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FX Day Trading - 5 December 2011
Dollar higher on employment report
Unemployment falls to 8.6%
Services PMIs today
"Ever wondered what monetary policy is?" That is how the European Central Bank (ECB) introduces €conomia.
The policy simulation game is an interesting demonstration of how difficult it is to control inflation with interest rates alone. Having been available on the Bank's website for some time, €conomia is now offered as an iPad app.
But has the ECB missed a trick? Surely there was an opportunity here to harvest the input of millions of players and to make the Eurozone the world's first economy with a crowd-sourced monetary policy.
It won't happen of course, Mrs Merkel would never give up her control of Euroland policy. Today she is in Paris to ensure President Sarkozy understands his instructions and knows what he is supposed to be saying about the debt crisis and the stability fund.
In four days' time he must stand beside her at the Eurozone summit meeting and look as though he means it when he agrees with her every word.
The latest story is that if Euroland member nations were to sign up for – and abide by – strict limits on their indebtedness the ECB would lend money to the International Monetary Fund (IMF), which the IMF would then use to buy the government bonds that the ECB is forbidden to buy directly.
As a cynical evasion of the rules it would be up there with the best, but the process could provide what the financial spread betting market needs to see while at the same time saving face for the German chancellor, who has been adamant that the ECB must stay at arm's length.
As it will not be until the weekend that the EU leaders reveal their Plan E, online spread betting investors have only rumour and speculation to boost or drain their confidence in the euro.
The attitude was mostly neutral on Friday and was unaffected by a slower rise in producer prices (annual 5.5%), the day's only Eurozone statistic. There was equally little impact on sterling after the UK construction sector purchasing managers' index (PMI) fell by fractionally less than expected, from 53.9 to 52.3.
What did get things moving was the US employment report for November. Unemployment fell from 9.0% to 8.6% and non-farm payrolls went up by 120k. A further 72k jobs were added to previous months' totals.
The numbers were not spectacular – barely enough to keep pace with demographic growth – but the fall in unemployment was a welcome surprise and the monthly increase in payrolls was the 13th in succession.
FX spread betting investors saw the figures as another sign that the US economy is doing better than Europe and they decided to buy the US dollar, sending it more than a cent higher against the euro, the pound and the franc.
On today's agenda it will be the services sector PMIs that attract most attention. T
The Australian reading is already out, down by a point at 47.7. Germany, Britain and the States are expected to deliver figures above 50, therefore still indicating expansion. Euroland as a whole is forecast to come in at 47.8. Euroland retail sales will probably be 0.2% up on the month and US factory orders down by the same percentage.
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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: US Dollar Higher on Fall in US Unemployment Rate', Article by Moneycorp, last update: 5-Dec-11
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