Forex Update 2 March 2012

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Forex Trading: 02 March 2012

It was a case of sideways trading yesterday for EUR/USD as those spread betting on forex are waiting to see how the Greek debt swap deal will pan out next week.

Despite the dollar falling against the majority of its counterparts on the back of weaker than expected US manufacturing, traders still feel that they would rather be short of the euro.

The pair is currently trading at $1.3270 and is very close to its support of $1.3265, and if it breaks that the pair may well head lower towards $1.3235.



Forex Trading: 01 March 2012

There was a huge amount of excitement in the afternoon of yesterday's session as the markets were hit by a triple whammy from heads of central banks who indicated that the stimulus party is over.

The Governor of the Bank of England admitted to the treasury select committee that his asset buying program would not be renewed when it comes to an end in May.

The markets understand that the ECB's LTRO II that was rolled out yesterday is unlikely to be met by a LTRO III and then the bombshell from Ben Bernanke sent markets in a tailspin.

He was far more positive about the US economy than was expected, painting rather a rosy picture of the recovery and falling unemployment, but at the same time not being complacent.

This was a clear message to say that QE3 was unlikely in the near term and the markets got hit as a result, in particular gold which slumped 5%.

The dollar has got considerably weaker over the years as the US attempts to inflate its way out of its debt hole and this has fuelled the bull run on the commodities spread betting markets.

When there's a hint that the good times of stimulus are over, then spread trading investors will check their exposure and readjust somewhat.

The risk aversion naturally translated into a sell off for the euro and other risky currency pairs making the dollar the outright winner during the session.

EUR / USD saw a decline of over one percent and is testing new lows around the $1.3310 area.

Sterling was also a beneficiary yesterday as GBP / EUR got itself back above the €1.1900 mark and is at €1.1950 this morning.



Forex Trading: 29 February 2012

On the economic data front we've already had UK consumer confidence out that did not come in as the expected improvement, so no improvement on last month and a highlight of the figures was an improvement in the personal finance number.

Here consumers are more confident about their finances than they were a year ago and a little more optimistic about the economy. Whilst the headline figure hasn't changed, these glimmers of hope for the consumer might signal a turning point.

At the beginning of last year we saw consumers starting to get more confident, but that was swiftly reversed as the European debt crisis unravelled. This time round, with the Greek situation to one side, there's hope that overall confidence can continue to improve.

There's plenty more in the way of other data today. Also from the UK this morning we get money supply data. At lunch time there's US GDP figures followed by the Chicago PMI number. After that oil inventories and then this evening the Fed's Beige Book.

Sterling has benefited somewhat following the slightly positive consumer confidence numbers.

The GBP / EUR spread betting market is up a tad at €1.1830, a way off the highs and strong resistance around the €1.2000 mark. It would seem that, with the euro's recent strength, any sterling gains against the single currency could remain short lived.

For the euro the bulls are in the ascendancy ahead of the LTRO with EUR / USD at $1.3455 just below its recent highs at $1.3485.

Today's session might be volatile especially around the time of the LTRO release this morning so all eyes on the near term support and resistance seen at $1.3400 and $1.3500 respectively.



Forex Trading: 28 February 2012

As mentioned yesterday, the risk appetite is still apparent with risk assets such as the euro and metals doing well late on.

On that note the euro ran out of a bit of steam yesterday and by mid afternoon it had fallen to a day low of $1.3363 against the dollar. That was pretty short-lived though, as it shot back up in anticipation of tomorrow's ECB cash injection.

On the back of this the tone for the rest of the week could be set for the euro. Currently the euro / dollar forex market is trading at $1.3460 and is heading towards its resistance level at $1.3485.



Forex Trading: 27 February 2012

It's not as if risk aversion is truly off the cards at the moment since the euro remains strong compared to others.

This is most likely because of the impending second round of cheap loans that are due to flood the European banking system on Wednesday as LTRO II gets underway.

This is one of the major events of the week and investors will be watching closely to see just how much will be lent by the ECB.

Not only will the amount be an important factor but also which banks belonging to which countries will be taking up the cash.

Italy, Spain and France made up the majority of those hungry for the funds, so it will be interesting to see just how much they participate on Wednesday.

Traders long of the euro watched their bets rally as optimism was still the theme on the back of a successful Italian bond auction last week.

There was also positive consumer sentiment data and better than expected US home sales, which encouraged traders to move out of safer currencies such as the dollar.

The euro is now close to the $1.35 level and trading at levels not seen since last December. This morning there has been a bit of profit taking from long EUR/USD positions and is trading around $1.3429.



Forex Trading: 24 February 2012

On the forex spread trading markets, the euro poked its head above the resistance area of $1.3300 against the dollar and then the floodgate of buyers opened pushing it to a new two and a half month high.

This move is a coup for the bulls who maintain the momentum and this morning EUR / USD is at $1.3380 following yesterday's impressive German business confidence data.

Support is now seen at the previous resistance of $1.3320/00, then $1.3280/45 and resistance is seen at $1.3425/50.

The weakness in the dollar against the euro hasn't equated to weakness across the board for the US currency.

Against the Japanese yen it continues to make ground above the ¥80.00 level at ¥80.55 at the time of writing. This marks a fresh seven month high and it looks like the fortunes of the dollar against the yen may have changed.



Forex Trading: 23 February 2012

The dollar saw a big jump against the yen yesterday, those spread betting on USD / JPY saw the forex market move back above the ¥80 level to a seven month high.

The dollar bulls aren't getting too excited though as the last time this happened almost a year ago the dollar reversed its gains very quickly. Nevertheless, that move was driven by the Japanese tsunami, so maybe this breakout will be different leading to another drive higher.

The gains that the US currency saw against the yen didn't translate to huge moves against other currencies on the FX spread betting markets. The euro is flirting with $1.3300 again, trading at $1.3280 at the time of writing.

The $1.3300 level remains the major near term hurdle for the single currency and a break above here could see the next leg higher.



Forex Trading: 22 February 2012

As we expected, those spread betting on the EUR / USD forex pair saw the euro surge on the back of the news that Greece's bailout was approved. There may have been a case though, for profit taking as the single currency failed to maintain the gains and ended the day down 10 points.

The dollar found strength against the yen and shot to a six-month high, as the speculation is that the US economy is growing and the need for quantitative easing may reduce. This morning USD/JPY is trading at ¥80.180 and is in a strong uptrend, which could potentially continue.



Forex Trading: 21 February 2012

With Greece managing to avoid a default as the EU agreed their next bailout this allowed the euro to enjoy a nice move higher of over 100 pips against the dollar.

The single currency also reached a three-month high against the yen, with the EUR / JPY spread betting market hitting levels not seen since mid-November, further pushing out the demand for safe haven currencies.

This morning EUR / USD is trading at $1.3250 and could see its fourth consecutive positive day on the back of the recent fundamentals.



Forex Trading: 20 February 2012

The risk taking on the equity markets is also filtering through to the FX spread betting markets this morning, as we saw Eurozone finance ministers potentially giving the €130bn bailout package the go ahead.

Both this, and the cut the banks' cash reserves requirements by the People's Bank of China over the weekend, adds to the hopes of a stimulus to economic growth. The result is a weakening dollar and yen as safe havens are off the cards for now.

The newly-injected optimism in the market could see the euro push higher on the back of it and this morning EUR/USD is seeing a bit of upside, taking it to $1.3195 at the time of writing. Like equity markets, however, it has just softened a little since the start of today's session.


By Simon Denham, 2 March 2012


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