A daily look at the FX markets from Moneycorp.com.
For the latest FX Daily Trading Update see FX Day Trading.
FX Day Trading - 18 August 2010
Sterling lower all round
Nobody claims responsibility
MPC minutes today
A couple in Coventry took a week to realise they had registered their baby daughter as a boy. It seems from the article in the Daily Mail that they have yet to notice the spelling error in the child's given name.
As a result, she will have to spend the rest of her life as Raydon instead of sharing her identity with the radioactive gas Radon, atomic number 86. There is a suspicion that her father selected the name late one evening after winning a game of darts with a six and two double twenties. But at least she didn't have the misfortune of him finishing on six, treble twenty, double twenty: Radon sounds so much nicer than Seaborgium.
There was a similar element of random chance in Sterling's fall from grace on Tuesday. Whilst it would be convenient to link the falling Pound to falling inflation, there is no evidence of that in the price action.
In the hour after the announcement that consumer price index inflation had fallen from 3.2% to 3.1% Sterling added around half a cent against the Euro and the US Dollar. It was before the announcement and later in the day that the damage was done. Compared with Tuesday's London opening, Cable is a cent lower, as is Sterling/Euro. It is one Yen lower and softer across the board.
It would be wrong to blame the UK economy for Sterling's setback. Beyond the inflation figures it had nothing to say for itself. Nor was the news from elsewhere at all embarrassing to the Pound.
The Eurozone's current account deficit was a billion Euros bigger than expected. A five-point improvement in Eurozone economic sentiment to 15.8 was offset by a six-point fall in German sentiment from 21.2 to 14.0.
Canadian manufacturing shipments went up by an almost imperceptible 0.1% in June. US housing starts and building permits were as disappointing as expected.
The only redeeming feature was the better than expected 1.0% monthly increase in US industrial production but there was no obvious reaction to that either.
Successful government bond auctions in Ireland and Spain, together with BHP's mega-bid for Potash Corp, will have been helpful in boosting sentiment towards commodity currencies but none of that ought to have had a detrimental effect on Sterling.
In the absence of any better explanation it looks as though one of the muscular investment banks decided to see if they could take Sterling for a walk. In a seasonally thin market with plenty of chart points scattered around they clearly met with some success.
Figures released earlier this morning for Australian wage prices in the second quarter of the year were close to forecast, rising by a quarterly 0.8% and an annual 3.0%. Eurozone construction output will not matter greatly to the Euro and there is no data from North America.
Coming out overnight will be New Zealand producer prices, Australian average weekly wages and Japanese machine tool orders. Nothing of any great consequence there then.
That just leaves the minutes of the August Monetary Policy Committee meeting, due out at half past nine. With inflation remaining stubbornly above its target range it is probably a safe bet that nobody suggested lowering the Bank Rate and that Andrew Sentance suggested raising it.
But did the discussion stray onto the subject of extending the programme of quantitative easing? The governor said in his letter to the chancellor that 'We stand ready either to expand or to reduce the extent of monetary stimulus as the outlook demands.'
If the subject of QE receives more than cursory mention in the minutes, yesterday's tormentors might take it as further encouragement to sell the Pound. Cable is holding above a particularly tasty chart point which, if breached, could lead to another five cents of downside.
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.
Note - 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.
'FX Day Trading 18 Aug 2010', Article by Moneycorp, last update: 18-Aug-10
Related articles:
FX Day Trading, 9-Feb-12,
Daily FX Trading updates covering the influences on the key FX markets. Daily updates include key FX market movements and features the Dollar, Pound, Euro and Yen as well as...see: FX Day Trading
FX Day Trader, 8-Feb-12,
A daily review of the currency markets concentrating on the major Dollar, Yen, Euro and Pound Sterling markets...see: FX Day Trader
£1 per point: Start trading £1 per point/tick & an initial deposit of £30
Multiple markets: Forex , Commodities, Indices & Equities
Risk Warning - Spread betting carries a high level of risk to your capital & you may lose more than your initial investment. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seek financial advice where necessary & make sure spread betting meets your investment objectives.
(1) The FTSE Rolling Daily Spread is 1 tick during market hours & 4 ticks out of hours. 1 Tick is defined as a full FTSE point. See our Product Information for more details. (2) The above information is correct at time of writing. (3) Tax Law can change.
FinancialSpreads.com is a trading name of London Capital Group Ltd which is authorised & regulated by the Financial Services Authority (FSA). Registered address: is 4th Floor, 12 Appold Street, London EC2A 2AW. All information correct at time of publication.
Risk Warning:
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.
Disclaimer:
Online-Spread-Betting.com does not endorse the information and
analysis available on this site. It is provided purely for information
purposes and is delivered as a personal view of the writer. Under no circumstances
is the information hereon to be used or considered as, an offer to sell, or a
solicitation of any offer to buy. The website content does not constitute investment
advice and neither the individual contributor nor Online-Spread-Betting.com accepts any
responsibility for any use that may be made of the content.
* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
