Portugal & The EUR The Key

The USD has continued to trade in a strong mode the past couple of sessions and held onto its gains Monday. The jobless numbers from the States Friday were not as good as were expected and although the Official Unemployment Rate fell to 9.4% it was not taken as a particularly good sign – this because many people have simply stopped looking for work. Wall Street has turned in a few rather lackluster performances in a row and this has come even as some M & A news (mergers and acquisitions) has emerged - as was the case with DuPont on Monday. There was no official major economic data from the U.S. yesterday or Europe, and trading continued to move with cautious sentiment across the broad marketplace.

Yesterday saw a return to nearly normal market volumes. It was also the mark of the new quarterly earnings season as Alcoa released their company figures on Wall Street. Europe however continues to be mired within the depths of the Sovereign Debt crisis and all attention will be on Portugal this week as they prepare for a bond auction that is scheduled for tomorrow. The USD has maintained a strong grip on the EUR - and the greenback is at the higher end of its range against the Single Currency. The lackluster jobless numbers from the States poured some cold water on the notion that economic data was going to suddenly become completely positive. Today the U.S. releases little data again, but for those interested Wholesale Inventories figures will be published. The story for the USD remains the quandary that the European Union faces and how the EUR is going to respond. The USD has done well and may continue to find backers in the near term.

Europe will be quiet with data today, but whispers galore will continue to be spoken about Portugal and the rumors that Germany and France have both insisted to its E.U. member nation that it should start to line up ECB and IMF lifelines. Portugal said that this news was not true on Monday, but long shadows continue to plague the financial situation in the country.

The Sterling is trading at lower values against the USD also and this has a direct relationship to the EUR centric pressures that pervade the economic landscape. The Halifax HPI turned in a negative reading from the U.K. yesterday with a minus 1.3% figure. Today the Nationwide Consumer Confidence reading is tentatively listed on schedule – but it could be delayed. Tomorrow Trade Balance numbers will be released. Like the ECB, the Bank of England will hold its monetary policy meetings the next couple of days with the results being announced on Thursday.  The main story for the GBP continues to be the storm clouds that are coming from the European continent and the fear of a knock on affect.

The JPY has found more tranquil trading the past couple of days and it finds itself in the weaker parts of its strong range against the USD. The AUD has traded to the weaker side of its range compared to its value one week ago. Questions are emerging about the economic impact from the massive flooding in Queensland and this has certainly put short term pressure on the AUD. Gold has been slightly weaker the past few trading sessions and finds itself around 1376.00 USD as of this morning. Gold continues to be a barometer for risk adverse trading as questions continue to emerge about the financial problems that are hovering over Europe. The broad markets have exhibited cautious sentiment the past few trading sessions. Many commodities have been trading lower. Traders will have to watch ranges closely as full volume emerges globally.