Taking Advantage Of Ranges

Market volumes will be thin after the European sessions are completed today because of the holiday in the United States. The EUR continues to hold its ground amidst gains against the USD. The GBP has climbed slightly. And the AUD finds itself near the higher parts of its range once again. Before the weekend came Gold found itself under pressure and as of this morning’s writing is near 1493.00. Crude Oil continues to range in a fairly consolidated manner. Other commodity prices have found themselves being shadowed via concerns about the global economic outlook. Forex markets are likely to range trade today without any impetus coming from the U.S. and traders may be able to take advantage of ranges if they choose to participate. Global equities are likely to be somewhat positive today as they live off of a weekly gain from Wall Street that was achieved on Friday, which broke an eight week losing streak.

Friday’s data from the States was rather uninspiring as the Revised Consumer Sentiment reading slightly missed its estimate with an outcome of 71.5 and the ISM Manufacturing PMI beat expectations with a result of 55.3. Even though the ISM mark was better than anticipated investors remain skeptical because Manufacturing PMI reports from different Fed districts have been rather downcast. Though there is certainly a holiday in the States, which will bring about very quiet market conditions today, traders should keep in mind that at the end of this week the Non Farm Employment Change numbers are on the schedule. The jobless situation in the States remains troublesome. Wall Street’s gains last week will be put to the test this week as sentiment is debated. The USD is likely to range trade today and traders must be aware of any sudden bursts as thin volume prevails.

The EUR has definitely benefited from the European Union’s brokered bailout deal for Greece. The ECB will hold its monthly conference this Thursday and they are expected to increase their interest rate by another quarter of a point. The question thereafter will be what President Trichet will say at his press conference regarding future policy. Some analysts have questioned the rate hikes and have cast a suspecting eye at the possibility that the higher interest rate policy is part of a confidence game being played by the ECB in order to keep the EUR strong as many questions circulate around the Single Currency regarding the debt crisis. The Sentix Investor Confidence reading will be released today, tomorrow the Final Services PMI and Retail Sales figures will be presented for Europe. The EUR has done remarkable well as a well managed political game has been played by the E.U., IMF, and ECB. Sentiment surrounding the EUR is still fragile however as concerns definitely still exist about the financial options that Greece is going to take regarding its debt – like a possibility of ‘rolling over’ some of its obligations – which is likely to be interpreted in some circles as a default.
The GBP has remains rather quiet although it has shown some ability to gain the past two sessions. The Sterling has been traversing the lower parts of its range against the USD as the BoE’s monetary policy has been seen as dovish. The Construction PMI will be released from the U.K. today and tomorrow the Services PMI will be brought forth. The GBP like the broad market today is likely to remain rather range bound.

The JPY has held its consolidated range without any signs of letting go. The JPY has stubbornly stayed within the midst of its stronger values for a considerable amount of time and as of yet shows no signs undergoing a revolution.

Traders participating in the markets who are taking short term positions must understand that the holiday celebrations in the States will make for a quiet overall session. Range trading is likely to be the predominant theme. However with the Non Farm Employment Change data from the U.S. and the ECB monetary policy meeting coming towards the end of this week, investors will be priming themselves for potent factors.

Written by bforex.com