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FX Day Trading - 30 August 2011
UK bank holiday dampens activity
QE3 uncertainty holds back US dollar
Britain's 0.2% growth figure survives first revision
A chap called Christopher Lowcock was sentenced to house arrest in Rochdale. He had to wear an electronic tag that would monitor his alcohol intake and location.
A two-man security team decided to attach the monitor to his right leg, which was swathed in bandage. They failed to notice that the limb was an artificial one. By removing it, Mr Lowcock was free to break his curfew at will. He could not do a runner but he was perfectly able to hop it.
The US dollar did a runner on Friday after Federal Reserve Chairman Ben Bernanke failed to announce a third round of quantitative easing.
FX spread betting investors had been more than half expecting him to announce QE3 at the same venue he had chosen a year earlier to wheel out QE2.
All Mr Bernanke would commit to, however, was an extra day's discussion of the subject by the Federal Open Market Committee at its meeting in three weeks' time. It was not a "no" but it was a "definite maybe".
The dollar initially strengthened on the (lack of) news but soon went into reverse. By close of play in New York it was a cent and a half off the day's high against the pound and the euro.
It did not help pro-dollar sentiment that the first revision to second-quarter US gross domestic product was a negative one. The initial estimate of 1.1% growth in Q2 was revised down to 1.0%. It was not a big change but it was unhelpful.
Sellers of the dollar found further encouragement in the University of Michigan consumer sentiment index, which fell by 8 points to 55.7.
Britain's GDP growth data were shock-free. The first revision to the Q2 numbers left the original estimate unchanged at a quarterly 0.2% (an annualised 0.8%). There was minimal reaction to the figures.
As we enjoyed our last buckshee day off until Christmas, the rest of the world rolled out a handful of ecostats but shares spread betting investors could not be bothered to do much about them in the absence of London's lead.
A monthly fall of 8.0% for Australian new home sales did not dislodge the Aussie. Weaker-than-expected personal spending in the States briefly rattled the US dollar but any damage had been repaired by the end of the day.
Figures released earlier this morning showed a 13% monthly rise in New Zealand building permits. The equivalent Australian measure was down by 1% on the month and by 15% on the year. It was too stark a contrast for investors to ignore and it cost the Aussie nearly a cent against the Kiwi. This also played out in the AUD/NZD spread betting market.
Coming up before lunch are UK private-sector and mortgage lending and three measures of Euroland confidence.
This afternoon Canada presents raw material and industrial product price indices (PPI). America reveals the Case-Shiller index of metropolitan house prices and the Conference Board's consumer confidence index. The minutes of August's FOMC meeting are published this evening.
There may be something in that list to kick things off, but inertia will probably set the tone to start with.
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'FX Spread Betting: Dollar Weakens as Bernanke Fails to Mention QE3', Article by Moneycorp, last update: 30-Aug-11
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