FX Spread Betting: Euro Falls on Further Eurozone Downgrades
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FX Spread Betting: Euro Falls on Further Eurozone Downgrades

FX Spread Betting: Euro Falls on Further Eurozone Downgrades


Investors’ appetite for risk is being severely tested this morning as everything from the UK equity markets to soft commodities are heading south.

There have been signs that the rally up to now was running out of steam and the two year long bull market is being put to the test.

Once again it’s the Eurozone debt issue that is at the forefront with a downgrade to Italy’s debt this morning following Greece’s downgrade last Friday.

Recently, any weakness has been short lived as the European indices spread betting markets have largely been propped up by US markets, but this time round there’s a sort of different feeling to this sell off.

Things are really looking dire for Greece which is almost at a make or break stage. The pressure is really on them to start being radical in their actions to sort out their budget deficit and today we expect announcements from their government that will try to address concerns.

The problem is almost as difficult as trying to scale the heights of Everest without any clothes or equipment. Every time there’s a cut made it leads to a reduction in growth and less tax receipts and eventually the money will dry up completely leading to a default.

One possible resolution is the sell off of their state assets and radical privatisation to stimulate growth. However, finding any buyers will be very difficult since, in the most extreme case, any exit from the Euro will amount to a huge loss on that investment.

The other possible outcome is a restructuring of their debt and considering how the EU has been content in throwing good money after bad for the past few years, this is the most likely option.

On top of all the Euro woes, yet another bit of economic data from China showed signs that global prospects are coming under pressure.

Add it all together and you get a sell off for the Euro on the FX spread betting markets.

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'FX Spread Betting: Euro Falls on Further Eurozone Downgrades' by DB, updated 23-May-11

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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading 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.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.


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