Dow Jones, Silver and Forex Futures Trading - Monthly Review April 2011
The regular monthly spread trading review from IG Index.
The Month Ahead
UK Inflation Set to Cause Sterling Volatility Across the Forex Spread Betting Markets
A few of the major economic announcements this month have already been revealed, including the interest rate decisions from the Bank of England and European Central Bank, and the US Non Farm Payrolls. However, as we’ve seen recently, it’s the unexpected events that really drive markets.
May started with the US announcing the death of Osama Bin Laden and, though market reaction was initially muted, speculation over what this event means for the world will remain a constant talking point through May.
Perhaps the ramifications of this will be seen most clearly in the price of traditional safe havens like gold, although early trading this month shows little sign of investors willing to sell out just yet.
Inflation remains a major concern for the UK economy and April saw a surprise drop from the previous month but remains well above target at 4%.
This month’s inflation data is expected on 17 May and will give us the definite possibility of a jump in volatility for Sterling against a mixture of other currencies. This will come as traders on the forex spread betting markets attempt once again to second guess what the inflation data means for future interest rate decisions from the Bank of England.
Commodities Spread Trading Report
Silver Spread Betting Market Surges
Although sometimes seen as the ‘poor-man’s gold’, the performance of silver spread betting market has been anything but second-rate this year. The metal was up by more than 50% for the year to date by the end of April.
As with gold, there are a few reasons for the rise: silver is used in the manufacturing process of in-demand products like semiconductors but this rise is not just down to the proliferation of electronic devices in recent years.
A weakening Dollar has played its part here too as, like gold, the price of silver will usually moves in the opposite direction to the US currency.
In addition, fears of inflation, global instability and concerns about the printing of more currency by central banks involved in quantitative easing have all propelled precious metal prices higher.
However, silver started May with a heavy fall as exchanges raised margin requirements for futures contracts.
It is likely to remain an interesting market to watch in the short term, with plenty of volatility in store and that longer term trend remaining intact for now.
Indices Spread Betting News
Dow Jones Index Targets 13,000
After a difficult couple of months, as events in Libya and the tragic earthquake in Japan unnerved investors, April was the month when the Dow Jones once again extended its two-year plus recovery.
Investors were very much in ‘risk-on’ mode and pushed the Dow out to its best levels in almost three years.
This was despite a warning shot across the bows from the ratings agency Standard and Poors over the creditworthiness of US long-term debt.
The next hurdle is the 13,000 level. In May 2008 this proved to be a real obstacle for any rallies, but back then of course markets had been sliding for more than six months.
A decisive move through here could leave the chartists speculating that there is really very little left in the way of a run back to the all-time highs above 14,000.
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
IG Index >>
"With IG Index you get all the normal advantages of Spread Betting plus..." >> read
IG Index review.
Risk Warning: Financial Spread Trading and CFDs carry a high level of risk to your capital. You may lose more than your initial investment. They may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by IG Index which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 114059.
'Dow Jones, Silver and Forex Futures Trading - Monthly Review April 2011' edited by IG Index, updated 12-May-11
Index of monthly spread betting reviews from IG Index...see Index.
Q) Average Trading Results?
A) Get free spread betting tips, offers, price updates, important news and more! All Free - Click here!
Risk Warning:
Please note that spread betting and CFD trading carry a high level of risk to your capital. You can lose more than your initial deposit. These products may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.
