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FX Day Trading - 20 December 2011
ECB president reiterates his position
No large scale bond buying
And no doubts about the euro
Today's Daily Telegraph reports that luxury tat manufacturer Swarovski has teamed up with INAX, a leader in the great white telephone industry, to produce a crystal-encrusted water closet.
It was developed as a publicity piece for a Japanese furnishing company, Lixil. Kazuo Sumimiya, a director of the firm, said the posh potty was designed to please Kawaya Kami, the Japanese toilet god. It has a street value of ¥10m (€100k), roughly the amount that every family in Greece owes to the IMF.
And that number is set to go up as more tranches of bailout money are dished out. To keep the scheme ticking over, EU leaders agreed two weeks ago to advance another €200bn to the IMF, which might or might not be spent on Eurozone government bonds.
Now, however, the number is looking more like €150bn, partly because Downing Street believes it is not Britain's job to inflate the price of Italian bonds and partly because a couple of other EU members feel the same way.
European Central Bank President Mario Draghi reckons it is not the job of the ECB either. Buying government bonds on any more than a modest, market-calming scale would, he said, "negatively affect the credibility of our institution".
In his testimony to the European parliament Sig. Draghi also said, in half a dozen different ways, that austerity in Euroland would mean a shrinking economy. But he is not worried about the euro; "I have no doubt whatsoever about the strength of the euro, about its permanence, about its irreversibility." Well that's a relief.
With - or despite - the input from Sig. Draghi, the euro had a comfortable day on Monday, holding steady against the US dollar, the franc and the yen and losing only a little ground to the pound.
GBP/EUR continued to struggle fruitlessly with technical resistance that has held it back for nearly a week. The commodity dollars edged higher, keeping pace with sterling but showing no greater ambition.
The seasonal slowdown combined with a shortage of useful economic indicators to produce low levels of activity and little movement in financial spread betting markets and currency prices.
Euroland construction output fell by -1.4% in October and Canadian wholesale sales rose by 0.9%. In the States the NAHB housing market index advanced by a point to 21, its best level in 19 months.
Figures announced overnight included a four-point improvement, to 40, in Nationwide's index of UK consumer confidence and a GFK index of German consumer confidence unchanged at 5.6.
At nine o'clock IFO releases its important German business confidence measures and two hours later the Confederation of British Industry reports on December retail sales.
The Canadian inflation data come out at midday. After lunch the figures for US housing starts and building permits come out.
Of those, the German IFO report is probably most likely to get things moving. However, in its pre-Christmas torpor the forex spread betting market is unlikely to be gagging for action.
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.
'Forex Trading: GBP/EUR Struggles to Break Technical Resistance', Article by Moneycorp, last update: 20-Dec-11
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