Spread Trading 2 Sep 10
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Trading 2 Sep 2010
No wonder there is so much uncertainty in the equity markets with the amount of conflicting data coming out of the world’s leading economies.
A weak ADP Employment number came out as -10K at 1315 but seemed to have been completely forgotten by traders by 1500 when the ISM manufacturing data came out significantly ahead of expectations.
There was also strong manufacturing data coming out of China, however this morning the Nationwide House Price Index in the UK saw a fall of 0.9% in August following on from a fall of 0.5% in July.
The net result of all this was a 150 point rally for the FTSE 100 and it has held onto those gains in early trading this morning and is back above the 5350 level.
Elsewhere in spread betting, Gold had $12 trading range yesterday with it making highs just above $1254 before profit taking knocked it back down to $1242.
However, the strong upward trend line has not been broken and with one fund manager looking to $2000 by the end of the year, albeit probably talking up his own book, further appreciation looks to be the preferred direction for the metal.
Oil reversed the losses it had seen the on Tuesday as it was once again clinging onto the coat tails of the equity market rally with WTI closing up over $2 at $73.80 despite a 3.5 million rise in oil inventories from the previous week.
In forex spread betting, the dollar had a weak day against Sterling with cable also reversing the losses of the previous day finishing above 1.5450; however it is Sterling that is looking weaker this morning as it continues the declines seen throughout August.
Against the Euro the dollar struggled losing over 100 points and is now back up to 1.2800. It’s the ECB rate decision today at 1245 followed by Jean Claude Trichet’s press conference at 1330, which if you can sit through without falling asleep, usually has some fairly pertinent information which can cause a short term uptick in volatility.
USDJPY went as low as 83.67 during intraday trading but rallied after the ISM figures as the outlook for the US did not seem quite so bleak and is currently at 84.15. There seems to be a real battle between the bulls and the bears with strong buying below 84.00 and selling above 85.50.
The trend is still firmly negative for the currency pair over the medium term but it seems traders are becoming increasing wary to bet against further intervention by the BOJ.
There is a slew of economic data out today which should provide a further insight into the state of the UK, Euro zone and US economies. 0930 sees how the UK construction industry is recovering and at 1000 we get the Euro Zone GDP figures. Over the water this afternoon see the weekly jobless numbers which will be given extra scrutiny with tomorrows Non Farm Payroll data release and later at 1500 Factory Orders and Pending home sale data, the former being of interest to see if it can be as bullish as yesterdays ISM Manufacturing number or if it was a one off shining light in a still very murky global economy.
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 2 Sep 10' edited by SD, updated 02-Sep-10
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