So far the markets are quiet as we start the new trading week. Aside from some mild strength in the British pound, there’s not much to speak of so far.

The FTSE and other European stock markets are likely to open up strongly, but that will primarily be down to playing catch-up with the late session recovery on US markets from Friday.

There’s no meaningful economic data to come today. We’ve already had Australian home loans data, which came in below estimates, but this appears to have had little impact on the AUD/USD.

Here’s a heads up of the main announcements for the first half of the week.

Tuesday:

We have the Japanese central bank’s latest monetary policy statement. No surprises are expected from this, but the following press conference may reveal a few tip bits that reveal how the bank is feeling about certain problems such as the strong yen.

Any hints of currency intervention (or lack of) could impact forex pairs such as the USD/JPY.

Tuesday’s main event is the US Federal Reserve interest rate statement. No change is expected on the headline rates, but the big question is what the Fed will be doing with the cash it is now receiving in interest payments from the mortgage bonds it purchased.

Will it buy more bonds with the cash, adding more liquidity? Or will it start to withdraw from the market and simply let the cash payments build up?

Either way, in for the forex spread betting markets it could be a big day for pairs such as the GBP/USD and USD/JPY.

Also don’t miss the Chinese Trade Balance data schedule for release some point on Tuesday.

Wednesday:

Wednesday’s highlights include the Chinese inflation data at 03.00 GMT, following by UK unemployment claims figures at 09.30. Will the new UK government’s austerity measures start to bite as expected? Keep an eye on the GBP/USD.

By Dave Evans, BetOnMarkets.

Spread betting is a leveraged product. It carries a high level of risk to your capital and, as it is possible to lose more than your initial investment, it may not be suitable for all investors. Therefore, ensure you understand the risks involved and seek independent advice if necessary. The tax treatment of spread bets may be subject to change in the future

The above should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument.

In the forex spread betting markets the Euro continues to battle higher against the dollar without seeming to be able to sustain the critical move above the $1.3000 level.

We have now been hitting the $1.3035/50 area for weeks. Occasionally we pull back down a bit but the forex spread betting market always returns to this mark.

Standing on the sidelines it is possible to see from the various data that the market is still, even after a 10¢ reversal, short of Euros. This lopsidedness is continuing to have an effect on market direction.

At the moment it is not the US Dollar bears who are continually under pressure as they were throughout the first half of 2010. Currently the boot is very much on the other foot. Every move higher for the Euro/Dollar rate puts more short-sellers under water. It’s also interesting to note that we have now almost entirely reversed the “break out Sovereign debt move” which started around the beginning of May. This can clearly be seen in the charts you get from FinancialSpreads.com and IG Index.

Looking in more detail the Euro has price resistance at $1.30035 and above here more resistance around $1.3110. To the downside the price support is building nicely circa $1.2965 and also around the $1.2880 mark.

The Pound is also looking bullish against the US Dollar and is having its own battle a little north of the $1.5600 level.

Investors are selling the spread trading Sterling/Dollar market at all prices above $1.5600 and are building up heavy short positions. The recent move up to $1.5650 has probably proved worrying for these short sellers. Nevertheless, just like the Euro, the attempted break higher ran out of steam.

It’s difficult to judge where the Sterling/Dollar market is going however shorting the market is dangerous. For now, the momentum is definitely Sterling bullish.

Risk Warning

Spread betting is a leveraged product. It carries a high level of risk to your capital and, as it is possible to lose more than your initial investment, it may not be suitable for all investors. Therefore, ensure you understand the risks involved and seek independent advice if necessary. The tax treatment of spread bets may be subject to change in the future

The Committee of European Banking Supervisors (CEBS) reported on Friday that seven of the ninety one banks tested in the European Union stress tests failed to pass.

Spain produced five of the failed institutions with the majority being savings banks. Greece’s ATEBank and Germany’s state owned Hypo Real Estate made up the other two names with the total shortfall in capital required amongst the group totalling 3.5 billion Euros. The Euro was the biggest loser after the results were announced, selling back off towards the 1.28 level against the Dollar.

European Indices traded largely between small losses and gains throughout the day with particularly tight trading ranges as most investors had a firm eye towards the results of the bank stress tests, due out after European stock markets closed.

The results of the stress tests has been a headline that most in the market has been waiting for and so naturally with the results due out after the market closes, and it being a Friday too, today’s session has been fairly quiet.

Gains in the miners were weighed down by some profit taking in the banks, mostly as investors reduced their banking risk ahead of the stress test results, and this left European Indices slightly higher on the day, to close the week around 1% higher.

UK GDP surges

One of the main headlines on the day was the fact that UK GDP for the second quarter smashed past market expectations to post a growth of 1.1%, almost double what had been expected. Many investors will now question the validity of double dip recession fears and when you ally today’s UK GDP data with yesterdays better than expected retail sales figures and terrific euro zone industrial orders data, it has certainly helped to reassure the near to medium term market fears.

That said, preliminary GDP figures are liable to change and so whilst today’s data is extremely positive, many traders are unlikely to plough full steam ahead just yet and are likely to wait for more readings to confirm how quickly the UK is growing.

Whilst stronger growth is likely to help calm fears of a double dip, much stronger growth could also raise the likelihood of interest rate hikes sooner as opposed to later.

Please remember that Spread Betting and CFD Trading are leveraged products that carry a high level of risk to your capital and can result in losses that could quickly exceed your initial outlay. These products may not be suitable for everyone, so please make sure you fully understand the risks involved.

Spread Betting and CFD comments by Nick Serff, Market Analyst, City Index.

The above should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument.

Neither City Index not Spread-Betting.org warrant or represent that the material is accurate, complete, not misleading, or fit for the purpose which it is intended and it should not be relied upon as such.