A Complicated Marketplace

The EUR debt crisis continues to pick up steam. And repeating a performance from the past two weekends, European governments made several pronouncements over the weekend which are likely to affect investors today. The EUR lost ground to the USD as Friday’s market session came to an end. The word restructuring being used about the Greece debt woes has sent a collective chill through the international marketplace as equity markets have turned increasingly negative. Spain also may spark some concern because of the political situation that is playing out with massive protests and an impending election. Essentially Greece is looking at a few alternatives as it must take into consideration further austerity measures, which would likely be met head on with public unrest. However, many officials continue to highlight their belief that any type of restructuring for Greece would be extremely detrimental for the entire European Union. Additionally the IMF signed off on an aid package to Portugal this weekend.

There was a lack of fundamental data on Friday, but as anticipated the European debt crisis has been quite enough to stir the market forces. The EUR has NOT fallen off a cliff from a value perspective, but it is trading at the weaker parts of its range certainly versus the USD from a short term perspective. A flight to quality may have started, but it will take more than one day of trading to prove momentum. Gold has actually increased in value even as the USD has gotten stronger, not exactly the most common site. This highlights that the broad markets are rather complicated at this juncture. Gold as of this morning is trading around 1508.00 USD per ounce. Crude Oil however has not found the same kick start and seems to be within a range trading mode. Thus, highlighting that as global equities have turned cautious to negative, and Gold and the USD have traded stronger, that investors may be looking to park their assets in safe havens.

Up until this point the EUR has been able to fight off many attacks on its value over the past year and a half as news about the Sovereign Debt saga has grown. This is not a new circumstance. Greece has been under the spotlight for over a year along with Portugal and Ireland. Traders have witnessed the fact that the EUR has in actuality maintained much of its value throughout the saga. Even as the Greek story has once again become a focal point in the last week and a half, the EUR for all of the worries surrounding the Single Currency has held some of its ground and has not lost a ferocious amount of value. Perhaps there are critical tests for the EUR coming in the days ahead. The question is if the EUR can continue to ward off cracks in the overall sentiment surrounding some of its member nations. Fitch, the rating service, downgraded Greek bonds this weekend.

Europe will release a host of PMI Services and Manufacturing readings from Germany and France via its Flash reports today. The marks are expected to be slightly below the previous month’s outcomes. The U.K. and the U.S. will be quiet with data today. Tomorrow Germany will release the Ifo Business Climate survey along with GDP numbers. The U.K. will publish Public Sector Net Borrowing and the States will release New Home Sales figures on Tuesday.

The commodity markets have been a tough road the past week also in regards to finding stability. After a huge surge upwards the past few months, physicals suddenly have begun to show some worries about the prospects for global growth. The AUD has reacted to this by coming under some pressure, but it must be pointed out that while Gold remains a ‘flight to quality’ the AUD may not find the same amount of downside pressure as other major currencies when priced against the USD. Again, there are many questions that will confront traders this week with so many concerns that are simmering regarding the major economies. The JPY remains slightly weaker against the USD but well within a know range.

Europe is certainly a worry, but the data from the U.S. has not been exactly stellar. While the fall on Wall Street can be blamed on the European worries, the major indexes have fallen three weeks in a row and this is not merely a European centric side effect.

Written by bforex.com