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FX Day Trading - 8 December 2011
ECB rate cut likely today
But what else?
No change expected to BoE Bank Rate
Images taken a week ago by the Heliospheric Imager-1 space telescope show a big solar flare. As the flare passes Mercury it appears to reveal a planet-sized object.
UFOlogists claim it is a massive Romulan spaceship whose cloaking system was temporarily disrupted by the flare. Physicists at the laboratory responsible for analysing Imager-1's pictures say it is a quirk of the way the images are generated and simply shows Mercury's position the previous day.
Conspiracy theorists reckon it is a giant thermo-nuclear euro, sent up there by Angela Merkel and Nicolas Sarkozy as a threat and programmed to destroy the solar system if the summit meeting does not go their way.
Financial spread betting investors - and quite possibly half of the participants - do not know what to expect from the discussions in Brussels.
The uncertainty is characterised by two adjacent headlines on Bloomberg's screen this morning: "Euro Gains Before Leaders' Debt Crisis Summit, ECB Interest Rate Statement" and "Euro Weakens Amid Concern Region's Leaders May Fail in Debt Crisis Fix".
And it is not just the EU summit looming over the euro. The European Central Bank will reveal today what, if anything, it intends to do to help resolve the debt and liquidity crisis.
There is a general assumption that the Refinancing Rate will go down from 1.25% to 1%. However, investors expect Mario Draghi and his Governing Council to come up with more than that; at a minimum, a more extensive provision of liquidity to Euroland's commercial banks.
The ECB's hands are tied on the matter of government bond purchases, not least because of the opposition of Chancellor Merkel and the Bundesbank.
It is possible, though, that Sig. Draghi might set out his stall for a more interventionist approach provided EU leaders reach agreement on greater fiscal integration.
As usual, the meat of the matter will be revealed not in the three-line statement at 12:45 but in the press conference that starts 45 minutes later.
The Bank of England's Monetary Policy Committee announces its December decision at midday.
No change is expected to the 0.5% Bank Rate or the £275bn asset purchase programme, although there could be an announcement about the provision of liquidity to banks.
There was no change overnight to the Reserve Bank of New Zealand's 2.5% Cash Rate or the Bank of Korea's 3.25% Base Rate.
The last 24 hours' economic statistics were easily overshadowed by developments – or at least the anticipation of them – in Euroland.
German industrial production went up by 0.8% in October; in Britain it went down by -0.7%.
The NIESR estimated that Britain's gross domestic product grew by 0.3% in the three months to November.
On today's ecostat agenda there is absolutely nothing to distract from the ECB and the Brussels talks.
Even if there is no opportunity to follow the ECB press conference live, bear in mind it begins at 13:30 and runs for about an hour. The forex spread betting market is on edge and any surprises from Sig. Draghi would feed FX volatility.
That could mean spikes and troughs and opportunities to spread bet outside recent ranges.
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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.
'Forex Spread Betting Market on Edge Ahead of ECB Rate Decision', Article by Moneycorp, last update: 8-Dec-11
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