Short Term Vs. Long Term

The broad markets were dominated by three themes yesterday, foremost were the ‘whispers’ that Ireland is closer to accepting a joint European and IMF bailout for its banking and government debt. Second was the IPO of General Motors on Wall Street. Third was the impressive reading from the Philly Fed Manufacturing Index that beat its estimate by a wide margin coming in with an outcome of 22.5 compared to the anticipated mark of 5.1. The EUR was able to gain versus the USD Thursday and now finds itself within an interesting trading range going into today’s final sessions before the weekend. Wall Street was in a buoyant mood not only because of the General Motors Initial Public Offering, but because of the positive economic data from the Philly Fed.

Not everything is wine and roses and not many festivals will be held quite yet for the global economies, but Thursday’s trading was positive. The questions that now lurk is just how the final agreement with Ireland will look and what type of measures the country will have to undertake to stabilize its financial institutions and thus stem the fear of contagion which remains a constant shadow in the E.U. for the EUR. Also the economic data from the States was a pleasant surprise, but the weekly Unemployment Claims though better than expected are still turning in rather lackluster figures if a true improvement in the jobless sector is being sought. And the Philly Manufacturing report must be weighed against the negative report from the New York Fed earlier this week.

The U.K. released plenty of data yesterday and the results remained rather muted. Retail Sales met expectations, Mortgage Approvals were lackluster, and the Public Sector Net Borrowing figure came in close to the estimate with an outcome of 9.8 billion. Today will extremely quiet for economic data globally. The GBP responded with a slightly positive gain against the USD yesterday, but much of this had more to do with the EUR centric winds pervading. It must be remembered that British banks remain a very interested bystander to the problems surfacing in Ireland due to the amount of exposure the British banks face per their investments.

While Wall Street turned in a positive day on Thursday and so did most global bourses, but the question that will arise today is if yesterday’s action was good sentiment coming in or merely a technical approach to the market by traders. Many questions are still hovering over the major economies and one day of positive cheer is not going to disperse a nervous crowd.

The JPY traded in a slightly stronger mode on Thursday, but its trading could be defined as consolidated still. The AUD gained against the USD on the two fold reasoning that Gold found some stability and climbed above 1358.00 USD an ounce and the greenback was weaker.

Going into the weekend it appears to be a classic traders market and the opportunity will be there for those with the stomach to participate. The question is which insights each participant will bring into today’s sessions considering that yesterday proved to be a reversal of sorts. Short term versus long term is certain to be a key element for the broad markets today.

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