Consumer Confidence Takes Hit
31-08-2011
The short term risk appetite party came to an abrupt end on Tuesday as the CB Consumer Confidence reading provided a harsh dose of reality. The outcome of 44.5 compared to the estimated result of 52.1 was a stiff reminder for investors that economic data remains challenging at best. The EUR came off of its highs and Gold climbed as safe haven trading began to show signs of life. Gold as of this morning is once again perched near its highs and finds itself around 1833.00 USD an ounce. Equity markets in the U.S. turned in small gains, but it became clear by the end of the day that investors were taking a defensive posture and it must be noted that volumes remained quite thin. Today the U.S. will start its jobless data parade as the ADP Non Farm Employment Change statistics come into view.
News from Europe continues to dominate the Forex markets as rumors continue to swirl about the health of financial institutions, Sovereign Debt, and potential measures to create stability. Policy makers in the E.U. are carrying out a public debate regarding the existing dilemmas and are not finding much common ground. Germany and Finland appear to be taking a fiscally conservative approach and this is not going over well with some other E.U. nations. Today Germany will publish their Retail Sales figures, and while not a significant report it will no doubt help monitor the overall sentiment. The EUR remains in a rather strong position against the USD taking into consideration the amount of negative news that is being generated from the continent. Traders should be mindful that the Single Currency has somehow managed to range in a rather consolidated manner versus the Greenback through the existing fog thus far.
Part of the reason the EUR has remained fairly stable against the USD is because of the lack of clarity that is coming from the Federal Reserve. Economic data from the U.S. has been poor and with the potential for disappointing results from the ISM Manufacturing PMI tomorrow and a bad payroll number on Friday things could become increasingly unpleasant for the Fed. Not only is the Federal Reserve mandated to look after the USD, but they are also sanctioned to take notice of the employment picture in the States. Besides the ADP report today, the Chicago PMI will also be published and investors who around to participate as August comes to an end will have to likely deal with less than appealing results.
The GBP lost some ground yesterday as Net Lending to Individuals came in negative. But it is unlikely that the Sterling was trading off of this data, the fact remains that the GBP is still stepping on the coattails of the EUR. The AUD did remain stubbornly strong on Tuesday and the Australian currency could become an increasing interesting trade if global economic data continues to sputter. While Gold remains high because of safe haven and speculative backing, the AUD does tend to move with economic prospects based on a broad swatch of physical resources. Crude Oil remained on the higher end of its consolidated range yesterday and should be watched for possible headwinds today. The JPY remains near its strongest values and unless the new Japanese government does something monumental it is likely that Asian investors will continue to be attracted.
