Gold Is Finding Friends

The term ‘overdone’ sometimes comes up in trading when talking about moves in various markets where the price action is perceived to have been too strong. This is a frequent case in commodities where certain resources can find themselves under the duress of sudden changing sentiments due to government reports or even weather forecasts. Crude Oil has recently traded at highs and some of this may in fact be because of the rather cold winter that arrived in Europe and parts of North America last week. In other words traders frequently find that they are at the mercy of unknown and unpredictable forces. The USD and EUR both have shown signs in the past few months of a zealous marketplace with plenty of volatility as they both struggle to emerge from their own negative stories. The USD has weakened due to the rather bad Jobless report last Friday which highlighted that the American economy continues to find a difficult path on the road to recovery. Due to the lack of significant gains in employment, investors turned their attention to the Federal Reserve and Ben Bernanke. Bernanke was quoted this past weekend as saying that basically all options remain on the table in order to get the U.S. economy going including the possibility of a larger amount of quantitative easing than already publically stated.

The EUR has found headwinds as the Irish financial crisis underscored that the Sovereign Debt crisis on the European continent has not gone away and that many of the problems have in essence simply been pushed down the road. European officials meeting yesterday were NOT able to find any happy solutions to their problems and the calls this past weekend for the creation of an all encompassing European Bond that would be backed by all E.U. nations was met with a cold fate. Germany is outspoken regarding its opposition to such an entity. The USD and EUR traded in a fairly tight range on Monday like many of the other currencies. This as sentiment has investors so nervous that many of them are sitting on the fence. The short term road signs and the long term markers for both the USD and EUR are at a variance. Gold in the meantime has found many backers as doubts about the currencies are in vogue. The precious metal climbed to above 1420.00 USD an ounce and it appears that for the time being traders do not believe the commodity is overdone. This as so many questions continue to plague the USD and EUR.

German Factory Orders figures will be released today. The U.S. will publish Consumer Credit numbers but this report, along with the German statistics are doubtful to cause much of a stir. Wall Street behaved in a rather consolidated fashion on Monday as did other global bourses which showed a lack of desire to take a stance. Traders may find opportunities when taking a look at the USD and EUR when searching for ranges, but traders will have to stay will aware of any official statements coming from Central Bank spokespeople on both sides of the Atlantic which could spur on momentary shifts in sentiment.

GBP

The Sterling continued to trade under the influence of a EUR centric shadow on Monday and although this is likely to stay the same today, it must be noted that Manufacturing Production numbers are due today and are forecasted to show a slight gain of 0.4%. The Halifax HPI has been pushed back until tomorrow at the earliest and it must be kept in mind that the report has had a tendency as of late to show up only when the BoE is making their MPC decision. The BoE meeting is scheduled for Thursday and unless the BoE announces a new stance it is likely to remain a rather tranquil affair. The GBP was able to stop its slide last week, but it has shown the tendency to be at the mercy of any ugliness which develops around the EUR regarding the Sovereign Debt issues - which reflect poorly on the U.K. as well. The GBP will likely trade in range today unless a major surprise comes across the news wires.

JPY & AUD

Like a well practiced song the JPY finds itself back in the stronger depths of its water versus the USD as Asian traders have once again shown a well trained ability to seek risk adverse positions when so many questions hover in the air. Asian bourses reflected the fact that investors are a nervous bunch and struggled to find positive movement. The AUD did gain slightly on Monday reflecting the sluggish trading in the USD and the momentum that Gold has sustained. The AUD is near the high end of its value, but it proved last month that it has the capability to surge if Gold continues to find quick friends.