An Avalanche Of News Coming

Yesterday proved to be a light day of trading with many investors still on holiday. The U.S. markets were fully open but volume was limited. Gold which started out Monday near record highs did fall back and as of this writing is near 1500.00 USD an ounce. Wall Street turned in a rather cautious day with slight declines within the Dow Jones and S&P 500, but saw limited gains for NASDAQ. A huge amount of quarterly earnings will be brought forth from American corporations this week, however the critical event will be tomorrow’s FOMC monetary policy decision which will be highlighted by a press conference afterwards led by Federal Reserve Chairman Ben Bernanke. The USD traded a bit stronger on Monday, but its results will be eyed skeptically considering the lack of major participants.

Helping the USD may be that ECB President Claude Trichet was quoted yesterday as saying that a stronger USD would be good for the U.S. and world economies. Trichet also took a more dovish stance towards inflation in Europe saying that he does not see a secondary threat. The EUR has done quite well the past few months on the back of a hawkish viewpoint that has seen Trichet take center stage, thus his comments yesterday could prove significant. The EUR does in fact have many questions still surrounding it led by the storm clouds that continue to circulate over Greece and the prospects for a restructuring of its Sovereign Debt.

Crude Oil has kept a steady pace and is trading near highs as conflicting news about global supplies and production has been sounded. The continuation of the political upheaval in the Middle East has certainly given some speculators an opportunity to justify their ‘buy’ positions. However the fly in the ointment for the global economies will be the high price of energy. If the manufacturing sectors are hit with high production costs this will certainly have an impact on inflation. The fear is that consumers who have to fuel their transportation needs will also pull in their purse strings if they are paying more for their consumption of energy.

Yesterday the U.S. released New Homes Sales numbers and they came in better than expected with a result of 300k, the expectation was 280k. However the housing sector in the States remains under a torrent of poor expectations. Today the S&P/CS Composite-20 HPI will be published and the anticipated result is minus -3.2%. The States will also see the CB Consumer Confidence reading which will give some insight into the mind of the public which is paying for more expensive gasoline. A mark of 64.6 is the expectation, which would be a better result than last month. Given that the sudden burst of higher costs has started to hit consumers a surprise result in the CB Consumer Confidence number perhaps should be expected today.

Other international data will be relatively light today. The U.K. will see the CBI Industrial Order Expectations. But tomorrow will be a huge day of fundamentals and news worldwide. The Germans will release the GfK German Consumer Confidence Climate report and inflation numbers, the U.K. will bring forth their Preliminary GDP results, and Americans will not only have the FOMC meeting – but Core Durable Goods Orders figures will be presented also.

The GBP has traded slightly weaker against the USD. The JPY has actually continued to pick up a bit of momentum against the USD. The AUD has been nothing short of volatile and though it has declined slightly it is still very much within record territory as it reflects the surge that has been seen in Gold.

The broad markets have been nothing short of volatile the past two weeks. The holiday break gave many investors a chance to catch their breath. However, with an avalanche of FOMC pronouncements coming, besides fundamental data and quarterly earnings reports a fast market should be expected to renew.  There will be plenty of opportunities abound for short term traders who manage their risks properly.