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FX Day Trading - 3 November 2011
Greek euro referendum next month
No more money for Greece until then
Euro interest rate cut possible today
What fun they must have had when Prime Minister George Papandreou, President Sarkozy and Chancellor Merkel met for a beer yesterday.
The rumour is that the discussion got a little heated because of something George had said the previous day. It culminated in the German and French leaders telling him that Greece could either get on or get out.
George could have his referendum but he had better look sharp about it. And they did not want to see any namby-pamby questions like "Do you prefer kleftiko to bratwurst?" The only one that would be acceptable was "Would you rather take your austerity in euros or drachmae?"
And by the way George, you are not getting another brass farthing until and unless your people vote to stay in the euro and swallow their medicine.
Since then Finance Minister Evangelos Venizelos has distanced himself from his boss, telling the media that plebiscites are a waste of space, the euro is a fantastic currency and can we please have our next €8 billion?
The G20 summit is likely to touch on the subject of Greece and the euro today when heads of government meet in Cannes, France.
It will all be rather difficult because most of them have no power to do anything about it apart from China, and Hu Jintao will want to wait and see what happens before he commits to any increase in his country's participation in the bailout fund.
Mario Draghi does not have that luxury. In his first three days in office, the new European Central Bank (ECB) president has had to field the Greek prime minister's referendum bombshell and a crisis meeting with Merkozy.
Today he chairs the ECB governing council meeting for the first time before facing a press conference that will demand answers to questions nobody has thought of yet. Everyone said Sig. Draghi would have to hit the ground running, but running what?
A central bank up to the gills in junk government bonds? Running which way? Lower euro interest rates? And running how fast? A rate cut today, or wait until next month?
It goes without saying that Wednesday's economic data made precious little difference to FX spread betting exchange rates. Euroland's manufacturing purchasing managers' index (PMI) was weaker than forecast at 47.1 and German unemployment rose by 10k to 7.0%.
ADP's US employment change figure showed a 110k increase. Overnight an increase in New Zealand unemployment helped the New Zealand dollar along its already-downward path. Services sector PMIs from Britain, Euroland and the States are due today, as well as US factory orders.
Dominating the proceedings will be the G20 meeting, which will presumably generate bucket-loads of gratuitous advice for the EU even if it reaches no useful conclusions itself, and the ECB rate decision and press conference.
There is no danger of "vigilance" about inflation being on the agenda. Indeed we may never hear the word again with M. Trichet gone. Instead, unless the refinancing rate goes down today, spread betting investors will be listening for hints of more relaxation in the near future.
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.
'Rise in Unemployment Sends New Zealand Dollar Spreads Lower', Article by Moneycorp, last update: 3-Nov-11
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