The USD lost ground to the EUR and GBP as range trading emerged and the broad markets proved that they continue to be tentative at best. Wall Street turned in a mixed performance that may have been slightly positive, but after six weeks of losses the fact that equities could not mount a good run on a Monday is not a bright signal. Today Retail Sales figures will come from the U.S. and with economic data having turned in cumbersome numbers the past month, investors may be geared for further grey clouds. A drop of minus -0.3% is expected from the Retail Sales results as consumers are anticipated to show evidence of additional stress because of rising prices, a soft job market, and a lack of good sentiment. The USD finds itself within a rather middling range against the EUR. The combination of a distressed outlook for the American economy and the continuing saga that traverses from Europe regarding debt has basically left investors feeling like they have been asked to dry off using a wet towel.
The overall market sentiment is mixed at best currently and Wall Street has shown that optimism may be fading quickly. Unless a sudden emergence of value investing begins to surge the equities appear as if they will continue to be under pressure. In this context the commodities markets have also started to show signs of strain as questions about future demand have grown louder. Crude Oil has been trading in a consolidated range for the past month and the question is whether it is more likely to raise or go down. If the economic reports are any indication and the global economies are really starting to sputter there is every reason to suspect that Crude will find fewer buyers. Yes, speculation could drive the market higher or a political event in the Middle East that is unexpected could bring about nervous gains, but if the U.S. and Europe continue to turn in poor economic numbers Crude may find additional reasons to loss some value. Gold which traditionally acts as a safe haven has found price pressure also the past week and of this morning’s writing is 1520.00 USD an ounce. The precious metal may continue to be sparked by volatility with a murky economic picture growing.
Europe was hit with another downgrade regarding Greek debt yesterday, this time by S&P. Even as the EUR gained on Monday the Single Currency appears to have a growing cauldron of tough questions emerging about the likelihood of a Greek debt restructuring. Even as the ECB and IMF have publically said a ‘haircut’ on Greek debt obligations would have a devastating effect, the fact of the matter is that most investors continue to punish the yield on Greek bonds and the debt is basically considered nothing more than ‘junk’. The EUR has continued to hold onto most of its value, but the question must be asked – why? The EUR has a tough road ahead if economic data continues to be poor and the debt crisis doesn’t go away. There will be little data from Europe today and the focus for EUR investors will continue to be Greece.
The GBP gained like the EUR yesterday and traders will find opportunities to test the range of the Sterling. Inflation data will come from the U.K. today along with a HPI – Home Price Index reading. The U.K. faces the same burdens as its major counterparts and the GBP remains locked in what has been a predominantly EUR centric mode.
The AUD did relatively well on Monday as it gained even as commodity prices were challenged. The Forex market on a whole gave mixed messages on Monday and the gains made by the AUD yesterday highlight that ranges are being tested. The JPY did little on Monday and its performance was locked in an extremely tight song and dance routine.
The broad markets continue to signal a large degree of nervousness and traders should be geared for short term movements and ready to take advantage. Traders should watch equities and commodities as a barometer of sentiment.
Written by bforex.com
