Asian traders instinctively perhaps Wednesday tried to be positive and this helped push up equity values in the bourses there. However today has started out on a negative foot once again as the crisis in Japan continues to deliver rather conflicting reports on the stability/ or lack of (depending on the particular source) regarding the nuclear reactors. The JPY spiked in value in early trading today and finds itself at new highs. The JPY at such a high value will do the Japanese economy little in the way of favors. It is certainly an unintended consequence that the JPY has gotten so strong, but speculative elements centered on the rumor that Japan is repatriating money has fueled some of this strength. The Bank of Japan is being watched closely. Other currencies have found relatively calm water comparatively. The USD traded in range against both the EUR and GBP much of Wednesday. The AUD however continued to lose some value and it did this as commodity prices continued to slip. Gold is trading at 1393.00 USD as of this writing.
There will be plenty of data released from the U.S. today and this follows yesterday’s very poor housing sector numbers. Both Building Permits and Housing Starts came in significantly below estimates on Wednesday and this helped fuel a rather poor day on Wall Street. The weekly Unemployment Claims, the Philly Fed Manufacturing Index, and Core CPI reports are all on schedule today. The FOMC Statement on Tuesday did specifically say the housing sector remains depressed and this was not a surprise, but yesterday’s poor outcomes from the housing sector reiterated a melancholy song for U.S. investors. The U.S. economy even though it has shown signs of life is still in the midst of a rather uninspiring recovery, one that still faces questions. There will be little data from the U.S. tomorrow, so today’s numbers and the combination of sentiment generated from afar will continue to have an impact. The USD has largely range traded against the EUR and GBP this week.
There was little data from Europe yesterday and the U.K. produced their Unemployment reports without much fanfare. Both the EUR and GBP found relatively calm ranges while trading. The situation for both currencies remains under a risk sentiment mode. Caution has been heightened since the crisis has begun in Japan, this while ‘local’ news and data has been widely pushed aside. Europe has many issues including debt, but one increasingly interesting development that is related to the Japan crisis is the question on the future of Europe’s nuclear energy programs. European bourses will have to be watched today. The question for traders regarding both the EUR and GBP is how long will these rather consolidated levels last? There will not be significant data from either Europe or the U.K. today and their respective currencies are likely to continue to react to global sentiment that surrounds Japan.
Commodity prices have been under extreme pressure since the Japanese crisis has started. The price of Gold has not dropped in a huge manner but it has gone down nonetheless. Crude Oil continues to trade slightly under the 100.00 USD mark. Part of the reason the price of physical resources have dropped is that speculators may be taking their money out of certain venues and parking their money in ‘safer’ places such as U.S. bonds.
The broad markets remain uneasy. Not only is the Japan story a concern, but the developments in the Middle East have not gone away. While the eyes of the world have turned to Asia, political demonstrations have continued across the Middle East and stability is still being sought. There can be no doubt the news surrounding the nuclear reactor crisis in Japan remains the focal point for many. Investors have a lot on their plates going into these last two days of trading this week. Equities internationally have performed poorly and remain a critical barometer of sentiment.
Written by bforex.com
