U.S. investors were given a day to rest on Monday in lieu of the Independence Day celebrations. The break from the markets may have been welcomed by many who have felt rather beleaguered the past week or so depending on their particular positions. The USD traded in range yesterday, which was to be expected considering that there was light volume taking into account the absence of traders. Clearly there was no data from the States yesterday, but that will change today with the publication of the ISM Non Manufacturing PMI. The estimated result for the reading is 55.1, which would below the previous outcome of 55.4. This report will be the last bit of major economic data from the U.S. until Thursday’s weekly Unemployment Claims. Coming into today’s trading session investors cannot be faulted for being cautious.
The USD has traded at the weaker side of its strong trend versus the EUR and GBP recently. The question is whether this is merely a short term range in a market that could eventually see the greenback get stronger. The Non Farm Employment Change numbers proved largely disappointing on Friday before the holiday weekend and underscored that the U.S. economy faces hurdles. The lack of strong job creation and a housing sector which remains challenging are two vital road signs that a strong recovery remains more of a hope than a reality. Wall Street has languished for a couple of months and going into this week’s trading is likely to be tested further. This leaves the USD in a precarious position in which it may continue to find favor among investors simply because they do not believe there are many other avenues that exist in which they can properly invest. In other words the ‘promise’ that the USD is a safe haven may continue to prove tempting in the current market environment.
Written by bforex.com