Sluggish Markets Dominate

The markets opened Monday’s trading with nervous sentiment and this continued into the day. The EUR started off the day on a weaker foot as it was taken lower predominantly during the Asian and European trading sessions, but it was able to stabilize as American volume started to enter the markets. The EUR/USD continues to exhibit signs of swift trading, but nevertheless has somehow maintained a fairly constant range taking into account the immense amount of news that surrounds both the European and American arenas. There was no major economic data released on Monday. The European debt crisis continues to dominate news and the Americans are not that far behind as Congress tries to find an agreement which will allow the debt ceiling in the States to be raised. A Euro summit will be held later this week which will deal with the Greek debt problems and the Congress in the U.S. must find a solution regarding spending within two weeks time.

Cautious trading was evident throughout the broad markets on Monday as Gold climbed to record highs. The precious metal is around 1606.00 USD an ounce as of this morning. Other commodities however were sluggish highlighting that concerns run deep as the global economic outlook remains less than promising. Today the German ZEW Economic Sentiment reading is on the schedule and the estimated outcome is minus -11.8. The U.S. will begin to publish housing sector data as Building Permits and Housing Starts numbers are presented. Tomorrow the U.S. will release Existing Homes Sales and Crude Oil Inventories reports. The crux of the matter is that both Europe and the States are coming under the heavy glance of investors who have begun to brace themselves for slowdowns.  And the fact that both spheres are facing difficult choices in the coming days have done investors few favors as they consider what many consider to be two currencies, the EUR and USD, which have fundamental financial problems.

The Stress Tests on banks in Europe continues to raise eyebrows. In total 91 European banks were sent through the drills and 9 banks actually failed, which equates into a failure rate slightly less than ten percent which is not something to exactly brag about. Add to that the fact that a default of debt was not allowed to be factored into the accounting and there is a clear reason why analysts are saying that the Stress Tests were nothing more than a confidence game being played by the European Union. And perhaps this is a reason many banking institutions continue to be hammered in the European bourses per their equity value.

The AUD finds itself on the lower end of its strong range even as Gold trades at record highs. Questions about the global economy continue to put pressure on the AUD. The Australian currency remains of interest and should be watched closely. One barometer besides economic data for the AUD should be other commodity prices such as Crude Oil, industrial metals such as Copper, and Grains. The commodities markets remain in the higher realm of their values, but do face severe questions regarding demand. The Baltic Shipping Index continues to show that demand for international transit is slack also.

The GBP did trade in range on Monday. Not until Thursday will the Sterling have any real economic data to mount some type of homegrown sentiment with. That is when Retail Sales and Public Sector Net Borrowing results will be released. The U.K. economy like its major counterparts is producing lackluster growth and faces hurdles regarding austerity measures. The GBP has been at the lower reaches of its range against the USD for a couple of months and it appears that Sterling will continue to find that it is having its value put to the test.

The JPY remained in a consolidated mode on Monday which should not be exactly a surprise for anyone. The JPY has been a stubborn currency and it continues to show that as long as questions about economic outlooks change that it will remain within the stronger parts of its range.