Factoring in the Fed - Where to now for the Dollar?
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Wall Street leapt higher last week
after the Federal Reserve calmed investors' fears about a sinking
economy, implying that risks to the financial markets from the summer's
credit crises have eased, says BetOnMarkets.com's Michael Wright.
Stocks
initially zigzagged after the Fed lowered interest rates on Wednesday,
because some investors balked at the notion that the Fed might not
lower rates again at its December meeting. However, investors
eventually appeared relieved after interpreting the Fed's comments to
mean that the central bank is now able to return to more 'regular'
worries such as price inflation.
Wall
Street was pleased by the fact that investors, businesses and consumers
alike will be getting cheaper access to cash, because of the widely
anticipated quarter-point rate cut. The Fed funds rate now stands at
4.50 percent. Last month, the Fed surprised the market with a
larger-than-expected half-point cut in the funds rate.
After
months of agonising over a weak credit market, investors appeared to
take some comfort from the fact that the Fed found room to offer a less
accommodative statement than some had expected. In comments following
its two-day meeting, central bank policymakers said recent spikes in
energy and commodity prices, are among the forces that could be adding
to inflationary pressures, and that with its latest move "the upside risks to inflation roughly balance the downside risks to growth."
While
a more accommodating statement would have left the door open for yet
another rate cut, traders worried about what would happen to the US
dollar if there was another cut. Some analysts have gone on record to
point out that the recent surge in the oil prices have been partially
attributed to the weaker US dollar.
The
focus remains on the once mighty US dollar, which now trades just shy
of 2.08 against the British Pound, and near an all time high of 1.45
for every Euro. The Bank of England's chief economist was rather
hawkish in his latest comments, dashing many people's hopes of a rate
cut here in the UK. This coupled with the US cuts, has pushed the USD/
GBP exchange rate ever closer to 2.10.
The Fed's latest statement has been labelled as "subtle as a sledge hammer" by
some economists, for the bold way it indicated that this was the last
cut for a while. This coupled with indications from the Bank of England
that they won't move on rates this side of Christmas, could present an
opportunity.
We're
still a long way off the dizzy heights of the 70s and 80s when you
could get around $2.64 to the pound at its peak, so there is certainly
room for higher levels. The Fed may be done cutting for now, but this
doesn't mean that the dollar will rebound. Given the hawkish comments
from the MPC it is possible that the Dollar could keep sliding against
the pound or at least may not strengthen considerably in the short term.
With the above information, the average trader can use BetOnMarkets.com
to take full advantage of this situation. A no touch trade compensates
a trader for correctly predicting that the market won't touch a certain
point in the future, within a set period of time.
A
no touch trade on the GBP/USD with a 20-day term, and a trigger set at
$0.06 cents lower than today's level, pays around 11%. This means that
the exchange rate could rise, stay where it is, or drop as much as
another $0.055 cents, and you could still win.
- THE END -
Contact Details:
Email: editor@my.regentmarkets.com
Tel: +44 1624 678 883
Address:
Regent Markets (IOM) Limited
3rd Floor, 1-5 Church Street
Douglas, Isle of Man
IM1 2AG
Betonmarkets.com is the leading fixed-odds financial
betting
website. The website has processed over 10 million bets since inception
in 2000, and generates annual turnover in excess of US$ 100 million.
Betonmarkets offers a wide range of fixed-odds financial bets on forex
rates, stock indices, and international stocks.
Betonmarkets is operated by the Regent Markets Group of companies.
Regent Markets is affiliated to the Regent Pacific Group, a Hong
Kong-listed investment group. Regent Markets has offices in three countries, and holds bookmakers licenses in the Isle of Man, the UK, and Malta.
Fixed-odds financial betting offers particular advantages over other forms of financial betting and investments,
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stock indices, and stocks.
Fixed-odds bets are also known as binary options, binary bets,
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market participants a unique tool to profit from market movements.
BetOnMarkets Bet Types:
One Touch Bet: You would buy a one-touch bet if you
believe the market will touch a given point at least once before the
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In other words, a one-touch pays out, if at any time prior to
expiration, the market touches or trades through the specified barrier.
Example: [Pays 100 if the FTSE touches X between today and date T]
No Touch Bet: A no-touch bet is the opposite of the
one-touch bet. You would buy a no-touch bet if you think the market
will never reach a certain level within a specified range of time. Example: [Pays 100 if the FTSE does not touch X between today and date T]
Bull Bet: You would buy a bull bet if you believe
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Bear Bet: You would buy a bear bet if you believe
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Expiry Range Bet: You believe that the market will be between two distinct levels (high and low) on the expiry date. Example: [Pays 100 if the FTSE closes between X and Y on date T]
Barrier Range Bet: You believe that the market will
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Double Touch Bet: You believe that the market will
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Up or Down Bet: You win if the market touches either of two pre-determined barriers before or on the date the bet expires. Example: [Pays 100 if the FTSE touches either X or Y between today and date T]
Double Up Bet: A Double Up bet pays two times the premium if the market rises above a given level between the time of purchase and the
close of trading. It expires at the close of business on the day of purchase of the bet. Example: [Pays 100 if the FTSE closes above X between now and the close of trading today]
Double Down Bet: A Double Down Bet pays two times
the premium if the market drops below a given level between the time of
purchase and the close of trading. It expires at the close of business
on the day of purchase of the bet. Example: [Pays 100 if the FTSE closes below X between now and the close of trading today]
Intraday Double Up Bet: Buy this bet to play a
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Intraday Double Down Bet: Buy this bet to play a
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Run Bets: These fun bets are over in the space of less than a minute; so you can make money in seconds. Here, you have to guess the last decimal digit of say, the USD/JPY (predict 3rd decimal place)
after 5 ticks.
About the Author
Name: Mike Wright
Address:
Regent Markets (IOM) Limited
3rd Floor, 1-5 Church Street,
Douglas, Isle of Man IM1 2AG,
British Isles.
Phone: +44 1624 678 883
Email: editor@my.regentmarkets.com
URL: http://www.betonmarkets.com
or http://www.betonmarkets.co.uk
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