The regular monthly spread trading review from IG Index.
The Month Ahead
US Jobs Data and BoE Quarterly Meeting to Lead Markets
August proved to be another annual volatility-fest across a whole range of financial spread betting markets, leaving investors with plenty of questions going into September.
The primary concern is one that has been top of the list for some time: just how stable is the economic recovery and is a double-dip recession a real risk?
The first Friday in September may help provide some answers with the release of US Non Farm payroll unemployment numbers.
Job losses have become a concern again in the USA and the slowdown in housing and construction is not helping, so these figures could well set the tone for investor sentiment in the first half of the month.
The announcements from the various central banks are going to play their part too, particularly close to home with our own Bank of England.
Inflation is still stubbornly above target and retail prices are apparently rising at their fastest rate in 18 years. Therefore, the Bank’s quarterly bulletin, due out on 20 September, along with the latest Monetary Policy Meeting minutes two days later, will be closely scrutinised for any guidance on the Bank’s thinking on how to rein inflation in without stalling the recovery.
FTSE Spread Betting Update
FTSE Struggles to Break 5450
After putting in its best performance for a year in July, the FTSE promptly reversed as August got underway. Once again the 5450 barrier proved to be a resistance level too far and stopped the rally, just as it did back in May.
August’s story was one of investors losing their appetite for risk and as the month ended there were no signs of them regaining this.
Going into September it is beginning to sound like a stuck record, for those of us who remember vinyl, but markets will be looking for some sort of reassurance that economies are not going to nose dive in the second half of the year.
Unemployment data is likely to be the focus for the month and until the FTSE cracks that 5450 barrier, many traders are struggling to see much medium term upside at the moment.
Forex Spread Betting News
Euro Looks to Bounce Back Against Rising Dollar
With markets once again in panic mode about the fragile recovery, and the media trying to ratchet up the gloom with talk of a double-dip recession, many asset classes headed south during August.
In times of trouble investors sought safe havens, with the US Dollar a popular choice, gaining ground at the expense of recent favourites such as the Pound and the Euro.
However, it looks like it could still be too early to call for the end of the recovery in the Euro that has been in place in recent months.
After being knocked back by around 700 points in August there are some signs of confidence creeping back in, with chartists eyeing up $1.2500 as a big level of support.
Whether this ends up holding through September remains to be seen, but with the US having its own economic pressures it looks like the Dollar is not going to get it all its own way on the forex spread betting markets.
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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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.
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'IG Index Review of August 2010' edited by IG Index, updated 07-Sep-10
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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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