Forex Update 2 September 2011

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Financial Spreads: Spread Betting and CFD Trading

Online Forex Spread Betting: 2 September 2011

FX markets continue to remain a little placid, with many pairs just drifting sideways. Hardly surprising really when you have the US Non Farms out later today and so we could possibly see this trend continue at least until 13:30 London time.

A couple of minor breakouts to the downside are supporting the dollar, which has been just about holding its own at the moment, with the US Dollar Index just above 74.000.

For individual pairs, euro/dollar was one of the pairs that saw a move lower yesterday which is following through today.

A break below $1.4300 has taken us further down to $1.4220 this morning and so levels to watch now are seen at $1.4185 below and that previous support seen around $1.4300 and then $1.4350.

Online Forex Spread Betting: 1 September 2011

Forex markets had a relatively quiet day in the grand scheme of things with the dollar just about holding its own.

This morning things look better still for the US currency with euro/dollar and sterling/dollar at $1.4310 and $1.6230 respectively.

For the euro $1.4275/50/20 are support levels with $1.4385 and $1.4420 being resistance targets.

For the sterling/dollar market, $1.6200 and then $1.6135 are seen as support with $1.6330/65 expected to give resistance.

Forex spread betting markets really have been rather boring in the past couple of weeks with few pairs making any considerable ground.

The Australian dollar/US dollar market stands out though, having recovered from hitting parity at one stage early on in August. It has formed a massive hammer candlestick on the daily chart and since then it's made its way back to $1.0700.

This morning the pair is at $1.0695 and support and resistance levels are seen at $1.0610 and $1.0750 respectively.

Online Forex Spread Betting: 31 August 2011

Currency spread betting markets are flat this morning on the whole with a smidgen of dollar weakness.

The euro recouped losses following the poor EU confidence number in the morning after the US confidence data disappointed. The euro/dollar market has now surged back above the $1.4400 level to $1.4460 following better than expected German unemployment data.

Over the near term resistance is seen at $1.4475 and then $1.4525/50 with support expected at $1.4380/50 and then $1.4290.

Online Forex Spread Betting: 30 August 2011

The strength in equities is not being complimented by the usual dollar weakness you'd expect when financial spread betting on the forex markets.

The US currency is just holding its own against the other majors so euro/dollar is at $1.4490 and sterling/dollar is at $1.6380 at the time of writing.

Volatility in the forex markets over the past couple of weeks has actually been relatively low, when compared to equity markets, with euro/dollar oscillating around the $1.4400 level. For the near term at least support and resistance is seen at $1.4430/1.4395 and $1.4525/50 respectively.

Online Forex Spread Betting: 26 August 2011

The forex spread betting markets are playing the range game with gusto.

Yesterday we commented on the big resistance above $1.4470 to $1.4500 due to the falling pennant formation still building. We naturally fell back to the low $1.43's as euro debt fears surfaced.

Today we are back up in the mid $1.44's at $1.4440. Traders are watching for a break of the pennant formation, now above $1.4475. If we stagger sideways the sellers may get more confident as the day goes on.

The sterling/dollar market is now some way from 'break out' and we are back well within the trading range that has dominated 2011, approximately $1.5950-1.6550.

Past history suggests we will drift back to test the lows now that the highs have held us back. However, as this comment has mentioned a few times, sterling does seem to be rather 'too weak' with all the information to hand that we have.

Good support is pretty much where we are at the moment at $1.6290/1.6300 and below here at $1.6260/65 and then $1.6220/25.

Online Forex Spread Betting: 24 August 2011

Forex markets seem to be almost somnolent at the moment with the dollar slowly drifting lower against nearly all comers in recent days but nothing too aggressive.

We are at the top end of the recent ranges for the euro and the pound, and the bottom for the yen, which in the past have generally led to a swift reversal back down.

If the Federal Reserve does go with QE III then the dollar may well have a bit of a nervous time of it as the printing presses set off once again. However, as this is the 'fear' then what will happen if it becomes the 'actuality'.

The pound is looking strong but, as mentioned frequently, sterling does tend to struggle at any price above $1.6480. The momentum looks favourable for further rallies but then they have looked similarly bullish in the past, continuously from May 2009 to November 2009 and then May 2011, only for the runners to fall at the last hurdle.

Resistance is pretty much continuous all the way up to $1.6660 and then $1.6750 and $1.69. Support is at $1.4475/85, $1.4430/40 and then $1.6350/60.

The euro is continuing to narrow the trading ranges, with the markets forming a technical analysis pennant formation on the weekly spread trading charts. We are nearer the top of the pennant at the moment, at about $1.4500, with the bottom being currently at around $1.4050. Within this formation, range trading seems to be the current plan for trading on our spread betting platform.

Online Forex Spread Betting: 23 August 2011

Looking at the forex spread betting markets, trading ranges between the euro and dollar have been quite tight at the start of the week.

The euro has moved slightly higher this morning though after data showed that China's manufacturing shrank at a slower pace in August against July.

Another reason for the shallow trading ranges is that traders are awaiting Fed chairman Bernanke's speech on Friday in which he will discuss steps to boost the US economy. The pair is trading at $1.4410 this morning and has rebounded of its support level at $1.4373 which may signal further upside.

The Australian dollar has moved higher against its US counterpart after the Chinese manufacturing data. Although the figures showed August slowed compared to July, they were still seen as better than expected.

The Australian dollar/US dollar rate has already risen sharply this morning, trading at $1.0491, and is above its previous support level of $1.0385, which could see the pair move higher today.

Online Forex Spread Betting: 22 August 2011

On the currency side there is actually not much action going on as it is still very difficult to decide which currency should be weak and which should be strong. They all appear to have problems of the same making.

The euro/dollar spread betting market continues to oscillate around a mid-point of about $1.43 with various attempts to push above $1.4450 and $1.45 and vice versa below $1.41/1.40 and $1.39.

Sad to say but range trading appears to be the play at the moment; unfortunately this has its risks as it is generally the 'play' until it isn't anymore.

Sterling had a concerted attempt to hold above $1.65 at the end of last week but every time we looked like making the break count sellers counterattacked and took us lower.

This is very much in line with the last three years where anything above $1.65 has proved to be a good selling point.

It must be said though that every currency in the world seems to have been mentioned as a depository for flight out of the dollar except for the pound. This is odd when you realise that UK debt is now trading at an all time low yield. Investors seem happy to fly to Gilts but not to Sterling.

This said it is impossible to deny that there is massive resistance built up over several years all the way up from $1.4480 to $1.6750 then even more at $1.6900 and finally from $1.7000 to $1.7050. There is good support below at $1.4450/70 then $1.6420/25 but if we do get down here it is probably safe to say that the bull pressure is easing for the time being.

By Simon Denham, 2 September 2011

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