The EUR reversal was put on hold as traders consolidated their positions on Tuesday and actually took the Single Currency to better values. With both Greece and other European nations saying a restructuring of Sovereign Debt is out of the question – and an exit from the EUR impossible, the Single Currency found stability. However, questions continue to be asked, and Greece’s economic woes are not about to disappear anytime soon skeptics say. Thus the EUR/USD pair is bound to see further volatility depending on developing news stories. As a barometer traders should continue to monitor the European debt yields.
Commodity markets like the currencies have found better footing. Gold has risen and finds itself clawing back up to the higher parts of its range. Crude Oil gained on Tuesday also and essentially in one day reignited talk about inflation among market participants. The past two weeks have seen swift markets in both commodities and Forex, some reasons for this have been because a wave of lackluster economic data from global spheres and troubling rumors surrounding the European debt situation.
The GBP has continued to trade under the shadow of a EUR centric scope. The Bank of England will issue their Inflation Report today and Governor Mervyn King will speak about economic conditions in the U.K., which will give investors some tangible sentiment to position themselves. The question surrounding the GBP is the effect of less than stellar growth coupled with tough austerity measures. If the Inflation Report’s rhetoric is stronger than anticipated it could spur on the Sterling. If the BoE talks down the concerns surrounding rising prices, the GBP may find some selling pressure. However, there is no denying that the GBP continues to trade in near unison with the EUR when compared to the USD.
The U.S. has been very light on data thus far this week. Today Trade Balance numbers will be published, but this is typically not a result that moves the currencies. The USD found consistent backing the end of last week and into early trading on Monday, but since then has found itself slipping back versus the EUR. A great debate continues to rage about the real intentions of the Federal Reserve regarding quantitative easing policy, the U.S. deficit, and the ability of the States to maintain growth. The USD finds itself in many respects as a participant in a parade of the ugly. The Greenback’s gains made last week were enough to bring on the belief that a reversal may be getting underway for the currency, but it will take more than 3 effective days of gains to sustain a rally and bullish USD sentiment. Tomorrow Retail Sales and weekly Unemployment Claims will be brought forth and these two reports could cause some angst among investors if they are more negative than expected.
The JPY has found a very narrow consolidated trading range the past two weeks. This reflects the amount of unknowns that Japan still faces economically due to the crisis that was sparked by the earthquake and tsunami which struck in mid March. Export companies such as Toyota are still under a vast amount of pressure and this is evident as the corporate giant refuses to give any financial forecasts for the coming year.
The broad marketplace found a resting spot on Tuesday and the question going into Wednesday’s sessions will be if this will continue. Investors have a wide range of concerns that remain unanswered regarding European debt, American growth, and the rise in commodity prices. Gold continues to show that not everyone is confident about the future for economic stability. As of this writing Gold is near 1522.00 USD an ounce. The question for traders today is just how tentative or fast the markets will be.
Written by bforex.com