The Confidence Game that Europe has been playing for over a year regarding its debt crisis is reaching critical levels. This weekend German and French officials are set to meet to discuss the Greek bailout. The uncertainty that surrounds the EUR is palpable. The EUR/USD was actually stable on Thursday after the previous day’s volatile session. Going into this weekend traders must decide on their level of risk appetite if they choose to hold onto positions going into Monday morning. The GBP did trade lower on Thursday, this as a poor Retail Sales number didn’t exactly impress investors. The AUD was stable but remains on the lower side of its strong range. Gold was consolidated. And Crude Oil remained in soft territory.
The European debt crisis is clearly the focus for investors including those in the United States. Wall Street remains tentative on Thursday, this after a big day of losses. Thus investors march into today’s sessions with a huge amount of overhang that will create caution. The Greek government says they will announce a realignment of their ministers today, including the Finance seat. The ECB, IMF, and Europe’s governments led by Germany and France will all get into the act today and this weekend as they try to find an avenue to deliver the much needed Greek bailout package. Yet, Greece up until now has not been able to come to any agreement on how they will implement new austerity measures, which are sure to be welcomed with disdain by a large and vocal segment of the Greek population.
Therefore the EUR/USD pair must be watched carefully today and traders participating will have to be ready for volatility that can ramp up at any moment. Traders will also have to take into account the over the last month and a half a significant amount of news, rumors, and whispers circulating about the EUR has been delivered over the weekend.
The U.S. released weekly Unemployment Claims on Thursday and the number slightly beat estimates with a result of 414k. However, this number will not start up the band for any duration because in reality the amount of people filing claims remains high and is not a good signal regarding the jobless problem facing the States. Today the Consumer Sentiment Preliminary reading will come from the University of Michigan and an outcome of 74.2 in anticipated. Consumer Sentiment is a lynchpin for investors and a poor number today could turn into a catalyst for negative sentiment which is already abundant. The warning signs are clearly brush stroked on the walls in big black letters. The U.S. economy is clearly in a soft patch once again and the question is whether it will regain its footing or slip into full recession mode. On this rather unoptimistic outlook, commodity prices have been hammered.
Gold traded in a consolidated manner, yes, and of this writing is around 1526.00, but it is likely being sustained via safe haven seekers. Most other commodities are soft to weak. Crude Oil remains under pressure as do the Grains and this is clearly developing on a belief that demand may decrease, which in effect has taken some of the speculators out of the ballgame. Going into the weekend both commodity markets and equities should be used as a barometer for existing overall broad sentiment.
Trade Balance numbers will come from Italy today, but if anyone outside of Italy mentions these numbers as a reason for affecting the value of the EUR they should be looked upon with suspicion. The only factor for the EUR today is the perception that European officials must continue to aggressively play their ‘confidence game’. Investors will want to see that the debt crisis has the proper management.
Safe haven trading was apparent on Thursday and is likely to stay strong today. The JPY did regain some of its value also yesterday, proving that Asian investors continue the tradition of buying the Japanese currency in times of trouble. The global economy has many questions hovering that are not so pleasant and traders will seriously have to consider the amount of risk appetite they have going into the weekend when dealing with the Forex market.
Written by bforex.com
