Investor Equilibrium
20-12-2011
Market noise came from equities on Monday as financial shares dropped in Europe and the States. Investors became nervous per the comments from ECB President Mario Draghi who signaled that the ECB does not intend on increasing its Sovereign Debt purchases and essentially ruled out a quantitative easing for Europe. Volumes in the broad markets began to fall off yesterday as the holiday season approaches quickly. The EUR, GBP, and AUD all traded sideways, but remain near their weaker values versus the USD. Gold as of this morning is around 1599.00 USD. The JPY remains fairly consolidated. There was a lack of economic data yesterday. However the German Ifo Business Climate survey will be released today, the U.K. will see the CBI Realized Sales, and the States will put forth Building Permits and Housing Starts numbers.
Essentially investors who choose to participate in these holiday markets are likely looking to take advantage of short term ranges and may be value hunting too. The EUR remains near the weaker parts of its range and this may prove an interesting opportunity for traders who believe that the Single Currency is not going to go too far in any particular direction as most financial institutions abandon their desks until after the New Year. However traders must keep in mind that the ECB will be offering a new package of bonds tomorrow and if the particular auction goes well it could jump start the EUR before going into Christmas as part of the overall desire to increase confidence. The EUR remains in the midst of a lightning storm as it continues to muster plenty of negative attention. Traders should continue to use the results of the Sovereign Debt yields from the E.U. to gauge the overall sentiment of the EUR.
The USD will continue to mount interest from investors seeking safe havens. Today’s data regarding the housing sector may go largely unnoticed considering that investors attentions are elsewhere. Tomorrow more housing numbers will be published via Existing Home Sales, Thursday will see Final GDP results, and on Friday Core Durable Goods figures will be brought forth. However as more investors make their way for the exits as the holidays approach these reports may not carry too much impact. The USD has picked up ground based on the worries coming from across the Atlantic. The U.S. economic numbers have been slightly better than their European counterparts also.
The GBP and AUD remain in a solid EUR centric mode and this will likely continue. Traders should remember that with lower volumes in Forex and within equities that correlations may fall to the wayside for instances, but they tend to begin to march to the same drummer within due time. Short term ranges will continue to offer some opportunities for traders these next few days. And it should be remembered that although the broad markets may be rather quiet that there is a chance for sudden bursts of energy on developing news that shakes investor equilibrium.
