Summer Trading Will Soon End

Friday came and went with all the force of a feather. The currencies and the broad markets traded in rather tight ranges most of the day putting into focus the amount of caution that prevails and the fact the summer is still in force. The USD found itself going into the weekend with plenty of its gains made the previous two weeks – holding. The Preliminary GDP results from the U.S. were unspectacular as they basically hit their targets. Ben Bernanke followed the statistics up with a couple of pronouncements at a central bankers meeting by stating the obvious, the American economy continues to struggle and the Fed has plenty of ammunition to help the economy escape a hard landing. This however, was what investors had been expecting and although Wall Street did manage gains on Friday this may not have had much to do with the Federal Reserve Chairman’s speech, but more to do with short covering and booking gains after betting on a ‘bad’ market.

Today Personal Spending figures will come from the States, but nearly all other data will remain fairly trivial from an international perspective as traders continue to accumulate their sentiment from a rather uninspiring month of data in August. Today the U.K. will have a banking holiday and Europe will be fairly quiet. The end of the week including Thursday and Friday will provide traders with the opportunity to create fireworks in the markets. Jobless data, including the Non Farm Employment Change is on schedule from the States and this will be magnified perhaps by a long weekend that will follow. The ECB will hold their monetary policy meeting this week too, but little change is expected and only Claude Trichet may affect investors, if he should offer some startling insight – but that is unlikely.

The Bank of Japan interestingly enough admitted over the weekend that the strong JPY is harming the Japanese economy. However the JPY remains in a strong position and until proven otherwise, the BoJ apparently has little in the way of fundamental backing – particularly from other central banks – to counter the safe haven move that investors are undertaking as they look to preserve money. The AUD has nearly fallen asleep, the Australian currency has been in an extremely tight range for over a week and investors are clearly waiting for signals that the political uncertainty that dominates the picture somehow subsides. Gold remains in the higher realms of its value, but it has consolidated the past week and is awaiting another round of impetus. This could be said of all the markets as light volume is widespread. With the advent of the jobless figures to come from the States and the month of September about to get underway, traders may find more active markets as time passes.

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