In forex spread trading, ratings downgrades for Spain & Italy knocked the wind out of the single currency in market activity recently, & spread traders said anxiety about Europe’s economy & fragile banks is likely to continue to hobble it in the coming weeks.
Higher yielding, growth sensitive currencies like the Canadian & Australian dollars ought to fare better, especially after figures revealed American hiring increased more-than-expected last month, easing fears about the world’s largest economy.
If the view that America can avoid economic downturn takes hold, speculators may continue borrowing American dollars at near zero rates to fund riskier but more profitable trades in other currencies & asset classes.
Whilst it was on track for a small gain against the US dollar the single currency was still stuck in a downtrend that began on August 29 at $1.4548. The single currency relinquished positive gains after ratings agency Fitch cut the credit ratings of Spain & Italy, the third & fourth biggest euro zone economies, citing a worsening euro zone debt crisis & financial situation in both nations.
The pound sterling may struggle too, as it hit a 14-1/2-month low below $1.53 after the BoE said it would pump an additional 75 bn pounds into the economy. Be aware that you can speculate on a range of forex markets via a Capital Spreads account.
American employers recruited more workers than forecast in September & job gains for the prior 2 months were revised up, easing economic downturn concerns. Nevertheless the unemployment rate stayed stuck at 9.1 per cent for a third straight month, maintaining the pressure on President Barack Obama & the US Federal Reserve to do more to encourage the recovery.
Nonfarm payrolls increased by 103 000 in September, the Labour Department reported, however that included the return of 45 000 striking Verizon workers. Excluding those employees, the American economy added a meagre 58 000 jobs. Growth in the labour market is still dropping short of the rate needed to drag down unemployment.
Hourly earnings improved, the duration of the average work week increased, & revisions revealed 99 000 more jobs were added for July & August than initially reported.
The unemployment rate also held steady despite a spike of new workers entering the job market. Analysts had expected payrolls to climb 60 000 last month, with the unemployment rate steady at 9.1 per cent. Employment growth has decelerated dramatically from the first-quarter of the year, when growth in payrolls averaged more than 165 000 a month.
Contracts for Difference Trading and Financial Spread Trading do involve a high level of risk. Investment formats such as these are margined which means that it is possible to lose more than your original stake.
You should always invest using capital that you can afford to lose; before making any trades make sure that you recognise the risk. Be aware that Contracts for Difference Trading and Spread Trading might not always be suitable for your trading strategy; where you think it is necessary obtain independent trading guidance.
Market review by Pip Trade.