For the latest FX Daily Trading Update see FX Day Trading.
FX Day Trading - 18 August 2011
More punishment planned for EU banks
SNB announcement backfires
UK retail sales data today
On both sides of the Channel the knives are out for miscreants. Zero tolerance is the new Human Rights.
In continental Europe, workers' pension funds were decimated after French and German leaders proposed a transaction tax on the banks who were refusing to buy overpriced Euroland sovereign debt.
A day of unintended consequences saw Eurozone bank shares drag down the rest of the market as investors began to appreciate the enormity of the Merkozy plan for a "Tobin tax" on financial transactions.
Although there can be little doubt that Britain would veto the idea for the EU as a whole, the possibility remains that France and Germany could railroad the proposal through in Euroland as their price for holding the euro system together.
Across the border, the Swiss National Bank came out with its latest measure to hold down the value of the franc. Contrary to market expectations it did not involve pegging the currency to the euro. Rather, the SNB "decided to expand again significantly the supply of liquidity to the Swiss franc money market... and to employ foreign exchange swaps".
In other words, the interest rate on francs is going from near-zero to even-nearer-zero and the SNB is simultaneously going to sell and buy the currency. Investors doubled up with mirth and bought more francs.*
It was a bad day for risk-appetite, a good one for the gold spread betting market, which commentators now say could well reach $1,800 an ounce.
Sterling did well enough, gaining ground across the board despite two major obstacles to its progress. It suffered a setback in mid-morning after an increase in the UK unemployment rate from 7.7% to 7.9%, and Monetary Policy Committee meeting minutes which showed none of the members voting for a rate increase at the August meeting.
The combination cost the pound a cent but FX spread betting investors' disappointment did not last. The employment data were not out of step with developments elsewhere and the alteration to the MPC voting pattern was no more than a psychological blow; it made no practical difference to the interest rate outlook.
The rest of the day's data contributed little. Euroland CPI inflation was on target at 2.5% and US factory gate prices accelerated with a 7.2% annual rise. Like the UK data last week, Japan's trade figures this morning proved that a weak currency is not the sine qua non for a trade surplus.
Among today's data, the most important ones will be UK retail sales, US inflation and US existing home sales. Expect more discussion about the lack of action in southern Europe and future of the Swiss franc.
* The hilarity about the Swiss franc is less pronounced this morning; an hour before London opened the franc dropped a cent against the euro and the pound for unknown reasons. This has also played out in the GBP/CHF and EUR/CHF spread betting markets. Perhaps the SNB has hit upon what the Piranha brothers would have called The Other Other Operation. It could be a turning point.
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.
'Gold Spread Betting Market Heads for $1800 as Risk Appetite Fades', Article by Moneycorp, last update: 18-Aug-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.
