Forex Update 25 January 2013

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Forex Trading: 25 January 2013

The Eurozone saw some better-than-expected manufacturing numbers yesterday due to some good surprises coming out of Germany. This helped push the shared currency 54 points higher to $1.3372.

However, the short-term outlook for the euro remains one of consolidation, with the EUR/USD market price swinging around the current levels for nearly two weeks.

The German business confidence indicator, due later today, is expected to rise for the third month in a row. Accordingly, the single currency is a little higher this morning in anticipation, currently trading at $1.3415.



Forex Trading: 24 January 2013

In forex spread trading, the euro-dollar market fell by around 0.2% yesterday and is currently trading at $1.3315 this morning.

This follows today's German manufacturing PMI survey which beat expectations, showing activity shrank by less than expected in January.

In addition, the dollar fell from a one-week high against the euro as the Federal debt ceiling was temporarily suspended, increasing investors' appetite for higher yielding assets.



Forex Trading: 23 January 2013

The euro-dollar pair moved up in early trading yesterday only to give up its gains later on, finishing nearly flat at $1.3317.

It's true that ZEW economic sentiment in Germany surprised to the upside, but perhaps investors were focused more on the Eurozone finance ministers meeting in Brussels.

The EU officials welcomed progress in Greece, Spain and Portugal but the debate on future bailout mechanisms is just beginning.



Forex Trading: 22 January 2013

The forex markets seem to be the place for volatility at the moment, with the euro and yen going walkabout.

The euro has risen to $1.34 after recovering from the lows of last year. However, the EUR/USD market did reach $1.49 during 2011 and even spent much of the start of 2012 around current levels, so any talk of massive rallies should be taken with a pinch of salt.

For the technically minded, the pair has resistance at $1.3400/10 and $1.3445/55, with support at $1.3325/35 and $1.3300/10.

Also see today's forex feature Financial Spreads Clients Look at Selling the Yen.



Forex Trading: 21 January 2013

The forex markets have seen the major currencies slip into two groups, with the euro and US dollar strengthening, and the yen, Swiss franc and pound weakening.

Noticeably, the EUR/CHF market only managed a paltry 200 point range throughout the entirety of 2012, but it has already managed a 500 point range in the first two weeks of 2013.

The Swiss central bank's holding of the SFr 1.20 line seems to be paying off, and I can imagine that a lot of positions are being unwound as currency funds get squeezed out of their trades.

The GBP/USD market continues to 'weaken', but in reality we are still very much in the range that has dominated since July 2010, trading between approximately $1.53 and $1.66.

With the current price at $1.5870, we are pretty much bang in the middle, with very strong support around the $1.5835/15 level.

Despite all of the headlines regarding the Eurozone and the US, the yen has been the biggest mover of the year so far.

After seeing the USD/JPY pair hang around the ¥76-84 range for the last two years, the prospect of a 'print and spend' government coming in has finally concentrated minds on the massive Japanese deficit.

The USD/JPY rate is now just trading under the ¥90 level, but the uber-bulls will be looking much higher than this at ¥100 and above.

The bears will be hoping for a pull-back to correct some of the recent moves, but it is fair to say that the sellers seem to be struggling to make much of an impact at the moment.

If we do see a downside move, there is good support at ¥89.30/40 and ¥88.90/10.



Forex Trading: 18 January 2013

Spanish borrowing costs fell at an auction yesterday, showing that Europe can also hold its ground after the ECB, like the Fed, promised unlimited easing action should the situation get worse.

Is the saying 'don't fight the Fed' becoming 'don't fight the ECB either'?

Either way, despite last week's dismal Eurozone GDP numbers, the optimism reached into the FX markets and sent the euro 88 points higher to $1.3374, which is where it remains this morning.



Forex Trading: 17 January 2013

Disappointing export numbers saw the German government cut its growth forecast for 2013 yesterday, signalling worries that Europe's economic engine is losing steam.

With elections later in the year, it could become increasingly difficult for Chancellor Angela Merkel to allow bailouts for the Eurozone without alienating voters.

Consequently, the shared currency dropped 25 points to $1.3287, although euro-dollar analysis shows that the pair did manage to hold above its short-term moving averages.

As a result, the euro has managed to recover a little and is hovering around the $1.3300 level this morning.



Forex Trading: 16 January 2013

We saw some ill-timed comments from Luxembourg Prime Minister Jean Claude Juncker yesterday, who said that the shared currency is 'dangerously high' after touching recent records versus the dollar.

What followed was a 72 point decline to $1.3312, interrupting a three day rally for the EUR/USD market.

Worries that Germany, Europe's biggest economy, is also starting to struggle has added another pessimistic touch, accentuating the sell off.

This morning, the risk-off appetite is still affecting the single currency as it slips down to $1.3285 at the time of writing.



Forex Trading: 15 January 2013

Today sees lots of inflation data due for release on both sides of the Atlantic and US retail sales figures are set for release at lunchtime.

Eurozone politicians across the board have come out to reiterate their optimism that the worst part of the crisis is 'probably behind us'.

The display implied coordination and a show of unity, which seems to be what financial spread betting investors wanted to hear.

As a result, the demand for the euro was boosted, sending its price against the US dollar to $1.3383.

However, in the short-term, there are still potential questions about a bailout for Cyprus and the elections in Italy next month.



Forex Trading: 14 January 2013

The euro-dollar pair continued its climb on Friday following comments by German Finance Minister Wolfgang Schaeuble saying that the common currency has seen 'the worst of the crisis'.

Consequently, the euro reached $1.3336 for the day, the strongest level since early April last year.

The risk-on mood was still prevalent in the currency markets overnight, however, along with the stock markets, this morning the pair is a little softer at $1.3360.


By Simon Denham, 25 January 2013


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