Finding Equilibrium
12-10-2011
The broad markets turned rather cautious on Tuesday as traders essentially waited the day out. The Europe saga remains a focus and questions remain about how exactly the E.U. will handle its banking problems and the potential fallout from a possible default from Greece. The EUR traded in a rather tight range most of the day and the GBP and AUD also found stable values. Gold continued to hover and as of this morning is around 1671.00 USD. Wall Street highlighted the amount of caution as the major indexes turned in mixed performance and volume remains uninspiring. Alcoa, the Aluminum company, released the first quarterly earnings report after the markets closed as is the tradition and it showed that it revenues have fallen and that its outlook is less then glowing.
The U.S. will release its FOMC Meeting Minutes results from the previous Fed get together. It may offer some insight regarding any disagreements about how to best deal with the unemployment situation in the States. Investors are likely however to remain attentive mostly to the European financial crisis. The E.U. has bought some time with the announcements recently from Germany and France that they intend on creating a clear package to make sure banks are capitalized and face no liquidity problems. Yet, the proof will only be in the pudding and some investors are openly questioning the ability of the E.U. to suddenly create a working formula for a crisis that has been developing over the last year and a half with little in the way of solutions except for measures which have proved largely ineffective. While some inflation data has been released from Germany and France already earlier this morning in Europe, investors clearly are hoping that the E.U. can fix their problems first and foremost and that remains the eight hundred pound gorilla in the room.
The JPY has stayed in a brutal consolidated mode and offer very little in the way of even a range trade. Commodity prices have bounced off of their lows from about a week and a half ago, but Crude Oil and other physical resources have a long way to go before they convince analysts that some fundamental shift has occurred and demand has suddenly emerged. Simply put the global economic outlook has not changed and the sun is not yet out, in fact the forecast continues to look cloudy at best. The U.S. is struggling to achieve growth and fears persists that the European situation has the capability of pulling its economic partners into a deep recession.
Data will not be the major motivator in the Forex markets today, and traders should watch bourses in order to gauge sentiment. The report from Alcoa last night may bring out some early nervousness which has certainly not disappeared as traders try to find equilibrium.
