For the latest FX Daily Trading Update see FX Day Trading.
FX Day Trading - 15 November 2011
Did you hear Spain sneeze?
Spanish bonds lower, yields up
UK inflation figures today
It is arguable that the big three credit ratings agencies are not very good. In the early years of the century they blithely ignored the risk associated with packages of sub-prime mortgages, granting them the triple-A status that led gullible investors to believe they were bomb-proof.
But the latest move from the EU - itself far from blameless in financial assessments - smacks of shooting the messenger. Commissioner Michel Barnier will issue today a directive forbidding the publication of credit ratings for troubled European sovereign borrowers.
Well that's going to work, isn't it? When investors buy a government bond with a BB rating they are taking a calculated risk: buying a bond with no rating at all would be the ultimate in outsider trading.
Investors will be asking themselves how the new edict may affect the credit ratings for Spain. All three agencies downgraded Spanish debt to A+ last month, four steps down from the AAA it enjoyed two and a half years ago.
Yesterday the bond market decided that was probably too optimistic. As they had last week with Italian bonds, investors began to move out, pushing ten-year yields nearly a quarter of a percentage point higher to 6.06%. The contagion could be spreading.
Investors also appear to have pulled stumps on their brief honeymoon with the new technocrat masters in Athens and Rome. It is not that they have fallen out with Lucas Papademos or Mario Monti, more that they recognise the uphill struggle that both men face.
Financial spread betting investors also could not fail to notice how yesterday's "successful" auction of five-year Italian government bonds delivered a yield of 6.29%. A month ago the market wanted nearly a percentage point less for a similar issue and Germany would be able to borrow on the same terms for 0.94%.
This week's ecostat agenda got off to a slow start with a 0.2% monthly fall for Swiss producer and import prices and a 2.0% decline in Eurozone industrial production.
Overnight the Reserve Bank of Australia released the minutes of a policy meeting earlier this month at which the cash rate was cut by 25 basis points to 4.5%. FX spread betting investors inferred that rates may fall further and they sold the Australian dollar.
Germany opened the reckoning for Europe with a 0.5% quarterly expansion for gross domestic product (GDP) in Q3. The figure was in line with forecasts.
Later this morning the UK inflation data are expected to show the benchmark consumer price index (CPI) rising by 5.1% in the year to October with the old retail price index (RPI) up by 5.5%.
Half an hour later ZEW publishes its survey of German and Euroland economic sentiment and Eurostat releases the Euroland data for third quarter GDP and September's balance of trade.
After lunch the United States will print the numbers for producer prices and retail sales at the same time as Canada reveals September's manufacturing shipments and new vehicle sales. The New York Fed's manufacturing index comes out later this afternoon.
Above and beyond all those the real one to watch is Spain's auction of 12- and 18-month treasury bills this morning. Was yesterday's half-hearted trashing of Spanish sovereign debt a childish prank or a sign of things to come? Today's auction result might hold the answer.
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 Investors Sell Aussie Dollar on Rate Cut Speculation', Article by Moneycorp, last update: 15-Nov-11
Related articles:
FX Day Trading, 18-Apr-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, 17-Apr-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.
