Trading Remains Nervous

Commodity prices broke downward yesterday as Gold, Crude Oil, and Silver all declined. Gold is certainly still within the higher realms of its trend and it might be foolhardy to consider its upward momentum a thing of the past, but trading on Wednesday was highlighted by broad market nervousness. This was exhibited through a less than stellar performance on Wall Street, which came on the heels of rather disappointing economic data from the ADP Non Farm Employment Change and the ISM Non-Manufacturing PMI reading. The data from Europe and the U.K were more than lackluster also yesterday, adding some fuel to the sentiment that the prospects for growth in the States, the U.K., and Europe remain hard to grasp.

The ECB steps into the investor whirlwind today. ECB President Trichet will step up to the podium and hold his press conference and all investors will be watching. The long and short of it will come down to code words surrounding inflation – like vigilant. If Trichet speaks about a threat of inflation and a thus a need to remain hawkish the EUR could get an added dose of impetus today. No one believes the ECB is going to raise their interest rate today, but there is a debate starting to emerge about the midterm intentions of the Central Bank. Some believe the ECB will continue to raise interest rates and other believe that what they did last month was a onetime affair, particularly taking into account the dangerous ground that nations such as Greece, Portugal, and Ireland stand on. Yesterday’s Retail Sales numbers from Europe turned up a result of minus -1.0% compared to the forecasted gain of 0.2%. Germany will release Factory Orders figures today. The strength of the EUR has been steadfast and it is likely to see some tests of stronger reaches.

The Bank of England will also be releasing their monetary policy statement today via the MPC, but no changes are expected. The Sterling has performed well and it bounced back on Wednesday from a previous tough session. This happened interestingly enough even as data from the U.K. continued to be more than underwhelming. The Nationwide HPI produced a negative -0.2% change compared to an expected gain of 0.3%. Construction PMI fell to 53.3, below the estimated reading of 55.6, and the previous mark of 56.4. Also the Net Lending to Individuals figures came in weaker. Tomorrow as is the routine, inflation data will come. The GBP finds itself in a range that is likely to give traders opportunity to swim its waters today, but traders should remain aware that EUR & USD centric shadows exist.

Jobless data continues from the States today and if yesterday’s results from the ADP are any measure, investors are likely to be a bit nervous about the weekly Unemployment Claims results on the schedule. But the biggest data will be tomorrow’s Non Farm Employment Change results. While some are pointing towards an improving Unemployment Rate, skeptics are pointing out that the rate has fallen because many people have given up looking for work or have been out of work so long that they no longer show up in the statistics. Wall Street has been more than a little tentative as it has traded with a negative bent this week. The USD has been pushed around by many of the benchmark currencies and investors are weary about the Greenback facing further pressure.

The JPY did pick up additional ground on Wednesday and it continues to show a propensity for gaining value short term in small increments. The JPY is inching once again towards values the BoJ considers too strong. The AUD fell again on Wednesday, but this must be taken into context with the fact that it had climbed so swiftly. In the background Gold as of this morning is trading around 1520.00 and has been volatile like many of the other commodities.

Written by