Euro Swings Provide Opportunities for OpenBook Traders
January 31st, 11:12 am by Barbara Zigah
(eToro Blog) Putting a little pressure on the Euro yesterday was news that Portuguese bond yields touched on record highs, suggesting to investors that Portugal is quickly becoming the new Greece. However, that pressure was brief as the Euro-Dollar is currently trading higher at 1.3185. Current support is being attributed to the developing news story that Germany may now get their coveted “fiscal pact.”
On the OpenBook, sentiment is predominantly bearish with 12 shorts to every 1 long. Guru pawelskrzypek saw some of his buy orders activated, and closed two longs to 15% and 19% returns; two open longs are also already showing profits of 23.50% each. Trader pyruss also eked out some smaller gains on two closed long positions, and holds another open long which is just now turning a profit.
Trader ritcizz from Brunei is a relative newcomer to OpenBook, and earlier closed several long positions in the EUR/USD pair with gains ranging from as low as 6% to as high as 156%. On occasion, this trader was caught flat-footed by the volatility of the Euro, but is still on the way to posting an 8% gain for the week.
Another relatively new OpenBook trader who shows promise is tristan09e from France; this trader is on his way to posting a 44% gain for the week, and 59% for the month. This trader predominantly trades the Euro-Dollar, with nearly 90% of his portfolio allocated to it which has yielded a return of 9.7%.
Recently, Standard & Poor’s downgraded Portugal’s credit rating to “junk” status and clearly investors agree; yesterday’s sale of 10-year benchmark bonds resulted in a yield of more than 16%. Comparatively, analysts say that bond yields which rise significantly over 7% are generally unsustainable.
At this level, Portugal is now essentially shut out from raising funds in the capital markets which means that the government’s ability to meet future debt obligations will be difficult, if not impossible. Analysts expect that Lisbon may now need a second bailout, and believe that the E.U./IMF could require the government to restructure existing debt as a condition to a second loan.
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