The next two days should provide an electric trading atmosphere, this on the heels of the today’s ECB monetary policy press conference and tomorrow’s U.S. Non Farm Employment Change numbers. The USD lost ground to the EUR on Wednesday, but certainly did not slip in a manner that showed the day’s session was anything more than what could be described as a test of a range. Today Claude Trichet, the President of the ECB, is likely to be confronted by tough questions and the manner in which he handles the minefield will certainly have an effect on the EUR. Yesterday the ADP Non Farm Employment report came from the States and was better than anticipated and interestingly enough, Construction Spending was stronger than expected. Today the U.S. will release weekly Unemployment Claims, but the day’s impetus will certainly be on the ECB.
The European Central Bank had been rumored to be considering pulling back its support system for European bonds possibly this month, but that has almost certainly been pushed back because of the Sovereign Debt concerns which are roiling the market. Thus, it will be put upon the shoulders of President Trichet to answer and fend off what has become a nearly delirious atmosphere concerning the future of the Single Currency. The EUR has found itself under immense pressure since the outbreak of the Irish financial crisis coming to the fore and the question is when and if the stream of bad sentiment will be able to be slowed. The major obstacle facing Trichet today could be the amount of skepticism that exists within investors. While journalists may be polite today, investors and traders could view perspectives in a different light, and this will mean the EUR is likely to be tested.
With the combination of Jobless data coming from the States – the weekly Unemployment Claims today and not to be forgotten – the Pending Home Sales, traders will find themselves with a full plate of offerings. Tomorrow’s official Non Farm Employment Change numbers are certain to add to the chorus. The jobless data remains critical as does the housing sector and it will be of interest to see how international traders balance all the information coming at them.
The ECB meeting today will be critical. Investors did show a taste for risk appetite yesterday. As equities rose in many global bourses, including good gains on Wall Street, and the EUR traded in a better manner and the GBP picked up some lost ground against the USD.
The JPY lost additional ground to the USD also. Which could be interpreted as another sign of risk appetite from Asian investors, except for one thing which remains a strong guidepost – the price of Gold is hovering near the 1400.00 USD an ounce. It has not punctured the price lately, but has been consistently around 1392.00 the past two sessions. Meaning that fear still exists for ‘paper money’. While China has been adamant that it intends on fighting domestic inflation, it still obviously wants to keep its economic export engine in high gear and this also offers an interesting foray of perspectives on how it will manage such a task. The AUD picked up some ground yesterday on a weaker USD, but as pointed out yesterday, the Australian currency remains clouded by divergent ingredients.
Today and tomorrow will offer traders an ability to not only test their broad market sentiment, but it is likely to deliver a swift market with opportunistic ranges for those with the fortitude to participate.
Written by bforex.com
