The markets responded with mixed results on Tuesday as full volume returned. The EUR was able to hold onto its previous gains and did show an ability to move upwards still. This occurred as news was reported that said Greece will get another aid package and Germany essentially will not stand in the way. Meaning that Germany has agreed to be more lenient with the Greek government regarding its austerity The question now for investors is how this will affect the short term and long term viewpoints of the EUR. Certainly many concerns still exist and the possibility of the debt problems merely being pushed down the block to be dealt with later must be taken into consideration. Economic data from Europe continued to show that challenges are emerging, German Retail Sales did not meet expectations as they came in with only a gain of 0.6% compared to the estimate of 1.7%. The Consumer Spending numbers from France also proved disappointing. And in related data, the Swiss GDP results failed to meet expectations.
Final Manufacturing PMI numbers will come from Europe today. However the focus for the EUR will continue to be how the confidence game surrounding official pronouncements regarding the Sovereign Debt crisis is managed publically. The European Union has done a pretty good job the past few days of presenting a unified front regarding its policy stance towards the EUR. The question for investors is how reality will eventually play out. While a bailout seems likely for Greece today, the long term concern is that today’s solution will not solve tomorrow’s woes.
The U.S. released bad results from the economic front on Tuesday as all three major reports showed vulnerability. The Chicago PMI was far below expectations, the S&P/CS Composite-20 HPI dipped more than expected, and the CB Consumer Confidence reading failed to meet forecasts. Today the U.S. will kick off jobless numbers with the ADP Non Farm Employment Change report. Tomorrow weekly Unemployment Claims will be seen and then on Friday the government’s Non Farm jobless outcome will be presented. The U.S. has turned in lackluster data for a few solid weeks and while officials continue to express optimism for growth there are road signs that are warning about potential danger zones. The USD remains in range against the EUR and it has lost ground the last few trading sessions. With the jobless data on the horizon investors are likely to sit on the fence, which means traders may find opportunities within markets that are looking for direction.
The GBP did lose some ground on Tuesday to the USD and showed that the markets are mixed at best. The GBP is likely to trade in unison with the EUR more often than not. The U.K. will release its Manufacturing PMI report today and its expected outcome is 54.2, which would be below last month’s result of 54.6. The U.K. will also see Mortgage Approvals, Net Lending to Individuals, and Money Supply numbers. The U.K. like its counterparts has shown signs of faltering and investors will have more information to formulate their opinions after today’s data is published. The GBP has been in a EUR centric mode for a considerable amount of time, but there is reason to suspect that this will not always be the case.
The JPY managed to get stronger on Tuesday as the currency proved once again that it stands firmly within a consolidated range. The Japanese government has ‘no confidence’ votes ahead in the next two days which may affect sentiment, but Japan has seen many changes in government the past few years and investors are likely to remain calm. The AUD remained steady even as a disappointing GDP emerged from Australia early this morning. Commodity prices remain stubborn. The RBA will meet next week and its meeting will bring about impetus for the AUD. The Australian government continues to take the tone that it remains confident about the overall strength of the economy and that this morning’s GDP result was largely related to weather related events more than any real weaknesses.
Written by bforex.com
