Market sentiment remains on a razor’s edge as trading opens up this week. The developments in the Greek debt saga continue to cause nervousness as fears about a potential restructuring of obligations is rumored. The talk that is being heard is that Greece is having discussions about the possibility of rolling over its debt, thus extending the payment terms in which the bonds would be due to their creditors. While many have said that the price of a Greek default has been factored into the EUR, the fact is that not all of the possible domino affects can be calculated. The EUR/USD continued to foster a volatile ride before going into the weekend. Remarkably the pair has seemingly maintained a rather good trading range if only the final results are looked at. In other words for all of the volatility the EUR/USD continues to find a middle ground with so many questions in the air.
Part of the reason for the unwieldy balance is because even as the European debt crisis continues to be a festering sore, the U.S. economic data has done investors no favors. The Core Durable Goods number fell short of its estimate on Friday coming in with a result of 0.6%, missing the anticipated figure of 1.0%. Wall Street responded by finishing off with another decline and thus extending its losing streak to nearly two months. The amount of caution being shown throughout the broad markets is evident for all. The USD has picked up ground not only against the EUR, but the GBP and AUD also. Gold fell below 1500.00 USD on Friday in fast trading. The speculative edge in the commodity markets has run into a wall. Crude Oil continues to be under pressure and Grain prices have stumbled.
Today will be light with data from Europe. The States will present Personal Spending numbers, but the impact from this report will be minimal. Tomorrow the GfK German Consumer Climate reading and the CB Consumer Confidence report from the States will be published. The impact of bad economic data from Europe, the U.K., and the States has led investors to believe that at the least a contraction of the recovery is underway, if not a recession. Global equities look as if they will again face a negative start to the week.
The GBP continues to find mounting pressure. The whispers from the Bank of England have led investors to believe that the doves are in control of monetary policy. While the U.K. continues to mount austerity measures in the face of a challenging economic environment it has shown little inclination to change its interest rates. Tomorrow Final GDP numbers will come from the U.K. and Current Account statistics. On Friday the Manufacturing PMI will also be presented. The GBP has been under a considerable amount of pressure and needs to be monitored this week.
The AUD lost ground on Friday in the wake of faltering physical resource prices. It has also been reported that Australian banks have some exposure to the Greek bond crisis. The JPY lost some value to the USD on Friday. Asian equities have been under a considerable amount of poor sentiment like their counterparts.
This week is likely to be a continuation of the past few weeks with most impetus coming from the debt problems in Europe and the faltering economic data that the U.S. has recently produced. The Greek government is set to vote on austerity measures this week and this event will be widely discussed. The Forex markets have seen considerable volatility with so many questions still abounding and ranges will certainly continue to be tested.
Written by bforex.com