Cautious Approach To Markets
16-12-2011
Caution entered the broad markets on Thursday. The EUR, GBP, JPY, and AUD all range traded. Essentially investors began to show signs of shutting down their trading for the holiday season. Unless something ‘big’ happens via news today and early next week, smaller traders will find that they are ‘allowed’ to test values in the coming days. The EUR continues to move under the glare of the European financial saga and this is certainly not going to change anytime soon. There is widespread discussion that France among other European nations is preparing for a downgrade of their Sovereign Debt via the major rating agencies. France remains defiant and their officials continue to take the party line and say that their financial health should not be in question. But investors are not exactly smiling at the predicament facing E.U. nations. What is now happening in Europe appears that officials from various countries are actually pointing their fingers at others. For instance French officials are insisting that before debt from France is downgraded that the debt from the U.K. should be the one actually to get the downgrade.
There will be relatively no important economic data today from Europe or the United States and investors will be left to take into consideration their existing sentiment. Not only is this the last trading day before the weekend, but it is likely the last day of full trading volume for about three weeks as the holiday season begins to be celebrated in earnest. Global equities turned in mixed results on Thursday and Wall Street mirrored this approach. Gains were achieved but they were unconvincing taking into consideration the widespread losses seen across Asian and European bourses as of late. The United States did release data yesterday. Weekly Unemployment Claims were better than anticipated, but Industrial Production missed their estimates. Optimists are pointing towards better American data results, but it has to be asked in what context they are judging actual results. Employment and housing problems persist in the U.S. and do not appear to be disappearing soon.
Gold had an interesting day of trading yesterday as it gained. As of this morning the precious metal is around 1595.00 USD. In the wake of recent USD strength Gold has diminished in value, but there are enough underlying questions about global economic long term health to sustain legitimate interest in Gold. Crude Oil found itself under renewed pressure on Thursday and appears to be seeing some of its speculative elements falling to the wayside. Demand for Crude Oil has been questioned for months, but the geo political situation from the likes of Iran among others has pushed Crude Oil higher. Now it appears that Oil may be receding and face some tests.
The broad markets including Forex appear rather fragile going into today’s session. But traders should remember that as volumes begin to lessen that volatility can suddenly emerge. Plenty of questions still persist about the European debt situation and news must be monitored at all times for surprise rating agencies moves and political pronouncements that could scare investors. While there is no doubt that investors would like to go into the next few weeks without having any worries, unfortunately the state of the global economy is not wonderful. As a barometer traders should watch equities and bond yields as they make their decisions today.
