Although the EUR did in fact find footing yesterday and was able to gain against the USD nearly finishing at its close on Friday, the problems regarding Greek debt have not gone away. What has been witnessed is apparently a line in the sand that has been drawn regarding ‘real value’ and the EUR appears set to test it current range until a firm answer is drawn upon the board. Many scenarios are being discussed for Greece and none of them are pleasant. Greece is facing a political fight to get austerity measures passed. The IMF, ECB, and E.U. are all involved in negotiations regarding the bailout package and how it will be paid out. The EUR has shown remarkable stability for a currency that has so many fault lines. The perspective thus far for the EUR is that the Greek problems will not cascade into other related spheres. The term ‘firewall’ has been suggested by some analysts. The multi-billion dollar question however is if the perceived firewalls will work. Can the other countries facing a debt crisis truly separate themselves from the Greek problem? Can contagion be stopped? The EUR has traded as if investors believe that the crisis can be contained.
The USD has found swift trading against the EUR. Yet the USD has not lost chunks of ground to the other major currencies. The U.S. did not release major data yesterday, but today Existing Home Sales will be brought forth. The housing sector in the U.S. remains under stress and the anticipated outcome today is 4.82m compared to last month’s result of 5.05m. In reality however the poor housing numbers are expected and it is tomorrow’s FOMC Statement that is on schedule that will cause fireworks. The Federal Reserve is being eyed very carefully for any signs of wavering from their stance that the economy is not in anything but a recovery mode. Quantitative easing is scheduled to stop in the next couple of weeks and tomorrow’s report will likely touch upon the subject. If the U.S. economy as seen by investors as having entered a ‘soft patch’ is admitted by the Fed it will open the door to possibilities for other stimulus measures. Wall Street turned in slightly positive gains across the major indexes on Monday. Trading however remains tentative and confidence is not in large supply.
The GBP had a rather quiet day of trading. It did gain slightly against the USD, but not in the swift manner the EUR experienced. Sterling has been trading under a EUR centric mode for many months, but it has been a bit divergent in recent trading as investors have begun to look at the GBP on its own merits and with caution. Public Sector Net Borrowing figures will come from the U.K. today, but it stands to reason that the GBP may continue to range trade until answers come from afar regarding the European debt crisis and the FOMC Statement from the States. Tomorrow the MPC Meeting Minutes will be published.
The AUD moved higher, but does remain at the lower part of its top values. Gold is trading around 1543.00 USD as of this writing. The precious metal remains a focal point with so many questions regarding the financial environment. Crude Oil remains tentative as questions about demand and supply shadow it. The Commodity market with the exception of Gold continues to be rather cautious. The JPY has moved to a slightly stronger ground against the USD.
The crux of today’s trading is sure to be the continued merriment coming from Europe and all of the major players that are involved in the Greek debt saga. The combination of major economic questions surrounding Europe and the United States continue to create fast trading within the Forex markets.
Written by bforex.com
