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12/06-12   -   Press releases

Markets recover, but doubts remain.

After yesterday´s rally deflated, markets are once again pushing higher. Doubts still remain however, with many pointing out that Spain´s bank bailout solves none of Europe´s long term problems. Unless there is growth across the region, Spain´s banks could be bailed out again in the future.

Still, ´risk on´ assets are pushing higher, with the AUD/JPY up 0.74% and the NZD/USD up 0.58%. The euro is recovering strongly with the EUR/JPY up 0.54%, the EUR/USD up 0.29% and the EUR/GBP up 0.21%.

The yen continues to weaken as traders switch out of the yen in favour of other more risky assets. The USD/JPY is up 0.31%.

Gold is down despite weakness in the US dollar today, with the precious metal off by 0.28%.

Coming up today we have UK manufacturing production at 09.30, with NIESR GDP estimates at 15.00. The US federal budget follows at 19.00.

Markets continue to trade in a volatile fashion, buffeted by competing cross winds. The future of the euro is in doubt, but there is still a chance that European leaders will manage to muddle through. The solution is clearly greater fiscal/financial integration or chopping off the dead wood. The question is whether political leaders have the fight to push through such reforms against an increasingly Euro sceptic populace. At the same time, the dollar index remains deeply over bought, which implies the potential for a bounce for risk on assets from a technical perspective at least.

So accepting the risk that Europe could still place another land mine in the path to recovery, we have to work with what we have technically. A good way to play this on might be a LOWER trade predicting that the closely correlated USD/CAD continues to reverse from the highs and close below 1.0100 in 20 days time for a potential return of 344%.

Get this trade now, go to:

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