Spread Trading FX Market Review
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The Spread Trading FX Market Review with quick and simple answers to common FX spread trading questions:
Spread Trading FX Market Review, 16 December 2011
Investors continue to battle against the back drop of this European debt storm and indecision continues to remain rife.
When you get assets like the US dollar spiking you have to start to worry. The normally perceived safe haven of gold has seen a mass exodus and volatility remains high.
The dollar index is back above the 80.00 level, not seen since the beginning of October when stock markets had that crash in August and September.
With such little economic data out today and next week being effectively the last one of the year, with Christmas in the way after that, many people are probably tempted to net off their books and call it a year.
Volumes are likely to be low from here on in, but this is where markets can sometimes be pushed to the upside. With triple witching today anything can happen.
On the FX spread betting markets, the euro seems to have found a level at $1.3000 against the dollar where the bears have run out of momentum to push the single currency lower.
Flat to lower this morning EUR/USD is at $1.3010 and with the trend lower still very much negative there are few bulls out there to support the euro. In fact, even if there are any, a move higher would probably be seen more of a bear squeeze than a reversal of the trend.
Spread Trading FX Market Review, 15 December 2011
Despite all of the efforts being made by European leaders, a possible break up of the Eurozone is becoming more and more likely.
Signs that people are preparing for such a break up are already being seen as money presses for individual currencies such as the Drachma and even Deutsche Mark are ready to go at a moment’s notice.
In addition, the world’s biggest inter-dealer broker has been testing its execution systems for currency deals in the event of anyone exiting the Eurozone.
As a result the euro has taking a pounding, most literally too as sterling looks increasingly like more of a safe haven than many other currencies.
GBP/EUR has been heading back towards €1.2000, but just this morning is running out of steam and the interest on UK gilts continues to head lower as investors buy up UK government bonds as a safety precaution.
This once again indicates the faith the bond spread betting market has in the coalition’s deficit reduction plans, even if they are going slightly off target due to the lack of growth.
Even though the European debt crisis has dominated financial markets throughout 2011, and seems to have been all this column has been writing about, there seems to be little prospect of that changing into the New Year.
With global equities dropping like a stone over concerns that a Eurozone debt resolution will not be reached anytime soon, the euro was inevitably only going to go one way.
The single currency dropped below the big psychological level of $1.30 which, as we said a couple of days ago, was the low last January and subsequently the next downside target.
The EUR/USD spread betting market is pushing higher this morning to around $1.3030, but traders should tread with caution as we’re in a bear market and any upside is likely to be limited to the very short term.
Spread Trading FX Market Review, 14 December 2011
A credit crunch across Europe is underway which can explain why the euro took such a bashing yesterday. However, despite this crunch, the equity markets seem to be largely ignoring the similar situation that we faced just over four years ago.
Just as back in the middle of 2007 when the last credit crunch lead to the then banking crisis, this time there’s a real threat that this one could fan the flames of the sovereign debt crisis.
As banks deposit overnight money with central banks as opposed to other banking institutions the lack of liquidity means that less cash is available to drip feed through to the wider economy.
This causes the vicious circle to continue going round as the lack of funding to businesses and individuals knocks growth on the head. This in turn puts further stress on countries' budgets which are already feeling the squeeze from austerity.
The one major thing that Europe really lacks at the moment is confidence and that confidence doesn’t exist because there is no clear growth strategy.
It’s all about austerity and imposing fiscal discipline, which is required to a certain degree, but without any real growth plans the problems will only get worse.
As mentioned above, the euro was beaten up badly yesterday as bears drove the single currency back down towards $1.3000 against the dollar. Here it seems to have found a degree of support with EUR/USD trading at $1.3040 at the time of writing.
Key levels to watch are $1.3000 and $1.2950 to the downside with $1.3100/60 and $1.3240 being seen as resistance to the upside.
Spread Trading FX Market Review, 13 December 2011
There's lot’s of economic data out today, with UK inflation numbers to get us underway. CPI is expected to dip below 5% and from here on in expectations are for a continuation of softening inflation which will be welcomed by consumers.
Then we get the German ZEW survey, followed by US retail sales at lunch time and we end the day with the FOMC rate announcement.
FX spread betting investors saw the euro take nearly a 200 pip hammering against the dollar yesterday. This came as the grim reapers of the credit rating world said that the EU summit last week really didn’t give much indication as to how the Eurozone debt crisis is to be resolved.
There could be several casualties seeing their credit ratings cut, and it comes just as we are due German Economic Sentiment figures today, which is expected to show a three year low.
Caution is the theme at the moment and traders of the dollar are taking advantage of the euros weakness. The pair traded at $1.3161 yesterday, which is a level not seen since October 4th.
It appears there is a bit of a bear market squeeze at the moment and the pair has moved higher to $1.3205.
Spread Trading FX Market Review, 12 December 2011
On the economic front, this week will see the release of UK RPI and CPI inflation data.
There is also German ZEW Economic Sentiment which could have an effect on forex traders watching the euro markets.
The dollar is rising this morning, in line with the bearish view on equities, as traders appear to be more risk adverse.
Forex spread betting investors have looked to the safer currencies as expectations are that German economic data will show that investor confidence is at a 3 year low.
The euro is trading lower against the dollar at $1.3310 which may be pricing in the speculation for tomorrow’s data release. The pair see support at $1.3285 and resistance at $1.3390.
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Spread Trading FX Market Review, 9 December 2011
Despite hopes that European Union leaders would make some progress at the summit yesterday, we were left disappointed as they failed to all agree on a resolution. The ECB also cut interest rates by 25 basis points to 1%, although that could be said to have been already priced in by the forex spread betting markets.
The overall effect on the euro – dollar spread betting market was a negative one and it shed around 75 points. This morning the pair is trading around $1.3325 and trending down along a bearish trend line. We see support at $1.33167 and resistance at $1.3370.
Spread Trading FX Market Review, 8 December 2011
Forex spread betting traders have been largely focused on the euro rather unsurprisingly and this morning the single currency is trading at $1.3420 against the dollar at the time of writing.
Since the end of October the trend has been very much downwards for the euro, capped by a downward trend line but major support around $1.3200 remains in place.
So key levels for EUR/USD to watch over the short term are $1.3485 and $1.3520 to the upside and $1.3350/00 to the downside with the bigger support seen at $1.3200 as mentioned.
Spread Trading FX Market Review, 7 December 2011
FX spread betting investors have been speculating on European policymakers expanding the funds available to indebted Eurozone countries, at the upcoming EU summit.
The single currency moved higher against most of its counterparts, as the hope is that the summit in Brussels will provide clear steps as to how the debt crisis can be resolved.
Along with this, the ECB is also forecast to cut interest rate from 1.25% to 1% tomorrow. This morning the euro is trading steadily higher against the dollar at $1.3437.
Spread Trading FX Market Review, 6 December 2011
On the economic data front things are a little quiet with the second reading of EU GDP due for release this morning which is expected to remain unchanged at 0.2%.
Having said that, there is pressure to the downside, particularly following the terribly poor raft of PMIs that have consistently pointed towards contraction for many of the bigger EU economies. Spain saw output collapse recently to an almost three year low.
The uniting of Merkel and Sarkozy in putting forward plans to give Brussels more control over regions deemed as careless, gave traders a much needed boost in sentiment.
As a result, the euro rallied against the dollar and encouraged traders into more risky assets. However, then S&P ploughed in and inevitably the euro tanked and managed to close just 18 pips up against the dollar.
This morning, is much of the same and the single currency is trading down at $1.3375. Fundamentals are playing a big part in this but, according to the technical analysis, the pair is trading in an intraday bearish channel which could signal further downside.
Spread Trading FX Market Review, 5 December 2011
Today sees lots of PMI service numbers released with the UK’s expected to just about cling onto the 50.0 level.
A dip below will mean that the service sector’s run of expansion will have come to an end after 10 months on the trot. With the headwinds faced by UK businesses out there it’ll be a close call come 9:30 London time this morning.
Let’s put it this way, if we had the snow like we did this time last year then we would probably see this number come in well below 50.0.
The euro is showing a degree of life this morning as EUR / USD bounces off the $1.3400 level. At $1.3440 at the time of writing near term support and resistance is seen at $1.3340/05, $1.3255 and $1.3545/70.
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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading 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.
'Spread Trading FX Market Review' by DB, updated 16-Dec-11
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