Bourses Decline Again
04-10-2011
Opinions differ so much in Europe that investors literally do not know where to turn. As investors looks for answers the problem that most of them face is that the questions cannot even be agreed upon. The Greek crisis is merely a small glimpse into the overall problems for the E.U. at this point. The Sovereign Debt concerns have grown into worries about the stability of the banking system for Europe. But between those two concerns, Greece and European banking, a slew of problems will have to be solved in between and there is little in the way of clarity that signifies this is possible. Thus the EUR continues to find itself under an immense amount of pressure and it declined again sharply on Monday. The GBP and AUD both lost value also yesterday to the USD. Safe haven trading is not only in vogue it is becoming a severe problem for global bourses which suffered losses too among equities.
ECB President Trichet and Fed Chairman Bernanke are both scheduled to make public appearances today and they are likely to offer calm words for the markets, but the question is if they can actually offer insight that will produce greater confidence? Data today will be relatively light, but that will change as the week progresses and the U.S. begins to publish jobless numbers. Today the U.S. will release Factory Orders, but it is questionable if investors will even glance at the report in this chaotic trading environment. The problems that are being on focused regarding Europe cannot be overstated at this point. While it is near certainty that the EUR will remain a currency because it continues to have the backing of Germany, the question is what its fundamentals will look like one year from now. The ECB meeting on Thursday will be in the spotlight and President Trichet will likely have an aggressive audience on his hands as he looks over his final press conference for the European Central Bank before he rides out into the sunset.
Wall Street has found itself on a dangerous slope the past two months and with quarterly earnings just around the corner, investors have additional concerns to monitor regarding corporate outlooks which should prove more than interesting Physical resources have faced an extreme amount of headwinds recently. Crude Oil and industrial metals have found plenty of pressure due to concerns regarding the prospect for diminishing demand. In the meantime Gold continues to display that it is in the midst of a storm. The precious metal is around 1674.00 USD an ounce as of this morning. Gold is seen as a safe haven by many and it is a certainty that it will find volatility in these swift markets.
The JPY moved back to the strongest side of its range on Monday proving that the Japanese currency remains a magnet for Asian investors in tough times. The AUD has faltered badly the past month as the global economic outlook has changed. The AUD is a good barometer for global prospects and those around Asia.
The broad markets are unlikely to stop being volatile. Taking into consideration the news from Europe, the ECB monetary policy meeting this Thursday, and the Jobless numbers coming from the States on Friday ‘caution’ will be the key word and Forex will remain fast.
