Spread Trading 1 Mar 10
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Trading 1 Mar 2010
Sterling reacted very badly to the new opinion poll in the Sunday Times showing that Labour had essentially closed the gap to the Tories.
Currency markets are a global product and moved by an external outlook to a country’s position. Therefore, we can extrapolate the move, and the weakness through last week from the prior weekend’s polls, to the fact that foreigners do not have a high opinion of Messrs Brown and Darling.
The mood was hardly lightened by pictures this morning in the newspapers of a desperate middle aged man attempting to prove his virility by jogging in the rain.
Mr Cameron’s PR people should realise that there a few sadder sights than a man ‘of a certain age’ running for the cameras.
With QE and low rates likely to dominate for the short to medium term, no matter what the Fed indicated on the Discount rate, the pressure cooker outlet is almost certain to be the currency markets.
This could be true for the foreseeable future, with the occasional blip in the Bond markets just to remind us as to what will happen when things turn a bit tighter.
We have grown used to the idea that rates will remain at the current levels for the rest of 2010 and that the slack may begin to be taken up through 2011/12.
3 month money is currently at about 0.65% and year end is only ‘expecting’ minor hikes to around 1.125%.
In reality the ‘expecting’ bit of the last sentence should be under the word ‘insurance’. Most of the market does not expect any move before Q2 next year in anything except in the direst of needs, i.e if the currency goes into freefall or inflation really gets a grip.
All this leaves Sterling rather high and dry with few friends in places of power.
The Equity markets, though, continue on their way quite serenely as the woes of the various sovereign states remain out of their zone of influence.
Tax rates do not impact the corporate side to nearly the same extent as the domestic, as revenue authorities recognise that too high an attempt to extract money will just result in the removal of the company concerned.
This said, the FTSE is now at the top of the trading range of recent times and traders are looking at getting out of longs and possibly, if we start to drift lower, venturing a short or two.
A break and close above 5400 might give the bulls more to get their teeth into but for the moment things are actually quite peaceful as neither the up nor the down direction looks a favourite.
The S&P 500 has, once again, managed to climb into the 1110/1112 region and, as with myriad previous comments, the bull will be hoping that activity above this mark finally turns into a break.
We have traded above 1110 quite a few times in the last few week, and historically in November/December last year, only for the close to disappoint.
Today looks like being another attempt at the level and the more cautious traders will be sitting on their hands awaiting events. For those with more aggression, we may see some two way activity as bears look for a repeat of previous failures at this level and bulls try to get ahead of any break out.
Sterling is suffering in the light of the possibility of another Labour or hung administration.
This is a natural reaction as difficult decisions are definitely not the forte of either Brown or Darling. This is clearly shown in the continued wage inflation of the public sector when the rest of the population is suffering the effects of the last few years.
If there is no appetite to get to grips with public spending in even this most basic of areas where is the political will to actual make cuts going to come from?
As mentioned in previous comments, once $1.55 was defeated there was little to hold the currency from a swift move down to the $1.50/1.51 range.
So it has proved, with Thursday through to early this morning giving up over 300 pips.
Major support is at around $1.5060 but it must be admitted that Sterling is not the only currency in trouble so it might not be all one way.
The UK’s problems are very current, however, the Euro is also in a bit of a pickle. Nevertheless, it at least has the ability, currently, to spend its way out of trouble, or at least push the day of reckoning further into the future.
Gold has moved back up towards the top of the trading range having unsuccessfully probed the sub $1100 level once again.
Time will tell if this attempt to break above $1124/1127 will come to anything either but our spread betting account holders seem confident that a break higher is imminent as longs dominate shorts to a considerable degree.
Oil is also probing the top of the range as we try to breach 81 Dollars once more.
Nymex is trading at $80.34 in early action as traders found that the barrier of $78 and $77 proved just as unpalatable to a move lower now as it did to a move higher in early Feb.
We may now find that the trading range of $77-81 proves very attractive in the medium term as any break outs are irresistibly pulled back into the fold.
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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Spread Trading 28 Feb 2010
Index Spreads: Week-on-Week Price Update:
- The FTSE 100 closed last week up -3.6 points at 5354.5 (up -0.07% w-o-w)
- Wall St (Dow Jones) closed last week up -77.09 points at 10325.26 (up -0.74% w-o-w)
- The Nasdaq closed last week up -5.61 points at 2238.26 (up -0.25% w-o-w)
- The S&P 500 closed last week up -4.68 points at 1104.49 (up -0.42% w-o-w)
- The CAC 40 closed last week up -60.74 points at 3708.8 (up -1.61% w-o-w)
- The DAX 30 closed last week up -123.59 points at 5598.46 (up -2.16% w-o-w)
- The Nikkei 225 closed last week up 2.45 points at 10126.03 (up 0.02% w-o-w)
Also see Indices Spreads.
Forex Spreads: Week-on-Week Price Update:
- GBP / USD closed last week down -$0.020 at $1.522 (down -1.3% w-o-w)
- USD / JPY closed last week up -¥3.1 at ¥88.9 (up -3.37% w-o-w)
- EUR / USD closed last week down $0.014 at $1.365 (down 1.04% w-o-w)
- EUR / GBP closed last week up £0.019 at £0.896 (up 2.17% w-o-w)
Also see Forex Spreads.
Commodities Spreads: Week-on-Week Price Update:
- Brent Crude Oil / UK Oil (Apr) closed last week up -$0.60 at $77.59 (up -0.77% w-o-w)
- WTI Nymex / US Oil (Apr) closed last week at $79.66
- Gold closed last week up -$6.40 at $1,105.50 (up -0.58% w-o-w)
Also see Commodities Spreads.
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.
Financial Spreads >>
"With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." >> read
Financial Spreads review.
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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It 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.
Article provided / approved by Financial Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Spread Trading 1 Mar 10' edited by SD, updated 01-Mar-10
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