Rollercoaster Ride For EUR/USD

The EUR/USD pair continued a rollercoaster like range as sentiment continued to roil. Greece apparently has come to an agreement with the E.U. and IMF on a new five year bailout package. But this hardly means that Greece is out of the woods because they still have to pass new austerity measures and then the nation needs to make them work. This has left a large swatch of investors with the belief that Greece will eventually face some type of restructuring. Maybe not next week or month, but at some point Greece is not likely going to be able to maintain its fiscal policy. There are loud whispers coming from Brussels this morning that an important segment of European officials have privately told Greece that there will be no more help and that the nation must enact bold moves and see them through.

Politically it is important for the sake of the E.U. to maintain a strong EUR, but it may prove very difficult long term to keep the vision that all nations within its union are equal economically. European Flash PMI data from the Manufacturing and Services sectors yesterday proved negative from France and Germany, once again underscoring that not only is the debt crisis a problem, but the possibility of slipping into another recession looms. Inflation an oft used explanation for consumer sentiment marks, has been strong within the energy and food spectrum, but many officials believe this pricing pressure will ease long term. Crude Oil had a fairly wild day of trading as different international entities entered the production and supply debate with proposed measures. The news surrounding Crude Oil appears largely political and for public consumption in order to show populations that officials are monitoring inflation. Europe like its counterparts faces the prospects of a downturn economically as confidence ebbs because of inflation and debt which have a direct result on growth.

The U.S. released weekly Unemployment Claims and they provided little hope. The numbers were sour again. The jobless problem in the States is becoming acute. With the prospect of a national election in a year and a half it is a dead certainty that unemployment and the weakness of the American economy are going to become the chief focus for the electorate. The consumer confidence numbers in the States have been poor. Today Core Durable Goods numbers will come from the U.S. and so will Final GDP results. Wall Street had a tough day on Thursday as it went negative in a big way and it took all day long for equities to fight their way back to almost even. Sentiment remains fragile and going into the weekend investors are faced with the possibility that Wall Street may continue its weekly losing streak. The USD has had a volatile week against the EUR and traders must be prepared for sudden moves.

The GBP sank early on Thursday but did manage to climb back slightly. The Sterling has been on its back heels for a while as it has been confronted by poor economic data and continues to trade under a EUR centric shadow. Today Mervyn King, the BoE Governor, will speak about the state of the U.K. economy. CBI Realized Sales yesterday proved negative with its reading and the BBA Mortgage Approvals was only slightly better than its rather lackluster estimate. The Sterling remains under pressure it appears.

The AUD and JPY both remain in tight ranges. The AUD has been lingering on the weaker side of its strong range. Commodity markets have been mixed and questions about the global economy continue to have their effects on the AUD. Having said that the interest rate from the AUD remains a good value for some investors and this is likely the reason the AUD has held on thus far to its relatively strong values. Gold as of this morning is trading around 1521.00 USD and did have a volatile session on Thursday. The precious metal should be watched carefully today. Speculators within Crude Oil were sent a warning shot from governments via the IEA when they announced that they would release some reserves. This should serve as a broad reminder that governments are becoming increasingly important in the Commodity and Forex markets as politicians worry about their constituents and their jobs.