Europe & The Koreas Being Watched

As expected Thursday’s trading was rather muted as the United States celebrated Thanksgiving effectively taking a massive amount of volume out of the markets. Friday will start basically in the same ranges that the markets have seen since Wednesday and volume today will also be rather light, this because most American institutional investors will not return to their offices until Monday. There will be no data from the U.S. today and investors looking forward will certainly be keeping the consumer and jobless numbers on schedule next week within sight from the States. Today is the official beginning of the holiday shopping season in the U.S. and making news this weekend will be the turnouts that retail stores are gripped with. Consumer spending is a critical element of the U.S. economy, thus it is no small matter and some of the key numbers that investors will look for will be amount of average purchases, overall sales, and the amount of discounting retailers have used in order to lure patrons.

Today’s trading will center for most on the European debt situation and what the Ireland crisis means for the rest of the continent. Austerity measures have started to become known and the question is how Ireland will cope with such a fundamental change of oversight that essentially means it will have the IMF and E.U. looking over its shoulder for years to come. Investors eyes have turned to Portugal and Spain and these countries are finding the glare rather uncomfortable. Spanish government officials are insisting that its national financial future is stable and that they will not need assistance. This however has not calmed the markets and the EUR continues to find itself tested by the USD. Data from Europe today will consist of the French Consumer Spending figures and the German Preliminary CPI, but it will be the Irish situation which continues to grab the headlines.

The U.K. will not be releasing any data today and the Sterling will continue to trade under the weight of a EUR centric cloud. The GBP has held up better than the EUR against the USD, but it has found stiff headwinds and is likely to face more tests. The U.K. continues to turn in mixed economic data that has not been able to show that it is going to suddenly begin achieving strong growth. Like its major counterparts the U.K. is facing budget problems because of deficits, but it has enacted very severe austerity measures and its ability to maintain these conditions will be watched.

The JPY is trading to the weaker side of its range against the USD, but still within a known range. The JPY has performed well in light of the Korean escalation which continues to roil, but it must watched carefully if further news develops. Gold has also traded in a tight range considering the amount of tension that is ratcheting upwards. The AUD has found itself under some pressure as the USD has traded in a strong manner and Gold has come off of its record highs. Traders will have to be ready for any news flashes from the Korean situation which could cause nervous sentiment to escalate in the markets particularly following this weekend.

The markets will continue to be rather quiet today regarding overall volume because of the American holiday. Traders should be ready for range bound movement which is punctuated by sudden movements. The European debt crisis will remain the focal point for many going into the weekend and the Korean tension will shadow investors too. Short term trading is likely to be the byword today for market participants.

Written by