A Day Of Positioning Ahead

There will be very little data released today internationally. The U.S. will bring forth Crude Oil inventories and the U.K. will be publishing its MPC Meeting Minutes. The USD traded in a rather broad range against the EUR and GBP on Tuesday as it showed some initial weakness, but made a comeback by the end of the day. Wall Street did gain, but the action in equities will not be enough to get most investors excited about long term prospects. Tomorrow the U.S. will release weekly Unemployment Claims and the Philly Fed Manufacturing Index reading. The U.K. will release Retail Sales numbers also on Thursday.

Looking back at yesterday, the German ZEW Economic Sentiment report produced a disturbingly poor mark of 14.0 compared to the estimate of 20.9. Housing Starts and Building Permits data from the States again provided another lackluster set of outcomes. Today in many respects will represent the penultimate day of summer, this with little in the way of releases on the calendar and traders fully aware that sentiment is being dominated by short term emotions with little in the way of volume. The U.K. coalition government is ‘enjoying’ their first 100 days in office as of today and the honeymoon period for the government will likely start to come to an end as questions build regarding austerity and sluggish growth. Also the American election season is starting to heat up with November quickly approaching in politicians minds and there will continue to be no shortage of rhetoric from the White House and its opponents as they debate economic policy.

The AUD has essentially traded under lock and key the past few days as investors stay on the sidelines as they wait for the results from the approaching vote this weekend. The JPY maintained its range as well on Tuesday as Asian traders continued to keep their eyes on cautious bourses. Gold reflected the broad markets and also languished in place much of the day and finds itself around 1224.00 USD an ounce.

There can be no doubt that investors have had to watch governments globally since the onset of the financial crisis in 2008. Governments continue to play a crucial role in policy and regulations and the impact has been huge. The question in the minds of investors is how the markets will unfold in the months and years to come. While stability was attained, the reality is that there are many who believe that problems have only been pushed down the block and will still have to be dealt with in the future. Huge amounts of debt when compared to GDP is rampant among most major economic powers and if another international downturn were to take place doubts will mount about the ability to meet obligations.

Because today will be very light with data the day will largely belong to traders who will try to take advantage of ranges or be trying to position themselves before tomorrow’s U.S. and U.K. data.

Written by bforex.com