The move by the ECB is in line with the EU treaty, however, the headlines will be an untimely blow as the EU group scrambles to keep the euro together.

The proposed new elections in Greece on June 17 look set to be won by parties favouring opposition to austerity measures which would likely lead to Greece crashing out of the euro in a disorderly fashion.

The market is naturally already pricing in this scenario and the euro has depreciated significantly and the borrowing costs in Spain and Italy have moved higher as contagion worries increase.

There is real concern that a run on Greek banks ahead of the elections could tip the balance. Contingencies for a Greek exit are rapidly taking shape.

Broker Icap is already set up to trade the Drachma in the eventuality of a Greek exit.

The repercussions of a disorderly Greek exit would be severe and of course unknown adding to the uncertainty.

Mervyn King and David Cameron yesterday blasted the Eurozone woes. King stated that the Eurozone is “tearing itself apart” as the UK downgraded its growth forecasts to align with the problems in Europe which is the UK’s main trading partner.

David Cameron stated that it is “make up or break up” and the euro is at a “crossroads”. The change in tone from King and Cameron will be noted as the gloves are now off as the inability for Europe to get its house in order shackles the UK economy.

Spain goes to the well this morning and the auction will set the tone for the day.

If the well is dry and there is limited uptake; then expect the euro to come under further pressure.

The escalating concerns on Spanish banks and the exposure to Greece could dissuade uptake.

Today focus will naturally remain in developments in Europe as economic data is overshadowed.

The markets are understandably in safe haven gear with the USD and CHF gaining.

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 inverse correlation between EUR/USD spot rate and 1-month option volatility shows the interrelation between currency rate & volatility.

On a weekly chart basis, EUR/USD volatility enters its 3rd consecutive weekly rise, the longest winning streak since mid June of last year, when the storm in Italian banks erupted euro volatility & equities.

Escalating gains in EUR volatility suggest further upcoming increases in the VIX (volatility on S&P 500), which is already entering its second consecutive rising month after 6-straight negative months.

The key value to watch in VIX is 22.16, which is the 100-week moving average, a technical level, not broken since December 2011

Will the euro do it again?

We are aware of the euro’s familiar pattern of bottoming in the middle of the month (Jan 16, Feb 16, Mar 15, Apr 16), which if materializes again, suggests that the interim bottom in EUR/USD may occur no later than Wednesday.

This would be followed by an interim rebound, expected to taper off at $1.2980-1.3020, a previous support, now a likely resistance.

But the aforementioned sharp rebound in EUR volatility suggests that any stabilisation in the currency is increasingly looking like “selling the bounce”.

S&P 500 joins the Dow 30 in breaking below its 100-day moving average for the first time since November, opening the possibility for losses towards 1315, followed by 1287.

The 7 percent peak-to-trough pattern tells us that the S&P 500 extended its 6-month run without losing more than 7 percent from peak-to-trough.

Any declines of a smaller magnitude proved to be a buying opportunity. A break below 1320 would be a decline of more than 7 percent from this year’s high of 1422.

Gold’s classic safe-haven allure shall remain invalid as long as the bulk of buyers entered below $1300, which was in 2009-2010, when the Federal Reserve’s QE operations triggered en-mass buying among central banks, hedge funds and retail interest.

These players (which are sitting on a profit) may be obligated to close their positions (or partial close) in order to reduce losses in other assets.

The question then is raised as to when will central banks send their buying teams, given that quantitative easing is all but a foregone conclusion.

Technically, gold clearly broke below its 4-year trendline support last week (1620), and is eyeing the next target at 1516 (100 week MA), a technical level last breached in May 2008.

 
Contracts for Differences (CFD) trading, margined forex trading and spread trading carry a high level of risk to your capital. You can lose more than your initial investment. These types of trading may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.

Trading update from City Index.

 
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Details of the report revealed that the negative output is expected to widen further as a result of the sluggish economy.

“We expect the UK economy to remain broadly flat over the next 6 months” according to the report.

“While significant downsides persist, we expect economic recovery to take a hold in 2013”.

These latest figures support the Bank of England’s case to maintain low interest rates in an attempt to boost growth. As expected, both rate decision and QE programme where left unchanged yesterday.

Overnight we saw China’s inflation rate drop to 3.4 percent in April from 3.6 percent in the previous month and below the Chinese government target of 4 percent.

This will reduce the headache for the government as rising consumer costs have been one of the biggest causes for concern in recent times reaching as high as 6.5 percent in July last year.

The drop in oil has certainly helped China’s progress alongside its bid to improve domestic demand to offset their fall in global demand for their exports.

Recent data suggests that Chinese consumption is struggling as imports grew only 0.3 percent last month compared to 5.3 percent in March.

Consequently CFD trading investors will be keen to see how policy makers act within the next few months, perhaps leading to a cut in interest rates.

Today is pretty light on headline data with only Canadian unemployment and Michigan confidence figures of note. We will continue to monitor the political situation in the Med as a guide towards sentiment for next week.

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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By scrapping austerity measures he will effectively freeze access to emergency loans, inevitably face bankruptcy and ultimately exit the Single European currency.

Today he will meet the two major pro-bailout parties and if they fail to form government then Greece will go back to the election polls in the next few weeks.

This latest worrying chapter has certainly been played out in the CFD trading markets with equities both in Europe and the UK facing falls in addition to EUR/USD falling below the key 1.30 level.

Further north and back to the drizzly weather of the UK where the wettest April since records began has had a damming effect on retail sales according to the British Retail Consortium (BRC).

Sales YoY dropped over 3 percent blamed largely on women and children’s wear and come at the same time as the UK re-entered recession.

Based on these latest figures it will be interesting to see how the NIESR calculates next month’s GDP estimate which is released on Thursday afternoon.

This will follow the Bank of England decision where we are expecting no change in interest rate and Asset Purchasing programmes.

Elsewhere this week we have some very keenly anticipated Job numbers from Australia.

Obviously concerns have been well documented with their falling growth forecasts and drop in interest rates so a negative figure here could add fuel to the case for shorting the Aussie.

Sterling currently trades just above 1.60.

Finally to end the week we have inflation numbers from China and Germany on Friday morning where we are expecting figures of 3.4 percent and 2.2 percent respectively.

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.

Several times the markets have reached resistance levels along the way and cleared past the hurdles. Is the only way up or is there a reversal ahead?

Much depends on how strong the current rally is and if momentum can push the higher.

There are some warning signs which also need to be noted. Whilst prices have risen, several indicators have not joined the rally which creates a technical divergence.

Although this does not call for a top, the other parameters such as Price, Pattern and Time suggest we may be close to one fairly soon if not already having arrived at one.

FTSE 100 still remains below 6000

Whilst the US markets have fuelled higher prices the UK FTSE 100 has not joined the rally. It may be that the index could be running out of steam. Or there could be a development for a thrust higher which sometimes occurs and thereby creating a Key Reversal pattern.

Going into this week, the FTSE 100 may look to test the 6000 level if the US continues higher.

If cleared then 6100 – 6250 becomes the next objective. Traders will need to watch 5900 as short term support, which, if broken, may indicate that the index may already have reached a top and a correction is due.

The nearest lower support rests at 5690.

Dow Jones clears 13111 level

Several resistance levels have been cleared by the US Dow Jones index. So far the index has surpassed the 12935 and now the 13111 level. We are also seeing the index test a key level at 13270 in Friday’s trading session.

This week is important as if we see the Dow close lower for the week then that would be an early warning signal that the index may be at a decision point once again.

The 13150 level should be monitored just in case the Dow decides to break below this area to reach for 12700 as a first base test. Wave threes can be very swift and sudden so protective stops are a good idea at current levels.

Gold reaches lower as expected

Gold has now reached the $1660 level as expected with the metal trading to lower support at $1630. If this area holds then we may see the $1715 level tested if the commodity decides to trade to the upside. The trend remains bearish as seen by the red bars.

Until this has changed, weaker prices may not be ruled out just yet. If the $1715 barrier prevents the gold CFDs market from rallying, then the lower targets of $1580 may be possible over the coming week.

Until we see higher highs and higher lows the trend remains firmly bearish. The intermediate term trend is neutral.

 
Contracts for Differences (CFD) trading, margined forex trading and spread trading carry a high level of risk to your capital. You can lose more than your initial investment. These types of trading may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.

Trading update from City Index.

 
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.

The study blames low growth in the coming two years as the UK steers itself out of this technical recession.

NIESR recognized that later revisions may alter this, but said “small quarter-to-quarter movements of this sort are largely irrelevant to the broader picture of an economy that remains very weak”.

The big ticket data release this afternoon is the US non-farm payrolls. It’s been a mixed bag data wise leading up to today’s announcement so there is a large degree of uncertainty over the actual number.

Consensus estimates are for 175k jobs created in April, initial jobless claims yesterday came in better than expected which point towards a positive number but at this stage it is difficult to call.

The dollar has regained significant ground against Sterling in the last week and the risks remain to the downside, however, if the number disappoints, GBP/USD could be trading above 1.62 quite quickly.

EUR/GBP has broken its correlation with movements in EUR/USD for the time being, with self-governing Sterling strength evident.

This has been confirmed by the shift in interest rate differentials between the UK and Eurozone, a move which has gone in favour of GBP strength.

The view now points to some further downside potential in this currency pair, with a test of technical support around 0.8067 on the cards.

Enjoy the bank holiday!

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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Mervyn King went on to talk about the challenges facing the banking infrastructure going forward with a need for regulation, resolution and restructure which will be demonstrated next year when the BoE’s new financial policy committee will have the power to regulate banks.

King supported the idea of ring fencing high street bank operations so they have their own financial cushion to avoid failure and noted the necessity for a framework to allow a bank to fail without being nationalised.

Over to the markets and UK PMI services data has just come out significantly worse than expectations with a fall to 53.3 from 55.30 in March, however, UK service expectations improved.

UK Nationwide House Price data also came in weaker than expected. Nationwide expect house prices to be flat or moderately lower over the next 12 months. The pound is relatively unchanged on the data.

A key event today is the ECB meeting, it is widely expected that rates will remain on hold but there is an outside chance of a rate cut.

The key focal point will once again be the press conference following the meeting where Mario Draghi will face key questions on the outlook for Europe.

Recently we have been hearing calls for a clearer strategy on how to tackle slumping growth in the Eurozone and what role the ECB can play in assisting the system.

In the forex CFD trading markets, the main mover overnight was the NZD which has weakened following poor unemployment data which showed that unemployment rose to 6.7 percent.

The slump in the NZD which tripped into the AUD was not helped by slowing Chinese PMI data for April.

The slowdown in China has led to the Reserve bank of Australia cutting interest rates earlier in the week by 50 basis points and this will weigh on commodity currencies in the next week.

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.

We have seen a raft of weaker than expected manufacturing data out of Europe this morning, which has reaffirmed the difficulties facing the region in the midst of the debt crisis and austerity plans.

Spanish manufacturing PMI fell to 43.5 in April from 44.9, whilst French manufacturing fell to 46.9 from 47.3, and Italian PMI also fell to 43.8 from 47.9. German manufacturing also fell to 46.2 alongside the broader Eurozone manufacturing PMI measure which hit 45.9.

All manufacturing PMI numbers this morning missed consensus forecasts, weighing on early trade in London. In the same breath, both German and Italian unemployment rates nudged higher to 6.8 percent and 9.8 percent respectively.

By afternoon trading, losses deteriorated further upon the release of US ADP Employment, which showed a rise of just 119,000 jobs last month compared to market expectations of 177,000 jobs growth.

This is the smallest gain in some seven months and investors have been quick to correlate the miss with concerns that Friday’s payrolls will tow a similar line, despite yesterday’s US Manufacturing data showing an increase in the employment section of the report.

Data out in the afternoon also showed that US factory orders dropped the most in three years in March as demand slumped. Orders fell by 1.5 percent, broadly in line with expectations whilst the previous month’s rise of 1.3 percent was revised lower to 1.1 percent.

With most economic data out today missing forecasts, CFD trading investors have shown little motivation to add further risk and have instead moved to minimise their exposure ahead of Friday’s payrolls.

Summer trading historically not a good omen for the FTSE 100

The omens for trading on the FTSE 100 in the summer months are not overly optimistic when taking into consideration historical price trends.

Since 1998 the FTSE 100 has lost an average of 2.87 percent between May and the end of August whilst the FTSE has fallen ten times out of the last fourteen years for the same period. The average falls on the FTSE have been 7.68 percent when the market has fallen.

UK Corporate Earnings

There has been a deluge of UK corporate earnings to digest this morning such as Next, BSkyB and Home Retail Group.

BSkyB shares CFDS traded amongst the best performing stocks on the FTSE 100, rallying 1.5 percent after reporting a solid profit number of £908m; a rise of some 15 percent with net revenues for nine months rising to £5.1bn.

Next shares rallied over 2.5 percent to trade close to the £30 mark having reported total sales had risen 1.4 percent, with yet again its directory business helping to boost sales at a time when retail sales had fallen 3.9 percent for the period.

A positive caveat to take into consideration with Next’s numbers is that they are being compared to a somewhat indifferent period this time last year, where the warm weather and Royal Wedding helped to increase sales performance.

So the resilience of these numbers is pleasing for shareholders and the longer term revenue targets remain in place.

Home Retail Groups shares however slumped 13 percent to hit its lowest levels since January earlier this year after reporting a 60 percent decline in profits.

The drag on the share price has come mostly however from shareholder disappointment of the fact that they have axed a final dividend and emphasised the difficulty towards which the Group is facing amidst pressures on consumer spending.

The Group said that prospects for the year ahead remain uncertain, a factor that shareholders typically dislike, even more so in difficult times.

 
Contracts for Differences (CFD) trading, margined forex trading and spread trading carry a high level of risk to your capital. You can lose more than your initial investment. These types of trading may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.

Trading update from City Index.

 
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.

The widely expected move was for a 0.25 percent cut, however, the key rate moved from 4.25 percent to 3.75 percent. This is the first acknowledgment by the RBA that Australia is beginning to be affected by the global slowdown, particular in China.

“This decision is based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated” according to the RBA.

As you would expect the AUD has been heavily sold off since the announcement and GBP/AUD currently trades at 1.5720, from 1.5564 before the decision.

In other news Spain followed the UK yesterday confirming they were in a technical recession following negative growth in the first quarter of the year.

This data, coupled with poor Greek retail sales falling by 13 percent and a 0.3 percent negative growth figure, weighed heavily on the single European currency yesterday pushing Sterling higher.

These gains have been given back this morning following UK PMI data which has fallen to a reading of 50.5 following a reading of 51.9 in March and below expectations of 51.5.

The sharp fall is the lowest since Christmas and has been largely attributed to low demand from the Eurozone which has hit manufacturing and meant UK exports fell to levels not seen since May 2009.

Consequently, Sterling now sits at 1.2213 against the single European currency and Cable at 1.6205.

Later today we have manufacturing data in the US where they are expecting a reading of 53, slightly down on last months 53.4.

However, all eyes are on the latest Non Farm Payroll which will be delivered Friday afternoon.

As reported in our commentaries, the employment data has been positive of late except for last month so this months figure will be keenly watched by the forex CFDs trading market.

Expectations are set at 165,000 new jobs created with the unemployment rate to maintain at 8.2 percent, any serious deviation lower from these figures could see a risk off move played out by investors.

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.

This morning S&P have taken a negative rating action on 16 Spanish banks, in addition, press reports out of Germany suggest that a Merkel-Hollande alliance will not be as straightforward as the Merkozy alliance.

At the moment, the Euro is holding up fairly well as the market has been selling the USD on sentiment that the Federal Reserve will ease further, however, the underlying negative tone will be a concern to the CFD trading markets.

Later this week the ECB are expected to leave interest rates on hold, however Mario Draghi will face tough questions in the press conference on the strategy for Europe amid growing concerns for a growth compact.

US jobs data will be a main data point to watch this week. Friday’s non-farm payroll report will form important sentiment for the pace of the US recovery after last month’s disappointing number which followed a good run of jobs data.

The number is expected to be a good number and the feedback on this data will be a key factor for the Feds future strategy-a bad number and we can expect more easing.

In the UK, attention will focus on the PMI data tomorrow and Thursday which will offer a snippet of growth feedback following last week’s preliminary Q1 GDP which came in negative.

Again if data proves negative, it could trip the Bank of England to pump more QE through the system- possibly at the May MPC meeting. Elsewhere we have an expected rate cut from the Reserve Bank of Australia tomorrow which could weigh on the AUD.

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.