EUR/USD, FTSE and FX Futures Trading - Monthly Review May 2011
The regular monthly spread trading review from IG Index.
The Month Ahead
EUR/USD Volatility Set to Continue on Weak US Employment and European Debt Concerns
A few of the major economic announcements this month have already been revealed, including the US Non Farm Payrolls. However, as we’ve seen recently, it’s the unexpected events that can really drive the financial spread betting markets.
Moving back to more predictable matters, on Friday 3 June we saw the release of the latest US unemployment numbers, the Non Farm Payrolls.
This is always a major event on the calendar and this time around it was no different, with the numbers coming in way below expectations; only 54,000 jobs were added to the US economy compared to the widely anticipated 185,000.
The interest rate decision from the European Central Bank at 12.45 on Thursday, 9 June is also likely to come under scrutiny. Inflation figures for the EU released at the end of April showed a slight drop to 2.7%, but still well above the 2% target.
No change is expected to rates in June, but the ECB is expected to give broad hints at this meeting that rates will be going up again in July.
Forex Spread Trading Update
EUR/USD Spread Betting Market Slips on Greece Worry
Fears about sovereign debt in Europe made May a volatile month for the EUR/USD forex pair.
After coming into the month at its best levels for over a year, the pair swiftly reversed and at its worst was down more than 900 points from its high.
However, as we saw at the end of the Irish crisis last year, the Euro once again confounded its critics and swiftly recovered a portion of those losses as the market became more convinced that Greece was not heading for default anytime soon.
This spectre of debt in Europe is unlikely to disappear in the near term though, so it should make for more volatility into the summer, and many chartists would assert that the near 12-month uptrend is still resolutely intact for now.
Indices Spread Betting Report
FTSE Spread Betting Market Spends Much of May in Reverse
It was not just the Euro that was under pressure in May, the FTSE spread betting market spent the first three weeks in a steady decline, albeit punctuated by strong but ultimately unsustainable rallies.
The UK blue chip index slid to its lowest level for two months but did manage to claw back a reasonable amount of ground towards the end of the month.
So is it going to be another case of ‘sell in May and go away’? We have seen what can broadly be described as sideways trading for the FTSE for a few months now, with very little conviction to keep on buying through the 6000/6100 zone.
It is, however, still holding onto its two-year plus recovery, and is worth watching in June to see if it can finally crack the ceiling that has stopped progress for much of this year.
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.
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'EUR/USD, FTSE and FX Futures Trading - Monthly Review May 2011' edited by IG Index, updated 08-Jun-11
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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.
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