Consensus At the G20?

The USD powered ahead on Thursday in markets that saw lighter than normal volume due to holidays being observed in a variety of nations. There was no major data yesterday, but propelling the market were loud whispers coming from the G20 meetings that it recognizes that there is considerable worry among investors that Ireland may have to refinance its Sovereign Debt. European ministers once again find themselves under the gun and having to deal with questions about the possibility of government default by one of its members. The debt crisis within the European Union has largely been swept under the rug the past few months, but as traders have now digested the workings of the Federal Reserve they might be balancing their views with Europe in mind. The USD posted strong gains versus the EUR.

Wall Street did trade even as many banking institutions in the States were closed for Veterans Day. The markets posted another set of negative returns in the major indexes. This time leading the way was rather disappointing sentiment created by Cisco, which turned in a worse than expected growth forecast the day before. Coupled with a stronger USD, some of yesterday’s trading may be interpreted as an old fashioned risk aversion move, except that Gold moved lower as it fell and finds itself near 1388.00 USD an ounce.

The U.S. will release the University of Michigan Consumer Sentiment reading today and the Preliminary mark is anticipated to be 69.1, which would be better than last month’s outcome. The German Preliminary GDP report will come from Europe this morning and it is expected to have a gain of 0.8%. This number will be watched carefully by investors who have once again become weary of the European story. Also on the agenda today is the French Preliminary GDP as well as Europe’s broad Flash GDP statistics.

The EUR has suffered the most versus the USD in trading this week. The GBP has lost value, but not at the pace of its counterpart. The economic data coming from the U.K. continues to be mixed to disappointing. Today there will be no major releases from the U.K. and it is likely to find the Sterling under the shadow of any malaise that the EUR continues to extend. It was only a week ago that investors were talking about the impact of the Federal Reserve and its quantitative easing policy and much of that debate continues, but the argument now centers more on the Fed’s long term affects and if the QE ‘project’ has any chance of succeeding. The markets continue to offer a whirlwind of volatile ranges because of the divergence in sentiment due to the concerns of investors worldwide which are colliding in some instances.

The JPY lost value against the USD on Wednesday and finds itself nearing the lower realms of its worth in recent trading against the greenback. The question is how long such a move can last for the JPY in a broad marketplace that is showing signs of nervousness. The AUD fell from its record levels, and this was due to the combination of Gold falling and the USD finding some running space. It has been a rather strong trading week for traders who have felt that a reversal in sentiment may take place. The question going into today’s session is how participants will position themselves going into the weekend. The prospects that government officials taking part in the G20 are likely to continue to make their voices heard over the next few days as they give their own thoughts to the economic events taking place is sure to be a lynchpin for sentiment.

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