Optimism For A Day
20-07-2011
Wall Street turned in a positive session on Tuesday. Investors appeared ready to provide a ‘relief rally’ after a disappointing Monday. Washington also was able to elevate risk appetite with a compromise proposal now on the table, which would raise the debt ceiling level for the States. Housing sector data including Building Permits and Housing Starts slightly exceeded expectations too. The EUR/USD pair traded in range with no real direction. Europe remains a core issue. The German ZEW Economic Sentiment reading provided a harsh reality with a mark of minus -15.1 compared to the estimated outcome of minus -11.8. Discussions are ongoing regarding the Greek debt situation and an E.U. summit will begin in earnest tomorrow in order to draw up an outline for the newest relief package for the troubled nation.
After Wall Street closed on Tuesday, Apple released a promising quarterly earnings report. Risk appetite may continue to build based on this report from Apple, but financial companies continued to turn in tough results. Existing Home Sales numbers will be released today along with Crude Oil Inventories data. Europe will be relatively quiet with releases, but tomorrow PMI results will come from Germany and France for the Manufacturing and Services sectors. The U.K. will publish its MPC Meeting Minutes today, but it should be met with a fairly muted response taking into consideration that the BoE’s dovish policy has been largely translated into the market. Tomorrow the U.K. will release Retail Sales and Public Sector Net Borrowing which could have an effect on the GBP.
Gold came off of its highs on Tuesday as some investors may have decided to book profits. Commodity prices were higher for the most part yesterday, Crude Oil climbed to the higher parts of its rather consolidated range. Gold as of this morning is around 1588.00 as of this writing. While the Crude Oil Inventories numbers will come from the States today, traders should note that this result will only have a momentary effect on the market as the Commodity markets continue to trade more on sentiment created from the global economic outlook.
The AUD did climb on Tuesday and it approached the stronger parts of its range. Today’s trading for the Australian currency should prove interesting. The AUD has seen a well practiced range the past couple of months and for traders with the patience and ability to use risk management opportunities do exist. The JPY continued to staunchly stay on the stronger parts of its range. While some risk appetite did emerge yesterday it will take more than one winning session for safe haven seekers to suddenly change their stripes and reverse their positions.
The U.S. and Europe will remain a critical lynchpin for investors worldwide. Tomorrow weekly Unemployment Claims and the Philly Fed Manufacturing Index will come from the States. However, it is the ongoing political wrangling that weary investors are watching in order to see if any bona fide results are found regarding U.S. spending and its debt ratios. Yesterday’s rally on the major stock indexes did not influence the Forex markets too much. It is likely investors will need to have several positive sessions in a row to change overall risk sentiment. The ongoing saga in Europe is producing a definite amount of skepticism also and tomorrow’s E.U. summit regarding debt will have many attentive viewers.
