The Forex Markets - A Trading Update

Posted on | March 22, 2010 |

The Financial update from David Evans, BetOnMarkets.

The trading week is just a few hours old, and the sellers are already out in force for the British pound.

The move is partly a continuation of last week’s momentum and partly a function of increasing fears over a hung parliament in the upcoming UK elections.

The GBP/JPY is this morning’s top mover.

Today’s main economic news items are speeches from ECB president Trichet and MPC chairman King. These are scheduled to start at 15.30 and could have a major impact on their respective currencies.

At the Close of Play on Friday

Stocks and forex markets were serving a reminder that the recent rebound in confidence is build on fragile foundations.

The FTSE 100 started the day very well but fell off dramatically in the last couple of hours.

Forex markets are being rocked by a number of lingering worries and negative headlines:

• India unexpectedly raised interest rates after inflation hit a 16 month high.
• This has fed fears that central banks will start to turn the liquidity and asset purchase taps off before the recovery has had chance to set in.
• The Greek saga continues to roll on with rumours that French Premier Sarkozy opposes a IMF bailout for Greece in favour of a European wide solution. This position is at loggerheads with Germany’s more hard line view. Most importantly, it means that the problem has not reached resolution and markets, more than anything hate uncertainty.
• The British pound experiencing heavy selling. Traders seem unimpressed with the recent public borrowing numbers with some sources attributing the recent sterling rally to short covering rather than a belief that the UK is out of the woods.
• The cost of insuring against the UK defaulting on its debt has risen recently. Also adding to the selling is comments from MPC member Sentence hinting that a UK double dip recession is a possibility.

The above comments do not constitute investment advice and neither BetOnMarkets nor Spread-Betting.org accept any responsibility for any use that may be made of them.

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