Banks Downgraded
30-11-2011
The holiday season is almost officially underway regarding the shopping season and investors will begin to have their attention turned elsewhere. However the broad markets remain a firestorm and because of this Forex, equities, and commodities remain challenging. The EUR finds itself fighting along its lows against the USD, and the GBP and AUD continue to shadow the results of the Single Currency. The financial crisis in the E.U. has not relented and controversies simmer regarding possible solutions. Sovereign debt yields among E.U. nations remain under pressure. Topping off financial asset problems was the downgrade yesterday via the S&P ratings agency on some of the States and Europe’s largest banks including the likes of Goldman Sachs and UBS.
While the CB Consumer Confidence reading turned in an unexpectedly positive reading yesterday, housing data from the States remained absolutely depressing. Pending Homes Sales data will come from the U.S. today, along with the ADP Non Farm Employment Change numbers and the Chicago PMI. The data will offer plenty of information for investors to gain further perspective regarding the U.S. economy, but the question is if the data will get real attention taking into consideration the amount of storms elsewhere. The financial crisis in the E.U. continues to roil sentiment and it is a genuine fear of contagion which has affected broad market results. Global equity markets and physical resources remain cautious as evidenced by their respective results. It should be remembered that the Thanksgiving holiday in the States had a large amount of impact on recent volumes which were low, but as of today all markets should be back to normal.
The EUR is facing pressure and has not shown much ability to bounce upwards. Certainly the Single Currency may have spurts of gains, particularly if the E.U. is able to deliver some type of new dose of confidence, but traders must stay attentive to the wide swatch of ‘negative’ sound bites that continue to filter out via media services. German Retail Sales numbers will be released today, but are unlikely to create much impetus taking into consideration the saga of Europe.
The GBP and AUD have traded under the storm clouds of the EUR consistently for the past month and this is not likely to change. The correlation for the Sterling and the Australian currency are simply the global economic outlooks and the sense that if the E.U. financial institutions in fact weaken this will affect the U.K. and Australia.
The JPY has weakened in trading the past couple of sessions against the Greenback. The JPY remains at critical strong historic values against the USD and the Japanese government has a stated desire to weaken its currency. However, the battle is not over between investors who are attracted to the ‘safe haven’ status of the JPY and the Japanese government. The range on the JPY should be watched.
Gold is trading at 1712.00 USD as of this morning. The value is relatively high taking into consideration the pressure the EUR is facing and traders should monitor the precious metal.
