Important Data Today

And with the seemingly quickness of flicking a light switch, the broad markets went from risk taking to risk adverse. The EUR traded significantly lower as the Italian bond auction results began to generate higher yields again. The GBP and AUD followed the Single Currency lower and the USD essentially became a magnate for safe haven seekers. Equity markets in Europe turned lower as the day progressed and Wall Street went into a decline across the Atlantic. While Italy did deliver on its amendments to its budget and brought in a new leader, Mario Monti, questions persist about the ability of Italy to handle its debt ratios. Adding fuel to the fire are concerns about the broad European economy which appears to be lurching into a full blown recession.

Part of yesterday’s negative sentiment may have come from investors who were positioning themselves for today’s Preliminary GDP reports from Germany and France. Data has steadily underperformed from the E.U. the past couple of months and it is possible that investors were putting themselves into less vulnerable assets with today’s important statistics on the calendar. The German ZEW Economic Sentiment reading will also be published today. The German GDP result is expected to show a small gain of 0.5%. The fact is that growth is proving hard to achieve for European nations. The staggering amount of debt ratios has been setting off alarm bells for quite some time, and today’s data will be a further confirmation that economic conditions are lackluster. The EUR is near the lows of its range and this may provide situational opportunities for traders who have the stomach to follow short term trends.

The U.S. will release important numbers also today, Retail Sales figures and the Empire State Manufacturing Index will be published. While the States has done a marginally better job of sustaining growth concerns are lingering over its economy also. The Federal Reserve has literally been sitting on the fence as they have tried to say that the U.S. economy is stable but still faces challenges. The Fed and the White House have also been voicing their concerns about the situation in Europe. Today’s Retail Sales number will give some insight into the mindset of U.S. consumers before they go into the critically important holiday shopping season. The USD has found takers as investors have sought stable assets and it still may have room to accumulate value.

The confidence game that is being fostered by politicians in Europe remains a tough sell. The most obvious barometer of risk appetite comes from its bond markets, which continues to see the German bond yields decreasing on greater demand and sees riskier nations such as Italy and now France coming under pressure.  Gold traded lower on Monday as the Greenback gained. The precious metal is around 1770.00 USD as of this morning. Gold has been in a rather consolidated mode for about a month and a half as the E.U. crisis has grown in stature. Gold has short term ranges that it seems to be bouncing off of, but is also appears to be setting itself up for a longer term trade outlook particularly if the situation in the E.U. does not improve.

Forex and commodities traded with volatility on Monday and this highlights that uncertainty among investors continues to be a lynchpin for risk. Greece and Italy have been in the news in abundance the past two weeks, but now investors seems to be tuning their heads more to the E.U. leadership as a whole.