Without any major economic data being released on Monday investors were forced to trade off of existing sentiment. And the sentiment is generally not positive, that being said traders are able to make money from both sides – long and short. The EUR and GBP gave back some of their gains to the USD yesterday as investors likely questioned the speed of the Greenback’s decline taking into consideration that the European economy appears just as weak – if not more so – then their American counterpart. Gold remained steady on Monday, but Crude Oil continued to keep a slightly negative trend. The AUD has remained in a consolidated range and this has plenty to do with the upcoming monetary policy statement from the RBA.
Wall Street faltered on Monday although not with the force that has shadowed it in previous sessions. Stocks have sunk for almost five weeks in the States and this clearly underlines the cautious sentiment that has filtered into the markets based on weakening U.S. economic data coupled with the debt concerns that loom over Europe. The Forex markets proved tentative at best on Monday as traders were given a rest from the volatility that swept through on Friday after the publication of the Non Farm Employment Change figures. Commodity markets besides Gold have shown that questions are emerging about the prospects for demand if the global economy should actually slide further.
The Federal Reserve is being monitored closely. Today Ben Bernanke is scheduled to speak to the International Monetary conference in Atlanta about the health of the American economy. Yesterday a couple of high ranking Fed officials including FOMC member Fisher publically stated that they were against further ‘intervention’ with the U.S. economy. This will be taken as a sign that some Fed members may not be geared to continue its quantitative easing policy as much as some analysts have speculated. Thus many investor eyes will be on Ben Bernanke today and be listening to his tone carefully. It is doubtful the Fed Chairman is going to give too much away today, but what will prove interesting will be his stance taken on the current state of the American economy. Investors are asking is will the Fed ‘QE’ or will it not ‘QE’- that is the question. The USD did gain against the EUR on Monday showing that the Forex markets are not a one way avenue.
Short term and long term trading are often divergent paths. The problems that continue to face the debt crisis in Europe certainly linger. Although for the time being it appears that the E.U. with the cooperation of the IMF have come up with some type of package to help Greece, the fundamental problems will continue to be strong. Namely, Greece, Portugal, and other European nations face austerity measures that will not only prove difficult to implement, but the measures will also put consistently tough pressure on their populations which may prove resistant and signal their discontent in a manner that will not be conducive for the long term health of the EUR. Germany Factory Orders and the broad European Retail Sales figures will be presented today. Both sets of numbers will prove interesting because both are expected to provide gains compared to negative results of the previous month. There will be no major releases from the U.K. today. The GBP is likely to maneuver under the clouds of the EUR today.
The JPY has stayed tightly consolidated. Asian equity markets have also been tentative. The AUD is certain to garner attention today with the coming announcement from the RBA which is expected to maintain its current monetary policy stance regarding its interest rate. Though the Australian economy did slump with its most recent GDP report, many, including officials in Australia, see the outcome as a one off largely caused by bad circumstances which will improve. The AUD remains a speculative currency for traders, this because it has a good interest rate return, one of the ‘stronger’ economies, but one too that is largely commodity based – meaning opportunities exist if its ranges can be digested comfortably.
Written by bforex.com
