ProgressiveFX.co.uk

Early market events again set the tone for a volatile trading week. The unprecedented $700 billion rescue package proposed by US Treasury Secretary Paulson was rejected in the House of Representatives calling into question whether the plan would survive. Banks of both sides of the Atlantic came under threat. In the US Washington Mutual and Wachovia Bank both underwent takeover?s while government intervention in the UK, nationalizing Bradford and Bingley, and Europe was required to support the still ailing financial sector.

Data in the US, while mixed, was reacted to by markets in a positive manner with poor data generally only causing short lived weakness in cable. ISM Manufacturing data showed the sector still in contraction territory at 43.5. Consumer confidence came out better than expected at 59.8 versus the forecast of 55 and quickly pushed the dollar back onto course for further gains against the pound. This trend accelerated after the US Senate voted in favour of the $700bln rescue package and pushing the bill back to the House for a second round of voting. Fridays Non-farm payrolls came out much worse than expected at -159k versus an expected -105K, it was however the average hourly earnings numbers that provided support for the dollar.

The euro spent the week trading at the mercy of the dollar as data continually pointed towards an economy heading for recession. This view was supported by the ECB President Trichet after the ECB left interest rates on hold at 4.25% on Thursday. In his press conference Trichet acknowledged that the eurozone economy was weakening at grow had slowed while inflation was subsiding. The dovish tone of his statement have led most analysts to believe the central bank will cut interest rates in the near future as monetary policy shifts away from price stability to focus more on supporting growth.

Locally the nationalization of Bradford and Bingley weighed heavily on the pound early in the week. Mortgage approvals came out higher than expected while consumer confidence showed an improvement in September. UK GDP remains flat while house prices seem to be finding a bottom. Despite the more optimistic data outlook concerns over the health of financial institutions continued to favour the dollar as the pound saw consistent losses against the buck. The surging dollar did lend support to the pound versus the euro at sterling reached a 6 month high versus the single currency.

Next Week:

Interest rates, inflation and growth forecasts will take center stage this week with the release of the FOMC minutes and the BoE MPC meeting. The recent slew of weaker data and the turmoil in global financial markets will place further pressure on the Bank of England to deliver a rate cut sooner rather than later. With inflation still near 5%, market expectation is for the MPC not to change their monetary policy position at this meeting.

ProgressiveFX.co.uk is delighted to expand its service proposition, through Baydonhill PLC, to include FX advisory services, foreign currency mortgages, international payment solutions and currency forward contracts.

Rob Parton, ProgressiveFX CEO, commented; "We are delighted to have secured another partner of the highest quality. ProgressiveFX.co.uk now offers a total solution for retail and institutional clients in respect of their foreign currency needs".

I am delighted to announce that Finexo and ProgressiveFX.co.uk have agreed to enter an affiliate partnership. ProgressiveFX, has for some time been impressed with the service, attentive support and inparticular the resources made available to FX traders by Finexo.

ProgressiveFX.co.uk now has two special and important relationships, (eToro the other) and our aim is to secure one more partner thus completing a differing selection of platform types, and thereafter focus on helping traders select the right partner for their individual needs.

We believe Finexo is an excellent choice for new traders keen to enter the FX market. The platform functionality is simple, logical and straightforward and the Finexo team are proactive in helping new traders enhance their learning curve.

The daily market news and FX strategy report is a great help in particular.

Good trading!!

Equities suffered their biggest one day fall in decades yesterday after the US House of Representatives stunned markets rejecting the $700bn bail-out plan proposed by the Bush administration. The move, which jeopardises what little liquidity is left in global financial markets, was a political gesture designed to crush any rescue plan that offered investment banks, and highly paid Wall Street bankers, a get out of jail free card at taxpayers expense.

Hopes remain that a revised plan will be forced through later this week but the failure to approve the bail-out was greeted with dismay. Gold, the classic safe haven rallied sharply, whilst oil fell up to $10 a barrel on expectation that lower economic growth would hit energy demand. Yields on US Treasuries also fell as investors bought up government backed assets. In the UK the government nationalised the mortgage book of Bradford & Bingley after a plea to the big 5 British banks to intervene failed, whilst in Europe the Dutch and Belgium governments moved to support Fortis, another bank on the verge of collapse.

Risk aversion was further extended as money market overnight swap rates rose to record highs as banks refused to lend cash to each other, fearing contagion across the sector. Safe haven currencies, USD and JPY, rallied strongly as investors unwound carry trades and accelerated the recent flight from risk. The AUD, NZD and GBP were among the higher yielding currencies worst hit.

Future students of finance can look forward to studying 2008, in addition to 1929, in the chapter titled 'Examples of Systematic Failure in Western Capitalism' within their MacroEconomic textbooks.

Welcome to my first BlogFX. As you explore the ProgressiveFX site I am sure one of the first questions that will arise is why did ProgressiveFX partner with eToro? It's a fair question.

The team at Progressive, and myself in particular, are experienced investors. I have been trading equities, CFD's, covered warrants, commodities, derivatives and currencies for approaching 15 years. I love trading and enjoy communicating with other traders.

As the retail FX market has grown I have tried many different FX platforms including Easy-Forex, AbnAmroMarketIndex, Oanda, DBFX, MetaTrader, Alpari and of course eToro and a multitude of others the names of which fail me. Some platforms are great for professional traders, some are great for novices. And some, no names mentioned, you just can't trust.

I rate AbnAmroMarketIndex highly for its charts and functionality. I rate Alpari highly for corporate accounts and I rate eToro highly for its ease of use, leverage flexibility, retail originality but most importantly for its customer service. As you may already know, trading FX can be fun, profitable, addictive and fulfilling. It can also be stressful and chaotic, as any investor who has tried to trade any asset class in recent weeks will confirm.

Before ProgressiveFX commited to eToro we did our due-diligence, not for a few days but for months. We used common sense yard-sticks to gauge if the eToro team were the kind of people we wanted to work with. When we funded our account we wanted to see the money available for trading there and then, not hours later. eToro credited our account right away. We understand that any business that handles money has to identify its clients and get proof of I.D. But we don't want to have to jump through hoops for weeks. We found the identification process easy. I just had to scan my passport, credit card and proof of address and email it over. Took 20 minutes. No big deal. And if I knew how to use my new scanner, it would have taken 5.

For trading I wanted ease of use, low spreads, fast execution. eToro is as good as any I have used, and better than most. And inevitably when things don't go to plan, I want a real person with a name to talk to or email directly, not some info@email inbox that gets checked by a whoever is free in a call centre.

Sometimes, unfortunately, things don't go as we planned. That's life. Then I want someone to listen, empathise and work with me to fix it. eToro get 10/10 for fixing things for me. And of course most importantly when I want to cash in my profits do they send me my money? Yes, they do. It hit my Paypal account sooner than I expected.

So ProgressiveFX and eToro are doing business together and I can think of no better way of kicking off the relationship than giving $10,000 USD to some talented trader who knows how to make money day-in-day-out across a range of currency pairs, long and short.