Euro Gets another Bounce even as Equities Slide
January 30th, 2:33 pm by Barbara Zigah
This post is also available in: Italian
(eToro Blog) Slightly removed from the spotlight given the overwhelming focus on Greece, it’s easy to forget that there are other E.U. members which are also fiscally impaired. Earlier today, The Spanish National Statistics Institute reported that according to preliminary estimates, the Spanish economy contracted by 0.3% in the last quarter of 2011, in line with last week’s forecasts from the Bank of Spain. Analysts say the figures clearly suggest that the Eurozone’s 4th largest economy is headed for another recession, despite being the last of its Eurozone peers to emerge from the most recent recession.
In spite of the Spanish news, the Euro continues to find some support and is trading higher at 1.3125; one trader who profited nicely from the Euro’s intra-day volatility is trader foddam03 who earlier closed a short position which gave this trader a gain of 88%.
However, Euro support notwithstanding, worries of Greece are putting pressure on the European bourses which are trading lower. As of this writing, the German DAX is down by 33 points and the CAC-40 is lower by 32 points; on the OpenBook, investor sentiment remains skewed toward short positions, more so for the CAC-40 than for the DAX, however. Trader petra09 closed out a long position in the DAX earlier for a 14.59% gain, and holds one other already profitable long position with a TP set at 6,602.2700. This trader has only a relatively short track record on OpenBook, but for the last three months is near to recording a 50% gain.
Trader ROLaterveer, who primarily employs a high risk strategy, allocates 40.5% of his portfolio to the German DAX and recently closed out one short position for a small gain of 4.5% and holds two other shorts. Trader Renlie24 also allocates a large proportion (36%) of the trader’s portfolio to the DAX and opened one short position today to hedge an open long. Trader arasu88, who looks to have just opened this OpenBook account earlier in January, is already showing some trading prowess on the DAX; in the 20 positions opened this month, every one has returned a profit with gains ranging between 1% and 22%.
Spain’s government had said that they would not meet the IMF’s 2011 deficit targets and would step up their efforts to meet the targets this year. Analysts believe that more austerity will shrink the economy further perhaps as much as 1.7% this year, and push the E.U.-high unemployment rate to 23.4%. That news, though generally unsurprising, will still worry the E.U. leadership as they attempt to hammer out the details of the Eurozone’s emergency funding mechanism, the EFSF. The EFSF is already earmarked to help Greece and possibly Portugal and Italy. Last Friday, Fitch’s credit ratings agency downgraded Spain’s sovereign debt from AA- to A.
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