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FX Day Trading - 04 January 2012
Slow start to the new FX year
FOMC to reveal individual forecasts
Manufacturing PMIs more upbeat
Investors will be taking a keen interest in the forecasts that Federal Reserve presidents will make for the Federal Funds rate. The minutes of the Federal Open Market Committee (FOMC) revealed yesterday evening that Chairman Ben Bernanke has taken another step towards making US monetary policy more transparent.
He had already pledged that interest rates will not start to rise until next year and has set up regular press conferences to explain policy. His latest scheme is that future FOMC minutes will include individual participants' monetary policy projections.
The personal forecasts might or might not be helpful to spread betting investors but will make their lives more interesting once every six weeks.
Their lives were not particularly interesting yesterday though, other than as a result of seasonal meteorology. There was a vague leaning towards risk and away from safety, but the effect on forex spread betting markets was minimal.
The improved sentiment came from manufacturing sector purchasing managers' indices (PMIs) that turned out better than predicted. Switzerland (50.7) and America (53.9) were both in the growth zone, and Britain (49.6) was not far adrift from the boom/bust barrier at 50.
Another positive note was the 22k fall in German jobless claims that lowered the unemployment rate from 6.9% to 6.8%. Investors chose to ignore the news from Spain, where almost 22% of the workforce is unemployed and nearly half the nation's youth are unable to find a job.
Beyond the PMIs and employment numbers, investors were not given much to play with. Consequently, exchange rate movements were moderate. EUR/USD and EUR/CAD each gained half a cent, whilst GBP/USD and GBP/CAD saw similar gains. In addition, the antipodean currencies kept pace with sterling.
If Tuesday's ecostats were not enough to get things moving, today's will have no easier job. German and Euroland services sector PMIs stand alone because the UK and US equivalents do not come out until tomorrow.
Britain's construction PMI, which has no foreign equivalent, should remain comfortably within the expansion zone above 50. UK mortgage approvals will still look feeble, as will personal lending and consumer credit.
Euroland inflation is predicted to come in at a provisional 2.8%, down from 3%, but only the most outrageous number would have any implications for euro interest rates. The sole US statistic relates to US factory orders, which probably rose by 2.0% in November.
The first signs are that investors are in no hurry to get involved in the new-year FX market. Prices could remain in a holding pattern until the weekend but to assume that they will is almost to guarantee that something silly will happen.
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.
'European PMIs Boost EUR/CAD FX Spread Betting Markets', Article by Moneycorp, last update: 4-Jan-12
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