Italian Bonds
12-12-2011
The EUR was tested on Friday within it ranges. Early in the day the EUR was taken to new lows, but within a couple of hours began to turn around and march towards higher values, only to finish the day once again near the lower end of its range. In essence the Single Currency mirrored the sentiment that exists in the broad markets. Equities which turned in mixed results all week finished with gains before going into the weekend, but investors may put these positive gains to a quick test this morning with the notion that the push upwards was because of a collective sigh of relief that the E.U. summit didn’t end in a complete failure. There is no major data scheduled for release today from Europe or the States and because of that traders will be left to ponder their outlooks. Short term and long term perspectives may be quite contradictory comparatively. The E.U. essentially delivered calm words, but they were underscored by a noticeable amount of debate.
Gold as of this morning is around 1689.00 USD and showing that it is under some pressure. This has come on the heels of continued momentum by the USD to hold its ground even as range tests abound. Crude Oil has traded slightly lower the past two sessions. Oil is still near the higher end of its range and its value must be balanced by two different thoughts which are - one geopolitics via Iran and two the outlook for global economies which continues to be weak and investors must ask themselves which problem will be solved first and make their decisions based on this.
While today will be rather quiet from the States, tomorrow the Federal Reserve will offer its monetary policy statement and press conference. Also Retail Sales figures will be brought forth which will deliver insight into consumer thinking before the critical holiday shopping factors in full. And having said that, the equity markets in the U.S. must be watched carefully this week and next, as investors try to put a dose of optimism into the markets before beginning the New Year. The question is if a Christmas rally is attainable taking into consideration the weight from the concerns coming from Europe regarding the fear of contagion and a U.S. economy which remains troubling.
The GBP and AUD remain under the full realm of a EUR centric mode. Both currencies certainly have their own perspectives and characteristics pertaining to their domestic economies, but the troubles from the E.U. are having a clear knock on affect. What could be interesting for traders with a taste for adventure is to trade the EUR/GBP pair with the thought in mind that some divergence will come about. The JPY is locked into its consolidated persona rather well. The JPY has inched up in value in small increments in recent trading but its move mimics that of a snail pace.
Forex and equities will be watched carefully today to see how investor sentiment is playing out as we begin to approach the holiday season in earnest when volumes start to decline. But there are important events left on the calendar like today’s Italian Sovereign Bond sale in which yields will be watched closely. And therein is the clue for today’s trading within the EUR/USD pair. Can the Italians produce a stable sale of its debt without its yields coming under attack from speculators? The bond sales from Europe today and tomorrow’s Fed meeting from the States will provide plenty of impact.
