Benchmark Currencies On Rollercoaster

Swift and volatile trading has been seen in all the benchmark currencies the past two days. The EUR/USD has turned in a wide range as a both Europe and the United States have been dealt hard punches from news being generated around their debt futures. The European Union has seen a renewed discussion on the possibility of Greece having to restructure their Sovereign Debt. The States has been issued a warning by S&P regarding the long term outlook for its debt versus budget deficit accounting. The USD gained on the EUR with a steady pace on Monday, only to see a complete reversal on Tuesday. The EUR enters Wednesday once again within the higher parts of its range against the Greenback.

Today will be relatively quiet with data from Europe with only the PPI numbers coming from Germany. The U.K. will release its Bank of England MPC Meeting Minutes and the States will publish Existing Home Sales results. Tomorrow’s data will be the German Ifo Business Climate reading, Retail Sales from the U.K., and weekly Unemployment Claims from the States. Traders should keep in mind that the upcoming trading session on Friday will be extremely quiet as most of Europe will be shuttered for holiday. Trading volumes this week and the beginning of next will remain thin because of holidays being celebrated, this could potentially add to the volatility in the broad markets.

Gold climbed to new highs on Tuesday and as of this writing is barely below the 1500.00 USD an ounce mark. Crude Oil has remained stubborn and its price remains near the higher part of its range. With this in mind the AUD continues to also test its highs. Commodity prices continue to be underpinned by speculative elements, inflation concerns, and prospects for growth.

The GBP finds itself with good value against the USD as of this morning. Like the EUR the Sterling faced pressure in early trading this week, but rebounded yesterday. Today’s BoE MPC Meeting Minutes report should offer some insight to investors, but no real surprises are expected. It is widely known that the BoE has an internal debate raging regarding its inflation mandate and its growth prospects. Like Europe the U.K. is trying to implement a strong cost savings austerity plan and as growth struggles, questions continue to be highlighted regarding the ability to overcome the hurdles that abound. Tomorrow’s Retail Sales and Public Sector Net Borrowing numbers should be of interest to investors. However, the GBP continues for the moment to trade within the shadows of the EUR, and though the Sterling has shown slight signs of divergence from the Single Currency, it has yet to move away from the EUR centric mode.

Traders have seen rapid shifts of sentiment this week thus far and with many investors certain to disappear after tomorrow’s sessions the broad markets are likely to face more tests. Equities have been on a roller coaster suffering declines on Monday and finding some stability on Tuesday. Wall Street was able to turn in gains yesterday and last night’s better than expected revenues from Intel may bring more optimists out of hiding. However, the debate will continue to rage today regarding the prospects for Europe and the States as their economic futures are weighed against their current financial policies, which have an array of investors and analysts up in arms.

The JPY has slipped slightly in trading against the USD yesterday and early today, but it remains within the stronger parts of its range still. The Japan crisis has not disappeared and though it may not have the international focus it had the past few weeks, the situation remains a challenging one for the Japanese government. The JPY appears for the moment to be practicing its well known range dance.

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