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FX Day Trading - 18 November 2011
Spain borrows ten-year money below 7%
At 6.98%, to be exact
No boost to sterling from increase retail sales
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A similar thought process has been going on in Greece and Italy, where appointed and ostensibly economically more competent governments have taken over from politicians.
Thousands of people have taken to the streets in the cities of both countries to protest against their new leaders, alleging they are no better than their predecessors.
In Athens the argument is that the new regime is undemocratic, akin to the colonels' junta of 1967-74. In Milan the objection is simpler: "We Don't Want Bankers To Rule".
The investment fraternity shares the protestors' unease. It would like to see econocracy succeed in Italy and Greece but remains unconvinced that it will be able to sell austerity to voters where the politicians failed.
Financial spread betting investors are also worried about what will happen in Spain when opposition leader Mariano Rajoy wins this Sunday's general election without any declared plan to sort out the huge unemployment and stagnant growth which plague his country.
With that in mind they were not exactly fighting to buy the €4bn of 10-year bonds auctioned by the Spanish government yesterday. The Treasury claimed a success, selling €3.6bn at an average yield of 6.98% and thereby avoiding the stigma of paying above what has become the bogey line at 7%. Critics say that to have sold the €400m balance would have meant accepting lower bids and crossing that threshold.
Yet the auction did go through below the psychologically important level and the sky did not fall.
Forex spread betting investors decided not to wallop the euro, although they did give the commodity dollars a bit of a kicking as well as equities and oil. Ignoring the odd couple of dozen ticks here and there, the US dollar, the pound, the yen, the euro and the franc are unchanged this morning from Thursday's opening levels.
Sterling would have reasonable grounds for feeling miffed that it did not do better after the release of figures showing that retail sales rose by 0.6% in October and were up by 0.9% on the year.
Market analysis had suggested falls of -0.2% for both figures. Other than a momentary upward spike there was no reaction from the pound. The rest of the day's figures produced no ripples either.
Better than expected US building permits, housing starts and jobless claims were balanced by a five-point fall for the Philadelphia Fed's manufacturing index. It had been supposed to go up.
With no other data to feed on today, investors may pay more attention than usual to Italian industrial sales and Canadian inflation.
They will certainly be keen to hear what comes out of the British prime minister's meeting with the German chancellor.
And they will assuredly be watching carefully to see what the European Central Bank gets up to in the bond market.
Currency Trading and Spread Betting carry a high level of risk to your capital and you can lose more than your initial investment, they may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
The above content does not constitute investment advice, it is provided purely for information purposes and is delivered as a personal view of the writer. Neither the contributing company (or writer) nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the content.
'Commodity Currencies Lower in Forex Spread Betting on Eurozone Worries', Article by Moneycorp, last update: 18-Nov-11
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