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FX Day Trading - 9 August 2011
Market anarchy spreads to London's streets
Another day of panic on Monday
QE3 tonight?
The global equity-market story is laden with parallels to the English riots: dispirited investors with no money and no prospects run amok, torching equity indices while central banks and politicians remain behind the curve, bickering over policy details.
It was another horrid day for personal pension funds on Monday, with no respite from the doom and gloom that has afflicted global financial markets since US politicians came to their inglorious compromise ten days ago.
Shares spread betting investors have become convinced that chaotic leadership in Washington will exacerbate the US economic slowdown, leading to a global double-dip recession. Even those who do not subscribe to the nihilism are dumping assets, in the same way that London residents flee from the baying mob.
It feels like months since exchange rates moved according to the ebb and flow of national economic data and there was no sign of any return to such orthodoxy on Monday. Gold spreads pushed ahead above $1750, the crude oil spread betting market extended to 30% its fall from the highs of late April, equities dumped another 5% (or whatever).
Against that backdrop a fall in Euroland investor confidence from 5.3 to -13.5 looked almost positive and an improvement in Britain's RICS house price index from -26 to -22 was irrelevant.
The day's most notable success for the authorities came when the European Central Bank went into the market to buy Italian and Spanish government bonds.
It was able to push their yields below 6% and further away from the 7% level at which, everybody assumes, Italy or Spain would throw themselves upon the mercy of the European Financial Stability Facility. The ECB action provided at least a partial reassurance that somebody is doing something.
Further statistical irrelevance is available today in the form of UK production figures and the balance of trade as well as Canadian housing starts. What will matter very much is the policy decision of the Federal Open Market Committee this evening.
As in Britain, there is widespread pressure in the States for another round of quantitative easing. Opponents of QE3 argue that the $2.3 trillion printed in QE1 and QE2 between December 2008 and June this year have been spectacularly unsuccessful at reviving the US economy. Proponents ask what there is to lose by having another shot.
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 Spreads Push Above $1750 as Equities Plummet', Article by Moneycorp, last update: 9-Aug-11
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