USD & EUR – Who Is Next In Europe?

The Irish banking and debt crisis took a turn for the worse and pushed the EUR lower on Monday against most currencies. The USD found itself back at highs against the EUR as Irish government officials started to debate implications of accepting new requirements from the European Union openly. A new Irish budget will be voted on shortly and though the aid package has not been released for reading yet – because it has not been fully agreed to – the process for signing into law new austerity measures will be a tough pill to swallow for many. Investors not only got an earful from Irish officials, but they had to also contend with the double speak surrounding the possibility of other European nations falling prey to the debt crisis. While various government officials from a host of E.U. nations have addressed the crisis with ‘a happy face’ there can be no denying what has taken place to date. Greece claimed that they would need no help early this year and had to capitulate. Ireland followed suit saying that they were more stable than Greece, but have now had to accept their fate. Thus the question becomes who is next if the situation continues to deteriorate economically. And the two nations being eyed are Portugal and Spain in what is becoming a game of ‘who do you believe?’.

There was little data globally on Monday to look at, but this will change today. The U.S. will release Preliminary GDP statistics and the estimated number is an outcome of 2.3%. Also important for traders to watch will be the Existing Home Sales figures. Both the GDP and housing numbers remain a vital source of information for investors and going into the holiday season many market participants remain cautious about the outlook for the U.S. economy. Wall Street turned in another nervous day of trading on Monday and November has proven difficult for the major stock indexes to advance.
The USD still has plenty of questions surrounding it because of the monetary policy coming from the Federal Reserve, but because of the dark cloud hovering over the EUR the greenback has certainly found renewed safe haven interest. Europe will release German and French PMI Flash reports from the Manufacturing and Services sectors. Most of the readings are expected to be around the previous month’s outcomes however, investors will only give these marks a fleeting glimpse as they concentrate on the Sovereign Debt dilemma that roils the continent.

The broad markets remain swift and treacherous. The USD has found backing within a safe haven realm and it must be remembered that many American traders will soon start disappearing for the Thanksgiving Day holiday on Thursday, meaning volume will drop off dramatically starting sometime during the U.S trading session on Wednesday. The Irish situation remains a critical lynchpin today. The acceptance of a aid package is known, what is not clear are the details, nor the conditions that Ireland will have to accept. Sentiment is likely to be tested across the broad markets again today and traders will have to be prepared to act quickly.

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