For the latest FX Daily Trading Update see FX Day Trading.
FX Day Trading - 21 November 2011
Will the ECB step up its bond purchase programme?
The rumours say yes
The ECB president says no
The Mandometer is a new gadget for weight watchers. A computer screen is connected to a weighing scale that sits under a plate. As the user eats, a graphic shows the amount of food consumed and the pace of that consumption. If the grub disappears too quickly a message appears on the screen and a computer voice backs up the warning to slow down.
They say Chancellor Merkel is sponsoring the development of a giant version of the machine to sit under the national treasuries of Greece, Italy and Spain.
All three of those countries have had a change of government in the last few days. In one of them the change was actually democratic. Mariano Rajoy's Partido Popular lived up to its name yesterday, winning an overall majority in Spain's parliament on a platform of not being like the other lot. Mr Rajoy has said he will rebuild financial markets' confidence in Spain and restore its triple-A credit rating. Although nobody has a clue how he will go about doing so, investors will probably look kindly on his strong majority – and therefore the euro – for the first 24 hours.
They were already seeing the euro in a positive light on Friday. Not only was the European Central Bank (ECB) soldiering on with its efforts to shore up the price of Spanish and Italian government bonds, there were rumours that it was about to scale up its action.
One story had it that the ECB would spend €20bn a week on Club Med paper; another said it would lend to the International Monetary Fund (IMF), which would intervene on its behalf.
Confirmation of either scheme by the ECB was conspicuously lacking. Rather, its new President Mario Draghi lambasted political leaders for dragging their heels on the implementation of earlier agreements. He reiterated his predecessor's line that the job of the ECB is "anchoring inflation expectations", not acting as the lender of last resort to impoverished governments.
Looking at the US shares spread betting market, Washington seems to be heading towards a debt crisis of its own.
Three months after a select "super committee" was appointed to narrow the budget deficit there are only two days to go before the deadline for its proposals. There are no such proposals yet. In their absence there will be automatic and arbitrary cuts to defence and social spending.
There could also be more downgrades to America's credit ratings (it lost one of its AAA ratings back in August). Paradoxically, the prospect of a US budget crisis and rating downgrade have been positive for the US dollar.
Forex spread betting investors are still inclined to see the dollar as a safe haven, whatever the ratings agencies say.
Economic statistics were few and far between on Friday: Canadian inflation subsided from 3.2% to 2.9% and Belgian consumer confidence deteriorated from -7 to -14.
Overnight Rightmove's UK house price index clocked a -3.1% monthly decline, reflecting a more realistic attitude among sellers. Beyond US existing home sales there are no other useful ecostats on today's agenda.
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.
'ECB Bond Buying Helps Prop Euro Spread Betting Market', Article by Moneycorp, last update: 21-Nov-11
Related articles:
FX Day Trading, 18-Apr-12,
Daily FX Trading updates covering the influences on the key FX markets. Daily updates include key FX market movements and features the Dollar, Pound, Euro and Yen as well as...see: FX Day Trading
FX Day Trader, 17-Apr-12,
A daily review of the currency markets concentrating on the major Dollar, Yen, Euro and Pound Sterling markets...see: FX Day Trader
£1 per point: Start trading £1 per point/tick & an initial deposit of £30
Multiple markets: Forex , Commodities, Indices & Equities
Risk Warning - Spread betting carries a high level of risk to your capital & you may lose more than your initial investment. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seek financial advice where necessary & make sure spread betting meets your investment objectives.
(1) The FTSE Rolling Daily Spread is 1 tick during market hours & 4 ticks out of hours. 1 Tick is defined as a full FTSE point. See our Product Information for more details. (2) The above information is correct at time of writing. (3) Tax Law can change.
FinancialSpreads.com is a trading name of London Capital Group Ltd which is authorised & regulated by the Financial Services Authority (FSA). Registered address: is 4th Floor, 12 Appold Street, London EC2A 2AW. All information correct at time of publication.
Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it 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.
Disclaimer:
Online-Spread-Betting.com does not endorse the information and
analysis available on this site. It is provided purely for information
purposes and is delivered as a personal view of the writer. Under no circumstances
is the information hereon to be used or considered as, an offer to sell, or a
solicitation of any offer to buy. The website content does not constitute investment
advice and neither the individual contributor nor Online-Spread-Betting.com accepts any
responsibility for any use that may be made of the content.
* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
