The Final GDP number will come from the States today, but it is nearly certain that this will not be the main mover of the broad markets on Friday. Investor sentiment finds itself tangled in a whirlwind of emotions due to international developments which have proven relentless. The Japanese crisis continues to spark chaos in the Asian markets which have found their equities whipsawed due to the contrary news reports which continue to circulate regarding radiation. The Libya situation finds itself in focus as questions continue to be asked about the military action that is unfolding. And not to be outdone Europe is well within the midst of another Sovereign Debt and banking storm as Portugal has been urged by E.U. leaders not to turn their backs on commitments made regarding austerity measures.
With all of the above clouds above pure fundamental data was merely glanced at on Thursday and provided a muted effect on the broad markets which turned in mixed results. The USD lost some ground to the EUR as the day came to an end, but the Greenback kept a stronger stance against the GBP. The USD finds itself in the middle of its ranges against the Single Currency and the Sterling and the question for investors is which direction risk sentiment will turn today. The JPY continues an immensely consolidated place versus the USD as a lack of total clarity continues to be the main topic for traders concerning the Japanese crisis. The AUD did gain well on Thursday and in early trading this morning and is in record territory. Gold although losing a touch of value yesterday still maintains a strong posture going into the final trading day of the week and as of this writing is about 1433.00 USD per ounce. Crude Oil also continues to be stable and stubborn.
The U.S. did release its Core Durable Goods number on Thursday and it came in well below expectations. While the weekly Unemployment Claims numbers were slightly better, they are still nothing to get excited about. Wall Street has done remarkably well this week taking into consideration all of the international risk events that have provided theatre. Today the Final GDP number will come from the States and a result of 3.0% is anticipated. Investors may use this number as a spark for trading today, but taken into the context that weak economic numbers from the housing sector and durable goods have emerged this week, it is also clear that fundamentals are not being taken into consideration by those who are showing a taste for risk appetite. What traders should know – if they pay attention to such things – is that volumes in the equities markets remain thin and this is a sign that recent gains may have to do more with sheer speculation.
Europe has found itself having another encounter with its financial woes the past few days. Portugal and Spain are making news for all the wrong reasons. It appears that Portugal will have to ask for a bailout from the E.U. relatively soon, having said that, the country’s politicians have not shown the ability to swallow a tough economic austerity bill. And what this has done is once again shown investors that Europe has a two tiered economic system and this will not go over particularly well with the German population which is being asked to pay the bill. The EUR did rebound in trading yesterday against the USD and it should be examined in these coming days closely.
The U.K. will not release major data today, but Thursday’s Retail Sales results will not be welcomed. The U.K. essentially continues to show that its economy is struggling to maintain any semblance of growth. The next few months will be a big test for the Bank of England as it is confronted by inflation, a tough austerity package, and possibly unfavorable growth prospects. The GBP finds itself in a rather strong range, but traders may be asking themselves why.
Going into the weekend, investors cannot be faulted for showing caution with many international risk events continuing to develop. Risk adverse trades such as Gold and the USD are intriguing. And as Saturday and Sunday arrive investors will have to continue to stay appraised of the news in order to judge sentiment which has been on a tricky path recently.
Written by bforex.com
