Currencies Confronted By A Storm

After a week of volatile trading across the broad market place, the currencies could be facing another rather tenuous few days. Today there will be very little economic data released globally, which will leave the Irish aid situation the main talking point. On top of that there is the fact that trading this week will fall off a cliff on Thursday and Friday as the U.S. celebrates its Thanksgiving holiday. The USD gave back plenty of its gains made earlier last week as Friday came to a close. The EUR picked up ground on the belief that the Ireland situation has been stabilized enough to tame any possible domino effect. The GBP also managed to push itself back to the stronger parts of its range against the USD and this essentially sets the table for a test of ranges in the coming days.

The overhang of the Irish debt crisis is sure to blow a cold hard wind onto investor sentiment. The question is what the short term prospects for calm are, compared to the long term concerns about a possibly ugly combination of laggard growth and austerity measures. Ireland like Greece will now be faced with heightened requirements by the European Union and the IMF to counter its flailing economic problems. The Irish banks are in line to receive at least 50 billion EUR in order to balance their books, and the Irish debt situation is still under a great deal of stress and could need further cash infusions equaling over 100 billion EUR of total aid.

The U.S. will release its Preliminary GDP and Existing Home Sales on Tuesday. The Europeans will publish their Flash Manufacturing and Services PMI readings. Wednesday the U.K. will bring forth GDP statistics and the U.S. will push out a host of releases before going into Thanksgiving. With the holiday season nearly upon the markets, investors will find themselves going into the final days of trading this year with many issues still confronting them.

The USD was able to gain the past two weeks as the EUR suffered with its Sovereign Debt crisis. However the U.S. economy is still facing the prospects of an economy that is not going to achieve outstanding growth, and may in fact still struggle with debates centering on the Federal Reserve and government policy. There is a counterbalance that investor must weigh carefully between the USD and the EUR. Many nations, particularly emerging countries, have been caught in the middle of this uncertainty and watched as their own currencies have risen to uncomfortable values.

Commodity prices continue to face volatility. Gold is trading at nearly 1360.00 USD per ounce going into today’s European trading session. The price of Crude Oil has found itself under pressure recently as the USD got stronger and real questions have arisen about China’s intention to fight domestic inflation. The JPY remains in a consolidated range against the USD, but leaning towards the weaker side of its range. The JPY has been in an extremely tight pattern for a considerable amount of time and its overall strength remains a detriment to the Japanese economy. The AUD has climbed upwards the past two trading days as Gold has brightened a tad and the USD has found some resistance.

Trading this week will likely remain under the strains of existing sentiment and investors have plenty on their plates to digest as they delve into the details regarding the Irish aid package. The European Union once again appears to have been able to push its envelope packed with problems down the block and the question is what will happen eventually when the package is opened.

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