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FX Day Trading - 18 October 2011
Jam delivery expected soon
Tomorrow, they say
Cold water futures go limit up
To those Brits who mock continental European politicians for disappearing during the whole month of August: chortle no more, it's time for a bit of mote-and-beam.
The Mother of Parliaments has decided to award itself an extra week's holiday in November to replace the time lost as a result of the August riots. It means MPs will get 87 days' vacation this year, plus weekends. That's even more than the bloke who hands out the sandwiches at G20 meetings.
And only a couple of days after his last shift, European politicians are desperately trying to manage down expectations for the crisis solution that was allegedly agreed in Paris.
Spread betting investors had thought (because G20 finance ministers had told them so) that the EU summit meeting this coming weekend would finally resolve the Greek/debt/economic/confidence problem that has been building for two years.
On the back of that promise financial spread betting investors dismissed any fear of the economic downturn that non-resolution might bring, selling safe-haven yen and dollars to buy higher-risk commodity currencies and equities.
The cracks began to appear even as the last crumbs were being brushed from the conference table, when EU Commissioner Ollie Rehn warned investors to expect no more than an outline plan at the end of this week.
His words did not cause too much alarm at the time; as long as there really was a plan the details could wait. But yesterday things took a turn for the worse when Steffen Siebert, Chancellor Merkel's chief spokesman, poured icily cold water on investors' hopes.
He said: "The Chancellor has pointed out that the dreams building up that this package will mean everything will be solved and over by Monday cannot be fulfilled." For the avoidance of doubt German finance minister Wolfgang Schäuble put it more succinctly: "We won't have a definitive solution this weekend."
This was not at all what FX spread betting investors had been looking for. It did not help matters when Moody's issued a veiled threat to downgrade France's triple-A credit rating.
In an elliptical statement the agency said: "The deterioration in debt metrics and the potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the government's Aaa debt rating." In other words, if France has to shell out more than it can reasonably afford to Greece and the EFSF it will lose a third of its As.
The reaction to it all was predictable. The euro went down, the commodity currencies went down, equities went down and the safe-haven currencies – including sterling – went up.
We are not back to square one. There does seem to be a genuine desire in Euroland to sort things out and scale of the project to do so will not be the work of an idle moment. But it is still jam tomorrow. Look for further erosion of the euro and the commodity currencies as that realisation sinks in.
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.
'Euro Falls in FX Spread Betting on German Warning Over EU Crisis Summit', Article by Moneycorp, last update: 18-Oct-11
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