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FX Day Trading - 2 September 2011
Manufacturing activity weaker everywhere
Contraction among Euroland and UK manufacturers
US non-farm payrolls today
"Those who do not remember the lessons of history are doomed to repeat it", George Santayana. "Insanity: Repeating an action and expecting different results", Albert Einstein.
There's a lot of it about. Spain's parliament votes today on an amendment to the constitution. The principal change will be to set a maximum level for government borrowing. Perhaps Madrid politicians do not remember that the existence of just such a debt ceiling precipitated the downgrade of America's credit rating last month.
Japan's Ministry of Finance admitted spending ¥4.5 billion ($58bn) to depress the yen on 4 August. The action knocked three yen off the currency's value in nine hours. Less than a week later it was right back where it started. Same action, usual result. Do loaches sweat?
The euro did yesterday morning. Against the run of play it set off lower even before the London market got into its stride.
Early ecostats had nothing to do with the move. Unless financial spread betting investors have suddenly taken an interest in German private consumption (down 0.7% in Q2), there was nothing in the slew of German data at 7am to provoke disappointment.
Nor was Nationwide's bleak house price report any reason to buy the pound, but the GBP/EUR spread betting market went up half a cent during the morning session and is still there or thereabouts for this morning's opening.
The round of manufacturing purchasing managers' indices did no favours to anyone on this side of the Atlantic. They were all lower on the month, as predicted. Only Germany (50.9) and Switzerland (51.7) were still in the growth zone. Britain and Euroland were down at 49.0, both of them more than half a point short of forecast. The surprise winner was the United States.
Although it, too, was down on the month (from 50.9 to 50.6) the figure was still positive, a good two points better than expected, and it sent the dollar higher. A pedant would point out that the data included a fall in production and a rise in inventories, the implication being lower customer demand. But it's optimists we need at the moment, not pedants.
Today's data cover Swiss employment, the UK construction PMI and Euroland producer prices. More importantly they cover the US employment situation.
As Santayana and Einstein would attest, neither historian nor scientist could reasonably expect today's non-farm payrolls figure to be markedly better than those that went before, because the underlying situation is unchanged.
After a 117k increase in July the consensus among economists is that payrolls will have gone up by around 70k in August. That would only be half the number needed to keep pace with demographics. At least in theory it would therefore mean an increase in the pool of jobless, although the unemployment rate is predicted to remain steady at 9.1%.
The imminent payrolls announcement will be a disincentive to trading activity this morning. In principle that means modest ranges, but it also provides would-be heroes with an opportunity to take the dollar for a walk in a thin spread betting 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.
'Dollar Spread Betting Market Under Pressure Ahead of Non Farm Payrolls', Article by Moneycorp, last update: 2-Sep-11
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