Important Days Ahead For U.S.

28-10-2010

USD

The USD held onto its gains from the day before and started to raise the eyebrows of investors who may believe the slide in the greenback has almost reached its end. The USD picked up ground against the EUR and also made a slight inroad against the GBP. Core Durable Goods Orders data was released on Wednesday and came in below expectations with a result of minus -0.8% compared to the estimated gain of 0.4%. However the broad number for Durable Goods did show an improvement making the day a mixed bag. The biggest news circulating around the USD was the loud whispers that the Federal Reserve may provide less quantitative easing than originally expected and may carry out the measures on a month to month ratio instead of a sweeping initiative done all at once. This may have added to the stability that the USD experienced and could have been a reason that Wall Street turned in a sluggish performance. The Fed may make an official announcement as early as next week regarding quantitative easing.

The U.S. will release weekly Unemployment Claims today and the number is expected to nearly match last week’s result. The big data that investors are certainly gearing for is the Advance GDP number that will be issued tomorrow. Coupled by the fact that next Tuesday is a critical election day in the U.S. with Congress up for grabs could lead to a very strong air of caution. The currency markets have certainly seen plenty of volatility as ‘fair value’ has been battled for as questions such as Central Bank policies have put investors on a razor’s edge. The USD has certainly struggled the past couple of months, but it has begun to show that it is receiving some backing as the Fed’s policy may becoming a bit more clear. With the GDP number on the calendar for tomorrow and big news days ahead next week, the USD will be a focal point for all.

EUR

Bond markets internationally have been a nervous bunch with the prospects of a Fed intervention and continued turmoil in Europe shadowing bonds in Greece and Portugal. The EUR struggled again on Wednesday and this came with little in the way of data released. The news that may be causing some unease among traders for the Single Currency is that France appears to be in chaos with public strikes as it tries to institute reforms to its retirement age and pension laws, Greece and Portugal continue to argue about their challenges ahead, and Ireland has shown that it is struggling with it policies too. Europe will remain quiet with data today and tomorrow German Retail Sales are on the schedule. The EUR is likely to remain strongly dollar centric, but it may start to feel the weight of sentiment shifting once again if its nations economic policies foster concerns regarding the manner in which it will be able to achieve fiscal responsibility. Certainly it is not only Europe’s bonds that are raising question marks, but a fragile ‘confidence game’ exist and if investors get nervous, the EUR could find interesting days ahead.

GBP

The Sterling did trade slightly lower on Wednesday but maintained a fairly comfortable range. The Nationwide HPI will be released today and is expected to have a result of minus -0.3%. Tomorrow Net Lending to Individuals and Final Mortgage Approval numbers are on the schedule. The U.K. did get a dose of good news from the better than expected GDP numbers earlier this week and the GBP certainly got a boost from this. The question is how long the GBP will be able to maintain a confident outlook with economic concerns still lingering around the periphery. Today’s HPI data and tomorrow releases will be watched closely. Importantly a dollar centric mode for the GBP may find impetus with rather large news making its way from across the Atlantic.

JPY & AUD

The Bank of Japan made no changes to its monetary policy earlier today and the JPY has stayed well within it strong consolidated range versus the USD. The AUD also had a rather small range on Wednesday and this occurred as Gold once again provided an interesting range and did see some downward pressure. Gold however continues to stay about some key psychological resistance points and with so many concerns about the prospects of long term inflation sneaking into the global picture due to faulty government policies globally, trading in the precious metal remains highly volatile. The AUD may find itself in rather complex mix of sentiment the next two days.

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