Spread Betting: RBS Rallies on Investment Interest from Abu Dhabi Wealth Fund
Posted on | March 27, 2012 | No Comments
The relatively quiet economic docket coupled with a lack of any real conviction that further QE may be forthcoming has left the broad European market struggling to extend yesterdays gains.
Should additional easing occur, it will likely surprise the bond markets which - taken in context against equity markets - have not reacted to the rumours.
Main headlines surrounded that of state backed bank RBS and the potential sell off by as much as a third to an Abu Dhabi wealth fund outfit.
The bank as a result, has spent much of the day at the top of the FTSE adding 4.58% with Standard Chartered and Barclays also gaining by 2.07% and 2.95% respectively.
Fighting for bottom place much of the day, Compass Group and Resolution plc have both seen a decline of over 3%.
Compass Group falling on the admission that H1 sales growth would be slower than that of last year. Resolution had fallen by as much as 7% intra-day upon the revelation that it would exercise a stock spilt but has pulled back somewhat.
The release of the CBI survey this morning showed that British retail sales had steadied this month rising from -2 in February to 0.
With muted wage growth and potentially higher oil prices stoking inflation fears, its likely that growth in this area could remain elusive from some time to come.
Stateside, markets opened up in early trade but the release of the consumer confidence numbers temporarily stalled additional upward momentum.
While the US confidence data came in at 70.2 from against expectations of 70.0, the fact that its a decrease on last month’s number could be cause for concern and has pushed European markets lower.
The Richmond Fed Manufacturing index also failed miserably to lift investors coming in at a shockingly low number of 7 against an expectation of 18.
Sterling has been the best performer in the currencies today rising to 1.60 against the dollar for the first time since November last year as the residual effect of Bernanke’s comments impacted the greenback.
The Japanese yen was overall the worst performing currency with rumours abound that the BOJ could indulge in further currency weakening this week.
The release of the Japan inflation numbers on Thursday may underpin this as yet unsubstantiated marker chatter.
Gold spread betting remains solid following yesterdays rally supported by its 200 day MA testing the $1691 level which has been acting as a barrier to further upside.
Copper has dipped back today on the back of a stronger dollar trading in a narrowing range the metal is well supported by the 200 day MA.
In oil spread betting, prices have slipped back despite news of a bombing in a Sudan oil field. Expectations are that tomorrows supply reports will show a rise in crude stocks,
Please remember that Spread Betting, FX and CFDs are leveraged products and carry a high level of risk to your capital. It’s possible to lose more than your initial investment. These products may not be suitable for all investors, please ensure you understand the risks involved and seek independent advice if necessary.
Spread Betting, FX and CFD comments by Michael Hewson, Market Analyst, CMC Markets.
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 CMC Markets nor 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.
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 Joshua Raymond, Chief Market Strategist, 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 nor 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.
Disappointing European Data Sends EUR/USD Spreads Lower
Posted on | March 26, 2012 | No Comments
The Week in Review:
Finally economists are in agreement that for the time being, the Eurozone is under control, although close scrutiny is being paid to Spain and Portugal, who say they do not want to branded ‘the new Greece’.
Greece though, are by no means out of the water with the Bank of Greece releasing official figures showing an expectation that the economy will shrink by 4.55% and unemployment will remain around 19%.
Exports are also likely to decline said the EU’s Horst Reichenbach.
ECB member Timothy Geithner stated that the risk of catastrophic failure in Europe has passed and that it is now time to focus on growth.
However, the flash manufacturing and services figures released last Thursday did little to enhance this proposition with all bar German flash services contracting during the previous month. EUR/USD weakened 100 points off the back of this news.
Oil is the latest headache for world economies. The price of Crude Oil rose above the $107 a barrel mark over supply fears as the restriction on Iran starts to kick in.
They, however, have assured Kuwait that they will not close the Strait of Hormuz, a threat that would have caused significant problems for the small state.
It seems in reality that there is a readily abundant supply with Saudi Arabia saying they have 25% excess capacity and France considering releasing strategic oil reserves.
The IMF’s Christine Lagarde commented that oil prices could rise though by between 20-30% because of the difficulties.
In Britain, economic policy was of interest with the release of the budget and the monthly MPC meeting.
The committee as expected chose to keep interest rates constant and voted 7 to 2 in favour of no new quantitative easing measures.
Inflation, based year on year, was slightly lower than previous months at 3.4% whilst public net borrowing was 12.9 billion, its highest level in February since records began detailing a significantly larger than expected budget deficit.
The budget itself had little market impact but will influence the state of consumers’ pockets in the years to come.
The headline changes were the increase of the personal allowance, the abolition of the 50p tax rate and the increase in tax on cigarettes.
The ‘granny tax’ on middle income pensioners was worse reacted too, with these individuals being £279 worse off a year as a result of this stealth tax.
The budget offered positive news for businesses with a confirmation that corporation tax will be cut to 24% from next month, falling to 22% by 2014, which should help particularly large companies.
There was also an ‘above the line’ tax credit for large companies that invest in research and product development which could lead to firms making investment decisions and starting to put record cash piles to work.
After a strong start to the year, mining stocks appear to be on the retreat as commodity prices begin to fall.
Randgold Resources saw a 13% drop in stock after news of a coup by mutinous soldiers in Mali, the West African nation where its flagship Loulo mine is located.
Randgold gets about two-thirds of its gold production from this country.
Gem Diamonds released positive underlying earnings up 119% with Cairn Energy and Premier Oil from the oil and gas sector announcing solid performances in their full year results.
Elsewhere in shares spread betting, retailers, Debenhams, Ted Baker and Next all produced results in line with analysts’ expectations and Kingfisher, (the owner of B&Q and ScrewFix) announced a better than expected pre-tax profit of £807 million, a raised dividend and an EPS of 26.9p.
In America focus centred on Apple who announced their first ever dividend of $2.65 per share.
They also revealed they are to undertake a $10 billion share buyback scheme as they look to utilise their substantial cash reserves. The company is now valued at nearly $600 billion, similar in size to the GDP of Poland.
UPS declared it had bought TNT for $6.77 billion and Oracle revealed they bounced back in Q3 beating analysts EPS expectations.
The Spread Betting Markets - The Coming Week:
The upcoming week sees the G7 Meetings lasting all week.
There is pending home sales and consumer confidence data from America on Monday and Tuesday.
The UK current account figure is released Wednesday with American unemployment claims and Canadian GDP released Thursday and Friday respectively.
Bowleven, Kazakhmys, Afren and Imperial Tobacco release trading statements throughout the week.
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.
Article by Spreadex
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.
FTSE 100 Index Spread Betting Market Falls amid Weak Retail Sales
Posted on | March 22, 2012 | No Comments
Investors averted risky asset classes today and sold out of heavyweight resource and financial stocks after manufacturing data out of China, Germany and the Eurozone emphasised the slowdown of global growth.
UK retail sales also disappointed, with sales falling quicker than forecast whilst the previous month saw a sharp downward revise, keeping the pressure on the UK’s high streets and maintaining the risk off mode from index spread betting investors today.
By late morning trade, the FTSE 100 had lost 1% to trade below support at 5840, whilst the German DAX index fell the heaviest in European trading, losing 1.5%.
The manufacturing data out of China, Germany and the broader Eurozone has been really disappointing and triggered investors into shying away from risk.
The HSBC flash PMI fell to 48.1 from 49.6, weighed down significantly from a slump in new orders, which fell to 46.2 whilst new export orders continued to slide.
We always see a knee jerk reaction from investors in mining stocks each time there is further evidence of a potential hard landing in Chinese growth and unfortunately the HSBC flash PMI data alludes to such a scenario.
As a result, we have seen investors sell out of heavyweight mining stocks, forcing the FTSE 350 mining sector lower by over 3% to reach its lowest levels since 3 January 2012.
Indeed, weakness in the mining sector over the past six weeks has been a crucial factor in the inability of the FTSE 100 to breach the 6000 level, with the sector now down 15% since early February.
Much of the ability for miners to bounce back will likely be weighted in Chinese monetary policy expectations and whether the country starts to increase the speed at which monetary policy switches to stimulate the slowdown in the Chinese economy, and subsequently, falling resource demand.
Equally alarming on the data front today was the fact that we have also seen German flash PMI data surprisingly re-enter contraction territory at 48.1, when a measurement of 51 had been expected.
Meanwhile Eurozone manufacturing measures remain in contraction zone, slipping further to 47.7 from 49 when a small improvement to 49.5 had been expected.
UK retail sales slump
UK retail sales also told a concerning story, with UK sales falling quicker than expected last month by 0.8% against expectations of a fall of 0.4%, whilst the previous month’s growth of 0.9% was sharply revised down to 0.3%.
The really disappointing element is the downward revise to the previous month’s growth.
It tells a tale that the stronger start to the year on the high street was perhaps not as strong as suggested and re-affirms the cautious stance on retail outlook.
A continuation of weak retail sales data poses a significant threat to the FTSE 350 retail sector which has rallied 18% already this year.
Randgold shares slump 15% on Mali coup rumours
Shares in gold miner Randgold Resources slumped 15% as shareholders grew increasingly concerned regarding the miner’s production at its Mali operations amidst political instability in the region, with speculation that a coup may be taking place amidst gunfire in the capital overnight.
Shares spread betting investors hate uncertainty and with the country in a state of emergency we have seen significant reductions in investor’s positions in Randgold Resources.
This theme could continue until there is a sense of clarity surrounding the situation within the country and any effect on the miners’ operations and production.
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 Joshua Raymond, Chief Market Strategist, 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 nor 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.
Sainsbury’s Spread Betting Market Rallies on Strong Sales Growth
Posted on | March 21, 2012 | No Comments
The FTSE 100 rebounded from weaker Tuesday trading to push tentatively back above the 5900 level helped by some muted buying back into mining and banking stocks; two stock sectors that suffered heavily in yesterday’s 1% FTSE losses.
Retailers have also been in stronger demand today, with the FTSE 350 retail sector rallying 0.63%, helped in part by better than expected sales growth at Sainsbury’s.
By 10.40am the FTSE 100 had rallied 7 points - or 0.1% - with similar gains seen in broader European indices.
There was little surprise in the Bank of England’s MPC minutes, with a unanimous vote of 9-0 in favour of maintaining rates on hold, whilst Posen and Miles were the only two within the committee who voted for more QE.
Sainsbury’s delights with sales growth
Sainsbury’s shares rallied over 3% in trading after the retailer reported sales growth - excluding fuel - of 2.6%, beating market expectations for a growth of 2.1% and said it had gained market share.
The trading update was yet another positive report by the firm, which has generally outperformed its major sector peers this year as its ‘brand match’ campaign helped to increase footfall to its stores.
Sainsbury’s shares have gained 2% in 2012 alone, short of the FTSE’s 6% rally, though beating a weak performance in the share value of peers Tesco and Morrisons, who have suffered 17% and 8% falls respectively.
Budget speech eyed, though market reaction could be muted
With much of the details of the UK budget already well leaked to the press, it is unlikely we will see a significant market reaction, barring surprises, though naturally the budget will be a key focus for spread betting investors.
The price of Sterling, gilts and individual stock sectors such as construction, retail and banks could see some knee jerk moves throughout the budget speech.
That said, the fact that much of the speech is already well known thanks to targeted political spin and leaks, the market reaction to the budget speech could well be rather muted unless there is a shock or two.
Indeed, shares of Tesco, Sainsburys and Morrisons have already rallied between 1% and 4% this week alone on the back of the much speculated suspension of maximum Sunday trading hours for major retailers.
Public Sector Net Borrowing surges in February
We could however, see a response in Gilts and the pound Sterling after figures showed that UK public sector net borrowing (PSNB), surprisingly, nearly doubled in February compared to January.
PSNB rose to £12.909bn last month from £6.066bn a year earlier and much more than many had expected.
Given the fact that PSNB was expected to undershoot the year’s target, there was every expectation that the government would ramp up borrowing in the final few months of the fiscal year but perhaps by not as much as what has been released today and will likely serve as a blow to George Osborne when he announces his budget.
The effect was to put pressure on the pound Sterling, which fell against the US dollar from $1.5900 to $1.5850 as a result.
Forex spread betting investors may be somewhat disappointed that perhaps the one element which may please ratings agencies Fitch and Moody’s (who recently put the UK on a negative outlook), that the UK borrowing figures should undershoot targets significantly, may not in fact be realised.
It had been hoped that borrowing for the year could come in at around £120bn-£123bn, below the Office of Budget and Responsibility’s (OBR) forecast of £127bn.
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 Joshua Raymond, Chief Market Strategist, 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 nor 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.
BMW Spread Betting Market Plunges 3% on Chinese Growth Fears
Posted on | March 20, 2012 | No Comments
The effects of a China slowdown are all too apparent in European shares spread betting markets today.
Comments from BHP Billiton chairman that demand for iron ore is dwindling have caused the mining sector to retreat with Fresnillo, Antofagasta and Rio Tinto among the worst casualties, all trailing near the bottom of the UK index.
Auto stocks are also on the back foot with BMW down around 3% as fears that the difficult economic backdrop in China will adversely affect sales.
The utilities sector is seeing some interest on the back of positive comments from Nomura’s in respect of National Grid and United Utilities.
The telecommunications sector is in favour with Vodafone top of the leader board adding 1.58% having announced a mobile radio launch in India.
Talk that the company could get a tax benefit should it be successful in its attempt to buy Cable and Wireless is also supporting the price.
UK CPI data showed that inflation had dropped further in February, falling to 3.4% annually.
The decline can be attributed to the cuts made in gas and electricity bills as well as the 2011 VAT hike removal from the annual comparison.
While this means that inflation is at its lowest since November 2010, it may give some manoeuvrability to the BoE to extend QE measures.
News that Saudi Arabia is pledging to lower the high price of oil has seen prices retract somewhat but potential for a spike higher still remains a key concern.
Later this afternoon, spread betting investors will be paying attention to US housing starts data which is expected to print a 3 month high, increasing to 700k annual against January’s 699k.
Please remember that Spread Betting, FX and CFDs are leveraged products and carry a high level of risk to your capital. It’s possible to lose more than your initial investment. These products may not be suitable for all investors, please ensure you understand the risks involved and seek independent advice if necessary.
Spread Betting, FX and CFD comments by Michael Hewson, Market Analyst, CMC Markets.
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 CMC Markets nor 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.
Strong German Sentiment Lifts Euro and Shares Spread Betting Markets
Posted on | March 19, 2012 | No Comments
The Week in Review:
It is a rare week when the Eurozone and Greece in particular are not the focus of traders and economists thoughts.
However, last week the emphasis was on America as the S&P 500 closed above the 1400 mark for the first time since June 2008; 3 months prior to the beginning of the financial meltdown.
Market attention centred around the Federal Reserve after they indicated that no new stimulus measures would be issued with gold prices hitting a two month low on Wednesday as a result.
The Bernanke effect was seen across the metals board with silver falling to a seven week low with the strengthening dollar putting downward pressure on the precious metals market.
The US has experienced a robust six month period of job growth, however, unemployment levels remain stagnant at 8.3% which has resulted in Bernanke persisting with his plan to keep interest rates at close to zero through to the end of 2014.
Nevertheless, if treasury yields continue to climb as the economy strengthens, then the Fed may be forced to reconsider raising the benchmark rate before this time.
Additional easing also remains on the policy table, even after these upgraded views, as concerns remain with America still in a difficult position.
Economic figures out last week aided in brightening the outlook; retail sales, PPI data and the Philly Fed manufacturing data were positive and released as forecast.
The main boost though came from TIC long term purchases, a figure which represents the balance of domestic and foreign investment, which disclosed a far outreaching figure than expected.
Such a strong number shows that foreigners are more interested in purchasing US stocks and bonds than the US is in purchasing foreign stock expressing that the US market is strengthening.
In Asia, China reported their largest trade deficit in 22 years whilst India cut their reserve ratio to 4.75% from 5.5% showing that after years of excessive expansion maybe things are starting to slow down in the Far-East.
Japan continues to battle the yen which has fallen to an 11 month low helping to boost the nikkei. The Bank of Japan has reiterated that they will continue to fight economy deflation and will keep rates and stimulus on hold for the time being.
As metals fell, the price of oil continued to surge. However, with the US and UK agreeing to an emergency stock release and the Saudi Oil Minister stating that there is ample production it will be interesting to see if this bulge in price continues or if it subsides over the coming weeks.
In Europe, spread betting markets kept with trend and continued to rise as the Greek debt swap was deemed more successful than expected and the final approval for aid was given to them from EU finance ministers.
Draghi stated “we are continuing to see signs of stabilisation of the Eurozone economy” whilst the Luxembourg financial minister sees the immediate problem switching to Spain with their deficit reduction likely to be below 3% for 2013.
Schaeuble, the German minister reiterated that there will be no leniency with Spain and that they must reach the 3% mark. German economic sentiment far exceeded expectations and gave the foremost lift to the markets as European stocks rallied and the Euro strengthened off the back.
In shares spread betting, the results of the central bank test showed that banks have raised profits.
However, four banks, one of them Citigroup, failed the stress test, because their proposed capital plan was rejected.
Goldman Sachs was hit with a £1.3 billion backlash following the resignation of banker Greg Smith who cited the ‘toxic’ environment in his reasons.
In his resignation letter he stated that staff referred to clients as ‘Muppets’ and blamed top bosses for the ‘decline in the firm’s moral fibre’.
Results published from the FTSE were on the whole positive with Legal and General announcing operating profit of £1.8 billion and a raised dividend whilst Yule Catto saw pre-tax profit up 99% and Antofagasta saw earnings up 32%.
Tullow Oil reported 2011 operating profit up 332% with pre-tax up 499% and announced that their 4A appraisal well off Ghana was successful. Stock value increased 58 points on Friday.
HMV say that there is an on-going business review and confirmed a number of parties are showing interest in the acquiring the business.
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.
Article by Spreadex
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.
Shares Spread Betting: Tullow Oil Rallies After Oil Discovery
Posted on | March 16, 2012 | No Comments
With little in the way of corporate earnings today, European shares spread betting markets continue to edge higher with financials among the biggest gainers.
The fund management sector is leading the way with Hargreaves Lansdown the cream of the crop adding 4.18% in early trade.
RBS is ahead on the back of a broker upgrade while Lloyds are also on the front foot, apparently reneging on an employee share award incentive scheme initially introduced following the merger with HBOS almost 3 years ago.
The upbeat mood can, for the most part, be attributed to yesterday’s US data which reflects continued improvement in the labour and manufacturing sector.
Tullow Oil, which released stellar results earlier this week, has added 3.54% following news that it had struck oil off the coast of Ghana.
Oil prices have rebounded following the abrupt crop back yesterday on reports of potential release of strategic reserves, so it remains to be seen if the current optimistic rally witnessed in global equity markets will continue.
The US CPI release later today should offer clues as to the effects of rising commodity prices over the past month. Expectations are for an increase of 0.4% from 0.2% in January
Please remember that Spread Betting, FX and CFDs are leveraged products and carry a high level of risk to your capital. It’s possible to lose more than your initial investment. These products may not be suitable for all investors, please ensure you understand the risks involved and seek independent advice if necessary.
Spread Betting, FX and CFD comments by Michael Hewson, Market Analyst, CMC Markets.
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 CMC Markets nor 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.
Retail Sales and QE Maintain Momentum in Spread Betting Markets
Posted on | March 15, 2012 | No Comments
Global bond yields hover around 5-month highs, equities near 4-year highs and the US dollar index at 2-month highs. This represents a positive trifecta whose message signals US data is at the forefront of the market rally alongside the BRICs.
Moreover, it comes at a time when the Eurozone remains shut-off by economic and banking de-leveraging.
Tuesday’s modest upgrade of current economic conditions by the FOMC was neither too aggressive for bonds, nor too timid for stocks.
The continued strength in retail sales, banks’ passing of the Fed stress tests and subsequent distribution of QE money to shareholders in the form of dividends, was sufficient to sustain momentum into the key technical levels of the spread betting markets.
The last time we saw such positive trifecta in stocks, yields and USD was in spring-summer 2010 and autumn 2011 as indicated in the chart.
In autumn 2010, the announcement of the Fed to start $600bn in QE2 was seen as potentially inflationary.
Renewed squabbles on the US fiscal budget after Republicans took back Congress was also negative for bond prices.
Meanwhile, BRIC’s role in boosting world demand and equities’ overall satisfaction of QE2 was a boon for overall risk appetite.
In spring-summer 2010, the barrage of improving US data pushed the Fed to raise its discount rate and even led to a +50% chance of a hike in the Fed funds rate later that year.
President Obama’s incentives for first time home buyers were due to expire and the impact grew more noticeable.
In terms of forex spread betting, the US dollar was partly boosted by US fundamentals and successive rating downgrades in the Eurozone.
Today, the situation appears rather more similar to 2010 as US economic dynamics are complemented by US stock purchases and a willing Federal reserve.
The long-awaited phase when USD strength prevails alongside rallies in equities may be unfolding.
The US currency could even add to its gains when shares spread betting markets face the obstacles of lower earnings growth at the April earnings season.
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 Joshua Raymond, Chief Market Strategist, 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 nor 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.
GBP/AUD Forex Spreads Rise amid Weak Australian Data
Posted on | March 14, 2012 | No Comments
In a week of caution and narrow ranges, the Australian dollar did not do particularly badly, with GBP/AUD rising just over a cent.
However, it was still one of the two worst performers.
Forex spread trading investors spent the first half of the week wondering if there would be problems with the Greek debt restructuring deal and ended it in love with the recovering US economy.
Whilst that is not normally a reason to sell the Aussie and buy the Greenback, that’s how it turned out last week.
And the Aussie failed to make much of a case for any potential supporters it might have had out there.
Australia’s current account deficit widened by more than expected. The performance of construction index, on which 50 marks the dividing line between growing and shrinking activity, fell further into the gloom zone at 35.6.
Economic growth slowed in the fourth quarter of 2011. Unemployment went up to 5.2% in February with the unexpected loss of 15.4k jobs.
Good news was hard to find.
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.
FX Trading Update by www.moneycorp.com where you can open a free, no obligation Trading Facility.
EUR/USD Forex Spread Betting Market Declines Ahead of Fed Statement
Posted on | March 13, 2012 | No Comments
US dollar rallies across the board on 5-month highs in US Feb retail sales, upward revisions in both the headline and the core figures and better than expected on the core.
Spread betting investors further boost USD ahead of what may be further recognition of improved US fundamentals from the FOMC later this afternoon and diminishing chances of an outright QE3.
How will the Fed factor this additional set of positive data into today’s FOMC statement, following the 3rd consecutive monthly +200k increase in non-farm payrolls?
The US figures augment the chances of “sterilized” form of asset purchases, which may not be sufficient for risk assets and the QE-dependent euro.
US Feb retail sales rose 1.1% (5-month high) from upwardly revised 0.6% (prev 0.4%); sales ex autos +0.9% from upwardly revised 1.1% (prev 0.7%).
Meanwhile, euro shrugs off the jump in the ZEW Expectations index, as the Current Conditions index falls to 37.6.
When economists and analysts see the positive impact of the LTRO on market liquidity rather than on the economy, they have no choice but to give positive responses regarding the future.
Whether this would translate into actual business/industrial revival remains to be seen.
The ZEW expectations index shot up to a 21-month high of 22.3 in March, while the ZEW current conditions index slipped to 37.6, giving back ground after the 11-point jump in February to 40.3.
The ZEW survey does not share the credibility of the IFO and PMI surveys in tracking and predicting German economic growth and the outlook for the Eurozone.
But the upbeat performance from recent PMI and IFO figures support the notion that Germany remains resilient to the negative macro currents in the periphery.
The ZEW survey involves responses from about 350 economists and analysts regarding the economic future of Germany for the next six months.
PMI surveys reflect the opinions of purchasing managers and decisions makers, with an emphasis on output, new orders, inventories, employment and prices across the manufacturing, construction, retail and service sectors.
Ifo sentiment surveys involve 7,000 participants/managers from various industries assessing their current business situation as well as their business outlook for the coming six months.
FOMC May not Prevent $1.28 EUR/USD
In forex spread betting, EUR/USD’s path towards $1.28 is alive well after the high profile failure to regain the 100 day moving average (1.3240) and the latest break below its 55-day moving average (1.3058).
EUR/USD has tested but not broken (closed below) its 55 DMA since January 31.
Yet, the latest technical oscillators point to a gradual deterioration towards $1.2950s, followed by $1.2870 as early as this week.
Don’t forget GBP
Sterling, the other QE-dependent currency has further downside, especially against the USD.
Entering its 3rd weekly decline and falling below all of its main weekly moving averages, the pair is set to find 1.5350s (from current 1.5629), which is the trend line support from the January 2009 low. These 3-year trend lines are not to be taken lightly.
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 Joshua Raymond, Chief Market Strategist, 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 nor 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.
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