FX Spread Betting Markets Tumble on Greek Bailout Referendum Decision
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 1 November 2011
The FTSE 100 has started the day on the back foot after some weak manufacturing data was released from China.
This hasn’t been complimented by the OECD’s gloomy outlook on growth in the Eurozone after they said they expect the odd little dip back into recession over the next year although an “official” one should be avoided.
This morning we also get the release of the first reading of Q3 GDP from the UK. Whilst we’re not expecting any negative growth, we’re not going to see any fireworks either although the figure might possibly come in better than market consensus.
All in all though it means that the UK economy is flat lining, something the coalition government will be blamed for on government cuts, which are still nowhere near as bad as everyone is hyping them up to be.
The problem of no growth is that the deficit reduction plans are not going to hit their targets and that could make bond markets think again, which up until now have given us the benefit of the doubt.
At the same time as the GDP figure, we get UK manufacturing PMI which is expected to just about remain above the 50.0 mark indicating expansion. Then later on it’s the US’s turn to paint their picture for manufacturing.
Later this evening Federal Reserve chairman Ben Bernanke will give a press conference and this will be closely watched to see just how far he’ll go in lowering his growth forecasts and increasing unemployment predictions.
Yesterday Greek PM Papandreou shocked the FX spread betting markets by saying that he is going to hold a referendum on whether they should accept the bailout or go bankrupt.
As a result, the euro reversed almost half of a month long rally against the dollar, tumbling 440 pips, and is now trading at $1.3699.
For more on the weakening single currency, please also see our feature EUR/USD Spread Betting Market Tumbles as Greece Announces Bailout Referendum.
Thanks to Japan’s intervention in the currency market, the US dollar got a shunt, sending in northwards. This opened up a trapdoor for the commodities spread betting markets, sending them spiralling down.
It seemed the only thing providing support for gold was the 40 day moving average, which stopped it from finishing below the $1714.2 mark, having lost $33.
It continues to look as though risk adverse investors are one by one losing their safety havens; after waving goodbye to the Swiss franc and now the Japanese yen, will gold step back in to be a hedging favourite? At time of writing, the precious metal is trading at $1710.0, not far off yesterday’s close.
MF Global’s bankruptcy claim somewhat distorted the trading session for crude oil yesterday, as they were one of the largest commodities brokers out there.
After market traders were told they could only liquidate existing positions at the broker, volumes were understandably sent plummeting, below half of average levels it was claimed.
So disregarding the slumping equity markets and rising dollar, crude sat pretty much flat. At time of writing though Brent is trading down on the day at $107.91.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'FX Spread Betting Markets Tumble on Greek Bailout Referendum Decision' edited by SD, updated 01-Nov-11
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