Jobless Numbers And Fear

05-08-2011

Wall Street suffered its worst day since December of 2008 on Thursday. Bond yields in the U.S. shrank. The USD grew stronger versus the EUR, GBP, and AUD as safe haven seekers lined up in mass in the broad markets. The U.S. Jobless numbers are on the calendar today. The ECB did no favors yesterday as President Trichet delivered what was received as negative news. Essentially the ECB said it was going to make bond purchases in Ireland and Portugal, but somehow left out Spain and Italy, which left investors scratching their heads as to what its meaning and affect could be. Economic data from the States has been poor for some time and the concerns that investors have about the possibility of a global downturn have hit the equity markets with full force. The crux of the situation is that investors have grown so weary that they are essentially buying U.S. bonds, which pay nearly no interest in an effort to merely preserve their cash instead of looking for profits.

Alternatives do exist however. The Forex markets do provide opportunities for traders who still have the stomach to seek gains. And it is possible to even go short equities and buy them back later. The markets are not about to go away even under a shadow of rather distressing news coming from the financial world. Traders and investors must remain strong in this type of environment and think on their feet. The USD for all of its gains yesterday actually remains in a known range against the EUR. While questions galore exist for the Single Currency it does remain a viable trading currency for the time being. As pointed out many times in this column there is a wide difference between short term trading and long term positions and investors know this full well. Part of the reason some suspect that the Bank of Japan and the Swiss National Bank intervened in their currencies a day ago was to perch the JPY and CHF up before the possibility of further bad economic data from the U.S. – namely the Non Farm Employment Change numbers which come today at 12:30 GMT from the States. While the employment sector remains under stress in the States and is likely to provide little relief for sentiment today, other sagas may actually garner more attention today. The ECB caused worry among investors yesterday and this is likely to stay the focus going into the weekend.

What experienced investors are worried about is banking liquidity in Europe. Stock prices in Europe in the banking sector have taken a beating this month, poor bond results are not helping, and the fear of contagion among nations regarding financial health has not helped calm anyone. Gold lost ground yesterday, but a decline of ten dollars overall compared to what are still near record prices must be taken into stride when looking at the big picture. The precious metal stands around 1660.00 USD as of this morning and is sure to see some fireworks today. The AUD slipped to low water marks on Thursday and is at the lower depths of its higher values. Physical resources did take a body blow also yesterday, Crude Oil broke its consolidation and declined and as of this morning WTI is near 85.00 USD a barrel.

The investment landscape is a complex one this morning. But the overriding thing traders must take into consideration is market psychology which is fragile at best. The question for traders is how markets will react to this current round of stress and how they will battle back. Typically summer – the dog days of August – provide fairly relaxed trading and rallies, but this is quickly turning into an atypical summer and the pressure is on investors who have certainly returned to their desks in order to search for answers. The Game of Confidence that government and Central Bank officials have been playing all spring is starting to look like a house of cards and investors have reacted angrily.

In the midst of the widespread sell off in equities on Thursday, the Forex markets actually behaved quiet well. Jobless numbers and politicians will all be under the spotlight today and is sure to be a fairly wild ride for some.

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The Collapse of Oil Prices Continues 16-05-2012

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European Uncertainty 15-05-2012

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Euro Falls Once Again 14-05-2012

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Time Is Ticking For Greece 11-05-2012

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Euro Declines Stop 10-05-2012

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Euro Decline Continues 09-05-2012

The beginning of trading on Wednesday continued the negative trend of the Euro and oil. The Euro continues to decline sharply, down 0.24% and trading at 1.2975. The EUR/USD broke through the 1.3000 barrier earlier this week after European elections in France and Greece cast a shadow over the future of the single currency. The Euro is also [...]

Declines Continue for Oil and Euro 08-05-2012

The Euro is down once again during late Asian trading on Monday, after suffering huge losses yesterday. The EUR/USD is down 0.15% and trading at 1.3032. The single currency did manage to recover somewhat during late trading yesterday, rebounding from a decline of 0.81% at the end of the Asian trading session. Investors continue to show [...]

Future of the Euro in Doubt? 07-05-2012

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Oil Prices Plummet 04-05-2012

Oil prices plummeted during the U.S. trading session on Thursday after European Central Bank President Mario Draghi expressed concern over future growth of the EU economy. The price of crude was down 2.48% and trading at 102.61 USD per barrel. Oil was also hit hard because Draghi claimed that ECB was not planning to increase liquidity in [...]

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