Greenback Marching On

The reversal for the USD continued its trend on Friday as the Greenback continued to gain value against the EUR and GBP. Commodity markets also declined before going into the weekend. The EUR started out Friday with a better stance as GDP numbers from Germany and France were more positive than anticipated, but as the Americans began to influence the broad marketplace risk adverse trading began to dominate again. Even as the States turned in a better than anticipated Preliminary Consumer Sentiment reading from the University of Michigan, Wall Street continued to be more than cautious, turning in negative outcomes in the major indexes. There will be a lack of major economic data today however the focus for investors in the short term may be the news that came from New York this weekend. The head of the IMF (International Monetary Fund) Dominique Strauss-Kahn was detained by the police. His plight may add to the shadows that the EUR faces regarding the Greek Sovereign Debt crisis taking into consideration that IMF has been playing a prominent role.

The USD has been strong for nearly a week and a half having coming off of its lows against the EUR and GBP with a decisive move. The question for traders now is if this move is the start of a longer term trend or if the USD will gradually slip back. The Federal Reserve is being watched closely as June nears and the quantitative easing policy that the Fed has undertaken is scheduled to end. This coming Wednesday the FOMC Meeting Minutes will be released and this may produce some morsels of evidence for investors who are trying to figure out the next moves by the Central Bank.

Equity markets globally have been on edge the past two weeks and this has also happened as commodity prices have come off of their respective highs. Gold as of this writing is around 1493.00 USD an ounce and Crude Oil is below 100.00 USD a barrel. The AUD has been under pressure as the prices in the physical resources have declined. The JPY remains solidly within a consolidated range. The Japanese government released some better than expected economic data early today, but many long term questions and concerns continue to hang over Japan. The JPY has been steady and strong since the onset of the tsunami tragedy.

The GBP has traded in a EUR centric mode and finds itself near the weaker parts of its range going into this week. There will be very little data from the U.K. and Europe today. Tomorrow the German ZEW Economic Sentiment reading is on the calendar and the U.K. will release CPI numbers along with the Inflation Report from the Bank of England. The real story for the EUR this week is likely to be any developing news regarding Greece and the debt crisis. Rumors aplenty are continuing to swirl regarding requests for additional aid and Germany’s reaction to this. The news surrounding the IMF chief is certainly not going to help the EUR, but may prove more of a nuisance as ‘other events’ develop and occur. The big question is what will happen next as Greece and the E.U. try to find a solution to the crisis that continues regarding debts and austerity measures.

The broad market has been cautious for nearly two weeks and this sentiment does not appear ready to change today. Traders should continue to watch equities and commodities as a barometer.

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