The broad markets including Forex and commodities largely danced around existing ranges on Wednesday. While the USD did fight off an early rise in value from the EUR, by the end of the day prices basically mirrored the previous day. Equities continue to struggle and Wall Street turned in another poor set of results across the major indexes. Crude Oil provided some firework as the OPEC meetings ended in disarray and without an agreement on production. This sent the price of Oil slightly upwards. Gold however finished lower and is trading near 1535.00 as of this writing. The AUD also continued to be under pressure as investors try to determine Australia’s economic prospects and weigh this against the RBA keeping policy unchanged earlier this week.
Central banks will be a focus today as both the ECB and BoE hold their monetary policy meetings. No major surprises are expected from either, but ECB President Trichet is sure to face questions about the debt crisis in Europe. While many fears about a possible Greek restructuring of its obligations have been discussed, there remains the possibility that a fresh wave of concerns could erupt at any moment. Having said this, Trichet is a skilled speaker and he is certain to try and comfort investors, knowing full well the implications that any change in signals could cause. Interest rates are certain to remain the same in the E.U. and U.K. today, but inflation concerns still exists – but so do weak growth prospects. And investors will be keen to judge Trichet’s tone of speech as much as the words he is explicitly conveying.
The U.S. will release weekly Unemployment Claims today and a number of 424k is expected. The jobless numbers have been disappointing the past two months. Last week’s Non Farm Employment Change data proved yet another bad lynchpin for sentiment. President Obama will face tough political hurdles if the jobless numbers do not begin to improve quickly with the American national elections only a year and half away. Wall Street has been consistently cautious the past month and a half and a combination of troubling economic outlooks and the possibility of over exuberant ‘buying’ of equities the past year may be taking their tolls. The U.S. will be rather quiet with data tomorrow, thus today’s numbers could set the table for trading going into the weekend. The USD started off this week in the weaker part of its range against the EUR and has not found consistent enough backing to change that.
The GBP remains an interesting dilemma for Forex traders. The U.K. has consistently turned in lackluster economic data but has managed to stay in a fairly guarded range. The Bank of England’s monetary policy meeting today is unlikely to produce any sea changes. Tomorrow the U.K. will publish Manufacturing Production and inflation data. Having traded in a rather EUR centric fashion for a considerable amount of time, some traders may be compelled to test for divergent results between the GBP and the EUR today and Friday.
The JPY has moved ever so slightly lower against the USD, but the value of the Japanese currency has remained locked in a consolidated range and is an opportunity for traders who feel comfortable trying to take advantage of these valuations.
Written by bforex.com
