The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

Yesterday stock markets and “risky” forex pairs pole vaulted a wall of worry to post huge gains into the close.

The Dow Jones closed up 2.85%, its second biggest gain this year. The FTSE 100 closed up 3.12%, marking its biggest 2 day rally, 5.15%, since March 2009.

The AUD/JPY closed up over 300 pips above ¥77.00 and even the EUR/USD managed to have a good day.

After these monster moves, it is perhaps understandable that markets are sluggish so far this morning.

The EUR/USD is the biggest seller as traders take the opportunity to reload to their shorts. Markets have had a tendency to back and fill in the last week, with traders keen to realise any gains no matter how short term.

So it wouldn’t be surprising if today saw pairs such as the AUD/JPY giving back a chunk of yesterday’s gains.

The issues in the Euro region still linger in the background, especially with the unknowns surrounding the Spanish banking system.

Who knows what news bombs are lurking around the corner.

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The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

The big headline from last night’s close is that the Dow Jones closed below 10,000 for the first time since February.

However markets are already look like they will continue their seesaw action with shares futures indicating a positive start to the day.

On the face of it, the damage between Tuesday and Wednesday hasn’t been too bad on the Dow – a drop of just 90 points, but in reality the market has been on one wild ride with a 400 point range.

Trading Today

At 13.30 we have preliminary US GDP figures followed by the latest unemployment claims. GDP is expected to rise, with unemployment claims dropping compared to the previous month. With markets still on tenterhooks, any negative deviation from the expected numbers could see the Dow plunge further below 10,000. However, for now, traders appear to the glass as half full.

Forex Update

The AUD/JPY continues to trade almost perfectly in turn with US stock markets and if you need a barometer investor’s confidence, the AUD/JPY should be your go to pair.

This morning’s early action has erased yesterday’s losses with the AUD/USD following suit. The euro is enjoying a strong bounce though has some way to go to erase yesterday’s thumping losses.

2 Financial Fixed Odds Trading Ideas

After weeks of monster moves, major forex pairs have been range bound this week, but this may just be a temporary quiet.

Although pairs such as the AUD/JPY and GBP/USD look as though they are setting up for an upside breakout, given the unpredictability of the news flow and central bank action, it might pay to add the insurance of a two way breakout.

AUD/JPY Breakout Trade Idea.

A way to trade this might be as follows:

Given that the AUD/JPY is already close to the upper barrier you may need to push it out a little to increase returns.

A breakout trade predicting that AUD/JPY will touch ¥72 or ¥77 at some point today could return 138%.

GBPUSD Breakout Trade Idea

A way to trade this might be as follows:

Given that the GBP/USD is already close to the upper barrier you may need to push it out a little to increase returns.

A breakout trade predicting that GBP/USD will touch $1.41 or $1.46 at some point today could return 121%.

Editors Note: if you lose either trade you lose 100% of your stake.

This website content does not constitute investment advice. No individual contributor, contributing company, BetOnMarkets nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

After plunging down throughout the morning and the US open, investors found enough confidence to step back into the market, forcing a rally that lasted well into the evening.

The day’s action formed what is known as a Hammer candlestick pattern, which is traditionally seen as a bullish reversal signal, also see Candlestick Charts.

You can see virtually the same pattern on an AUD/JPY candlestick chart.

Today’s Market Movements:

There is talk of optimism following the release of a paper supposedly leaking secret bailout clauses that would take Germany et al off the hook if things got really bad in Greece.

However this seems to ignore:

• The perilous exposure of German banks, and
• The potential for other countries such as Spain to implode.

This morning, ‘risky’ forex pairs have taken another lurch down, but so far the sell off is not coming close to the extreme lows yesterday. The morning loss of 0.74% on the Australian Dollar/Yen spread would be a huge move usually, but in the context of recently volatility, the move isn’t significant.

However, it is a reminder that traders need a lot of convincing before coming back to the market in full force. Daily backing and filling could continue to be the normal state of affairs in the short term.

The USA Comes to the Rescue

It’s interesting to note that before the US induced rally of yesterday afternoon / evening the markets were looking like they were in serious trouble.

Financial markets were on the brink with many Index markets and Forex pairs trading at or below 2010 lows in the morning.

None of yesterday’s news was especially new but market participants were in panic mode all the same.

It’s not just confided to the euro, the ‘risk on’ trade of buying the AUD/JPY was hit the hardest. The yen was riding high and seen as the safe haven du jour, while the commodity currencies of the Canadian, Australian and New Zealand dollar were slammed.

Even the Dow Jones was trading well below the 2010. If the key support levels failed then 9500 could be the next stop on the way down.

Let’s hope, the Hammer candlestick pattern is a good indicator and we do see a reversal.

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The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

Last night US markets suffered a late session collapse. That negativity continued in the overnight futures market indicating that the FTSE 100 spread will open up down near the 5000 level.

The US markets are in danger of breaching the ‘flash crash’ low from the beginning of the month.

There has been no single news-catalyst to speak of. Perhaps the markets are so jittery at the moment they need constant doses of reassurance from central government bodies.

The fears certainly have not gone away, with attention turning to Spain where the country’s banks are under severe pressure.

The Euro/Yen spread is currently trading near record lows and it wouldn’t take much to tip the pair over the edge, especially with the yen being seen as a safe haven in Asia with the Korean crisis.

Trading Idea

With the trouble brewing in Korea and the Euro crisis coming back off simmer on to the boil again, the Euro/Yen could be ripe for a sell off.

Looking at the long term charts, the next stopping point could be ¥105.00.

A good way to play this would be a Financial Fixed Odds ‘One Touch’ trade with the trigger at ¥105.00. A one touch trade predicting that the Euro/Yen will touch ¥105.00 at some point in the next 7 days could return 245%.

Editor’s note: If the Euro/Yen rate does note hit ¥105.00 within the next 7 days you would lose 100% of your stake.

Trading Today

Coming up today we have revised UK GDP figures at 09.30 AM with a month-on-month rise of 0.3% expected. GDP is the data that economists use as an official measure of recessions. With the UK officially out of recession, traders will be looking to see that the UK can avoid a so called ‘double dip’ whereby the post recession recovery is shallow, offering just a temporary reprieve.

Following this we have the latest US house price index at 14.00 with a jump of +2.5% expected. US consumer confidence will also receive a lot of attention at 15.00 GMT.

This website content does not constitute investment advice. No individual contributor, contributing company, BetOnMarkets nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning, forex markets are returning to relative normality, ie the euro is selling off again, but at a manageable pace, as has been mostly the case since April.

The Euro-Dollar is down 0.56% and the Euro-Yen down 0.34%. However, the most interesting move is in the Euro-Pound with the pound relatively strong across the board after Chancellor Osborne prepares to unveil the details of his £6bn of spending cuts.

Markets have had enough of words and want deeds, today they might just get this.

After recovering well on Friday, the Australian dollar is off the boil, but its antipodean cousin the New Zealand Dollar-US Dollar is the day’s biggest faller at -0.68%.

Today:

Apart from George Osborne’s announcement, the main thing to note today is that it is a public holiday in Switzerland, France, Germany and Canada so certain currency pairs may behave erratically.

The only announcement of note is US existing home sales at 15.00 GMT.

This website content does not constitute investment advice. No individual contributor, contributing company, BetOnMarkets nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning there is relief at last as a broad based rally has set in across the worst affected currency pairs.

The euro has been rallying for a couple of days against the dollar, but today is the first time in a few days the most major currencies are making ground against the yen and US dollar.

Yesterday was a bloodbath, there’s no getting away from it and today’s rally has to be seen in that context.

With the exception of the euro, most currencies have regained less than half the ground lost yesterday. So as welcome as today’s moves are, there is still a long way to go.

This is best seen on stock markets indices which, going by early futures trading, are not recovering as quickly as some forex pairs.

Coming up today

Today’s major announcement include a raft of French, German and Europe wide PMI and business climate data between 08.00 and 09.00 GMT.

At 09.30 we have the UK public sector net borrowing numbers. We’ll find out just how big the mountain the new coalition has to climb actually is. Then at 12.00 and 13.30 we have Canadian CPI and retail sales data.

This website content does not constitute investment advice. No individual contributor, contributing company, BetOnMarkets nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

A look at the Markets from Joshua Raymond, Market Strategist, City Index.

European markets plummeted another 2% on Thursday as investors fretted about the Euro Zone debt situation and the divisions within Europe after Germany’s decision to ban naked short selling.

Early Index gains were quickly used as an opportunity to sell offload stocks at better prices.

The markets are a whole mess of uncertainty and fear right now and so it is hardly surprising that investors are fleeing risky assets everywhere and this means heavy weakness for stocks, sterling and the euro.

This has triggered more deep losses the miners and banks, which have dragged Indices across Europe lower by over 2.5% to 3%, with the FTSE 100 hitting 5000 for the first time since early November. Economic data out of the US has hardly helped matters either, with jobless claims rising more than expected, leading indicators falling worse than predicted and the Philly Fed showing that factory activity accelerated less than expected in May.

The move by Germany to ban short selling, seemingly without mass consultation of the rest of Europe, is an indication that there are strong divisions in the Euro Zone at a time when the markets is crying out for some form of unity and strength. The fear is that without unity, debt problems could become contagious across borders quicker and easier.

Let’s not forget, many investors in today’s market still bear the scars from the credit crunch induced market falls of 2008 and with sensitivities just as high now as they were then, they don’t want to get burned again and this is almost certainly playing a role in the recent falls.

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The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

Euro Bounces Temporarily

This morning’s session has started with an unwinding of yesterday’s Euro (and Pound) rally that had many market participants scratching their heads.

It is thought that yesterday’s spike higher was in part caused by the Swiss Central Bank stepping in to halt a major rise in its currency as billions of euros flowed from Germany into Swiss bank accounts.

This may have been the case or it may have been a good old ‘short squeeze’.

The problem is that, as with the credit crunch, no-one knows what skeletons lie in the closet, especially for German banks.

A recent report claimed that German banks have not come clean on their huge exposure to Greece, affirming other rumours that the bailout of Greece is in fact a bailout for German banks.

The Daily Telegraph summary was, “Either way, things don’t look good and now could be a good time for a speculative punt on the euro experiencing a bout of (ever more) extreme volatility to the downside. So far the ECB has not stepped in to cut rates, but the longer the crisis goes on, it becomes an outside possibility”.

Australian Dollar Continues to Fall

This morning the Australian dollar heads the biggest fallers list with the Australian Dollar/US Dollar down 1.3% and the Australian Dollar/Yen down 1.5%. Of these, the AUD/ JPY offers the most interest, with ¥76.00 looking like a key support level.

The AUD/JPY has been particularly volatile due to its carry trade status.

Traders borrow in yen at near zero interest rates and invest in Australian dollars paying 4.50% interest. Free money…until the Australian dollar and yen move away from each other causing leveraged investors into a fire sale.

The Australian Dollar is also being hit as investors temper down their expectations for future interest rate rises and commodities come off the boil.

The AUD/JPY was one of the biggest fallers from peak to trough during the credit crunch. If the ‘sovereign crunch’ is to offer any repeat of that, then traders beware.

This website content does not constitute investment advice. No individual contributor, contributing company, BetOnMarkets nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

Today’s trading session could be chaos according to traders interviewed in the Daily Telegraph (H/T ZeroHedge).

Yesterday the currency markets extended their volatility with the Euro/Dollar spread falling to its lowest levels since 2006.

The main catalyst has been the announcement by the German regulatory authorities that it was banning so called ‘naked’ shorts of Sovereign Credit Default Swaps (CDS).

In plain English, these CDS allow traders to bet on whether a country is going to go bankrupt or not. The were first invented as a kind of insurance for anyone buying government debt, but more recently they have been used by traders to make purely speculative bets on the likelihood of a country such as Greece or the UK defaulting.

On a populist level, the ban is understandable, many politicians blame ‘the wolf pack’ of speculators for bringing Greece and the EU to its knees.

It was hoped that a ban would discourage such speculation and stabilize markets, especially the euro. If that was the aim, it’s failed spectacularly and many are now calling it an act of desperation with the ban completely unenforceable with potentially unknown consequences.

It’s thought people wanting to speculate against Europe have moved shorting the EUR/USD instead of the individual country CDS.

Trading Idea

Traders don’t know what is going to happen on the stock, bond or forex markets today so there could be some volatile swings.

In this situation, a Financial Fixed Odds ‘Breakout’ Trade could be a way forward as the market could spike higher or lower and you still win.

Judging by market’s early moves this morning, traders are currently keeping their powder dry and it may be a few days before the whales make their move.

Australian Dollar Continues to Fall

This morning the Aussie dollar is continuing its slide as commodities including gold slump on expectations of low future demand with European austerity packages.

Coming up today:

Today’s standout economic announcements include the release of the minutes from the last Bank of England Monitory Policy Committee meeting at 19.30. We have the same release from the US FOMC at 19.00 and US inflation (CPI) at 13.30.

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The “risk off” trade received an almighty boost yesterday evening from a wholly unexpected quarter, when the German authorities caught the market completely on the hop, when it announced its intention to ban naked short-selling in the CDS market.

It has introduced a temporary ban on naked short selling and naked credit-default swaps of euro-area government bonds starting at midnight last night.

The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011.

It mimics the same mechanism that was used by UK and US authorities’ to little effect, to try and prop up the equity markets in 2008 in the wake of the Lehman crisis.

If anything, the bans in 2008 exacerbated market declines and volatility, as investors took fright and bailed out of the whole sector and the Germans run the risk of causing the same mayhem.

The ban is even more curious with respect to the shares of the financial institutions involved, given that their share prices have been relatively orderly over the past few days and weeks. It creates a lot of uncertainty as to the reasons why they have decided to act now, and why these particular shares?

In taking this action the German authorities could end up causing the very market crisis of confidence they are seeking to prevent, by what could be construed, as somewhat hasty and ill-conceived actions.

As it is the Euro made fresh 4 year lows on this move, and yesterday’s news that the US Senate blocked by 94 votes to zero the use of US taxpayer’s money to fund the IMF portion of the European bail-out plan, will not have helped the credibility of the EU bail-out package agreed over a week ago either.

Also see Euro-Dollar Spreads .

On the sterling front yesterday’s worse than expected inflation figures should throw an interesting light on the release of last weeks Bank of England minutes today and the committee’s take on the decision to leave rates unchanged.

The release of the FOMC meeting minutes later on in the day, should also shed light on any further dissent within the Fed with respect to the tone of the statement, and the “extended period” phrase. Will additional members of the committee join Kansas Fed President Thomas Hoenig in the dissenters’ corner? If they do the Euro could fall even further.

EURUSD – last nights decision by the German authorities cut the legs from underneath the single currency, as it looks set to hit its long term target of $1.2135, which is the 50% retracement of $0.8230/$1.6040 up move.

Yesterday’s rally stopped short of the resistance around $1.2450/60, and while below this level further downside pressure will likely continue to build up and send the Euro towards $1.1700 on a break and close below $1.2130/35. A break above $1.2450/60 could well target $1.2750.

GBPUSD – the pound has been caught in the backwash of the short selling ban as investors pile into safe haven dollar buying.

Having been unable to break above the £1.4500/20 area yesterday on the high inflation numbers the pound slipped back. A break of the 13 months lows around £1.4240/50 would open up the next support around £1.4110 which is the 30th March 2009 lows on the way to a test of £1.4000.

£1.4000 remains a key support on a monthly close.

EURGBP – currently trading in a broad triangular range between £0.8500 and £0.8600, a break of £0.8500 should target the lows around £0.8400, and then a break lower towards £0.8250.

USDJPY – continued risk aversion has continued to favour the yen and we have seen the currency drop towards the ¥91.60 lows of 19th April. Any rallies should find resistance around ¥92.70 and ¥93.50/60, while a break of ¥91.60 targets the 91.20 area.

FX commentary from Michael Hewson, Analyst, CMC Markets.

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