Range Trading Among Currencies

Monday saw range trading in most of the currencies. The USD traded essentially in a pattern consisting of Friday’s highs and lows against the EUR and GBP. There was little economic data that was earth shattering yesterday and again today will be relatively quiet internationally. A Consumer Credit report was brought forth in the U.S. and did show a gain, but this was expected because holiday shopping this past December was stronger than last year’s. Wall Street did turn in gains and continues to propel itself towards to the highest points of its positive trend. Risk appetite among equity investors appears to show little signs of let up and this has been helped by the fact that bonds continue to yield very limited returns.

Tomorrow Ben Bernanke will speak on Capitol Hill in Washington D.C. and offer the Federal Reserve’s thoughts on the state of the U.S. economy and its outlook. Chairman Bernanke is certain to face difficult questions taking into consideration that there has been a change in the political environment and the Republicans are now in control of the House of Representatives. While this event is unlikely to become one of political rancor it will give a Republican led Congress the chance to express their opinions on the current conditions in the job market and government spending with greater force. Thursday will see weekly Unemployment Claims. Friday will have the Preliminary Consumer Sentiment reading from the University of Michigan. Chairman Bernanke’s testimony will be the focus point for American investors and though no major surprises are expected his tone will certainly help shape risk sentiment tomorrow. The USD finds itself within a fairly comfortable range with the EUR and taking into consideration the amount of volatility in the currencies the past year, the Greenback is in a known range.

The EUR and GBP both found themselves swimming comfortably in rather calm waters on Monday. The EUR did face some downside pressure, but climbed back to a range that has proven a battle ground the past two weeks. Germany Factory Orders were released yesterday and the number proved disappointing with a result of minus -3.4% compared to the estimated minus of -1.4%. The outcome will not warm the hearts of EUR skeptics who have been pointing towards weak growth from Europe and the continuing saga regarding Sovereign Debt issues. However, the EUR continues to perform relatively well and hold its ground versus the USD. Today Germany will release their Industrial Production figures. The U.K. was relatively quiet with data also on Monday, with only the BRC Retail Sales Monitor and RICS House Price Balance data available. Both reports did relatively well, but their results are nothing to start a celebratory parade with. Today data will be nearly nil from the U.K., but tomorrow the Trade Balance data will be brought forth.  The EUR and GBP have done well the past month and headed into the middle of February both currencies still have their backers.

The JPY and AUD both traded in range on Monday. The JPY remains on the stronger side of its well known and practiced value against the USD. Japan has had plenty of corporate data released via its biggest companies and the Nikkei has done relatively well. The Shanghai market in China will reopen tomorrow and upon its doors allowing investors back in, volume should return to normal for many markets as traders get to weigh their opinions against other participants who have been missing for a week. The AUD is still at highs but was pushed back slightly for a while yesterday, however it did finish the later trading sessions stronger. Gold did gain slightly by the end of trading on Monday and finds itself at 1350.00 USD this morning. Gold remains an interesting barometer and its consolidated trading pattern the few weeks has many anticipating its next move.