece to renegotiate its position within Europe.

From a practical point of view the banks re open on July 7th

The Polls

I have seen 4 polls the latest was from the University of Macedonia with 1,042 people survey 42.5% Yes and 43% no.

Alco’s polls was a ‘yes’ whilst Focus and pro rata were both ‘no’

This is all destabilising and if the price action from last week end is anything to go by then a move lower in €/$ is what we expect.

Our original comment was that 20^th July was is the most significant date as the ECB’s position will harden if their payment is missed

Enjoy your week end if you can.

Anish S. Lal @anish8fx

FX & Precious Metals Sales, Atom8 Financial Services LLP

2nd Floor, Centenary House, Palliser Road, London W14 9EQ, UK

T: +44(0)20 3405 3910 | M: +44 (0)7983701816 | anish.lal@atom8.com | www.atom8.com

Risk Warning

Trading on margin (spread betting, CFDs and FX) carries a high level of risk and may not be suitable for all investors.  The high degree of leverage can work against you as well as for you.  Before deciding to trade your live account, you should carefully consider your investment objectives, level of experience and risk appetite.  You could lose more than your initial investment and should not trade with funds you cannot afford to lose.  You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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NFP Thursday

Ladies and Gentlemen,

 

The markets have been very clearly focused on Europe and specifically Greece in the last few trading sessions.

 

Tomorrow, this temporarily changes as we have the US Non-Farm Payroll number at 1.30 BST

 

The ADP employment change data today was better than expected today at 237k when 218k was consensus, this is often seen as a pre cursor for the NFPs

 

The ISM manufacturing number was also better than expected at 53.5 when 53.2 was expected, so where does this lead us.

 

The NFP consensus is 233k and last month the number was 280k but everyone knows ‘The Fed’ is data dependant and with two additional job reports before the September Fed meeting does anyone care?

 

Yes, the split seems to be how many rate hikes will there be before year end, one or two?

 

However we may need to look away from the headline figure and understand what is going on beneath the bonnet to assess how the Fed voters will interrupt the numbers

 

The labor participation rate needs to be improving, average earnings need to be ticking up the year on year, the rate is presently 2.3% and aggregate income growth needs to be positive.

 

As ever the devil is in the detail

 

Good Luck 

 

Anish Lal