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FX Day Trading - 16 September 2011
Central Banks to the Rescue?
Need a Miracle
Precipice
Yesterday, it was revealed that rogue UBS trader Kweku Adoboli asked for a miracle in an online post when he realised that there was no way out of the position that he had built in EUR/CHF.
Today, it could be the refrain from the ECB as the short-term relief from news that five central banks would supply three-month USD funding to Europe’s increasingly besieged banks, waned.
Before yesterday’s announcement, the premium for 3-month USD interbank funding had reached 100 basis points, or halfway to where it peaked on the day that Lehman Brothers went to the wall.
The cynical view in the spread betting market this morning is that the co-ordinated central bank action is not so much a rescue, as confirmation that the edge of the precipice is near once again.
Despite the cynicism and this morning’s early movement, there is a possible short-term rally in sight. For GBP/EUR, however, the rate is currently mid-range and looks trapped between €1.13 and €1.16.
Over the last week we filled many orders for clients buying EUR above 1.15, which underlined the benefit of leaving limit orders in place, even when the sought rate is a six-month-high levels.
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.
'Spread Betting: Central Banks Intervene to Supply Dollars to European Banks', Article by Moneycorp, last update: 16-Sep-11
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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.
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purposes and is delivered as a personal view of the writer. Under no circumstances
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