The weekend did not produce an agreement for the Greek debt situation. Germany and other nations continue to debate the amount of money that Greece will be able to receive before the Greek government implements ‘needed’ austerity measures. Also the Greek public continues to mount protests in the streets and through strikes as they display their displeasure. The political situation in Greece is also in a state of flux and it is questionable if the present leadership has enough support to pass any type of new austerity mandates. The EUR stands in the wake and even though it gained swiftly against the USD on Friday as some speculated that all would be well for the Single Currency, once again the weekend has proven that upheavals still persists and not everything is settled on. Some analysts claim that a future Greek restructuring of debt has already been factored into the EUR, but it is the knock on affects that could come from Portugal, Ireland, and others that could change the game for European banks and governments and thus the Single Currency.
There will not be major data today, thus investors will stay transfixed on the EUR/USD pair via news coming from Europe regarding the debt crisis. However, it must be taken into consideration that the FOMC via the Federal Reserve will release their monetary policy statement on Wednesday and this will play its role in the broad markets too. The combination of a soft economic patch from the U.S. and the continuing European problems is likely to create volatile Forex, Commodity, and Equity markets all week long. A Preliminary Consumer Sentiment reading from the University of Michigan was published on Friday and it showed that the American public is not feeling optimistic. Wall Street responded with a rather lackluster day and going into today’s trading the major indexes have had seven weeks of negative trading.
The GBP basically stood in place on Friday even as the EUR gained against the USD. This perhaps shows that investors believed that the ‘true value’ of the EUR had been taken too low against the Greenback in earlier trading. Thus with the continuing saga from Europe unfolding, it will be more than interesting to see how the GBP stands alone on Monday. The EUR has faced volatile trading already since the opening of the Asian market sessions early this morning. But the GBP has not lost value at the same rate. There is an element of divergence in the marketplace and Sterling may have to be judged on its own until the EUR finds some stability. Tomorrow the U.K. will release CBI Industrial Order Expectations and on Thursday inflation and mortgage numbers will be brought forth. The U.K. like its counterparts faces critical hurdles regarding its economic outlook, and the difference may prove to be long term that the GBP does not have as much exposure to the European crisis as nations on the continent.
Gold has found backing the past two sessions and as of this writing is near 1535.00 USD. Safe haven trading is likely in vogue from many participants and the precious metal cannot be looked at with the same analysis as other commodities in this type of environment. There is some speculation taking place with Gold, but in times of uncertainty investors tend to look for preservation. The AUD proved that it can be affected by the questions surrounding the global outlook. The Australian currency has been taken lower, after making gains before going into the weekend. Gold is important in terms of underlying value for the AUD, but it is not the only factor. Crude Oil and the Grains have all been under pressure for a while and this is not likely to change in what is a nervous market.
The JPY has continued to gain against the USD. This comes even as news from Japan continues to be discouraging regarding the economic outlook and as the saga that is still emerging regarding the post tsunami aftermath remains grim. Asian investors have tended to use the JPY as a safe haven currency and this may continue to find favor.
Written by bforex.com
