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I'll be posting regular market updates from well respected Forex experts and showcasing the best Forex advice and systems, so you don't have to waste fruitless hours searching for it yourself!
Add me to your 'Favourites' now and as a special thank you, I'd like to give you 4 fantastic FREE gifts by simply entering your details on the right of this page >>>
You'll receive my 3 Part Ebook series 'The Forex Decoder' which covers everything from the history of Forex, to revealing the most consistently profitable indicators you'll need in your Forex arsenal. I've sorted the 'wheat' from the 'chaff' so you don't have to make the same mistakes as I did when I first started.
You'll also receive a copy of Mark Nelson's famous '7 Habits Of A Highly Successful Trader' which will prove an indispensible aid in your Forex career, as it has done in mine.
Just enter your details on the right and get these 4 fantastic gifts absolutely for FREE >>>
Yours 'Forexly',
Cliff
Simon Denham's Daily Market Comment
So another domino falls to the bailout facility set up by the
eurozone as the rumours that Spain would go cap in hand to the EU this
week end have become a reality. Equity investors are breathing a huge
sigh of relief as European indices jump on the open and even higher than
our original estimates however there are still lots of unanswered
questions about how this particular bailout will work and then of course
whether it will prove to be the right solution. If history is anything
to go by we have seen that bailing out banks doesn’t work in the short
term as we only have to see the struggling share prices of our own
nationalised banks. The severity of the problems that these banks have
been getting themselves into has been vastly underestimated by many and
once again we see that the answer from politicians is to throw good
money after bad.
The bailout funds at least have been set up
specifically for this purpose but at the moment it is unclear which
bailout fund will be used. Is it to be the EFSF or the ESM, this
matters because of the seniority that the debt with be given compared to
other private debt investors and if it’s the ESM then private debt
holders will be moved down the pecking order. Some EU countries are now
looking to ratify the bailouts and so another hurdle is put in place to
the whole set up.
As another €100b euros is piled onto Spain’s
humongous debt mountain their ability to ever repay it all will only
become a reality if their economy takes a turn for the better. The
likelihood of this is very slim indeed considering the rate of
unemployment and the massive housing bubble that is still bursting. It
will be interesting to see whether this jump in equities on the open can
be sustained as when the dust settles the focus will be back on Greece
which goes to the polls again this week end and of course the next big
worrisome elephant that’s just entered the room, Italy. Just as their
national football teams could not be separated over the week end, the
countries budgetary problems are very similar indeed and if Italy’s ten
year government bond yields starting heading back and above 6% then
alarm bells will ring again.
The FTSE has opened in very bullish
mode up over one and a half percent at around 5525. Those clients who
were savvy enough to buy ahead of the week end will be rubbing their
hands with glee and we can expect the action to revolve purely around
the Spanish bailout as there’s little else in the way of economic data
out today.
Fitch downgraded Spain’s credit rating by 3 notches to
triple-B on Friday pushing the euro lower against the dollar. However,
renewed hopes the euro zone governments might just about pulled this off
by working together sparked a recovery but not enough to pare all the
early losses. The shared currency closed 57 pips down at $1.2504 but
good news over the weekend after Spain sought 100 billion euro to prop
up its banking system already had a positive impact.
A stronger US
dollar sent gold prices tumbling on Friday but expectations of a rescue
package to bailout Spain’s struggling banks overturned that. It was
again gold buying as an alternative asset considering the plan for extra
monetary easing. In addition, gold opened higher last night after
Spain requested an aid of 100 billion euro, showing its willingness (and
Europe’s as a whole) to tackle the debt burden.
Elevated crude
oil inventories coupled with disappointment over what appeared to be a
lack of commitment from the Fed pushed the WTI crude prices to an
intraday low of $82.00. Nonetheless, optimism the European officials
might come up with a plan to save Spain’s banking system offered a late
rebound and even pushed oil prices 47 cents into positive territory to
$84.10. OPEC’S meeting in Vienna, scheduled for Thursday will likely be
in focus.
