In the absence of any economic data out of the US, Europe or the UK today markets will head into the weekend with the nasty after taste of yesterday’s awful data still resonating like a bad hangover.

Risk appetite took a hammering in yesterday’s afternoon session after US weekly jobless claims climbed to a nine month high of 500k, 24k above expectations as the economic recovery in the US took another body blow.

If that wasn’t bad enough the Philadelphia Manufacturing Business survey for August dived 7.7% against an expectation of a rise of 5.1%.

This double whammy of deteriorating US data has dealt a significant body blow to investor sentiment, and reinforced fears about a double-dip recession. It has also given investors a bit of a dilemma with respect to the Dollar, as to whether to sell it due to the shockingly bad data, or buy it, for its safe haven qualities.

To get around this problem investors have been diversifying into the Yen, Swiss Franc and gold spread betting markets, with all three gaining significant ground.

The Pound has benefited to some extent as well after surprisingly good July retail sales data, and better than expected public finance numbers yesterday morning as it continues to hold its own, close to 11 month highs against a basket of currencies.

The Euro continues to be buffeted by sovereign debt fears with Greece due to receive its next tranche of aid shortly, but beset with concerns about the damage the current austerity program is doing to the Greek economy. On other hand, the German Bundesbank revised up the growth forecast for the German economy by 1.1% for 2010 to 3%.

EURUSD – another day and another peak around 1.2900 and another failure to break above it. The prevailing range between 1.2750 and the resistance levels around 1.2950 continues to be the way of things for now, but while below 1.2980 downside pressures should continue to predominate.

Trend line support from the 1.1880 lows at the 1.2750/60 area is the first line of support for the moment, while just below that last week’s lows at 1.2735/40 should also bring additional buying interest.

The bigger level remains 1.2605, the 50% retracement of the 1.1880/1.3335 up move, which remains the longer term objective.

Without over labouring the point, the importance of the bearish engulfing candle last week on the weekly charts remains a significant sell signal, and while below 1.3000 the potential remains for further losses towards 1.2450 as a precursor to a revisit of the 1.2150 area.

GBPUSD – the Pound tried and failed yet again to break below the 200 day moving average at 1.5490 yesterday helped in no small part by the better UK economic data.

Another sharp rebound ensued stopping just shy of the 1.5700 area again at 1.5670. This failure to regain the 1.5700 area and break through the 1.5730 resistance continues to weigh on Sterling, as do the lower highs of the past 3 days.

Last weeks bearish engulfing candlestick remains the key factor weighing on the Pound, and a break and close below the 200 day moving average would be negative for Sterling and open up the risk for further losses towards 1.5320.

This would be a 38.2% retracement of the up move from the 1.4230 lows to the recent highs around 1.6000. Expect to find resistance on any rallies towards 1.5730 and 1.5820.

EURGBP – a brief dip below 0.8200 yesterday was followed by a sharp rally back towards 0.8245. However, while below the larger resistance around the 0.8300/10 level, the momentum favours a move lower to re-target the 0.8170 area initially.

A test towards the previous lows around the 0.8065/70 level remains the preferred scenario while below the 0.8300/10 resistance.

USDJPY – talk yesterday that the Bank of Japan may further ease monetary policy weakened the Yen slightly initially; however the poor US data sent the Dollar spinning lower towards its 15 year lows briefly dipping below 85.00 towards the fairly solid support down around the 84.70/80 level.

There still appears to be a reluctance to push the Dollar aggressively lower for fear of some sort of intervention, verbal or otherwise.

Only a rally beyond the 87.00 level, the May flash crash lows could prompt an unwinding of Yen long positions. The broad range between 84.70/80 and 86.25 appears to be the way of it for now and any move towards 80.00 could well be long and drawn out.

By Michael Hewson, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

Investors continue to remain cautious with respect to risk with gold continuing to rise against the US Dollar to six week highs, as well as pushing higher against the single currency.

Stock markets are also continuing to trade listlessly on low volume in a fairly broad range.

In Japan, reports that the Bank of Japan will be considering steps to further ease monetary policy at an emergency meeting in Tokyo today have weakened the Yen and given the Nikkei 225 a boost. The most likely course of action could well be in the form of expanding the size of the stimulus package put in place last December.

The Pound will be in focus again today after yesterday’s Bank of England minutes saw the Pound rally from its lowest point in over a week. It was thought that Andrew Sentance might have changed his stance on interest rates given the down-beat assessment of the UK economy given by Mervyn King last week. However, that was always going to be unlikely given the current stickiness of inflation, and the confirmation of that saw a Sterling rebound.

Today’s UK economic data will keep the Pound firmly in the spotlight with the release of the latest retail sales figures and public finances data for July.

July retail sales (ex fuel) are expected to fall from a month on month 1% in June, to a rise of 0.2% in July, as consumers retrench ahead of concerns about future tax rises and spending cuts. The year on year figure is expected to fall from 3.1% to 1.8%.

Public finance data is expected to show a fall from the £14.5bn in June to only £4.8bn in July.

In the US the only data of note is the weekly jobless claims which are expected to come in around 480k which is a slight decrease of last weeks 484k, and the Philadelphia Fed for August, which is expected to show a slight increase to 7.5, from July’s figure of 5.1.

EURUSD – the single currency continues to find the air rather thin above 1.2900, making a slightly higher high at 1.2922 before retreating lower again.

However while below the larger resistance level between 1.2950 and 1.2980 downside pressures should continue to predominate.

The break below the 1.2820 level in Asia this morning now opens up the 1.2750/60 area which is trend line support from the 1.1880 lows.

Last week’s lows at 1.2735/40 should also offer some support while 1.2605, the 50% retracement of the 1.1880/1.3335 up move, remains the longer term objective.

We still need to be aware of the importance of the bearish engulfing week on the weekly candle charts which remains a significant sell signal, and while below 1.3000 the potential remains for further losses towards 1.2450 as a precursor to a revisit of the 1.2150 area.

GBPUSD – yesterday’s failure to break below the Pounds last line of defence at the 200 day moving average at 1.5495 sparked a sharp rebound towards 1.5700 yesterday. However, a failure to sustain a move back above 1.5710 through the 1.5730 resistance continues to weigh.

The bearish engulfing week candlestick remains the key factor weighing on the Pound, and a break and close below the 200 day moving average would be negative for Sterling. In fact it would open up the risk for further losses towards 1.5320 which would be a 38.2% retracement of the up move from the 1.4230 lows to the recent highs around 1.6000. Expect to find resistance on any rallies towards 1.5730 and 1.5820.

EURGBP – the failure to break through the larger resistance around the 0.8300/10 level prompted a sharp pull back in the single currency. However it needs to sustain a break below 0.8220 to re-target the 0.8170 area initially.

A test towards the previous lows around the 0.8065/70 level remains the preferred scenario while below the 0.8300/10 resistance.

USDJPY – the Yen spread trading market remains stubbornly within the broad range outlined in the last two days treading water between the resistance highs around the 86.25 level and the fairly solid support down around the 84.70/80, as well as short term support around the 85.20 area.

Traders continue to remain cautious about whether Japanese officials will sanction steps to stem the Yen’s recent rise.

Only a rally beyond the 87.00 level, the May flash crash lows could prompt an unwinding of Yen long positions. In the absence of any physical intervention, there remains the possibility of seeing a re-test towards the 1995 levels just below 80.00.

By Michael Hewson, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

A return of risk appetite yesterday saw mixed fortunes for the Euro and Pound forex spread betting markets.

The single currency rallied on the back of relief over the success of Irish and Spanish debt auctions, which saw the Irish auction total bids of €5.1bn on an auction of €1.5bn.

The average yield was also slightly lower, while Spain also managed to get all of its €5.5bn worth of debt away.

In another boost to risk US Industrial production for July also helped boost sentiment, surprising to the upside with a rise of 1% against an expectation of 0.5%.

Given how poor recent US data has been this was a rare silver lining amongst a lot of recent clouds, however investors seized upon it as evidence that things weren’t as bad in the struggling US economy as previously thought.

On the flip side Sterling took a hit, dropping back from its recent highs on its trade weighted index as CPI inflation data showed a decline of -0.2% for July.

However, on a year on year basis it remains stubbornly above the 3% level necessitating another letter from the governor of the Bank of England to the Chancellor of the Exchequer.

The biggest concern remains food inflation which is up 3.4% annually, and given recent rises in soft commodity prices, which have yet to filter through the supply chain, is unlikely to come down quickly anytime soon.

Today’s release of the minutes of the August Bank of England meeting is likely to show divergent views on how to deal with the current problems.

Andrew Sentance is likely to be on his own in the hawk camp, favouring a rise in rates. On the other hand the others may veer between holding rates and QE as it is, and the more dovish wanting to recommence QE if the economy continues to show signs of weakness.

EURUSD – the single currency continues to pare back its recent losses breaking back above 1.2900 yesterday as some risk appetite began to return. However while below the larger resistance level above the 1.2950 area at 1.2980 downside pressure should continue to predominate.

The next support level sits around 1.2735/40 which is trend line support from the 1.1880 lows, as well as last week’s lows, and then at 1.2605, 50% retracement of the earlier mentioned move. The bearish engulfing week on the weekly candle charts remains a significant sell signal and while below 1.3000 the potential remains for further losses towards 1.2450 as a precursor to a revisit of the 1.2150 area.

GBPUSD – a failure to sustain a move back above 1.5710 through the 1.5730 resistance saw the Pound retreat yesterday after the weaker CPI data saw the Pound slide back. It has so far managed to hold above the key support levels around the this weeks low’s at 1.5535 as well as the 1.5550 area which was the 50% retracement level of the 1.6880/1.4230 down move, on the way back up.

The bearish engulfing week spread betting candlestick remains the key factor weighing on the Pound but it does continue to hold above the support levels between 1.5510 and the 1.5550 area.

A break and close below the 200 day moving average would be negative for Sterling and open up the risk for further losses towards 1.5320 which would be a 38.2% retracement of the up move from the 1.4230 lows to the recent highs around 1.6000. Expect to find resistance on any rallies towards 1.5730 and 1.5820.

EURGBP – a resurgent Euro yesterday saw the single currency break above its previous peaks around the 0.8240 level to trigger losses back towards the larger resistance around 0.8300/10 level.

A test towards the previous lows around the 0.8065/70 level remains the preferred scenario while below the 0.8300/10 resistance.

There should now be interim support around the 0.8230 area and we would need to see a break below that to re-target 0.8170 initially.

USDJPY – not really too much to add from yesterday’s comment as the Dollar continues to tread water between the resistance highs around the 86.25 level and the fairly solid support around the 84.70/80 area as traders remain concerned about whether Japanese officials will sanction steps to stem the Yen’s recent rise.

Only a rally beyond the 87.00 level, the May flash crash lows could prompt an unwinding of Yen long positions. In the absence of any physical intervention, there is a good chance of seeing a re-test towards the 1995 levels just below 80.00.

By Michael Hewson, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

The US Dollar gave back some of its recent gains yesterday despite continued disappointing US economic data, as the single currency looked to regain some of its equilibrium after the battering of the last few days.

Traders decided to shrug off disappointing US manufacturing and housing data that pointed to continued weakness in the economy.

However despite this abatement in risk aversion the Japanese Yen, Swiss Franc and gold have continued to look strong as FX spread betting safe haven plays. This is especially true against the Euro, which continues to be dragged down by sovereign debt concerns and fears about the European banking sector. Irish and Greek CDS spreads have continued to widen as their debt insurance continues to rise in cost.

The Pound spread betting market also had a bit of an up and down day yesterday after weak housing data saw the Pound slip early on.

However it continues to remain strong on its trade weighted index continuing to make fresh 11 month highs.

UK inflation data for July out today will be a key test for Sterling as well as for the Bank of England’s credibility with respect to its inflation forecasts. What isn’t in doubt is that Mervyn King will probably have to pen another letter to the Chancellor of the Exchequer about another missed inflation forecast.

The hope is that the recent trend in prices continues to decline with expectations for CPI to show a month on month decline of -0.2% and a year on year figure of 3.1%, while RPI is expected to be flat month on month, with a year on year figure remaining at 5%.

In the US producer price data for July is due out with expectations of an increase in the month on month figure from last months -0.5% decline to a figure of +0.2%.

US housing starts will also be closely scrutinised after yesterday’s disappointing National Association of Home Buyers index data for August, which showed activity at its lowest levels since March 2009 at 13.

US Industrial production data for July is also expected to show an increase of 0.5% for July, up from June’s figure with capacity utilisation showing a figure of 74.5%.

In Australia the Reserve Bank of Australia released its August meeting minutes and was shown to be fairly positive about the Australian economy, leaving its growth forecasts of between 3.75% and 4% unchanged. Although it did acknowledge the uncertainty in the global outlook and, as such, it remained confident that rates would remain unchanged in the short term.

EURUSD – not unexpectedly given the strength of last week’s declines we have seen the single currency sustain a minor rebound back above $1.2850 towards $1.2900. There is a larger resistance level above the $1.2950 area at $1.2980 and while below here downside pressure should continue to predominate.

The next support level sits around $1.2715/20 which is trend line support from the $1.1880 lows, and then at $1.2605, 50% retracement of the earlier mentioned move. The bearish engulfing week on the weekly candle charts is a significant sell signal and could well signal further losses towards $1.2450 as a precursor to a revisit of the $1.2150 area.

GBPUSD – yesterday’s rally off the $1.5535 lows saw the Pound rally back towards $1.5700 but fall a little short of the $1.5730 resistance yesterday.

Last weeks bearish engulfing week candlestick will continue to weigh on the Pound but it does continue to hold above the support levels between $1.5510 and the $1.5550 area.

The rising trend line support, now around $1.5590/00, from the June lows at $1.4350, was breached briefly yesterday and though it broadly remains intact for now its longer term resilience has to be questioned. The bigger levels remain between the old 50% Fibonacci retracement level at $1.5550, while below that at $1.5505 there is the 200 day moving average.

A break and close below the 200 day moving average would be negative for Sterling and open up the risk for further losses towards $1.5320 which would be a 38.2% retracement of the up move from the $1.4230 lows to the recent highs around $1.6000. Expect to find resistance on any rallies towards $1.5730 and $1.5820.

EURGBP – having broken below £0.8200 the Euro continues to look weak against the Pound as it looks to head towards the previous lows around the £0.8065/70 level.

It has found some intraday support around the £0.8170 area, however while below resistance around the £0.8240 level, we should expect to see further declines. Only a move beyond the £0.8300/10 level would call into question a re-test of the lows.

USDJPY – the Dollar has started to tread water between the resistance highs around the ¥86.25 level and the fairly solid support around the ¥84.70/80 area as traders remain concerned about what steps Japanese officials may take with respect to any further Yen gains.

Only a rally beyond the ¥87.00 level, the May flash crash lows could prompt an unwinding of Yen long positions. Any physical intervention looks unlikely until we get a little nearer the ¥80.00 area.

In the absence of any physical intervention, there is a good chance of seeing a re-test towards the 1995 levels just below ¥80.00.

By Michael Hewson, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

At the end of last week all three of Germany, France and Spain posted better than expected Q2 GDP figures with Germany posting a 2.2% gain, its best performance in 23 years, against an expectation of 1.3%.

Even euro zone GDP came in higher than expected at 1% boosted by the lower single currency, and surging export growth out of Germany.

Given these positive figures it wasn’t sufficient to stop the single currency tumbling back from its recent highs as the US dollar snapped 9 weeks of consecutive declines last week.

It did so in some style, closing at its highest level since the beginning of July against a basket of currencies, posting its biggest weekly gain in nearly 2 years, as a sharp decline in risk appetite saw investors pile out of risky assets on the back of concerns about US economic recovery, and downbeat assessments of the economic outlook by the Federal Reserve, Bank of England and ECB.

Fears about sovereign debt problems within the Euro zone continue to weigh on sentiment with spreads on Spanish and Greek bonds against German bonds widening to their largest levels since June and July, while weak demand at some Italian bond auctions on Friday also weighed.

Elsewhere in the Forex spread betting markets, the pound also had a pretty good week on its trade weighted index despite its declines against the resurgent dollar, closing at its highest levels in 11 months at 82.55, but still seemingly unable to breach this series of highs, with any conviction.

Worries about the recent strength of the yen continues to worry traders, especially in light of today’s latest Japanese GDP figures for Q2 which showed that the recent climb in the yen is having a negative effect on export growth. In contrast to other G7 countries Japan grew only 0.1% in the last quarter, against an expectation of 0.6%, and the figures look unlikely to improve, if the recent climb in the yen continues increasing the pressure on Japanese officials to take steps to stem the rise.

In Europe CPI for July is expected to show that inflationary pressures remain very benign with a figure of -0.4%.

In US data out today Empire manufacturing for August is expected to show a slight increase from July’s low figure of 5.08, with an increase to 8.25.

EURUSD – the single currency posted its first weekly decline in 7 weeks last week and in the process wiped out the gains of the previous three weeks, as the currency went into full reverse, posting a bearish candlestick engulfing week in the process, and closing below its 38.2% retracement of the up move from the lows at 1.1880 to the 1.3335 highs at 1.2775. For spread betting, the next support level lies around 1.2690/00 which is trend line support from the 1.1880 lows, and then at 1.2605, 50% retracement of the earlier mentioned move. We could see rallies back towards 1.2840 and 1.2950 but while below these levels downside pressure predominates.

The bearish engulfing week on the weekly candle charts is a significant sell signal and could well signal further losses towards 1.2450 as a precursor to a revisit of the 1.2150 area.

GBPUSD – like the euro the pound suffered a significant reversal against the dollar last week, though not to the same extent. Nevertheless last weeks weekly close below 1.5710 signifies a significant sell signal on the weekly charts in the form of a bearish engulfing week candlestick. Unlike the euro the pound has just about managed to stay above the confluence of support levels between 1.5510 and the 1.5550 area, after making new lows at 1.5535 this morning.

Firstly there is the rising trend line support around 1.5550/60, from the June lows at 1.4350 which though breached briefly remains intact. Then there is the old 50% Fibonacci retracement level at 1.5550, while below that at 1.5511 there is the 200 day moving average.

A break of all three of these support levels, which looks increasingly likely over the next week or so, would be negative for sterling and open up the risk for further losses towards 1.5320 which would be a 38.2% retracement of the up move from the 1.4230 lows to the recent highs around 1.6000. Expect to find resistance on any rallies towards 1.5680 and 1.5730.

EURGBP – the euro continues to weaken against the pound breaking below 0.8200 and heading towards the previous lows around the 0.8065/70 level.

Expect to find resistance around the 0.8240 level and behind that at the 0.8300/10 level.

USDJPY – the dollar again managed to rebound strongly at the end of last week as traders covered short positions on the back of a number of statements from Japanese officials expressing concern over recent yen gains.

However any rallies continue to struggle anywhere near to, or above the 86.25 area, and behind that at 87.00, the May flash crash lows. Any physical intervention looks unlikely until we get a little nearer the 80.00 area.

There does appear to be some fairly good support around the 84.70/80 area but it would seem a test of the 1995 lows around 79.75 is only a matter of time in the absence of any intervention.

By James Hughes, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

Where to Spread Bet on Sterling/Yen

You can trade FX spread betting markets such as Sterling/Yen with spread betting companies like:

• Financial Spreads
• GFT
• Spreadex

How to Spread Bet on Sterling/Yen

If you decide to spread bet on a foreign exchange pair such as the Sterling/Yen then, looking at a spread trading site like FinancialSpreads.com, you might find a spread betting price of ¥133.62 – ¥133.70.

That means you can spread trade on the Sterling/Yen to go above ¥133.70 or below ¥133.62.

If you are spread trading, you bet on every unit the market rises or falls. With the Sterling/Yen market a unit is ¥0.01 of the forex pair’s price movement.

With this example, you could choose to spread bet £2 for every ¥0.01 the Sterling/Yen rises or falls.

 
Spread Betting on Sterling/Yen to Rise
 

If you bought the Sterling/Yen at ¥133.70 and the forex pair went up then the spread could change to ¥134.44 – ¥134.52. If that were to happen, you could close your trade for a profit, if so you would sell at ¥134.44.

P&L = (final price of the market – opening price of the market) x stake per ¥0.01
P&L = (¥134.44 – ¥133.70) x £2 per ¥0.01 stake
P&L = ¥0.74 x £2 per ¥0.01
P&L = £148 profit

Financial markets also move down, if the market had decreased to, for example, ¥133.03 – ¥133.11, you might want to close your spread bet to limit your losses. In that case, you would sell your spread bet at ¥133.03.

So, with the same £2 per ¥0.01 stake:

P&L = (final price of the market – opening price of the market) x stake per ¥0.01
P&L = (¥133.03 – ¥133.70) x £2 per ¥0.01 stake
P&L = -¥0.67 x £2 per ¥0.01
P&L = -£134 loss

 
Spread Betting on Sterling/Yen to Fall
 

A benefit of spread betting is that you can short the markets.

At the beginning of this example, the spread betting price was ¥133.62 – ¥133.70.

If you were to sell the Sterling/Yen at ¥133.62 and the forex pair decreased then the spread might become ¥132.84 – ¥132.92. If so, you might want to close your bet for a profit by buying at ¥132.92.

P&L = (opening price of the market – final price of the market) x stake per ¥0.01
P&L = (¥133.62 – ¥132.92) x £2 per ¥0.01 stake
P&L = ¥0.70 x £2 per ¥0.01
P&L = £140 profit

Nevertheless, if the market had moved up to ¥134.17 – ¥134.25, you might want to close your trade to prevent further losses. If this were the case, you would buy your spread bet at ¥134.25.

Therefore, with the same £2 per ¥0.01 stake:

P&L = (opening price of the market – final price of the market) x stake per ¥0.01
P&L = (¥133.62 – ¥134.25) x £2 per ¥0.01 stake
P&L = -¥0.63 x £2 per ¥0.01
P&L = -£126 loss

Sterling/Yen Rolling Daily spread betting prices accurate as of 13-Aug-10.

FX Spread Betting Guide

• Where can I Spread Bet on FX Markets?
• Where can I find Real-time Spread Betting Prices for FX Markets?
• Where can I find Live Charts / Candlestick Charts for FX Markets?
• How do you Spread Bet on FX Markets to Go Up?
• How do you Spread Bet on FX Markets to Go Down?

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.

Where to Spread Bet on Sterling/Dollar

You can trade FX spread betting markets such as Sterling/Dollar with spread betting companies like:

• Financial Spreads
• City Index
• IG Index

How to Spread Bet on Sterling/Dollar

Should you decide to spread trade on a foreign exchange pair such as the Sterling/Dollar then, looking at a site like FinancialSpreads.com, at the time of writing you would find a spread of $1.5590 – $1.5592.

Therefore, you can bet on the Sterling/Dollar to increase higher than $1.5592 or decrease lower than $1.5590.

When spread trading, you bet on every unit the market moves up or down; with the Sterling/Dollar market a unit is $0.0001 of the forex pair’s price movement.

For this instance, you might choose to bet £3 for every $0.0001 the Sterling/Dollar rises or falls.

 
Buying – Spread Betting on Sterling/Dollar to Increase
 

If you were to go long of the Sterling/Dollar at $1.5592 and the forex pair increased then the spread could change to $1.5639 – $1.5641. Assuming this was the case, you could close your spread bet at $1.5639.

P&L = (settlement value of the market – opening value of the market) x stake per $0.0001
P&L = ($1.5639 – $1.5592) x £3 per $0.0001 stake
P&L = $0.0047 x £3 per $0.0001
P&L = £141 profit

Markets can also fall, if the market had decreased to, for example, $1.5553 – $1.5555, you may decide to close your trade to limit your losses. Therefore, you would sell the market at $1.5553.

With the same £3 per $0.0001 stake:

P&L = (settlement value of the market – opening value of the market) x stake per $0.0001
P&L = ($1.5553 – $1.5592) x £3 per $0.0001 stake
P&L = -$0.0039 x £3 per $0.0001
P&L = -£117 loss

 
Selling – Spread Betting on Sterling/Dollar to Decrease
 

One of the advantages of placing a spread trade is that investors can go short of the markets.

Initially, the spread betting price was $1.5590 – $1.5592.

If you were to sell the Sterling/Dollar at $1.5590 and the forex pair decreased then the spread could become $1.5544 – $1.5546. If this were the case, you might decide to close your spread bet for a profit at $1.5546.

P&L = (opening value of the market – settlement value of the market) x stake per $0.0001
P&L = ($1.5590 – $1.5546) x £3 per $0.0001 stake
P&L = $0.0044 x £3 per $0.0001
P&L = £132 profit

Financial markets also move up, if the market increased to, for example, $1.5625 – $1.5627, you may want to close your bet to limit your losses. If that happened, you would buy back at $1.5627.

You would close your bet with the same £3 per $0.0001 stake:

P&L = (opening value of the market – settlement value of the market) x stake per $0.0001
P&L = ($1.5590 – $1.5627) x £3 per $0.0001 stake
P&L = -$0.0037 x £3 per $0.0001
P&L = -£111 loss

Sterling/Dollar Rolling Daily market correct as of 13-Aug-10.

FX Spread Betting Guide

• Where can I Spread Bet on FX Markets?
• Where can I find Real-time Spread Betting Prices for FX Markets?
• Where can I find Live Charts / Candlestick Charts for FX Markets?
• How do you Spread Bet on FX Markets to Go Up?
• How do you Spread Bet on FX Markets to Go Down?

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.

If this week’s intention by central banks was to reassure markets that they are in control of the economic situation with their respective updates on the outlook for growth and inflation, then the recent market reaction would seem to suggest that they have failed miserably.

Fears of a double dip and weak economic data has continued to weigh on investor sentiment over the past 24 hours, not only in the US where US weekly jobless claims again disappointed, coming in at 482k against an expectation of 465k, but in Europe as well as sovereign debt fears start to reassert themselves in the markets psyche.

Greece’s economy shrank much more than expected in Q2 by 1.5%, more than economists had predicted, while unemployment climbed to 12%, while euro zone industrial output declined 0.1% in June, against an expectation of a rise of 0.6%.

This has prompted some fears that euro zone Q2 GDP data due out this morning could be worse than expected.

Expectations are for growth of 0.7%, up from a Q1 figure of 0.2%. German, French and Spanish Q2 GDP figures are also being released this morning with expectations for rises of 1.3%, 0.4% and 0.1% respectively.

In the FX spread betting markets, the pound had a mixed day yesterday failing for the fourth time in the last two months to break above its 11 month resistance highs of 82.55 against a basket of currencies, while reports that the Bank of Japan was checking rates in dollar yen saw the yen weaken from its recent 15 year highs at 84.72 back above 85.00. Japanese policymakers have also been making noises expressing their concern about the rising yen and the effect on the Japanese economy.

US data out today includes advance retail sales data for July where a rise of 0.5% is expected after the decline of 0.5% in June, while CPI data is expected to remain benign with a rise of 0.2% expected in July after the 0.1% decline in June.

EURUSD – the single currency continued its falls yesterday falling below 1.2830/40 before bouncing off support at 1.2775, which is 38.2% retracement of the up move from the lows at 1.1880 to the 1.3335 highs. The subsequent rebound has seen the euro recover to 1.2870 but downside pressure still dominates while below the 1.2950 level.

A break of 1.2775/80 support would open up a move towards 1.2605, 50% retracement on a break of 1.2680 trend line support from the 1.1880 lows.

As explained yesterday the single currency needs to close this week above 1.3050, or we will see a significant sell signal (bearish engulfing week) on the weekly candle charts which would be a precursor to a revisit of the 1.2150 area.

GBPUSD – the pound continues to look heavy against the dollar but so far it has managed to stay clear and above the 1.5520/50 area where a confluence of support levels come into play. This can also be seen in the spread betting charts.

Firstly there is rising trend line support around 1.5540/50, from the June lows at 1.4350. Then there is the old 50% Fibonacci retracement level at 1.5550, while below that at 1.5516 there is the 200 day moving average.

A break of all three of these support levels would be negative for sterling an open up the risk for further losses towards 1.5320 which would be a 38.2% retracement of the up move from the 1.4230 lows to the recent highs around 1.6000.

Like the Euro, a weekly close below 1.5710 will signify a significant sell signal on the weekly charts or bearish engulfing week.

EURGBP – the euro continues to look weak hitting a low of 0.8205 yesterday before rebounding strongly.

Sentiment in the forex spread betting still remains negative while below 0.8300/10 resistance and while below these recent highs expect to a move towards the lows at 0.8065/70 while resistance should come in around yesterdays highs around the 0.8270 level.

USDJPY – the dollar managed to rebound strongly yesterday on fears of possible intervention as a number of statements from Japanese officials prompted profit-taking on recent yen gains. However any rallies should struggle around the 86.25 area and behind that at 87.00, the May flash crash lows. Any physical intervention looks unlikely until we get a little nearer the 80.00 area.

There does appear to be some fairly good support around the 84.70/80 area but it would seem a test of the 1995 lows around 79.75 is only a matter of time in the absence of any intervention.

By James Hughes, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

On the FX spread betting markets, the US Dollar has continued to rebound from its recent lows against a basket of currencies posting its largest one day gain in almost two years as fears about the outlook for global growth start to weigh on sentiment.

This has seen risk appetite diminish sharply and the greenback has benefited from its status as a flight to safety.

The downbeat forecast from the Federal Reserve on Tuesday was followed yesterday by a similar one from the Bank of England, and combined with fears about Chinese growth. The markets got a perfect storm of risk aversion and apprehension as equities fell and the Dollar surged.

Sentiment wasn’t improved any further when US trade balance figures for June, which came in way above expectations at $49.9bn against an expectation of $42.1bn. Exports were especially disappointing, dropping by 1.3%.

The Pound, despite the downbeat assessment of the economic outlook by the Bank of England has had a rather mixed 24 hours, down against the US Dollar, but up against the Euro, as employment data yesterday showed that the UK economy added jobs in the last 3 months at its fastest pace since 1989.

The Yen touched 15 year highs against the Dollar yesterday but slipped back as Finance Ministry and Bank of Japan officials expressed concern about the Yen’s rise and met up to discuss the situation in Tokyo this morning. The last time the Japanese intervened was in 2004 and if the Yen continues to rise speculation will increase that they will do so again, especially if it starts to get anywhere near its 1995 levels.

The Australian Dollar also fell as Australian unemployment rose more than expected in July to 5.3% against an expectation of 5.1%.

Today’s weekly jobless figures in the US are unlikely to lift the gloom with expectations of a slight fall from last week’s surprise 479k to 465k this week.

EURUSD – the failure to get back above 1.3125 yesterday proved to be the catalyst for the single currency to decline rapidly and in the process plummet through 1.2950 before finding support around the longer term support area around the 1.2840 level.

The move towards 1.3510, the 50% retracement area of the 1.5145 to 1.1880 down move looks highly unlikely to happen now or anytime soon, as the top may well now be in at 1.3335.

The single currency needs to close this week above 1.3050, or we will see a significant sell signal (bearish engulfing week) on the weekly candle charts, while next support levels lie around 1.2830/40, then 1.2775, 38.2% retracement of the up move from 1.1880 to the 1.3335 highs, as well as 1.2670 trend line support from the 1.1880 lows.

GBPUSD – the failure to overcome 1.5870 ultimately proved to be the Pound spread betting market’s undoing and while the decline hasn’t been as rapid as the single currency’s its no less significant for that.

The break below 1.5710 now opens up the move towards the 1.5520/50 area where the 200 day moving average sits alongside long term rising trend line support levels, remain also around 1.5520, from the June lows at 1.4350.

Like the Euro, a weekly close below 1.5710 will signify a significant sell signal on the weekly charts or bearish engulfing week.

EURGBP – the Euro got caught in the backwash of risk aversion dropping through the 0.8255 lows of last week and the 0.8245 61.8% retracement level of the up move from 0.8065 to the 0.8520 double top. This move lower now opens up the lows at 0.8065/70 while resistance should come in around the 0.8255/60 level.

USDJPY – the increasing risk aversion trade continues to benefit the Yen at the expense of the Dollar as it hit its lowest level in 15 years yesterday touching 84.72 before rebounding. There does appear to be some support around the 84.70/80 area but it would seem a test of the 1995 lows around 79.75 is only a matter of time.

Resistance remains around the 86.25 area and behind that at 87.00, the May flash crash lows. Any intervention looks unlikely until we get a little nearer the 80.00 area.

By James Hughes, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.

The US dollar’s recent gains throughout the course of yesterday were rather sharply pared back after the Fed’s statement last night.

As expected the Fed downgraded its outlook for the US economy calling investment in commercial property “weak” and making note that employers “remain reluctant to add to payrolls”.

The lone dissenter remained President of the Kansas City Fed, Thomas Hoenig who insists that the economy needs no further help while it is still growing.

In an attempt to reinvigorate the US economy’s faltering recovery the Fed said it plans to buy long-dated US Treasuries in an attempt to boost growth in the US economy and in the process maintain the vast amounts of money it has pumped into the US economy during the financial crisis, by using the proceeds from its first tranche of stimulus. This decision to reinvest the proceeds of previous stimulus is probably the least it could have done, but it also leaves the door open for them to go further if necessary.

The US dollar slid back as a result, however these losses were short lived as data out of China showed that the Chinese economy continued to slow with industrial output easing in July to its lowest level in 11 months, while inflation rose to its highest level in 21 months to 3.3%. Retail sales also slipped back during July rising by 17.9% instead of the 18.5% expected, declining from a rise of 18.3% the previous month. These fears of a continued slowdown in China could weigh on risk appetite in the short term and have seen the dollar continue to rebound.

In data out today the US trade balance for June is expected to show a deficit of $42.1bn.

In FX spread betting markets the UK the pound could well come under pressure as the Bank of England unveils its quarterly inflation review, where it is likely that the Bank will have to raise its inflation forecasts, and cut its growth forecasts for 2011 and 2012.

Furthermore, Bank of England Governor Mervyn King, when he speaks on matters of the economy, has recently had a tendency to talk the pound lower, which could provoke further weakness.

At the same time the unemployment data for July is also expected to be announced with claimant count unemployment expected to fall by 17,000 in July, which would bring the number of unemployed down to a 17-month low of 1.44m. The ILO unemployment rate is expected to stay steady at 7.8%.

EURUSD – yesterday’s break of trend line support and fall below the 1.3125, 38.2% level Fibonacci level, and previous breakout level saw a sharp slide to 1.3075. However the Fed statement stopped the euro decline in its tracks and sent the single currency back above 1.3125 again. While the single currency is able to close above 1.3125 the likelihood of a rise towards 1.3510, the 50% retracement area of the 1.5145 to 1.1880 down move, remains on the cards.

A sustained move below 1.3125 is needed to see further unwinding of stops towards support around the 1.2950 level, a break of which would open a test towards the 1.2840/50 level.

GBPUSD – the pound continues to look a little wobbly despite the late rally after yesterday’s Fed meeting. In the spread betting, the 1.6000 level remains the key barrier for sterling bulls despite three attempts to break above it.

Yesterday’s weakness saw the pound break below the 1.5810/20 level and touch 1.5710 before rebounding sharply above 1.5900. The pound needs to close back above the 1.5870 area to diminish the risk of further declines otherwise the risk remains for a deeper correction towards the 1.5520/50 area.

A break above the 1.6000 level is still possible but it needs to get back above the 1.5870 level pretty quickly.

Long term rising trend line support levels, remain around the 1.5490/00 area, from the June lows at 1.4350.

EURGBP – the cross continued to trade yesterday in the narrow upward channel identified yesterday from the 0.8255 lows of last week with support around the 0.8300/05 level and resistance around 0.8355/60, however this morning it broke to the downside, even though it briefly tried to trade above it.

The key target remains 0.8245 61.8% retracement level of the up move from 0.8065 to the 0.8520 double top, while below the 0.8410 level.

USDJPY – the yen continues to ping around within the confines of the range identified yesterday pushing back from the 86.25 break level which remains a key resistance, and the recent lows near 85.00 and the key support around 84.80.

The key support remains around last years lows at 84.80, a break of which would then look to target the 1995 lows below 80.00.

A break above 86.25 targets resistance at 87.00 the May flash crash low.

By James Hughes, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.