Forex Update 16 March 2012

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Financial Spreads: Spread Betting and CFD Trading

Forex Trading: 16 March 2012

Forex spread trading markets are rather flat this morning and for now the single currency is still managing to hold onto the $1.3000 level against the dollar.

There still seems to be a slight shift towards the dollar at the moment although this morning the US currency bulls are just taking a breather.

EUR/USD is at $1.3080 at the time of writing so traders will be focusing on support and resistance seen at $1.3000, $1.2970 to the downside and $1.3120, $1.3155 to the upside.

For USD/JPY, which has seen impressive gains in the last few weeks, a big top looks to have formed in early trade yesterday around the ¥84.00 level.

At the time of writing, USD/JPY is at ¥83.50 and near term support and resistance is seen at ¥83.15, ¥82.80, ¥82.60 and ¥83.85, ¥84.20 respectively.

Forex Trading: 15 March 2012

On the currency spread trading front, sterling has suffered in the face of Fitch's move to put the UK's credit rating on negative watch.

This has caused the GBP/EUR spread trading market to retreat from its highs back to the €1.2000 level and Cable is a little stronger at $1.5660.

For the euro, the single currency is holding onto the €1.3000 level against the dollar as it trades at 1.3050 at the time of writing.

The $1.3000 is the crucial support over the near term and a break below here could lead to a test of $1.2980/70. To the upside near term resistance is seen at $1.3090, $1.3120 and $1.3155.

Forex Trading: 14 March 2012

The recent dollar strength has really been the theme of FX CFD trading markets recently.

This has largely been to the detriment of the euro and yen where EUR/USD has been grinding lower and USD/JPY has been adding to its impressive rally.

As the equity markets have been rallying with risk appetite increasing in the past we would expect this to translate into dollar weakness. However this has not been the case recently and the dollar's recovery indicates a shift in sentiment towards the US.

The single currency is still holding onto the $1.3000 level trading at $1.3040 this morning but the bears might want to test the recent lows around $1.2980.

For USD/JPY which is at ¥83.30 at the time of writing ¥83.50 and ¥83.75 are the next targets for the bulls.

Forex Trading: 13 March 2012

The Greek bailout was finally made official yesterday and, whilst it didn't lead to any sell off in the forex spread trading markets, the euro didn't jump for joy either.

It seems that investors were effectively pricing in the prospect of the country needing yet another bailout further down the line.

The money will go some way to alleviating the pressure on the country over the near term. However, in order for the targets set by the EU to be hit, and to give Greece a fighting chance of avoiding the need for another bailout, it desperately needs growth.

In fact the whole of the Eurozone needs growth in order for it to avoid a catastrophic bout of contagion that will drag Portugal and then Spain and Italy into the mire.

FX traders saw the euro jump higher yesterday as Eurozone finance chiefs signed off a second bailout for Greece.

The €130bn package is expected to be made later this month and has finally put an end to the 'will they, won't they' speculation that has ruled the market swings recently.

That said, the single currency is down this morning against the dollar as expectations are for those strong US retail sales possibly showing a rise by the most in 5 months.

As a result traders are favouring the dollar on the back of the good news with EUR / USD trading at $1.3147 this morning. This dollar strength might continue once the US retail sales figures are released later today.

Forex Trading: 12 March 2012

FX spread trading investors were all on alert to see what the take up would be for private bondholders of Greek debt agreeing to take a haircut.

It was said that anything over 75% would be seen as positive for the nation and would also mean that the other 25% had no choice and would have to go with the move.

The participation rate was over 85%, but strangely traders took this as bearish and sold the single currency.

Coincidently, the strong NFP data showing that US jobs increased by 227,000 jobs, much better than expected, this actually ended up in a flight to the dollar, sending the riskier currencies such as the euro lower.

The euro - dollar spread trading market fell to $1.3120 at the end of the day and hasn't really made much ground since then.

This morning the pair are trading at $1.3100, but with the news that ECB President Draghi is willing to provide unlimited cash to the region's financial system, it seems traders are generally feeling more positive about the single currency.

Forex Trading: 09 March 2012

Is this the final breaking point in the conversation over Greece? Unfortunately I fear not as we've been here so many times before.

It would be nice not to have to talk about the peripheral Eurozone nation and that maybe the case for the next few months after the PSI agreement deadline was finally met last night.

But if you think that there'll be no more talk about the Eurozone and the effect that it's recession and ongoing sovereign debt crisis then I'm afraid that you are mistaken.

The finer details of Greece's bond swap are being thrashed out with claims that a decent amount of the private creditors are taking part. Greek officials are saying that the target of 95% participation has been met, allowing them to claim that the agreement is completely voluntary.

Either way this is slightly academic as the deal has been done and Greece can now write down vast swathes of the debt it owes to private investors and move on.

The focus of the spread trading markets is likely to shift onto other parts of the Eurozone with Portugal being the main target.

Things here are looking decidedly dodgy too and many believe that they'll need another bailout from the EU, despite the efforts the country has been making in order to deal with its debt problems.

So far this morning the yields on the ten year bonds for Spain and Italy remain placid so there's no real fear at the moment.

The euro is just softening this morning and bears will be claiming that the move higher in the last couple of days was a dead cat bounce.

EUR/USD is at $1.3215 at the time of writing and once again all eyes for FX spread trading investors will be on the NFP number later today.

Near term support is seen at $1.3200, $1.3170 and then $1.3100 meanwhile resistance is seen at $1.3285 and $1.3350.

Forex Trading: 08 March 2012

The spread trading markets have picked up following the falls from earlier in the week assisted by the prospect of the required PSI on Greek debt for the country to avoid default.

By the deadline tonight we will have a better idea of just how much of the €206 billion of private sector loans will be swapped for longer dated and lower yielding bonds.

This should finally get Greece out of the firing line and as more PSI has become apparent the markets have become perkier.

The euro was back in favour with those spread trading on forex as risk assets rebounded. If just 66% of bondholders agree to the deal, it would mean they can force the remaining who disagree to take a loss.

The expectation is that the Greek government will get at least 75% of them to agree and the positive news is pushing the single currency higher this morning.

It is currently trading at $1.3179 against the dollar this morning. We could see this move higher if the outcome is a positive one for Greece.

Forex Trading: 07 March 2012

No one seems immune to the slow down in growth across the world as we saw China downgrade its GDP forecasts at the week end and this morning Australia had GDP data for Q4 which was much lower than expected.

This is an economy that has been absolutely booming and a direct beneficiary of the rapid growth in China so this morning's figure is yet another worrying piece of data.

Investors are simply factoring in the risk of the worst case scenario, if the PSI involvement was poorly subscribed and this led to a default by Greece on its debt.

Such an event would be very bad news. However, even though the recent indications have been of limited PSI, the creditors of Greece would rather see a substantial write down of their assets in exchange for other interest bearing bonds as opposed to losing the whole lot.

It is unlikely that come tomorrow Greece will end up defaulting, but you have to prepare yourself for the slim chance that it might happen, which is why we've seen the selling across risk assets.

On the FX spread trading markets, the euro was not immune to the selling yesterday as it suffered from yet another attack by the bears.

EUR/USD nearly touched on the $1.3100 mark but just seems to have found a little bit of support taking it to $1.3165 this morning. The lack of public commitment from the Greek PSI is really taking its toll on the single currency.

The dollar's recovery against the Yen looked to have triggered a bit of a short term bearish signal as it dipped below the 200 period moving average on the hourly chart. USD/JPY is at ¥80.75 this morning but seems to be holding on for now but remains well below its recent highs.

We've seen too many times before the dollar make a come back against the Yen only for it to be short lived. As a result, some dollar bears, which may have suffered a little from the recent squeeze, might be positioning themselves for a reversal of the recent move. You can only really expect that to happen if risk appetite picks up again.

Forex Trading: 05 March 2012

March so far hasn't been great for the euro on the forex spread trading markets as it has been on a constant decline against its peers.

Despite the ECB's liquidity operation countries like Spain and the Netherlands aren't doing much for the cause, saying there is a possibility for more austerity measures to keep their shortfalls under control.

After Germany announced that their retail sales declined, we have the bigger European sales data out today which is also likely to have an effect on the single currency.

This morning the EUR / USD spread trading market is trading down at $1.3190. Depending on the result for Greece this week we may see further falls unless the news is good.

By Simon Denham, 16 March 2012

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