Gold Shining Brightly

The USD gained on the EUR on Friday with the Greenback practicing a slightly better stance. The USD has seen sustained pressure, but managed to find some backing as rumors continued to swirl regarding the European Sovereign Debt story. The U.S. did release Industrial Production data, which came in slightly better than anticipated and saw the University of Michigan’s Consumer Sentiment marks which also did a touch better than expectations. However, currency sentiment continued to center on the E.U. rhetoric surrounding the possibility of a Greek restructuring of debt. Greece continues to say the claims by some German officials and others are not true about the restructuring whispers, but this is essentially the same Greek government that told investors last year they would not seek a bailout package. Greek bond yields are at highs.

Gold continued to make new highs going into the weekend with the combination of global inflation concerns and the notion that some investors may be practicing risk adverse trading. As of this morning’s writing Gold finds itself around 1486.00 USD an ounce. The precious metal is being watched by all. On this news, the AUD also continues to trade near record highs. Australia released government data today showing that the devastating floods that shook some of the nation in January will have an economic impact. But the fact is that the interest rate via the AUD remains high and the outlook for the Australian economy is better than most. Crude Oil prices inched higher on Friday, even as Saudi Arabia said that plenty of supply exists. Commodity markets in grains turned in mixed performances on Friday, but bias continues to show support.

The GBP traded moderately well against the USD on Friday as it held its ground better than the EUR. The Sterling has started to show some signs of divergence with the EUR in recent trading, but traders must be alert to the notion that EUR sentiment does have a shadow that affects the GBP. There will be a lack of economic data from the U.K. and Europe today. Thus trading will likely remain fixated on the questions that hover over both spheres including growth, austerity, and budgets.

Tomorrow PMI data will be released from Europe, particularly from Germany and France. Both Manufacturing and Services readings will be published and these Flash results are expected to show a slightly negative outlook. The U.S. will present Building Permits and Housing Starts figures on Tuesday and both numbers are expecting to better the previous reports. However the parade of housing sector news which will kick off tomorrow and continue on Wednesday from the States with Existing Home Sales is not expected to be a ray of sunshine – in other words housing is expected to continue to show a rather depressed market.

The JPY has continued to gain, and its slow and steady gains towards the stronger sides of its range against the USD have been evident. The Japanese government needs to spend a huge amount of money for infrastructure costs pertaining to the rebuilding of the devastated areas that the tsunami hit. Japanese export companies will continue to be hurt by a stronger JPY. However, for the time being this may be a secondary concern for the Japanese government as the JPY range with slight gains.

Global equity markets turned in a mixed bag the past week. Wall Street has been unable to sustain its gains. Volume within the major indexes has been relatively light and this has raised the eyebrows of some investors who take this as a sign of heightened caution. Going into today and tomorrow’s trading sessions investors will continue to monitor Gold and any developing news from the European Union regarding its financial crisis.

Written by