European index CFD trading markets look set to finish the week on a downbeat note, despite some better than expected US employment data for December.

An initial move higher towards the highs of the week proved rather short-lived given the weak backdrop in Europe and the disappointing Eurozone and German data seen earlier this morning.

The Italian market has continued to suffer with Unicredit once more under the cosh slipping even lower, and pressuring financials across Europe.

The FTSE 100 CFDs market looks as if it could be the European out performer finishing the week on a positive note, while the DAX, FTSEMib and CAC40 look to finish the day lower.

The biggest fallers in the UK market include fund managers Man Group and Ashmore after Credit Suisse cut Ashmore to “neutral” while Man suffered on the basis of a price downgrade.

Interdealer broker ICAP is also down in the basement, while on the upside Vodafone is higher after being upgraded to “buy” by Goldman Sachs with a price target of 245p.

Terrestrial broadcaster ITV is also doing well after being upgraded to “overweight” by Morgan Stanley, while satellite broadcaster BSkyB felt the effects of a downgrade by the same broker.

US markets opened slightly lower despite a positive December payrolls report. The numbers came in at 200k, above expectations of 155k, while the unemployment rate dropped to 8.5%.

However, upside has been tempered by the fact that even though the numbers are above expectations, they aren’t enough to suggest a sustained recovery in the US economy, and they also make further QE less likely in the near term.

With Q4 earnings season starting in earnest next week with Alcoa due to report on Monday, investors appear to be holding fire until there is a clearer understanding about the direction of company profit margins and events in Europe.

The pound has been amongst the bigger fallers on the day but this decline has to be set in the context of a very positive week overall. It is still currently close to its highest levels in 10 months against a basket of currencies.

It also hit 15 month highs against the beleaguered euro which again has been hit hard across the board today on the back of an awful German factory orders number, and poor Eurozone retail sales numbers for November.

Eurozone retail sales slumped 0.8%, double market expectations, while factory orders slid 4.8% also well outside expectations of a 1.8% drop.

With Italian yields remaining stubbornly above 7% despite ECB buying expect the single currency to come under further pressure.

The US dollar has once again outperformed, approaching one year highs against a basket of currencies, on the back of improving US economic data.

Until recently, good US data had seen the US dollar decline. However this correlation appears to be decoupling largely to do with the fact that further QE in the US is now much less likely.

Conversely, the single currency is likely to see further rate cuts going forward especially with the first ECB rate meeting of 2012 due next week.

Despite the rally in the US dollar, gold prices have continued to retain their resilience but need to get above the 200 day MA at $1,632 to alleviate additional downside risk.

The weekly candle chart appears to be forming a bullish candle reversal but this has to be confirmed on the New York close today.

Despite uncertainty about the situation in the Middle East any prospect of rising tensions are going to continue to be a factor on Brent prices for the foreseeable future, with investors nervous about Iran as well as events in Syria.

Even though prices are a little weaker today today’s suicide bomb in Damascus highlights the tensions in the region. If prices break above the three month highs around $116, we could see a move to $120 fairly quickly.

Copper prices have slid back as equity markets have struggled to push much beyond their recent highs.

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

Despite the negative news headlines after the close last week, with the ratings warnings from Fitch, and the geopolitical uncertainty out of Asia from early this morning, markets initially managed to broadly recover from their lows.

Trading has remained subdued though, as investors appear to be sitting on the side-lines as pre-Christmas volumes take centre stage.

Banks have been in the spotlight in the wake of an announcement from George Osborne about the implementation of measures to split up the investment and retail parts of UK banks.

Lloyds has been heaviest hit, closely followed by Barclays, while HSBC and Standard Chartered have been hit the least, with talk they may be granted an exemption so the ring fence only relates to its core UK operations and not its global ones.

Other fallers include hedge fund Man Group after being downgraded to “sell” by Deutsche Bank.

The retail sector is once again feeling the pressure after HMV once again saw profits slide, losing £45.7m.

The commodities sector is also weaker with mining and oil and gas sectors lower on the back of geopolitical uncertainty out of Asia.

On the upside more defensive stocks are helping to stem the downside with Imperial Tobacco the best performer.

Also doing well is temporary power provider Aggreko after once again beating analyst expectations. It continues to win contracts all over the world the latest a $100m power contract extension in Bangladesh and is 20% up year to date.

US markets have shown their customary resilience opening higher this morning despite the political concerns in Asia and the concerns about European ratings.

The biggest gainers are defensive stocks with Pfizer and Merck leading the gainers, while financials continue to get hit with Bank of America and JP Morgan leading the fallers.

The US dollar has been somewhat mixed today with the commodity dependant Australian dollar getting hit the hardest as commodity prices slip back.

The single currency has found upside momentum difficult to sustain in the aftermath of Friday’s downgrade of Belgium by Moody’s and Fitch’s decision to put France, Italy and Spain on downgrade watch negative.

Its comments that a solution to the euro crisis remains “beyond reach” has been greeted with some ambivalence.

Today’s meeting of Eurogroup ministers is more likely to highlight the differences between EU nations with respect to the fiscal compact while the subject of bi-lateral loans to the IMF is also likely to create some divisions, with the UK resistant to the idea of paying up an extra €30bn.

ECB President Mario Draghi’s comments to the EU parliament merely served to confirm previous statements made in the last couple of weeks, though he did suggest that CFD trading investors should rely less on ratings agencies for their investment decisions.

There was also no indication that the ECB was considering any form of mass buying of European bonds.

The best performers have been the Norwegian and Swedish Krona, along with the Canadian dollar.

Oil prices continue to be buffeted by the competing forces of concern about European growth as well as rising tension in the Middle East. The price initially made 6 week lows below $102.50 before rebounding sharply.

Copper prices have pulled back from their lows, but still remain slightly softer on the day.

Gold prices have tried to push back above $1,600 but it appears to be struggling to get back above the 200 day MA. Until it does so the risk of further downside remains.

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

The Eurozone debt crisis appears to be spreading quickly, threatening to turn a regional crisis into a global crisis.

Fitch rating agency stated that further contagion would pose a risk to US banks. As a result risk assets continue to be sold but interestingly crude oil prices are climbing.

Coupled with comments from the Bank of England that failure to find a resolution will lead to “significant adverse effects” on the global economy, it highlights the risks of both economic and financial contagion.

For some European countries this is becoming a crisis of confidence and a breakdown in political talks is resulting in an ever worsening spiral of negativity.

While Monti was sworn in as Italian Prime Minister and Papademos won a confidence motion in the Greek parliament the hard work begins now for both leaders in convincing markets of their reform credentials.

Given that there is no agreement from Eurozone officials forthcoming, sentiment is set to worsen further, with safe haven assets the main beneficiaries.

EUR/USD fell sharply in yesterday’s session on the forex CFD trading markets, hitting a low around $1.3429. Attempts to rally were sold into, with sellers noted just below $1.3560.

Even an intensification of bond purchases by the European Central Bank (ECB) failed to prevent Eurozone bond yields moving higher and the EUR from falling.

Against this background, and in the absence of key data releases, EUR will find direction from the Spanish 10 year bond auction while a French BTAN auction will also be watched carefully given the recent increase in pressure on French bonds.

Having broken below $1.3500, EUR/USD will aim for a test of the 10 October low around $1.3346 where some technical support can be expected.

Over to the US and data releases have been coming in better than expected over recent weeks. This is acting to dampen expectations of more Fed quantitative easing and in turn helping to remove an impediment to USD appreciation.

While the jury is still out on QE, the US dollar is enjoying some relief from receding expectations that the Fed will forced to purchase more assets.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

The CFD trading markets remain tense as we move into the weekend, even in spite of Italian politicians lending their support to Mario Monti being appointed as interim Prime Minister.

The markets are hoping that the replacement of current Prime Minister Silvio Berlusconi will be someone who is able to push through reforms that EU, IMF and the markets think Italy needs to bring to make its huge debt pile manageable.So far yields on Italian bonds however have refused to budge.

To compound Eurozone woes Standard & Poor’s, the ratings agency, mistakenly suggested that it had downgraded France’s Triple-A rating sending yields on French debt markedly higher. The spread between French and German borrowing rates moved to a new high of 1.7 per cent and the Euro followed suit losing ground against the Dollar and Sterling.

This morning there are reports that the ECB has begun buying bonds in the secondary markets, which is lifting the Euro in early trading.

Data wise this morning the main focal point will be UK PPI numbers which are important to keep an eye on given the Bank of England is waiting in the wings to further expand QE either next month or early next year if the economic picture continues to deteriorate.

Most of the financial newspapers are reporting the news that UK gilt yields continue to fall, and that the UK government bond market is now a safe haven for investors.

The market can be very fickle, and it could be a combination of risk aversion and front running the Bank of England that is driving down yields rather than any expression of confidence in the UK economy as a whole.

Today is a bank holiday in America so we can expect very light trading after lunch. Next week sees a large amount of data released on the US, UK and Eurozone including German GDP and CPI data in the US.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

The situation in Greece continues to remain at the forefront as the continuing uncertainty spills over into every corner of peripheral Europe.

Italian and Spanish bond markets continue to feel the heat, while the European economy is also likely to continue to feel the strain of the continued turmoil.

Despite confusion yesterday as to whether a referendum might take place Greek PM Papandreou confirmed that it would last night after convincing his cabinet to back him, as he prepared to meet Merkel and Sarkozy in Cannes later tonight. Oh to be a fly on the wall for that meeting!

In any event it remains to be seen if his government will survive the week given his very shallow parliamentary majority, while EU leaders remain likely to insist its last week’s plan or no plan, with speculation that the next tranche of IMF aid could be withheld.

The release of the final manufacturing PMI data from Germany, France, Italy and all the Eurozone is expected to confirm that the chill winds of recession are starting to blow in.

German and French PMI are expected to be confirmed at 48.9 and 49, but it is Italy that continues to occupy the markets worst fears with expectations of a further contraction to 47.2. Eurozone PMI is expected to flat line around the 50 level.

Italian bond yields surged yesterday as investors’ dumped Italian debt and they are likely to remain under pressure while markets fret about the state of Italy’s finances and the political will to deal with them in the wake of events in Greece.

German unemployment is set to slip back by 10k while the unemployment rate is expected to remain unchanged at 6.9%.

In the UK the latest construction PMI data for October is expected to increase fears about the state of the UK economy despite yesterday’s better than expected Q3 GDP numbers. Manufacturing PMI data slipped sharply yesterday from 50.8 the previous month to 47.4 in October, with new orders sliding to 44.3.

Today’s construction PMI isn’t expected to offer any silver linings with expectations of a contraction as well to 49.8, from 50.1. Tomorrow is the key number and the services PMI given that it makes up over 60% of the UK economy. If this disappoints the alarm bells will be ringing even louder.

In the US as a prelude to Friday’s payrolls report the October ADP report is due out with expectations of private sector job growth of around 100k, up slightly from September’s 91k. A weak number here will increase speculation about further easing measures from the Fed at the latest FOMC meeting later today.

Yesterday’s weak prices paid number from the ISM suggests that pricing pressures appear to be diminishing, and in light of recent dovish comments from Fed members Yellen and Dudley there is speculation is some quarters that the Fed may hint at further measures. This seems unlikely at this time.

 
EUR/USD CFDs

We’ve seen a 500+ point move in two days and hit the EUR/USD CFDs hit the 1.3650 level without breaking a sweat, however we weren’t able to close below it so we could well get a pullback to 1.3850.

This plunge once again brings back into focus the longer term objective for a move back towards the 1.3000 level. The past week’s price action has been brutal and we could even pullback to the 200 day MA at 1.4105, however that isn’t the most likely outcome.

A close below 1.3650 re-targets further losses towards 1.3520.

The outlook remains for a longer term move towards 1.3050, which is the 61.8% retracement level of the 1.1880/1.4940 up move.

 
GBP/USD CFDs

The push lower in cable yesterday keeps the move towards the downside intact with the 200 day MA at 1.6140 remaining the top side barrier.

As such the downside potential in cable remains intact while below 1.6140. A move beyond 1.6140 targets 1.6300.

The 1.5850 level continues to keep a floor under the downside, but a break below this level could well open up further losses towards 1.5630. For now we could see rallies find resistance at 1.6020.

 
EUR/GBP CFDs

Yesterday’s push lower fell just shy of the twin lows at 0.8530 but the broader range remains intact with resistance on pullbacks now at 0.8650, and behind that at 0.8720.

As such the broader range of 0.8500/0.8800 remains intact, however the bias remains for a test lower towards 0.8450, followed by 0.8305, on a break below 0.8530.

 
USD/JPY CFDs

The fear of further intervention by Japanese authorities continues to keep a floor under the US dollar around the 77.70 area, after this week’s earlier failure to push beyond the 200 day MA at 79.80/90 and also trend line resistance from the 2007 highs at 124.15 at the same level.

Only a move and close above this key level could well signal further US dollar gains, otherwise we could see a drift back lower, on a break below 77.70.

 
Stock Market CFDs – Market Calls

• FTSE 100 is expected to open 60 points higher at 5,482
• DAX is expected to open 75 points higher at 5,909
• FTSEMib is expected to open 265 points higher at 15,193

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

When IMF chief Christine Lagarde stated at Jackson Hole that the world economy was in a “dangerous new phase”, little did she know that her words would turn out to be so prescient in such a short space of time.

Fears that the global economy is tipping back into recession have continued to be borne out by various economic indicators from Asia to the US, with Chinese manufacturing data contracting for the third month in a row.

In Europe the picture isn’t too much better with German manufacturing bordering on stagnant, while broader European manufacturing continues to contract.

The outlook for the European banking system remains highly uncertain. Downgrades for seven Italian banks and uncertainty over the next tranche of the Greek bailout all suggest that the banks could be undercapitalised to the tune of €300bn and that politicians need to act now to avert a crisis.

With central banks running out of bullets to deal with the crisis a number of G20 leaders co-signed a letter to the head of the G20 Nicolas Sarkozy urging European leaders to find a solution to the European debt crisis, as well as urging US leaders to put America’s public finances on a more stable footing.

Given that the main obstacles to expanding or leveraging the European bail-out fund (EFSF) are differences of opinion and political in nature, rather than economic, that could well be a big ask.

Today’s continuation of the G20 meeting and the annual meeting of the IMF will offer leaders the forum to give early indications of progress.

Last night’s statement to commit “to a strong and coordinated international response to address the renewed challenges facing the global economy” was a start. However, given the fragmented framework inherent to Eurozone it is unlikely that politicians will be able to offer anything other than soothing words or that action will be taken.

We shall soon find out in any case, as the euro region in last night’s communiqué pledged to increase the flexibility of the EFSF by the time of the next meeting on October 14-15th. Moreover, ECB member Luc Coene indicated that measures, including a possible rate cut, could well be taken in October if economic data continues to disappoint.

Online CFDs Markets will be analysing the contents of ECB president Trichet’s speech tonight for further clues about that.

In any case the US dollar has benefited the most as in an almost action replay of 2008 commodities and equities sold off hard on growth slowdown fears.

Even gold has slumped as investors rotated capital back into cash to cover losses on trading books, and to cover margin calls.

The only economic data of note today is Italian retail sales for July with expectations of a rise of 0.3%. This won’t assuage concerns about future Italian growth after the Italian government slashed its growth forecasts for 2011 and 2012 in the wake of IMF growth downgrades.

Given that the yields on Italian bonds continue to rise, despite ECB intervention, there is a real fear that if the Greek situation isn’t resolved soon Italy would feel even more heat from the bond markets.

 
EUR/USD CFDs

Yesterday’s sell-off found support at 1.3390 just below the 50% Fibonacci retracement level at 1.3405 of the entire rally off the 1.1880 lows in 2010 to the highs this year at 1.4940.

A sustained break of this level would then target 1.3050 which is the 61.8% retracement of the same move. T

he bounce off this support area could well see a pullback in the medium term towards 1.3670, but the close below 1.3500 the previous lows this month undoubtedly keeps the outlook negative for further declines.

 
GBP/USD CFDs

Yesterday’s break below the 1.5485 50% retracement of the 1.4230/1.6745 up move at 1.5485 shifts the focus definitively towards 1.5190 in the near term despite the bounce off 1.5330 yesterday. The pound could well struggle to rebound much beyond 1.5485 as the downward pressure continues to weigh on sentiment.

 
EUR/GBP CFDs

After initially losing ground in early trade the single currency managed to rebound off support at 0.8700 but again has been unable to move much beyond the recent range highs and last week’s high at 0.8790, however this remains the extent of the rebound thus far.

While below the trend line resistance from the 0.9085 highs at 0.8810 the bias remains for more range trading with an eventual move back towards the lows at 0.8530, and then on towards 0.8450.

 
USD/JPY CFDs

Once again the inability to rally and weak US bond yields keeps the pressure on the US dollar, however the base is just about managing to stay intact for now.

As such the bias remains for the prospects of further gains, on a break above 77.20.

Any move below the key lows at 76.20/30 could well see further US dollar losses towards 74.50.

 
Stock Market CFDs – Market Calls

• FTSE 100 is expected to open 40 points higher at 5,082
• DAX is expected to open 52 points higher at 5,216
• FTSEMib is expected to open 152 points higher at 13,634

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

European markets have shrugged off the downgrade of Italy’s sovereign debt by Standard and Poor’s last night as optimism about a successful conclusion to the on-going troika negotiations gains traction.

The payment of two scheduled bond coupons amounting to €769m has also improved sentiment and allayed concerns of an imminent Greek default, with UK markets heading back towards their recent range highs.

Markets have also shrugged off significant growth forecasts downgrades by the IMF for the US, Europe and the UK, for 2011 and 2012.

The biggest sector gainers have been technology stocks with ARM Holdings higher after a rating upgrade a US broker, while more defensive pharmaceutical stocks have also done well with AstraZeneca and Glaxo also performing well, which seem to suggest that while risk appetite has improved, there still remains some caution with respect to a more defensive stance amongst investors.

Another gainer has been US based Carnival Cruise Lines which bucked expectations of Q3 earnings of $1.62c a share to come in at $1.69c a share, boosted by higher ticket prices which helped offset higher fuel costs.

The company has downgraded its full year earnings guidance which could well temper the advances in the coming days.

GlaxoSmithKline is also a good performer on the day, as more defensive shares do well, while retailers are also performing well with luxury fashion retailer Burberry one of the stand out gainers.

On the downside British Airways owner International Consolidated Airlines is the dud of the day, down after international peer Lufthansa cut its full year profit target citing a slump in forward bookings.

US markets opened higher this morning ahead of the start of the two day FOMC meeting.

In earnings news cruise ship owner Carnival announced better than expected Q3 earnings of $1.69c a share up from last year’s equivalent of $1.62c a share.

Adobe Systems is also due to report Q3 earnings of $0.54c which is expected to be unchanged from the same period last year.

Also due after market close is Oracle Q1 earnings with expectations of $0.47c a share up from the $0.42c a share from a year earlier.

Economic data was a mixed bag with housing starts for August sliding 5%, well above expectations of a fall of 2.3%, while building permits jumped 3%.

Despite Italian bond yields continuing to rise, in the face of continued ECB buying the single currency has rebounded after initially falling on the back of the Italian downgrade.

Markets remain hopeful that tonight’s troika conference call with Greece will result in some form of agreement, while the completion of the latest coupon payment has allayed concerns of an immediate default, and pushing the euro back towards the Friday close around 1.3770.

The biggest faller on the day has been the Swiss franc after some disappointing trade numbers for August, which showed that the recent rise in the Swiss franc had eroded the current account surplus from Sfr2.81bn in July to a much smaller Sfr0.81bn, while a rumour wept the market that the Swiss National Bank was going to increase the peg in EUR/CHF up to 1.2500.

Copper prices have remained somewhat bogged down despite a recovery in equity prices today.

Gold prices have rebounded from yesterday’s lows around $1,765 as concerns about Europe continue to dog sentiment.

Oil prices have bounced back from their recent lows as equity markets have rebounded and on the back of some US dollar weakness ahead of the start of the FOMC meeting this afternoon which will be concluded tomorrow.

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

European Central Bank head Jean-Claude Trichet reduced bond purchases to €14.3bn from €22bn after its buying provided well needed relief to Italian and Spanish yields.

As borrowing costs for Italy and Spain soared to unsustainable highs earlier this month the ECB reactivated its controversial bond-buying programme. This has been successful so far, as Italian and Spanish bonds have fallen back to around 5% from above 6% previously and before ECB intervention.

Unfortunately this is not the case throughout the Eurozone, as yesterday saw Cyprus bond prices sore to 7% on €23.1m worth of 10-year bonds, compared to 6.25 per cent at a similar auction in June.

Officials in Cyprus reacted by declaring it would consider additional austerity measures with a two-point increase in sales tax, a three per cent contribution from civil servants’ salaries and additional tax for high earners.

Continuing on the European theme and fresh concerns for Greece after ratings agency Moody’s said demands for collateral from some of the states providing rescue funds could put its bailout at risk.

Greece agreed last week to provide AAA-rated Finland with cash collateral for its loans to Athens, in a bilateral agreement that sparked requests for similar treatment from Austria, the Netherlands and Slovakia.

Moody’s became the first rating agency to warn that the row over collateral could scupper payouts to Greece, saying a proliferation of such deals would be credit-negative for a nation it currently rates at Ca, just one notch above default.

Meanwhile the price of gold continues to rise and hit the $1,900 an ounce mark for the first time.

The main driver behind this is growing concern about the global economic recovery and the expectation of further increase of the supply of dollars by the US Federal Reserve. The commodity rose nearly 1% to $1,913.50 an ounce over night but then gave back these gains, as confidence returned and stock markets rallied after the open of trading in Europe.

Concerns of a slowdown in the US and the debt crisis in Europe have spurred demand for gold, which is seen as a safe-haven during difficult times. A further driver for this move is rumours that the US Fed may announce a further round of QE in an attempt to boost the slowing economy at the Jackson Hole summit later this week.

We are due several pieces of economic information from the Eurozone this morning with PMI data and the ZEW survey scheduled for release.

It is hard however to be very upbeat over these given the recent surveys and the resulting reaction in equity markets and whilst the Dollar has not been performing too well during the summer, it looks likely to benefit today, along with Sterling, at the Euro’s expense.

Any gains for the Pound might prove short-lived however, with the CBI industrial orders release later this morning expected to show a further decline in activity. Ahead of the UK GDP update later in the week, this might be enough to push the currency back down again.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

With the New Zealand economy aligned mainly to food exports, it might seem unfair that the Kiwi dollar has been caned for a global growth scare; but that is the reality.

In a week, it has fallen by nearly 5% against sterling and the yen – not through any shortcomings of New Zealand itself, but because online CFDs investors are scared.

A couple of things worked against all the commodity oriented dollars (the story is the same for the Australian and Canadian currencies); Euroland’s debt crisis worsened as southern Europe was forced to pay more for its borrowings, and the US’ debt crisis remained unresolved by a deeply cynical cross party compromise on reducing the US deficit.

Taken together, they indicate a global economic slowdown and they have provoked a worldwide flight to quality. Everybody wants the Swiss franc and nobody wants equities or global growth related currencies. Investors are so twitchy that sentiment could change at the bat of an eyelid, but it’s not obvious where to look for that change.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Review by Moneycorp. For more information and expert guidance on the currency markets, call Moneycorp today on +44 (0)20 7589 3000. Alternatively go to www.moneycorp.com where you can open a free, no obligation Trading Facility.

Turmoil continued on the markets yesterday as investors around the world fled to the safe havens.

This led the price of Gold to jump above $1,700.00 for the first time in its history. Traders, who once would have jumped into the Greenback for safety, shunned the Dollar as the markets opened following the downgrade of US Debt by S&P.

The Swiss Franc remains the only currency that has been looked as a safe bet despite the Swiss Central Bank doing everything in their power to weaken their currency.

Commodity currencies like the Canadian and Australian Dollars and the South African Rand, which have strengthened over the past 2 years, have all taken hits of 7-9% over the last fortnight. The Dow Jones finished 634 points down.

Sterling has actually remained relatively buoyant over the recent chaos in spite of the UK’s figures continuing to range above and below expectations.

With most of the markets embroiled in the ongoing Eurozone and US problems, the UK has stayed quiet and the long-term plan of both higher taxes and reduced spending to cut the deficit seems to be starting to take effect.

An interesting bit of news out today was that the price of German CDS’s (Credit Default Swaps) rose above that of the UK’s for the first time ever. This is potentially a huge step as Germany has been seen as a rock in the markets despite the fact they are bailing out most of Europe.

If the cost of insuring debt is cheaper in the UK, then the bond markets (which generally are the first sign of change) could be showing the way for a rise in Sterling against the Euro over the coming months.

 
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