Indices Spread Betting Markets Temper Gains After Bernanke Speech
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 9 September 2011
The indices spread betting markets have taken things in their stride throughout this week and have put in some decent gains.
We were slightly expecting more volatility in last night's action, which was dominated by Obama's speech to Congress, however the reaction from the Dow was somewhat muted.
But as usual it was Bernanke who market participants were more focused on and his speech can be summed up in just a few words: not good enough.
Investors were hoping for more hints that stimulus is coming but they didn't get it so that's feeding through to European stock markets this morning.
Obama also failed to set off any fireworks with his bigger than expected plan to tackle the dire unemployment situation in the US.
Businesses have been crying out for breaks and reforms to regulation as opposed to bigger government so that they can get hiring again.
Unfortunately, not much of what Obama said addresses these issues and so what so many people had got their hopes up about ended up being a bit of a damp squib.
The FTSE spread betting market is at just about break even this morning after having been called to open below the 5300 mark, so there are more buyers out there than expected.
At the time of writing the FTSE is at 5340 with the major resistance level at 5400 remaining the big hurdle for the bulls.
As long as the near term support of 5300-5280 can hold then we might even see a test of near term resistance at 5375 before a test of the all important 5400/25 area.
There is no real economic data to speak of today so things might remain range bound ahead of the weekend. However, we did have some Chinese data in the early hours which showed inflation has declined and so this is the first indication that their tightening is having the desired effect.
In turn it could mean an end to their tightening cycle which is what the bulls have been hoping to see for a while.
On the currency spread betting markets, the Euro, which rather like the equities has been pretty resilient in recent days, finally dipped below the $1.4000 and ended its session there too.
The ECB's statement, which was more bearish than simply dovish, wasn't received well by holders of the Euro and so the single currency suffered as a result.
Certainly no further interest rate hikes from the ECB can be expected any time soon and we may even see a cut next year if things don't perk up on the growth side.
So this morning EUR/USD is at $1.3910 with support and resistance levels are seen at $1.3875/15 and $1.4020/4110 respectively.
Cable managed to get itself back above the $1.6000 level yesterday but this morning it hasn't been able to hold on dipping back below to $1.5965.
Sterling didn't do too badly out of the BoE meeting as the very slim chance of further QE did not materialise. Support and resistance levels for Cable are seen at $1.5915/5875 and $1.6075/6140 respectively.
The moves in Sterling and the Euro gave another boost to GBP/EUR which took it back towards €1.1500.
At €1.1483 this morning all eyes are on the 200 day moving average which in the past month has proved very stubborn resistance. A break above €1.1500 could open the wave for €1.1600.
Many FX traders' eyes have been on the Swiss Franc and how the SNB's comments earlier in the week have affected the trend for the traditional safe haven.
So far their comments have caused a continued flow of cash out of the Swiss Franc and EUR/CHF appreciated further to over SFr 1.2100 even though the Euro weakened against other currencies.
This morning EUR/CHF is at SFr 1.2115 so Franc bears will be looking for a test of SFr 1.2250 and around SFr 1.2400 where the 200 day moving average currently sits.
Gold attempted to gain more of the lost ground from Wednesday, rallying back above $1850, and is continuing in that fashion this morning with the yellow metal at $1876.
The double top formed on the daily chart looks dangerously like not materialising as the metal is racing higher again and not far off testing its all time highs once again.
It would seem that any sort of correction at the moment simply provides the bulls with yet another buying opportunity.
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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'Indices Spread Betting Markets Temper Gains After Bernanke Speech' edited by SD, updated 09-Sep-11
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