Investors Taking Risks

The USD continued to be under assault from the EUR on Monday. There was no major data from the U.S. and Europe published its PMI Manufacturing and Services Flash reports from Germany and France with mixed to negative results. However, this did not stop the strong EUR move. The Sovereign Debt situation has not been put to bed on the continent, but the stance taken by the ECB last week regarding inflation fears and a possibly hawkish approach to interest rates has led the EUR down a path of stability and strength in the short term. The EUR move continues to surprise many analysts. Risk appetite must always be weighed into the equation of the EUR/USD move, this as investors are showing a sudden taste for delving into the equity markets. Wall Street turned in another good day throughout the major indexes. Today the U.S. will release the CB Consumer Confidence reading and it is expected to have an outcome of 54.4, which will be an improvement over the previous mark if it should attain the anticipated result.

Also from the U.S. today will be the S&P/CS Composite-20 HPI and it is expected to drop -1.4%. The housing market in the States remains under a vast amount of pressure. Tomorrow the New Home Sales figures will be brought forth.  It should be noted that President Obama will make the State of the Union speech tonight after the U.S. markets are closed. With an election campaign coming up for the current administration, Obama is expected to speak about the economy and the jobless situation in detail. Tomorrow the FOMC Statement will be released via the Federal Reserve and investors will examine its wording carefully.
The Sterling has done well the past two weeks along with the EUR against the USD. The GBP has traded in largely a EUR centric mode and it like its European counterpart finds itself touching the higher values of its range. The U.K. will release the Preliminary GDP today and the expected number is a gain of 0.5%. The outcome for the GDP report will be watched closely for any surprises. The U.K. has turned in mixed data at best and in order for the nation to achieve success it will have to create growth even though the government has enacted stiff austerity measures. Public Sector Net Borrowing figures will also be released today. Tomorrow the MPC Meeting Minutes notes will be published. While the GBP has traded via the winds being created from the storms the EUR has created, investors are still keen to look at data from the U.K. and ascertain its long term prospects. The Sterling has done well recently and traders can be expected to try and find opportunities within its ranges today and tomorrow.

The JPY traded in range on Monday in fact it was a rather consolidated affair. The AUD has turned in an interesting performance as it has gained against the USD, this as the price of Gold has actually lost ground. Gold finds itself around 1332.00 USD an ounce and the precious metal finds itself losing ground even as the USD has lost value. The same can be said for Crude Oil which has dropped in price the past couple of sessions. Commodity prices continue to be a talking point considering the inflation in food and fuel prices that have been recently seen globally. Speculative elements have certainly been part of the price action in commodities and the recent declines in Gold and Crude Oil must be watched. The broad markets are showing some divergence given that the AUD has been stronger as Gold has weakened, meaning investors should remain alert for sudden moves and that volatility is likely to continue as risk appetite is tested.