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FX Day Trading - 12 October 2011
Slow day, modest movements
NIESR says UK economy grew by 0.5% in Q3
Barroso bank-support proposal unveiled today
The EU/EFSF/IMF inspection team in Athens decided yesterday that Greece had made sufficient progress towards debt-reduction to justify lending the country another €8bn with which to pay the interest on its borrowings.
The Slovakian parliament decided it hadn't, and withheld its support for the plan to extend the role of the bailout fund. In an effort to keep the cash flowing into the Aegean, Jose Manual Barroso, one of the EU's three presidents, came up with a great idea to spread the load.
He told German newspaper Bild that, whilst "London has no obligation" to add to Greece's indebtedness, he "would wish that all countries that are financially able to do so show support". The idea went down like a lead balloon in London, where erstwhile chancellor Norman Lamont likened the Greek bailout to a Ponzi scheme.
President Barroso will be on the podium again today with his proposals for propping up banks and greater economic integration. It is not clear whether the president's plan has been formulated together with, or apart from, the recapitalisation proposal aired by the French and German leaders at the weekend.
Either way, online spread betting investors are wholeheartedly in favour of anything that props up banks. In the FX spread betting market, they decided that the day's developments were broadly positive for the euro. They were less enthusiastic about the pound and the US dollar.
In Britain disappointing figures for manufacturing and industrial production were offset, to an extent, by an estimate by the National Institute for Economic and Social Research that the economy grew by 0.5% in the third quarter.
In the States, the senate spent its day spoiling President Obama's. Not only did it reject his $447bn jobs bill, it also approved legislation that would allow trade barriers to be erected against any country with an artificially weak currency, i.e. China.
And there is a Democrat majority in the US senate; goodness knows how much more obstructive the Republican House of Representatives might be. America could find itself involved in a trade war simply because of spitefulness on Capitol Hill.
There were few data on Tuesday to feed currency movement. Apart from the UK production and GDP numbers, the only other figure on offer was an increase to 205k in the annual pace of Canadian housing starts.
Overnight the Westpac index of Australian consumer sentiment improved by 0.4% to 97.2 and home loans rose by a monthly 1.2%. Japanese machinery orders were up by 11.0% in August.
None of the data had any great effect. Compared with yesterday's opening levels sterling starts today unchanged – or nearly so – against the Swiss franc and the New Zealand and Australian dollars. Net movements elsewhere – mostly downward – are of the order of no more than half a cable cent.
Highlights today include UK unemployment, Euroland industrial production and the Canadian new house pricing index. At least as important will be the wise words of President Barroso.
Will the euro be able to wring another day's benefit from his proposal to recapitalise European banks? Or will spread betting investors think to ask themselves who will provide the €100bn that the European Banking Authority estimates the recapitalisation will cost?
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.
'FX Spread Betting: EC President Barroso to Unveil Bank Recapitalisation Plan', Article by Moneycorp, last update: 12-Oct-11
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