Markets Still Nervous

The USD continued to gain against the EUR on Thursday as President Trichet admitted the European economy has seen a bit of a downturn and hinted that the ECB may be reversing some of its positions regarding inflation and how to deal with it. Germany will be releasing inflation data today and this may prove interesting to investors who want a further glance into the crystal ball. Trichet uncharacteristically lost his temper at the ECB press conference yesterday when asked if Germany should consider going back to the Deutsche Mark. In essence the ECB seemed to reluctantly admit that challenges have not withered, but in fact have grown for the E.U. and the Single Currency. It must be noted too, that news continues to swirl regarding Greece’s economic conditions and its ability to meet its requirements in order to receive further assistance.



On the other side of the Atlantic, Ben Bernanke delivered a speech in which he too admitted that the U.S. economy was not achieving the growth levels that had been hoped for and that the jobless situation remains troublesome. However, Bernanke did not say that the Federal Reserve is going to begin a new round of quantitative easing. He only said that at the next Fed meeting on monetary policy will examine all possibilities in a fair manner. The USD continued to pick up ground against the EUR yesterday and traders are likely to see a test of the pair’s range today. The U.S. released weekly Unemployment Claims yesterday and the result of 414K was worse than the expected outcome of 407K. President Obama got into the act also in the States as he delivered a speech to Congress proposing a new jobs plan. However the speech was short on substance and it remains to be seen how this package will be approved by Congress in what is shaping up to be a tough election year. The jobless problem in the U.S. remains a worrisome concern for Americans.



The GBP held its ground yesterday and did not decline in the same rapid manner that the EUR experienced against the USD. The Sterling however does find itself hovering at the lower realms of its range against the Greenback. The BoE surprised no one yesterday as they basically held onto their rather dovish monetary policy. Inflation data will come via the PPI Input and Output statistics today, but the crux of the matter for the GBP remains its rather lacking economic indicators and the ability of the U.K. to meet its stated austerity goals while combating poor growth. The GBP is likely to continue to move in a related fashion to the EUR.



Gold has not disappointed anyone who seeks adventure while trading. The price of the precious metal climbed back on Thursday and as of this morning stands around 1870.00 USD in a fast market. Gold continues to be caught up in a whirlwind of impetus which includes safe haven seekers and speculation. The AUD has remained stubbornly within the stronger part of its range in recent trading and should be watched closely. The AUD is certain to see swift trading as the outlook for the global economy is debated.  The JPY has lost a slight amount of value, but still finds itself in the stronger parts of its range, albeit at the weaker end. The question is how serious the Japanese government is about trying to weaken the JPY and what type of ammunition they have at their disposal to achieve this.



Going into the weekend traders will have to be fully aware of broad market conditions. Without any major data releases scheduled for today, it is likely that participants will find themselves having to deal with sentiment that remains cautious and fragile.