The three key developments across the markets this week have been:

• upgraded UK growth by the Bank of England in its quarterly inflation report,
• Eurozone growth figures showing countries right across Europe continuing to struggle and,
• an article giving first details on how the Fed would begin to unwind QE as the economic recovery continues.

The higher growth figures expected by the Bank of England have lifted the pound, particularly against the Euro given the continued deterioration in growth across the continent.

The slowdown is slowly spreading from the troubled periphery into the stronger core countries, with Germany positing lower than expected Q1 GDP and France re-entering recession.

The news pushed the Euro to a one month low against the Dollar.

Depending on the tone of next weeks Fed meeting, where the Fed is expected to continue to discuss unwinding QE and varying the scale of asset purchases, the Dollar could have significant further upside over the coming weeks.

Next week is a busy one for the FX CFD trading markets, with central bank meetings and publications galore.

The Fed and Bank of Japan both have monetary policy meetings, plus we have minutes from this month’s meeting from the Bank of England and Reserve Bank of Australia.

The RBA release is eagerly anticipated given the drop in interest rates took the market by surprise.

 
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Mervyn King has signed out with an upbeat final quarterly inflation report with growth forecasts increased and inflation forecasts scaled down.

King expects to see unemployment gradually come down which backs up the official data today which showed unemployment levels falling.

The big positive is the expectation that growth expectations are looking rosier and at the same time inflation is softening, previously it has been the other way around.

The report is good news for consumers that have been hit with persistently high inflation and no end in sight for a return to growth.

Although the report gave a short term boost to the pound on the upbeat growth forecasts, this was short lived. Overall we expect the pound to fall in line with a more aggressive Bank of England as Mark Carney replaces Mervyn King as Governor.

The sparks of life are now evident but until we see the UK economy truly fire into life we can expect the Bank of England to be proactive and more aggressive which is likely to weaken the pound.

In other news, Japanese preliminary GDP beat estimates and this help to continue the positive risk sentiment in Asia until it was dampened by weaker Japanese earning reports.

In the FX CFD trading markets, the Euro came under renewed pressure against the USD as speculation increases for a further rate cut from the ECB following yesterday’s disappointing Q1 GDP data.

In addition, the USD is making gains after hints that the Fed is moving closer to exiting their QE strategy.

The focus for today will be on Euro area inflation especially in the light of an anticipated rate cut.

We also have inflation data from the US and initial jobless claims and the Philadelphia Fed survey.

Economic data from the US has been mixed but leaning towards the upside and it is hoped that this trend will continue, if so this will support a stronger USD.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

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Flash GDP estimates from Germany and France underwhelmed the markets early this morning, missing analyst estimates as the fog refuses to clear from the Eurozone economy.

With recovery optimists so dependent on the occasional glimpse of sunlight from Germany, their miss was particularly disappointing.

CFD trading markets have largely recovered from their early malaise to re-test recent highs as strong corporate numbers took centre stage.

Top of the leader board are budget carrier EasyJet, who provided positive guidance for the year after successfully tapering losses in H1.

Revenues were driven by strong demand for flights from the UK as Brits sought to escape the extended winter chill.

In a similar vein TUI Travel are trading higher after the board outlined a target of $1.3bn in full-year profits and promised a dividend return to shareholders later in the year.

Property giant Land Securities see their stock trading at fresh 4-year highs the net asset value of their portfolio rose to 903p per share (circa 95%) and rental vacancies decreased during the quarter.

With several high profile development projects in the offing for the remainder of the year, shareholders will be hopeful of further growth over the remainder of 2013.

Shares in the London Stock Exchange have also found support as Q1 earnings beat expectations on strong revenues.

CEO Xavier Rolet also offered encouraging guidance on the recovery in the IPO market that will potentially have positive consequences for the group later in the year.

Restaurant Group have managed to overcome the difficult consumer environment in the UK to deliver impressive revenue growth that leaves them seeking aggressive expansion over the remainder of the year.

Up to 35 new restaurants are currently planned, inspiring renewed optimism amongst investors who have sent the share price to all-time highs.

Less impressive numbers from ITV, who are pessimistic about advertising revenues in Q2, and Wood Group, who saw costs overrun on key projects during the period, have taken the steam out of their respective share prices.

However, an unexpected fall in the UK unemployment rate rounded off what has generally been a good news day in the UK.

US CFD Trading Markets

US stocks trade flat today, perhaps understandably after the exuberances of recent sessions, and whilst reports showed manufacturing contracted in April by more than forecast.

In shares CFD trading, Google was up nearly 2% in early trade today, and over $900 per share for the first time.

With the stock up nearly 26% so far this year, investors were further cheered by reports that the tech giant is to launch a subscription music-streaming service.

This is expected to be announced at today’s I/O Conference for developers in San Francisco.

Macy’s reported Q1 profit rising to $217 million from $181 million a year earlier and raised its quarterly dividend by 20% to $0.25 per share.

The stock was up nearly 3% on the open before falling back on traders cashing in their chips, with retailer up more than 7% in the last fortnight.

Dow constituent, Cisco Systems, will be one to watch after today’s closing bell following disappointing results from the likes of Oracle and IBM previously.

Cisco’s earnings will also provide one of the first read across opportunities for April numbers within the technology space. EPS is seen at $0.49 minus exceptional items with revenue seen rising by 5% to $12.17 billion.

FX CFD Trading Markets

Industrial Production figures from the US dropped more than they have done over the past eight months, allowing the Canadian Dollar to bounce back off its three-week lows.

The BoE upgrading its estimate of the UK economy has allowed the pound to strengthen against many of its peers as the Governor King added some positive sentiment saying he thought that a recovery for the economy was in sight.

Further positive news was at hand to give the pound a push in the right direction as UK jobless claims fell in April even though unemployment increased.

The meeting of Russian policy makers to decide what should be done with interest rates as the falling oil prices weighs on the world’s biggest energy exporter has caused the Ruble to drop for the first time in three days.

Commodities CFD Trading Markets

WTI crude took its run of losses to five days, with contracts for June delivery dropping below $93 a barrel ahead of today’s key inventory figures. Analysts are expecting stockpiles to increase by 450 000 barrels.

Confirmation that major Oil companies are facing investigation from regulators regarding possible price fixing has dominated news space, with the legitimacy of traders “independent” submissions being called in to question.

Copper continues its divergence from global equity benchmarks, sliding to a week low while indices press on toward fresh highs.

Often used as barometers for economic growth, investors face poor European growth numbers, Industrial Production in the US missing estimates, worries over the sustainability of Chinese expansion and rising stockpiles.

None of these are likely to spur confidence in the short term outlook.

Gold continued the theme, dropping to a 3 week low as dollar strength puts pressure on dollar denominated commodities.

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CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

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Strong demand for risk assets boosted CFD trading markets yesterday with Central banks supplying the main source of support for investor risk appetite, with a mixture of lower policy rates and quantitative easing providing a major boost.

Furthermore, numerous central banks seem to be talking down their currencies and/or intervening, contributing to the heavy weight versus Greenback.

Normally the Dollar would not improve during times of risk appetite, however it is finding ample support from the fact that Fed policy is set to change direction along with other central banks. As such, the currency is breaking key levels against major currencies including EUR, JPY and AUD.

The rise in US Treasury yields is sustaining the USD, aided by steadier US economic data particularly on the employment side.

Reports in the US are suggesting that the Fed is crafting an exit plan from QE, though the timing is still in question, another aspect assisting the Dollar at the start of this week.

Numerous Fed speeches over coming sessions will likely deliver further hints on any timing or plans for an exit policy. In the meantime, higher US yields and a firmer USD continue to mound pressure on gold prices.

There may be a little restraint in forcing the Greenback higher this week as US data releases are likely to look softer, with retail sales, industrial production and housing starts set to record declines.

Nevertheless, any reversal in the USD or yields could merely deliver improved levels for traders to go long the Dollar and short Treasuries especially as data elsewhere will not look much better.

Indeed, while in Europe there will be a likely bounce in the German ZEW investor confidence index in May, Q1 Eurozone GDP will record a contraction for the sixth consecutive quarter.

Promising headlines from Europe are not about bullish updates such as strong pace of growth or higher rates of return drawing in more capital. Replacing it you will find, ‘positive’ news from the region is more of the cut of avoiding another crisis state.

Yesterday discussions on both Cyprus’ and Greece’s austerity struggles, officials declared the support of a €2 billion for the former and €7.5 billion for the latter. Nonetheless, we have seen several times before that these funds are just insignificant markers in a much longer-term fix.

There are plenty of dangers ahead – and the market will maintain its scepticism.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

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Another volatile trading session in Europe on Friday left EUR/USD struggling with new selling pressure as the pair started its descent below 1.30.

There has also been further negative news for China, released overnight, showing that Chinese Industrial production has continued to slow and came in under consensus at 9.3% which has added to further AUD and NZD weakness.

As interest rates and QE were left on hold by the BoE last week, this weeks inflation report, on Wednesday, will be closely monitored to see if the recent growth figures have been affecting consumer purchasing power.

Also, in one of his last addresses, Governor King will release the MPC forecast for Sterling and the UK economy before being replaced by Mark Carney in July. Also on Wednesday, that could be Sterling positive, the UK Claimant Count Change that is expected to show further signs of a strengthening labour market with a -3.0k fall.

Eurozone finance ministers meet this afternoon in Brussels to agree the first bailout payment for Cyprus, agreed earlier this year, and also a further bailout required for Greece.

On Tuesday, German inflation is expected to remain on hold at 1.2% with ZEW Economic Sentiment forecasted to show a slight improvement. The big data this week, German GDP, is expected to show 0.3% growth last quarter to beat the -0.6% deficit last quarter.

This comes before Eurozone GDP which is expected to show the single currency remaining in recession with -0.1% contraction alongside -0.6% negative growth the previous quarter.

After last weeks USD/JPY surge above 100 and subsequent US Dollar strength, the FX CFD trading markets will be looking for positive news today, from the Retail Sales figure, and may be disappointed with expectations of a -0.3% contraction.

Wednesday’s industrial production is expected to show a slight contraction with CPI data on Thursday expected to fall to 1.3% from 1.5% compared with last year.

In another bullish move, Friday’s Michigan Consumer Sentiment is expected to strengthen further.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

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A combination of better-than-expected Chinese export growth and German Industrial production has boosted appetite in the CFD trading markets and led to EUR/USD driving higher yesterday.

In addition, overnight it was been confirmed that Australian employment data came in hugely better-than-expected, again boosting risk appetite and leading to gains in the AUD in early trade.

In other news the NZD fell after the central bank confirmed that they intervened last month to protect the NZD from further appreciation.

However with interest rates still high compared to the west at 2.5% and limited ability to intervene on a large scale, the NZD is not expected to depreciate too much. Needless to say, the move will make speculators think twice before going long NZD.

Elsewhere, the Polish Zloty gained ground after the central bank cut interest rates in a surprise move to try to boost growth.

Focus for today will be on the Bank of England interest rate decision, however it is not expected that we will see any change to interest rates or to QE which will hold at £375 billion.

The recent uptick in economic data in the UK through PMI and GDP coming in better than expected underlines the reasoning to hold firm.

We also have industrial and manufacturing production data due out of the UK this morning which is expected to be weaker than previous releases.

From Europe we have the ECB monthly report which although not likely to surprise will be eyed just in case and finally we have US jobless claims which are expected to show an increase in claims.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

The Single European Currency progressed to a high of 1.3130 following German Factory Orders which surprisingly rose a further 2.2% in March.

Also contributing to its strength were rumours that Portugal will auction 10-year bonds for the first time since the 2011 bailout amidst easing finance costs in Europe.

Nevertheless, it appears as though the powers that will be working under the single currency are becoming gradually more dependent on monetary support. This comes as as Spanish Prime Minister Mariano Rajoy requests the ECB to announce extra packages to support small businesses.

Meanwhile, Euro Group President Jeroen Dijsselbloem said the region needs more tools to recapitalise commercial banks as the ECB plans to conduct asset-quality review of financial institutions.

Following comments from Mario Draghi last Thursday, it appears as though the ECB are ready to firm up the ailing economy.

We should see the Governing Council continue to embark on its easing cycle over the coming months and the central bank may show a greater willingness to apply negative interest rates in the Eurozone as the region struggles to return to growth.

Therefore, the ECB monthly report due out Thursday may fuel speculation for additional monetary support. As such, the EUR/USD CFD trading market remains poised to face additional headwinds over the near to medium-term as the outlook for growth and inflation remains weak.

Finally, back to the UK the Pound has found a catalyst by the better-than-expected GDP number which eradicates some of the short term fears regarding a triple dip recession.

Attention will now turn to the NIESR (National Institute of Economic & Social Research) estimate of GDP for April for further clues on the state of the UK economy.

The Bank of England Interest rate decision will also be a key event. Recently there has been the view that more QE could become available but as yet we have failed to see it. If we this were to be announced expect rates to be pretty choppy following this news.

These data outcomes along with Industrial and Manufacturing results will shape Sterling’s performance for the rest of the month.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

The big news yesterday was Super Mario, ECB chief, dropping interest rates by 25 basis points at the ECB monthly meeting.

The move was widely expected in the market which is why there was not a huge reaction in the aftermath, with GBP/EUR nudging up 60 pips or so. The larger move was EUR/USD, which after trading over 1.32, came back to just over 1.30.

I think the CFD trading market was hoping for more details on how the ECB will help to extend credit to SME’s across the Eurozone, but as usual Mario talked a great deal with zero content.

We will most likely find out more about the plans in planned speeches and press leaks during this month.

In terms of the Euro moving forward, the rate cut should allow GBP to push towards the 1.20 level over the next couple of months.

This should be accelerated by today’s non-farm payrolls which are expected to be softer than originally forecast.

As Phil M said yesterday the soft ADP jobs number on Wednesday usually means the NFP number is also soft, and will cap off a month or so of weaker than expected US data.

The Dollar has in recent months begun to trade like a normal currency, away from the Risk-on/risk-off paradigm that dominated USD trading over the past few years.

That is why a disappointing NFP number should see the Dollar weaken slightly, however don’t be surprised to see GBP/USD ramp up as we move towards the number.

Eurozone PPI is also due this morning at 9am – recent individual country PPI’s have been dire so expect the theme to continue with currency area wide number as well.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Yesterday the FOMC left interest rates unchanged as expected and kept firm to the current pace of asset purchases.

The reaction in the FX CFD trading markets was muted as the Federal Reserve offered nothing significant to lean the market one way or the other.

The Fed could be seen as opening the door albeit very slightly for an increase in asset purchases by noting that they are prepared to increase or decrease purchases going forward.

They maintained their tone on employment and growth even despite recent weak data releases. Overall the meeting could be construed as slightly more dovish but effectively the FOMC will adopt a wait and see approach which is reflective of the mixed data of late.

Economic data from the US yesterday was mixed with weaker ADP employment data, the private sector added only 119k jobs in April and this could potentially lean towards a weaker non-farm payroll number on Friday.

ISM manufacturing also fell but by less than expected. In essence going forward weaker data should lead to a weaker USD as there will be more likelihood of an increase in the pace of asset purchases.

Elsewhere, Chinese HSBC PMI also came in weaker than expected and more soft data from China will weigh on commodity currencies and in particular the AUD.

Bank of Japan minutes yesterday revealed a continuation of an aggressive Bank of Japan that raised few concerns with the impact on wider financial markets which suggests more of the same going forward from the BoJ.

Today the focus will be on the European Central Bank meeting. The ECB are expected to cut the refinance rate by 25 bp form 0.75. This has been mostly factored into the markets now and we are not expecting fireworks on this decision.

The ECB may also discuss other measures which could potentially mix things up and move the Euro. One item would be a cut in the deposit rate or a mention of this possibility. This would be euro negative or we could see other unconventional measures targeting growth.

Also today, we have Eurozone PMI data and of particular interest will be the estimates of manufacturing PMI for Spain and Italy.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Economic data out yesterday was positive throughout most markets, completely opposite to the health of the real economies.

Equity markets in the US have rallied on the back of the figures and consumer confidence has risen. Most CFD trading investors expect the Federal Reserve to continue with their QE and bond purchasing stimulus plan to provide momentum to the economy.

However, the USD is a little weak even though the Fed has hinted that it may claw back some of its stimulus program as it feels that inflation is under control and the economy is slowly meandering back to growth.

Most of the direction on the USD as well as investor sentiment will be determined by Friday’s Non-Farm payroll figures. Though likely to come out in line with expectations, any move whether positive or negative will provide a more stable direction on the health of the Greenback.

The recent sell-off in the US Dollar and the risk-on approach by investors is mainly attributed to strong corporate earnings rather than the economy itself, while some feel it is due to cheap money being supplied by Central Banks.

The Federal Reserve meets this evening, and will take a call on further QE and interest rates, though interest rates hardly have any room for change. The Euro trades at 1.3170 against the greenback.

From the Eurozone, the main news grabbing the headlines, even though there seems to be increasing consumer sentiment in Germany, is the unemployment figures released lately.

Unemployment for the Eurozone region as a whole has topped the 20 million mark, taking the tally to a staggering 12.1%.

In the wake of this, we are likely to see an interest rate cut for the region, in an unlikely attempt to control employment rates, in the wake of the IMF continually maintaining that the stimulus program for the region be eased off a little.

This has led to bond maturity dates being extended for most countries in the Eurozone. Unemployment in Spain, France and Greece are all soaring, while the new coalition government in Italy provided some stability in consumer confidence for the country as they held a successful 5yr and 10yr bond auction.

Sterling has managed to rally nicely in the wake of the data releases from the Eurozone, coupled with its strong GDP figure of 0.3%.

A lot still needs to be done to the economy as higher prices (inflation for March being 2.8%); lower wages and low demand continue to squeeze consumers.

However, business confidence seems to be marginally better after the GDP figure, as most people were expecting the UK to fall into a triple dip recession.

In further good news, banks created more home loans in March than analyst predictions, as there are signs of a nominal recovery into growth. However, the IMF still feels that George Osborne needs to scale back the stimulus measures a bit and extend the program for longer.

SME lending in the region also reached its highest level for 2 years. GBP/USD sits well above the 1.55 mark for the interim, and investors remain bullish for it to breach 1.56.

However, this could be pulled back depending on the decisions at the FOMC meeting in the US and higher non-farm payroll figures on Friday.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.