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FX Day Trading - 15 December 2011
Euro keeps pace with pound
Sterling meets technical resistance
Negative Swiss interest rates?
In a speech yesterday, the UK's Chief of the Defence Staff said "I am clear that the single biggest strategic risk facing the UK today is economic rather than military."
His concern is that a new global financial crisis would mean cuts in defence spending by the United States and other strategic allies, leaving Britain defenceless against Germany and France.
That risk does, of course, presume the ability of Angela Merkel and Nicolas Sarkozy to stay in power long enough to co-ordinate an attack. On recent form that looks unlikely. They cannot even agree on the threat posed by Britain.
While the French president was calling David Cameron as "a stubborn kid", the German chancellor was talking of "a reliable partner for Europe, not just in questions of foreign and security policy [but] in the internal market, for trade, for climate protection".
Meanwhile, in capitals across Europe, the leaders who had agreed last Friday's "fiscal compact" were trying to figure out what they had agreed to and how - or even whether - to sell it to their electorate.
At the same time, investors were beginning to wonder if there might be method to Frau Merkel's apparent madness: Could she secretly be trying to drive out the weaker members of the single currency by the imposition of intolerable financial strictures?
The screw tightened on Greece when the IMF said economic reforms were behind schedule and told the government to get on with sacking people.
To rub salt into the wound the IMF also lowered its forecast for economic growth; this year the Greek economy will shrink by -6% and in 2012 by -3%.
Among spread trading investors, the mood was one of vague depression. They reluctantly supported an auction of €3bn 3-year Italian government bonds but only in return for a 6.47% interest rate. Just about every other trade involved hitting the bids.
In commodity trading, prices for oil and gold moved lower as with equities, and commodity currencies. The US dollar was the day's top dog, closely followed by the yen, the pound and, oddly, the euro.
GBP/EUR might have fared better had it not encountered technical resistance at a ten-month high against the euro.
The UK employment data did not get in sterling's way. Unemployment was steady at 8.3% and a net 128k jobs disappeared in the three months to October. However, the number of new claimants for jobseekers' allowance in November was up by just 3k.
Add to that a downward revision to the number of claims in October and the total for the two months came to 5.5k instead of the 19k that analysts had forecast.
A reasonably full agenda today includes UK retail sales, Euroland inflation and employment change, US factory gate prices and industrial production and the Philadelphia Fed's manufacturing index.
Potentially of most interest is the Swiss National Bank's policy announcement at half past eight. A new, higher, floor for EUR/CHF and negative interest rates are both possibilities.
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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 Spread Trading Markets Weaken as US Dollar Rises', Article by Moneycorp, last update: 15-Dec-11
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