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FX Day Trading - 7 November 2011
No market reaction to Greek coalition
Investors bide their time
SNB sabre-rattling sends franc lower
The organisers of next year's games have unveiled a road map for the Olympic torch on its way to London.
Along the route the torch will change hands 8,000 times as it travels by horseback, by canoe, by balloon and by zip wire as well as on foot. The journey will take 70 days to complete. The trickiest part of it will be the 300km from the Temple of Hera to Athens airport, which will take it past two million angry Greeks.
Greece's political road map is far less easy to read. In recognition of his victory in a vote of confidence on Friday night, George Papandreou is standing down to hand over the premier's poisoned chalice to a new leader who will head a government of national unity.
The news has taken some of the immediate pressure off the euro but FX spread betting investors are under no illusions that it means closure for the debt crisis. Although financial spread betting markets can see progress they will need something more concrete – good or bad – before they commit to a new direction.
There has therefore been minimal reaction from the euro. Compared with Friday morning's levels it is a scant half-cent lower against the US dollar and the pound, and almost unchanged against the Japanese yen. In the great scheme of things those differences are insignificant.
Most of Friday's economic data did not make much difference either. Euroland's services sector purchasing managers' index (PMI) was two points lower at 46.4 while the equivalent German PMI was up by a point at 50.6. German factory orders disappointed with a 4.3% monthly decline that hauled the annual increase down from 4.0% to 2.4%.
In the States non-farm payrolls increased by 80k in October. Whilst that figure was 17k shy of the expected number, upward revisions to earlier months more than made up for the shortfall.
The data that did make a difference were those for Canadian employment. Unemployment, which was supposed to be unchanged in October at 7.1%, went up to 7.3%. The net change in employment, akin to the US payrolls number, showed a loss of -54k jobs instead of the forecast 15k increase.
Those numbers were far enough adrift from expectations to knock a cent off the value of the Loonie against the US dollar and the pound. See also USD/CAD and GBP/CAD spreads.
A slow start to this week has brought an improvement in Australia's construction PMI from 30.0 to a still-anaemic 34.7 and an increase in Switzerland's rate of unemployment from 2.8% to 2.9%. More important to the franc was a reminder from the Swiss National Bank that it will intervene, if necessary, to hold down the franc.
Although no new threshold was posted, the assumption was that it must be more than 1.20 francs to the euro. Swiss inflation figures come out later this morning, together with investor confidence and industrial production from Germany and Euroland retail sales. The Halifax house price index is due out as London opens.
We are unlikely to learn anything useful from Athens today other than the name of the lucky winner of 'Who Wants to be a Prime Minister'. That might not be good news for the euro but ought not to send it lower.
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'GBP/CAD Spreads Higher on Rise in Canadian Unemployment Rate', Article by Moneycorp, last update: 7-Nov-11
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