Poor EU Manufacturing PMI Drags EUR/USD Spread Betting Market Lower
Spread Betting 3 April 2012
The indices spread betting markets were in buying overdrive yesterday as the FTSE rallied almost uncontrollably, especially into its close last night.
This morning the index just seems to be in respite mode but this is hardly surprising after seeing the third best rise of the year.
When US equities continued into the evening they managed to hold onto their gains which rubbed off on Asian markets, then into the European session and so the merry-go-round continues.
The respite is a mild gain for the FTSE at the time of writing as we sit at 5885 pondering the next move.
It would seem that the bulls have their tails up and fancy taking the markets higher. However, as we've seen so many times in the past, the index has failed at and around the 5950 level and shied away from taking on 6000.
We are sitting at some near term resistance right at this level, where the 20 and 55 daily moving averages are converging, and so this might prove to be a sticking point for the market.
The only negative we can take away from yesterday's rally was that it was on slightly lower volumes than usual. As a result, it may not have been the most convincing move to the upside and we may have to wait a couple of days before seeing any continuation of the rally.
The problem here is that it takes us into the Easter break, which is going to be an eventful one since the US is insistent on releasing its Non Farm Payroll figure when all major markets are closed.
However, this is historically quite a bullish season for equity markets and April itself has seen many more positive months in the past than negative ones.
Our spread betting account holders have opposed the strength to now selling into the rally across most of the major indices but the FTSE in particular.
This positioning by clients doesn't come as too much of a surprise considering that the opposing of moves has been relatively lucrative for some. The FTSE has been constrained to rather a tight trading range recently without any major breakouts to the upside or downside.
Economic data comes in the form of construction PMI for the UK which is expected to remain above the 50 level at 53.6 and might just compliment the much better than expected manufacturing number yesterday. However, one of the keys to whether we'll avoid a double dip recession will be tomorrow's service PMI number.
On the forex spread betting markets, euro bulls once again attempted to break through the resistance around $1.3385 but were swiftly rejected and the euro found itself making a low of $1.3277 before recovering.
The sudden turn around in sentiment for the euro was attributed to the disappointing EU Manufacturing PMI and Unemployment rate.
Having proved a solid line of resistance, bulls may be weary of attempting another break of the $1.3385 area anytime soon and at the time of writing EUR/USD is at $1.3345.
Gold made modest gains on Monday of $7 as strong US manufacturing data led traders to sell dollars and plough cash into stocks and other riskier assets, lifting gold in the process.
Also, the ending of a jewellers strike in India, one of the world's largest buyers of gold, is expected to push up prices as they return to the market.
Gold looks well supported in the near term and could test the $1696 level imminently but at the time of writing is just biding its time at $1678.
Crude oil posted its biggest gain in 6 weeks, rising $2.21 as better than expected manufacturing data from the US lifted hopes of an improving economy, pushing up energy demand.
Supply disruptions surrounding the unscheduled shutting of the Valhall platform, coming so soon after the shutting of the Elgin platform, is also likely to keep prices well supported above $100 for the near term. This morning Brent is currently at $125.
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'Poor EU Manufacturing PMI Drags EUR/USD Spread Betting Market Lower' edited by SD, updated 03-Apr-12
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