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.

European stock markets started the year in optimistic style, with gains led by the German DAX index after the release of better than expected levels for Eurozone purchasing managers indices (PMI).

Furthermore, Chinese data indicated a rise in its PMI which helped to boost risk sentiment. The Eurozone data however, remained at a weak level, contracting for a fifth month in a row, and remains constant with Eurozone recession.

One would not expect this equity rally to continue over the rest of this week, as risk aversion is set to play out alongside the on-going Eurozone debt and global growth worries.

Without doubt, both French and German leaders in their new-year messages talked about the risks ahead. A summit between Germany’s Merkel and France’s Sarkozy is planned for January 9th ahead of an EU Finance Ministers summit on January 23rd.

It is unlikely that there will be any major policy decisions in Europe before then.

In the meantime, German press reports suggesting that Germany is pushing for an even bigger write down of Greek debt than previously approved will only add to risk aversion over the short term.

The report in the Greek press highlighted the prospect of a 75% write down of Greek debt a far cry from the 20% proposed some months ago.

Eurozone markets continue to be troubled by the scenario of credit downgrades by major ratings agencies at a time when many countries have to issue hefty amounts of debt to suit their funding needs.

Against this background the EUR is set to remain under pressure, with a notable drop below 100 for the EUR/JPY CFD trading markets, its lowest level in over a decade registered. Reflecting the deterioration in sentiment for the currency, EUR speculative position hit an all-time low at the end of last year.

This is unlikely to reverse quickly, with sentiment set to deteriorate further over coming weeks and months as the EUR slides further.

 
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.

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European markets have drifted higher today with the FTSE 100 lagging behind.

A better than expected Spanish auction saw bond yields drop sharply, while a better than expected German IFO survey saw investors become more positive about a German recovery as we come to the end of Q4.

The DAX, CAC40 and FTSEMib are all up over 2%, while the FTSE has lagged a long way behind, with a rise at the time of writing, below 1%.

This may have more to do with the fact that the other European indices have a much smaller component make-up than the FTSE which benchmarks 100 stocks.

With trading volumes remaining fairly light in pre-Christmas trade it remains hard to imagine that this is anything but a slow news day rally.

The best performers are technology stocks with ARM Holdings once again the subject of takeover speculation.

Temporary power provider Aggreko is also higher after its positive trading statement yesterday, and after Citigroup raised its earnings forecasts by 12%.

Industrials are also performing well with Weir Group, IMI and GKN near the top of the leader board.

The worst performers have been in the pharmaceutical sector slipping back after AstraZenenca and some of its sector peers reported product issues and an evaporating pipeline.

Banks were initially under pressure, especially Royal Bank of Scotland in the wake of the Vickers report, but given that it is trading quite close to multi month lows it soon pared those losses.

Retailers are also trading positively after retail sales figures from the CBI showed a surprise jump in December, to a seven month high, with Kingfisher leading the sector higher.

US CFDs online markets opened significantly higher helped by the more positive tone out of Europe and a sharp rise in November housing starts, as they jumped 9.3% well above expectations of a rise of 1.1%.

Building permits also beat expectations, coming in at 5.7%, well above an expectation of a 1.4% decline.

Stocks in focus include AT&T after deep-sixed its bid for T-Mobile USA, thus incurring a $3bn break fee.

Financials have led the Dow higher with JP Morgan leading the way while Bank of America has recovered back above the $5 mark.

Earnings due out later include Nike with expectations of Q2 EPS of around $0.97c a share, up from last years $0.94c.

Oracle is also expected to see Q2 earnings rise from $0.51c a share last year to $0.57c a share, also after the bell.

The US dollar has dropped across the board today. The New Zealand and Australian dollar gained the most after this morning’s RBA minutes showed that the central bank was slightly less dovish on rates than the market had expected them to be.

Rising crude oil prices have dragged the Norwegian krone and the Canadian dollar higher.

The pound has outperformed after consumer confidence numbers showed an improvement in November. Retail sales from the CBI showed a rebound to their highest levels since May on the back of pre-Christmas discounting.

The single currency has lagged behind despite a better than expected Spanish T-bill auction saw yields more than halve from their previous figure on the six month auction, down from 5.227% to 2.435%.

This is less likely to do with the fact that they are suddenly less risk, and more to do with the fact that the ECB’s new liquidity measures giving buyers of bonds a “carry trade” get out.

Italian bond yields have also slid back.

Crude oil prices have rebounded on the back of the firmer tone in equity markets, while concern about sanctions on Iran continues to underpin any downside.

Gold prices have also pushed back above the $1,600 level on the back of a weaker US dollar looking to test its long term 200 day MA at $1,623.

Silver prices have also rebounded strongly, outperforming gold prices.

Copper prices have regained all of yesterday’s losses pushing higher on the back of a firmer Australian dollar and a weaker US dollar.

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.

They seem to be coming thick and fast at the moment, but there are two more risk events to watch out for today that have the potential to significantly move the currency markets.

Firstly and very importantly the Swiss National Bank has just finished its monthly meeting and will keep the EUR/CHF peg steady at 1.20.

There was a lot of talk that the SNB would be raising the peg to 1.25 which would have seen significant moves across the board in the Swiss Franc pairs and also the Euro pairs as happened when the central bank first introduced the peg.

The second risk event is a Spanish bond auction taking place at 9.30 this morning. The draining confidence in the Euro has seen large outflows from the single currency over the last week or so and it is very important to see if this leads to yields on Spanish bonds to increase once again.

Thankfully Britain retains its own currency, which is current market conditions seem to count for an awful lot. The UK also has a bond auction this morning but we will be looking for record lows, rather than highs when the auction is completed at 10.30.

In an interesting interview with a French newspaper the head of the Bank of France and ECB member Christian Noyer suggested it should be Britain, not France that loses its Triple-A rating.

It is almost unheard of for a central banker to speak out about another country’s credit rating let alone suggest that the markets should not accept the ratings as a valid guide to the strength of a nation’s financial health. Is Mr. Noyer priming us for an impeding French downgrade?

Around the indices CFD trading markets today we have already had German PMI data, which was slightly better than median forecasts, the ECB monthly report which has gained in significance as the sovereign crisis has gone along due to it revealing the scale of ECB funding to the Eurozone banking system and at 10am we get Euro-Zone CPI.

This afternoon there is a large amount of low importance US data due, which is unlikely to move the markets too much but important to watch out for given the Federal Reserve’s current wait and see stance.

 
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.

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The Euro continues to underperform especially against the dollar and the yen with the EUR/JPY CFDs hitting a two month low.

There is a growing concern that rating agencies will downgrade European sovereigns in the near term. In addition the lack of a clear plan moving forward from the EU summit is denting confidence in the single currency.

The market was also fearful in advance of this morning’s bond auctions from Euro sovereigns (it is understood that appetite was ok but there were rumours of a little help from the ECB). Asian stocks have also declined in line with the growing concern for Europe.

The key level for EUR/USD is the 1.31 barrier as a move below this level could open the door for a push under 1.30; this would help GBP/EUR push towards the key 1.20 level.

Data from the UK was largely ignored with UK CPI coming in for November at + 0.2%, that is + 4.8% year on year and this was largely in line with expectations. Following last week’s isolation from Europe so far the pound has reacted positively.

The pound could actually perform better moving forward; last week we saw the European Central Bank cut interest rates again and we now have the threat of downgrades for European sovereigns.

One aspect the UK government has managed is to be clear in their strategy to the markets the austerity plans for the UK have been very clear for some time and this has helped to sure up the UK’s AAA status. It may transpire of course that enforced austerity was the wrong call but for the markets the UK has embarked on a course of action with clarity.

In the Eurozone it has been a prolonged mess and we are still no nearer to seeing a full solution. This could spell further problems for the Euro and as a result the pound could shine.

The UK markets are AAA, have high liquidity and recently bond yields have fallen indicating more demand as a safer shore. If the Bank Of England ceased their QE programme the pound could come to life.

Tonight the US Federal Reserve (FOMC) meets and it is expected that all will remain unchanged. Recent economic data suggests that the Fed could soften its appetite for further QE, however I feel it will leave the door open for now.

 
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.

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The package produced by EU officials on Friday has struggled to contend with the high expectations before the EU Summit.

However, production of a fiscal compact, the stepping up of the European Stability Mechanism (ESM) to July 2012, no compulsory private sector involvement in debt reform and a feasible boost to the IMF of up to €200 billion, are all positive moves.

The fact that David Cameron has decided to reject a joint tender to revise the EU Treaty should not detract from the progress made.

Nevertheless, the methods may not be adequate to calm online CFDs market worries, with frustration at the lack of European Central Bank (ECB) response in terms of stepping up to the plate as “lender of the last resort” still weighing heavily on sentiment.

Data could add to the disappointment this week as “flash” Eurozone purchasing managers indices (PMI) fall further this month.

Over to the US and under the spot light this week will be the Fed’s FOMC meeting, November CPI and retail sales data plus manufacturing confidence gauges with November industrial production too.

It’s unlikely the Fed will change its policy stance at this time however the language may sound a little more positive on the economy based on recent headline data. CPI will likely remain subdued while the other data will continue to indicate a steady recovery.

As we approach the Christmas break liquidity is likely to thin further, with ranges likely to dictate.

The single European currency will probably struggle to make much advancement in current market conditions. Many facets of the EU treaty still need to be clarified to help secure market confidence again. Expect EUR/USD to trade 1.3260-1.3550 over the short term before Christmas.

 
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.

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It was akin to a game of chicken as David Cameron jockeyed the EU to protect the city and Britain’s interests.

In the end Cameron blocked a crucial EU treaty as he did not get the safeguards that he was looking for. So where does this leave Britain- isolated? fortunate? Politically Cameron has certainly put the cat amongst the pigeons with the Euro a political minefield in a liberal/conservative coalition.

The EU failed to agree Europe-wide treaty changes and instead pressed ahead with a fiscal pact for the 17 Eurozone nations plus anyone else who wants to join from the 27. The Euro area has agreed to make available additional resources of up to 200bln euro to the IMF and the EFSF leverage will be rapidly deployed.

Private creditors will also be cheered by the removal of previous mandates exposing them to increasing percentage losses via haircuts- now they are more protected through alignment with IMF principles and practices.

Back to the markets and the response was muted and slightly negative with Italian 10 year bonds rising back above 7% and the Euro CFD trading market unchanged after suffering losses yesterday.

At the moment it is unclear what the new status is for the 17+ without a new treaty- on the face of it what we actually have is another stability and growth pact despite the political rhetoric. In effect it is a step closer to a new treaty and a plan for a plan to move to fiscal unity.

The plan for unity however has been dealt a blow by the profound split with the UK potentially being joined by the Czech republic, Hungary and Sweden.

There is still unease, uncertainty and division which could spell turmoil for the financial markets. For the currency markets I would expect that we will see the markets react cautiously as we await more news today.

Elsewhere Chinese CPI came in lower than expected and both Japan and Korea downgraded their GDP outlook. However there is no real economic data due and the focus will remain with Europe.

 
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.

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We are set for an extremely busy and important week for the Eurozone.

The main event looks set to be the announcement of a deal on fiscal union between member states on Friday night, but what the index CFDs market expects this deal to look like and what the deal actually looks like may well turn out to be two different things.

What the Euro needs is further fiscal integration between members with the plan of a centralised treasury to eventually raise and distribute taxes. What the French and Germans are likely to propose is the fiscally stronger countries get a greater say in how the weaker periphery run their economies.

Thursday sees the ECB monthly meeting, with another reduction in interest rates expected. ECB head Mario Dragi has also hinted in a recent speech of large scale bond purchases by the bank. The much softer tone suggests a deal on government budgets might be closer than the market thinks.

Keeping with all things Europe, we also have a large amount of data to digest this week including Eurozone retail sales, German CPI and the closely watched ECB monthly report which will detail the size and scope of lending to European banks by the central bank.

The pound CFDs continue to hold their ground versus the Euro and Dollar despite the dire announcement by the Chancellor last week, who downgraded his growth projections for the UK economy.

The resulting changes to the UK outlook now mean the Government will not balance its books until 2016 at the earliest. The reason for Sterling not pushing lower in the face of a worsening outlook is probably that it is the least bad option in the face of the continuing European problems and the potential for QE3 in the US.

That said the Bank of England looks set to announce an increase to its own asset purchase scheme on Thursday at the MPC meeting. Governor Mervyn King was in very gloomy mood at his announcement on the Bank’s financial stability report last week and it is likely that the BOE will take action this month rather than waiting for the New Year.

 
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.

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German Chancellor Angela Merkel told the Bundestag that a new EU treaty was necessary to work towards a “fiscal union” in Europe.

On Monday she met with French president Nicolas Sarkozy who also called for EU treaty changes. In her own words she noted that such a step a few months ago was not even on the agenda and would have been considered crazy.

Merkel went on to say that the single currency would survive. The markets have responded positively to the news as Merkel & Sarkozy for the moment are singing from the same hymn sheet, in addition it is perceived as an encouraging development that the crisis can still be resolved on a long term basis.

Yesterday Bank of England governor Mervyn King warned of a spiral into a systemic crisis and urged UK banks to sure up their capital reserves to act as a buffer in the event of a full blown Eurozone collapse.

The key date for the diary is next Friday’s EU summit and it is likely we will see a plan from the Eurozone for its future- we certainly need to as we cannot expect to avoid a fallout without a comprehensive plan.

Reports that businesses have already commenced plans for a possible end to the Euro underlines the urgency of the situation on the current unsustainable path- it seems we are looking at a make or break scenario with closer unity or fragmentation.

The Euro has weathered the storm pretty well and has been supported by recent bond buying through the ECB, global central bank action on the swap margin and the new united push to fiscal unity by Germany and France. Next week however is a big week for the single currency.

Elsewhere the share trading CFD markets so far this morning have been pretty quiet. Today we have the big one from the US in the form of non-farm payroll data, recent US jobless claims were disappointing which may dim the prospect of a good payroll number.

However a respectable number coupled with positive momentum on a plan for Europe could see some USD weakness as risk appetite increases and thus gains in EUR/USD and GBP/USD.

 
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.