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FX Day Trading - 19 August 2011
Risk-appetite evaporates again
Global growth projections revised downwards
Brits spend more money on the same stuff
Congratulations to the 12.5% of A level candidates who achieved three A grades, commiserations to the 0.75% who failed one of their exams and deepest sympathy to Brian in Ipswich, who managed to fail all three.
His only possible job opportunity now is as a headline-writer for the Daily Telegraph's website. The incumbent's days will be numbered after this morning's effort: "Stock market plunge raises spectre of double-dip recession".
The correct ordering of horse and cart would have recognised that it was the combination of a threatened financial transaction tax in Europe, the imminent bankruptcy of Greece and the moral bankruptcy of Washington politicians that encouraged four investment banks to lower their forecasts for global growth yesterday, thereby triggering a sell-off on world equity markets.
Shares were down, crude oil was down and gold was up. The Swiss franc eventually went up as well, after follow-through of its earlier drop failed to materialise.
Online spread betting investors assume that the Swiss National Bank and the Bank of Japan are selling their currencies, sending them on downward spikes from time to time, but that nobody else is.
There was one such spike in the yen early this morning. There are many out there who see no prospect of longer-term success for the intervention and are using the spikes as an opportunity to pickup yen and francs more cheaply. Both currencies start this morning slightly stronger on the day against the euro, the US dollar and the pound.
Otherwise, the pound has again made a decent fist of it. Sterling is half a cent better against the euro and a cent or more better against the NZ, Australian and Canadian dollars.
Not for the first time this week the pound was able to skip round a potentially damaging ecostat. This time it was July's retail sales, which were up by a monthly 0.2% only because of higher spending on fuel. Sales by value were up by 4.3% compared with a year earlier while sales by volume were unchanged.
It seems that people are still buying the same amount of stuff, they are just having to pay more for it. That's what you get with inflation.
Figures from the States showing CPI inflation unchanged at 3.6% had no impact on the dollar. An hour and a half later a 3.5% fall in existing home sales and a 34-point plunge in the Philadelphia Fed's manufacturing index sent it higher as risk-aversion increased and indices spread betting investors filled more sandbags.
In theory, today should be a quiet one. German factory gate prices are already out of the way, up by 5.8% in the year to July. The only other data on the agenda are UK public sector net borrowing (PSNB) and Canadian CPI inflation.
PSNB figures have proven impossible to predict in recent months so today's number will be a surprise even if it is exactly in line with the forecast £200 million.
The Canadian inflation figure has the potential to move the Loonie, but only if it is wide of the expected 2.8%. Have a good weekend.
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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.
'Crude Oil Prices Tumble as Global Growth Forecasts are Lowered', Article by Moneycorp, last update: 19-Aug-11
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