Risk Takers Shine On Monday
01-02-2011
Investors showed the ability to take on risk Monday even as storm clouds are circulating over the Middle East. The Egyptian crisis is developing quickly and today will offer another day in which sentiment could be affected. However, the USD lost ground to the EUR and GBP as the Greenback essentially went back to the weaker parts of its range seen before last Friday. The U.S. released a better than expected Chicago PMI reading with a result of 68.8 compared to the estimate of 65.5. Today the ISM Manufacturing PMI will be published and its anticipated mark is 58.8. Tomorrow job data will begin to emerge with the ADP Non Farm Employment Change numbers, Thursday weekly Unemployment Claims are due, and Friday will climax the releases with the government’s official jobless statistics.
Wall Street turned in a positive day of results and this flew in the face of the caution that was being expressed only hours before on the floor of the NYSE opened. Good corporate results and M&A news spurred on risk taking as investors seemingly brushed aside global political concerns which are swirling. Commodity prices were broadly stable to stronger on Monday and grain prices did not relent. Crude Oil prices should be watched carefully considering the unrest in Egypt and the freezing weather conditions in some parts of the U.S. which typically underscores a reason for stronger prices. Gold traded in a consolidated range even in the wake of the concerns being expressed by many economic and political analysts. In essence the USD traded in a mode that was much like its recent trading the previous three weeks and it languished near low values compared to many of the major currencies. Risk taking was surprising strong yesterday and the question is if this sentiment can be sustained.
The EUR and GBP both attracted followers on Monday. As risk taking came back to the fore and the EUR showed that it still has room to maneuver and gain value. The questions about Sovereign Debt have seemingly been pushed down the road and investors seem keen on dipping their toes into bourses. German Retail Sales were weak yesterday as they stumbled to a minus -0.3% result, below the expected gain of 1.9%. Today the German Unemployment Change numbers will be presented and tomorrow PPI data will come forth for Europe. The Nationwide HPI will be released from the U.K. today along with the Manufacturing PMI. Housing prices in the U.K. are likely to show they remain under immense pressure and Manufacturing is expected to show a downturn as well. The mixed economic data from Europe and the U.K. has done little to dampen recent up trends in their respective values and investors have shown an ability to look past concerns.
The JPY picked up ground against the USD again on Monday and the AUD also climbed in value. The Asian markets will begin to close tomorrow for the Lunar New Year holidays and traders outside of Asia will have to monitor trading schedules carefully. China essentially will be closed for a week. In the meantime, the AUD which does not close has done well even as the price of Gold has remained relatively downtrodden. The AUD is near its high water marks and taking into consideration the amount of risk, economic data on schedule, and global news events developing - the Australian currency should be watched closely.
