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FX Day Trading - 03 January 2012
Investors search for the zeitgeist of 2012
Euros unlikely to top the shopping list
Elections distract from the US economy
The Daily Mail kicks off 2012 with a careless and eccentric rant at the City: "What recession? While families see income squeezed, this year Britain's big five banks aim to rake in £35bn profit."
It feels like only a couple of years ago that Britain really was in recession and the Mail was castigate the banks for losing money; "£40,000 a family: The eye-watering sum of taxpayers' cash used to fund the £850billion bailout" (4 December 2009). How times change.
The banks are not the only ones who cannot win, though. A century and a half ago Lewis Carroll described a caucus race in which everybody - and therefore nobody - wins.
The real thing kicks off in Iowa today, with a dozen candidates pitching to the born-again fundamentalists who will allegedly set the Republican agenda, just as the Tea Party anti-tax brigade defined the tone of the mid-term elections a year ago.
During the ten months still to go before the presidential election itself, American politicians at all levels will have to resist multiple temptations to take their eye off the real economic ball.
It could well be that the Federal Reserve is left in loco parentis for the US economy, just as the European Central Bank has been forced to take the place of politically-distracted political leaders in the nurture of Euroland's economy.
Spread trading investors are not yet unduly concerned about the risks faced by the US dollar. As far as most are concerned, the dollar and the yen represent a safe alternative to an unstable and potentially self-destructive euro.
Investors spent most of the second half of 2011 lightening their euro holdings, switching assets instead into the US and Japanese currencies - as well as into the British pound.
Over the holiday period that trend came to a seasonal halt. But financial spread betting markets are no longer on standby.
The new year brings with it new profit targets, as well as the usual lists of decisions and things to do that were put off over the last few weeks "until the new year". It is unlikely that a reminder to "buy more euros" features on many of those lists.
And yesterday's improvements to the manufacturing sector purchasing managers' indices (PMIs) from Germany and the Eurozone will not have done much to improve sentiment towards the single European currency.
Both went up by half a point - Germany's to 48.4 and Euroland's to 46.9 - but both were below 50, indicating a slowdown in activity. The equivalent Australian figure, released overnight, was of modest help to the Aussie dollar, rising from a negative 47.8 to a positive (if only just) 50.2.
There are more PMIs on today's card, from Switzerland, Britain and the States. Of the three, only the US number is expected to be above 50.
The only other significant agenda items are German unemployment and the minutes of the Federal Open Market Committee meeting last month.
It is unlikely that FX spread betting activity will crank up to warp-power the moment investors return to work. There can be no doubt, however, that a lot of folk out there will be searching for the zeitgeist of 2012. When they identify it they will be very tempted to go with the flow.
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 Trading Investors Buy US Dollar in Search for Safe Haven', Article by Moneycorp, last update: 3-Jan-12
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