A BIT of risk aversion set in yesterday causing the euro to suffer some losses. Euro-dollar couldn’t add to the decent gains it has seen so far this week, as a sell off in equity markets, driven by concerns about Portugal, knocked the shine off the single currency. Capital Spreads quotes a price of $1.3200-$1.3201 for euro-dollar.
With the Budget today, the pound is likely to be in focus. The recent advances in sterling – especially against the yen, where it has recently hit nine-months highs – could well see some profit taking ahead of the chancellor’s speech. CMC Markets offers a spread on sterling-yen at ¥132.915-¥132.94.
The final month of 2011 and the beginning of 2012 was a difficult time for the euro, especially against such a healthy currency as the Aussie. Relentless Chinese growth fuelled an almost insatiable demand for the Australian dollar, while the Eurozone’s woes kept traders away from the single European currency. However, concerns about a slowdown in China, and warnings about a drop in the demand for raw materials, have tilted the balance back towards the euro. As long as the Eurozone can avoid any further crisis, the outlook for euro-Aussie dollar looks brighter than it has for some time. IG Index offers a price on euro-Australian dollar of Au$1.2571-Au$1.2581.
The pound managed to pick up a degree of support against the euro yesterday, after a higher than expected inflation reading. However, the upside could prove to be short lived. The potential risk was that after the inflationary spike, we’d see a sharp contraction in the pound’s value. That this isn't being realised can be construed as good news, but the big question remains whether growth will return to the economy as a whole. It’s arguably going to take some conviction here if we’re going to retest the January lows in euro-sterling. GFT Markets offers a spread of £0.8317-£0.8318
Cable has been trading in a range for almost two months now, between support at $1.5650 and resistance around $1.5900. Trading the edges of this range will have given ample opportunities to make profit and it may make sense to continue to play the edges of this range with relatively tight stops until the trend breaks down. Spread Co quotes a spread of $1.5857-$1.5859 on sterling-dollar.