Stumbling Policy Makers

The EUR has continued to falter against the USD and this has come about as Europe has failed to deliver a unified policy front. As investors and other financial spheres, including the U.S., have asked Europe to provide a greater foundation and take action European policy makers continue to stumble and find it difficult to stand in unison. This has led to a further erosion of confidence among global market participants and a run towards a traditional safe haven – the USD. Even as the U.S. continues to provide unspectacular economic data and the Federal Reserve has publically warned about challenging conditions, investors have been put into an corner and been left with little choices as they seek preservation.

Traders seeking opportunities for profit must be willing to traverse terrain that that is volatile. Gold has sunk more than 150.00 USD the past few days. Silver has taken a large dip. Crude Oil continues to face headwinds. The price of Gold as of this morning is around 1595.00 USD and moving fast. Commodity prices have seen a severe push downwards. However, Gold is often divergent of other physical resources, but looking for fundamental clarity has left traders scratching their heads with Gold. Speculation has certainly been at the forefront for the precious metal for quite some time and now the emerging strength of the USD is likely weighing on Gold.

There will be relatively light economic data today. Only the German Ifo Business Climate reading is on the schedule for Europe. Data from Europe has underscored that economic conditions on the continent are not good. Not only is the specter of the Sovereign Debt crisis manifesting itself, but near zero growth is now being factored into the equation. The ECB not only has a perplexing puzzle on its hands as it tries to create confidence for the Single Currency, but now is dealing with the possibility and likelihood that the Central Bank may have to cut its interest rate sooner rather than later.

The GBP and AUD have both traded in a more stable manner compared to the EUR against the USD. The economic conditions for the U.K. remain grim and growth remains hard to grasp. The Nationwide HPI hovers tentatively on the schedule but it is unlikely to be published until the end of this week. The GBP has been under a rather strong EUR shadow for some time, but it is showing a bit more strength than the Single Currency as of late. The AUD has been on a one way track downward the past couple of weeks, the economic conditions globally are beginning to take their toll on the Australian currency and lagging physical resource prices have applied downward momentum also.  The JPY continues to trade near the strongest parts of its value, but like the CHF, questions pervade for the JPY because of the perceived threat of intervention by the Bank of Japan. Traders with a taste for excitement could take on a JPY position, but they must be aware that if an intervention takes place its waters will become very fast.

Equity markets will be watched closely today and this will have an impact on Forex. Wall Street and other bourses last week turned in some of their worst weekly results since 2008 and investors will be hard pressed to suddenly embrace optimism. The U.S. will release New Home Sales data today, but this is unlikely to create fervor. The CB Consumer Confidence reading will come tomorrow and on Wednesday the States will publish Core Durable Goods Orders statistics. The main story that investors will continue to focus on is the European saga, while they hope that the U.S. somehow can show that it is not slipping into imminent recession. The broad markets remain nervous and trading this week will mirror this.