A Cautious And Nervous Market

The USD turned in a fairly stable day taking into consideration that Wall Street tumbled on bad data. The day was highlighted by a bad Philly Fed Manufacturing Index outcome of minus -7.7 compared to the forecasted positive number of 7.1. In other words, manufacturing sentiment nearly fell off a cliff in the past month. This was underscored by another disappointing weekly Unemployment Claims result which posted a figure of 500k compared to the estimate of 478k. The combination of these two numbers was a tough body blow to the side of traders and brought out the bears in the equity markets. The USD essentially continued to trade in range against the EUR and GBP as it maintained its gains made earlier in the week.

The U.K. released Retail Sales figures which were slightly better than anticipated with a figure of 1.1% beating the expected gain of 0.4%. However, Public Sector Net Borrowing dropped unexpectedly and Prelim Mortgage Approvals in the U.K. were only able to meet its lackluster estimate. There was very little in the way of data from the EUR and it continued to trade under a rather cautious cloud as questions persists about the ability of the E.U. to have sustained growth while it undertakes austerity measures in many of its nations. There will be very little economic data today internationally and the crux of the matter will be existing sentiment that has been generated from earlier trading sessions this week.

The USD has been able to put in a good week of gains and the JPY has also maintained its rather stellar heights. Both currencies are viewed as safe havens and are finding backing as investors globally have sought perceived quality. The AUD has continued to move in an extremely tight range and it is clear that even traders have been reluctant to challenge the existing range until a clear result in the Australian election appears. After the election the AUD could become volatile and the perception is that if the Labor party were to lose to their opponents that the AUD may gain in a short term play. Having said that the outcome of the election is very much in question and caution will likely be a dominate theme until there are answers.

Written by bforex.com