Busy Week On Deck

USD

The USD finished off on a strong note going into the weekend as cautious trading stayed the ‘golden rule’ without much in the way of economic data to examine. Adding to the rather tentative nature of the broad markets was a shortened week due to the Labor Day celebration’s earlier. Wall Street gained on Friday, but the numbers were unconvincing and plenty of doubts remain regarding the strength of any bull runs. Data this week will be more important, however today will remain quiet, but tomorrow Retail Sales figures will be brought forth and on Wednesday the Empire State Manufacturing numbers will be published.

The crux of early market sentiment today may be focused on the Basel III accords that have been outlined regarding capital reserves for banking. The requirements for reserves will be nearly tripled although compliance will not be enforced for a considerable amount of time. In essence part of the new Basel accords are trying to create a stronger fundamental foundation to guard against another financial crisis and part of the new stipulations will make banks think twice about their core business practices. Also factoring into the markets over the next few days and surely the next couple of months will be the amount of political hyperbole that is beginning to become elevated as elections approach in November. Both Democrats and Republicans are turning up the rhetoric and certainly promises are sure to follow. The USD had a good week of trading, but the markets continue to move under the impetus of risk sentiment and with important data coming, participants could find volatility.

EUR

The EUR finds itself at an interesting juncture entering Monday’s trading. The EUR suffered a rather risk adverse backlash last week as investors again began to raise questions about debt issues across the continent. However, the Basel III accords that have began to come to light as of late last evening will likely be a factor in EUR trading early on this week - as investors react to the possibility of more financial clarity. Fundamental data today will be lacking, but tomorrow the German ZEW Economic Sentiment reading is on the schedule. Also sure to make news this week will be the Greek government, which will be offering a new round of debt. Investors who will be asked to ‘buy’ the Greek debt however are likely to focus on fundamental numbers and pay less attention to government ‘chatter’. The EUR found itself within the weaker parts of its range last week, but there are enough ‘sentiment’ scenarios that could play out to create rather interesting range movement.

GBP

The Sterling struggled on Friday as investors punished the GBP because of rather lackluster data from the whole of the week. Today the Nationwide Consumer Confidence reading will be published and carries an estimated mark of 59, also the RICS House Price Balance figures are on the calendar. Tomorrow CPI data will be brought forth and Wednesday will be followed up with the Claimant Count statistics and the possibility of an Inflation Report Hearing with BoE Governor Mervyn King. The Sterling has essentially run into headwinds as risk adverse trading has increased and investors are feeling less buoyant about the austerity measures when weighed against rather meek growth forecasts.

JPY & AUD

The JPY continues to find itself mired in the strongest parts of its range versus the USD. The AUD has climbed steadily in the past few trading sessions and is at highs. The AUD has not only been helped by the political looking glass becoming more clear, but has also found some backing on commodity based factors as metals have performed well. Traders should also monitor Crude Oil this week, it too is at highs, now while some of this is certainly based on positive speculation, it should also be known that a major pipeline between Canada and the USA was closed recently for repairs and inventory concerns have scared traders. However, the pipeline will not stay closed forever.