Dwindling Spread Betting Investor Confidence Raises Spanish Yields
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FX Day Trading - 11 April 2012
Contagion alert leaves euro unscathed
- Spanish and Italian bond yields higher again
- Swing to "risk-off"
Among the emergency calls received by the Leicestershire fire brigade last year was one from a woman who had built herself into a flat pack wardrobe. The furniture was obviously of such great strength that she was unable to break out. Ikea has claimed responsibility.
Sterling did not trouble the emergency services yesterday when it was unable to break out of the range that has kept it below €1.2150 since September 2010.
There would have been no point; if the pound is to move to a higher level it will need the assistance - and confidence - of FX spread betting investors, not a fire engine.
Anyway, the fire fighters were otherwise engaged on Tuesday, trying to put out the flames engulfing the world's stock markets and southern European government bonds.
Friday's underwhelming US payrolls number belatedly put the willies up institutionally nervous investors, who spent their day switching positions from what has come to be known as "risk-on" to "risk-off".
The almost childish simplicity of this binary modern-day strategy has it that financial spread trading investors are allowed to be either hugely confident or dismally pessimistic; there seems to be no room for shades of grey.
The effect on Tuesday was to tip the Canadian dollar below parity with the USD and to send the antipodean dollars and the rand lower.
The major currencies were almost ignored. Other than the yen, which strengthened by 50 ticks to a one-month high against the pound and the US dollar, net movements were minimal.
Sterling starts this morning virtually unchanged against the US dollar, the euro and the franc.
Economic data played only a supporting role in the process. In France, manufacturing production was down by -1.2% in February and business confidence steady at 95.
Spread betting investor confidence in Euroland deteriorated from -8.2 to -14.7 this month according to the Sentix measure. US wholesale inventories grew by 0.9% in February.
But financial markets were more interested in Euroland government bonds, where ten-year yields briefly moved above 6% in Spain and rose by quarter of a percentage point in Italy.
The underlying unease stems partly from the slower pace of employment growth in the States and, to a greater extent, a lack of confidence that Mariano Rajoy will be able to keep Spain out of the administrators' hands. The prime minister will address the Madrid parliament this afternoon to explain the latest round of spending cuts.
Today began with more positive news. In New Zealand the Quarterly Survey of Business Opinion showed a jump in expectations from 0 to 13.
The British Retail Consortium's retail sales monitor put March sales 1.3% higher than the same month last year.
Japanese core machinery order rose by a monthly 4.8%.
Australian consumer confidence improved from -5.0% to -1.6%.
German wholesale prices rose by 2.2% in the year to March.
Nothing too distressing among that lot then, but there is little else on today's agenda to keep the pot bubbling.
There are no more data from Europe and the only North American contributions are Canadian housing starts and US import prices. That means another day of agonising about Club Med and global growth.
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With financial spread betting you can lose more than your original stake or investment. Spread betting carries a high level of risk to your capital. Please familiarise yourself with the risks that are involved and before trading, ensure that financial spread betting matches your investment objectives. Seek independent advice where necessary.
Dwindling Spread Betting Investor Confidence Raises Spanish Yields - edited by Moneycorp, 11 April 2012.
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With spread betting you can lose more than your original stake or investment. Spread betting carries a high level of risk to your capital so please familiarise yourself with the risks that are involved and, before trading, ensure that spread betting matches your investment objectives. Seek independent advice where necessary.
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