All Eyes On Ben, EUR/USD

Tapering is likely the only thing on most investors’ minds today
Will they, won’t they? Tapering is likely the only thing on most investors’ minds today ahead of the FOMC’s decision on whether to finally taper the unprecedented $85 billion monthly bond buying scheme. Investors’ recent activity would suggest an initial confidence in no tapering with US indices starting strongly yesterday. However fear and second guessing appeared to drive the markets down towards the close.  With US futures up today, Asian stocks rising for a second day and Euro bourses expected to open up it would suggest investors are again attempting to position themselves for no taper. If the last few months are anything to go by, expect huge volatility today as investors attempt to get ahead of the Fed.

In other US news the bi-partisan budget deal has passed a crucial senate vote relatively, which could provide a genuine boost to the US bourses, as opposed to the speculators driving prices up.  The deal will help restore faith in the workings of bi-partisan politics after the catastrophic failure only months ago.

European markets, already expected to open up ahead of the tapering decision, received a further boost when a bailout backstop was agreed.  This agreement will act as a guideline for the new bank rescue system hopefully creating more stability and certainty within the euro zone.

There was further bad news for the digital currency Bitcoin today as China banned new deposits, landing a blow to hopes of recognition as a legitimate form of currency.  The currency had seen a recent surge in price after receiving endorsements from tesla to Richard Branson, breaching the $1000 mark only weeks ago.  With Denmark drafting rules to protect against the risk of Bitcoin and regulators warning against its use, it has been a bad few days for the currency with its price almost halving.

– Alex Conroy

-- PM Analysis

It’s the calm before the storm with indices trading up
It’s the calm before the storm with indices trading up during early afternoon as investors await the inevitable volatility that the Federal Reserve meeting will bring to the markets this evening. All eyes will be on Ben Bernanke to see whether he sends markets into turmoil in his final act as chairman to the Federal Reserve that will sure be a move to remember him from. Investors will be watching the EUR/USD closely during the statement at 1900GMT as it is thought this will act as a catalyst for the direction of the pair.

A 20-year high on Germany IFO business climate figures, alongside positive ZEW number that were released yesterday has resulted in the Dax trading over 70 pips up early Wednesday afternoon which follows on from a particular bullish run recently.

British supermarkets are trailing this afternoon, something you wouldn’t expect to see during the festive period and is a worrying sign. Marks & Spencer, Sainsbury’s and Tesco are all trailing the FTSE 100 during afternoon trading.

The question on all investors’ minds is soon to be answered, will they or won’t they taper? Regardless of the decision, it is sure going to be a bumpy ride.

-- Samuel Fox

Original Post

Disclaimer
Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk.