Europe Remains The Story

The EUR remained weaker on Tuesday as the news from the European Union didn’t inspire investors. The E.U. continues to face a complex mix of problems and what investors fear is that it is culminating into a conclusion. Having said that, the ability of the E.U. to literally push the can down the block and pray for a sunnier day has been seen before and the continent may still have some ammunition to try and create a better voice within its confidence game. While many analysts speak about a default from Greece it remains to be seen when this will exactly come about. And the real question is what would happen next? How will any type of default from Greece be contained so it does not inflict great harm in a domino like effect?  As for economic data from Europe, yesterday was quiet and today only the Industrial Production numbers for the E.U. will be published. The crux of the matter for EUR traders, and for investors worldwide in fact, remains the developing news from Europe regarding its financial crisis which offers a variety of new strands to examine on a daily basis.

The USD continues to move in stronger fashion as traders seek safe havens. While the U.S. economy certainly has its own economic woes, the USD is seen in many corners as a bulwark in times of trouble. And after the move by the Swiss National Bank recently in which the CHF was intentionally pegged to the EUR making it weaker, investors were left with fewer options when contemplating parking their money. The U.S. will release Retail Sales figures today and only minimal gains are anticipated of about 0.2%. Wall Street turned in a better day on Tuesday, but taken into context with recent performances still carries a large dose of skepticism among cautious investors. Tomorrow the U.S. will release manufacturing data along with weekly Unemployment Claims. However, the straw stirring the U.S. markets is a European centric viewpoint as investors openly question what would happen if the E.U. is not able to contain its crisis.

The GBP and AUD both slipped further against the USD on Tuesday. Economic data from both spheres remains murky and the prospects of a global downturn are doing no favors for either currency. The Sterling remains fundamentally under the shadow of the EUR because of the extensive ties the U.K. has to the continent. Employment data will come from the U.K. today and tomorrow Retail Sales numbers will be published. The JPY inched up a bit in value as it continues to range trade in the strongest parts of its realm.

Gold managed to turn in somewhat of a consolidated day of trading and as of this morning is around 1829.00 USD per ounce. The precious metal must be watched closely with so many questions still persisting in the Forex markets and as investors openly search for safe havens. Speculative influences have certainly been part of the price action in Gold but an extraordinary amount of nervous sentiment is still a part of the global investment landscape and this will continue to create volatility. Crude Oil remained in a consolidated mode also on Tuesday, but the commodity seems destined to face headwinds as long as the economic outlook remains challenging and demand does not fulfill expectations.

The broad markets remain fragile and while Wall Street turned in some positive gains yesterday a one day move should not be taken as a ray of great hope. With so many questions abounding regarding the European financial saga, traders can expect to find their opportunities using a short term perspective that takes advantage of ranges.