Markets In A Frenzy

The EUR has continued its swift decline versus the USD as a multitude of concerns hover over the Single Currency. Wall Street turned in another day of negative momentum as investors remained nervous, thus setting the tone for what appears to be a rather fragile broad marketplace today. There will be no major data releases today and the focus will no doubt be locked on European officials and the American equities. Greece has emerged at the forefront of the news as it awaits an aid payment if – and IF has turned into a large word – it can meet its obligations as judged by its overseers. And the overseer that has some of the biggest concerns is Germany, which is seeing an internal political storm build regarding its participation in the European financial crisis. The combination of sinking equity values, the holding of Sovereign Debt that appears in trouble, and rumors of poor capitalization have left a number of large European banks dealing with a myriad of concerns among investors. In essence the lack of clarity from the E.U. which has brought about piles of uncertainty continues to whip investor into a nervous frenzy.
European policy makers are being confronted with a tornado of bad data, rumors, and a very public debate on how the E.U. and ECB should proceed. The EUR has reacted to all of this in a negative fashion and finds itself at the lowest depth of its value against the USD in a year. Meanwhile the GBP has actually held ground and has shown some divergence with the EUR as it has been somewhat stable with the USD. The question that remains unanswered is just how insulated the U.K. banking system is from any type of possible contagion that could emanate from the E.U. should problems create massive vulnerability. Having said that, the apocalypse is not upon us yet and Greece is attempting to create revenues via a property tax to increase its capability to meet its austerity goals.  The E.U. saga is certainly not finished and has a long way to go as it plays out. The question is how investors will find comfort.

While the GBP remained firm on Friday, the AUD was hit with declines against the USD as global conditions took their toll. The AUD had been at a consolidated high range against the USD for much of last week, but the problems that grew in stature per conjecture from the E.U. and bad results on Wall Street on Friday became too much for the Australian currency. Gold has found some consolidation – if mere 30.00 USD moves can be considered such – and finds itself around 1846.00 USD this morning. The question for gold is how volatility will unfold for the precious metal considering the amount of tough hurdles that remain for safe haven seekers and the speculative crowd. Crude Oil remains in a fairly tight range and as long as the international economic outlook remains shaky it is likely that Oil will continue to face headwinds.

The JPY has remained steady during the convulsive trading among many of its peers. The JPY is in slightly weaker territory but cannot be described as having moved in a swift manner. The consolidated value of the JPY remains interesting for investors and the Japanese government alike. Japan is not a fan of seeing its currency ‘over valued’ but it is questionable just how much ammunition they have in order to confront this trading levels. Ranges seem likely to continue for the JPY. The Forex and Commodity markets will remain swift this week as investors react to the avalanche of news cascading from the European Union. There will be a lack of major data releases until the middle of this week and that will leave the swirl of rumors as a prime factor in the markets early on.