Cautious Markets Prevail Again

10-03-2010

USD
A repeat performance occurred in the currency markets on Tuesday when compared to Monday. The USD continued to show a stable range as it gained slightly against the EUR and GBP. There has been a lack of major economic data early this week and that has highlighted the amount of caution that exists in the broad markets. Wall Street gained yesterday but its results were within what has become a sideways track. Wholesale Inventories figures are on the schedule today and the projection is a gain of 0.2%. Tomorrow weekly Unemployment Claims and Trade Balance data will be released. While the unemployment statistics could provide some fireworks, investors may actually be gearing themselves for the Retail Sales publication on Friday.
The Wholesale Inventories data may provide insight into the sentiment of businesses within the U.S. as investors will look for an increase in their purchasing, which could signal that companies believe they are about to experience greater demand for their goods. Having said that, the numbers today will likely not cause much more than a short tremor. Traders may focus a bit on commodity prices for guidance, prices will be monitored with the Crude Oil Inventories numbers on the calendar today. The price of Oil has shown some ability to stay above 80.00 USD a barrel and suggests that some speculation has come into the commodity based on the belief by some that global economies are recovering and has the capacity to improve. However, it must be remembered that we are starting to enter what is historically a seasonal uptrend in Crude Oil. The caution that the broad marketplace has experienced this week should not be mistaken for a calm atmosphere, as investors continue to find a rather aggressive debate about direction. The USD has performed in a steady manner so far this week.

EUR
The EUR traded lower on Tuesday into ‘known’ depths within its current range. There was no major economic data from the European Union on Tuesday and the Greek debt crisis continued to dominate the news. The Greek government held high level discussions with the United States yesterday. It has publically asked the U.S. to allow for a discussion at the next G-7 on the subject of speculation within the CDS –Credit Default Swaps. However this appears to be a smoke screen by the Greek government and they could be trying to cover up their own mistakes by blaming investors who are merely acting as a counter balance in the financial world. German Trade Balance and French Industrial Production numbers will be released today. Tomorrow will be another quiet day of releases. The absence of major statistics from Europe has helped keep the currency markets within a cautious place. The EUR has slumped in early trading this week and traders continue to search for a fair value

GBP
The Sterling lost ground to the USD on Tuesday and finds itself facing a test of its recent lows against the greenback. Trade Balance numbers proved negative from the U.K. yesterday and this certainly did not help what has become a rather mixed bag of economic results. Today the Manufacturing Production figures will be brought forth and are estimated to have a 0.3% gain. The focus for GBP traders however could come from Prime Minister Gordon Brown who is scheduled to speak today about the British economy. The Prime Minister was quoted last night as saying the “economy is at a crossroad”. The debate among politicians is sure to continue to ramp up as an election data must soon be determined. Gordon Brown and his ruling government are stressing the need for active monetary policy now, while the Conservatives are stressing the need for austerity measures that will have to be undertaken. The GBP has met plenty of pressure in recent sessions and traders must continue to monitor the Sterling.

JPY
Asian bourses mirrored their international counterparts on Tuesday as they turned in flat results. The consolidation that has prevailed in the equity markets has certainly spilled over into the JPY and USD as both currencies perform what has become a time honored risk adverse dance. The JPY traded in a narrow range and did not show much indication that it was about to aim for a new direction. Gold is around 1123.00 USD an ounce and has the attention of many taking into consideration the strength of the greenback.

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