Swift Markets Again

USD
The USD lost ground to most of the major currencies except for the JPY on Tuesday on a day that saw swift trading again in the currencies. The EUR and GBP both gained quickly against the USD and they did so after a rather poor CB Consumer Confidence reading from the States, which set off yet more ‘fear’ that the Federal Reserve may act sooner rather than later regarding another round of stimulus in order to try and decrease the chances of another downturn in the U.S. economy. The U.S. will be relatively quiet with data today with only the Crude Oil Inventories report on the schedule. Wall Street for all of the talk that has centered on its gains since the beginning of September continues to turn in a rather start and sputter attitude.

Gold & AUD
The largest story yesterday may have been the fact that Gold broke through another barrier climbing to above 1310.00 USD and this promptly sent the AUD on a ride upwards too. As long as questions continue to exist about the stability of the major currencies Gold will likely find plenty of speculative action. The AUD is a commodity based currency in many respects and its potential to gain in value has a direct correlation with the precious metal.

JPY
The JPY also needs to be highlighted. It finds itself languishing again at the stronger points of its value against the USD. The short term intervention the Bank of Japan took a couple of weeks ago has now found that its effort has been confronted by market forces which continue to seek the JPY for a complex mix of reasons including interest rate trades and risk adverse treasury seekers. The BoJ is being watched carefully due to the value of the JPY and the government’s stated opinion that they cannot allow the Japanese currency to become too strong. As a side note, the Tankan survey released earlier today showed a negative outlook by businesses when asked about their prospects for next year. This probably has a direct relationship to their worries about exchange rates being affected by a JPY that is too strong.

EUR & GBP
Europe and the U.K. will be relatively quiet with data today and the trading for both the EUR and Sterling are likely to find a dollar centric mantra still. Both currencies are flourishing under the assumption that the U.S. is about to undertake further quantitative easing. The question that traders must cautiously ask themselves is when ‘fair value’ will come into the frame of reference again. Both Europe and the U.K have their own economic problems, like the U.S., and it stands to reason that a counter balance will come into view at some point – the question is when.

The U.K. will release the Nationwide HPI tomorrow, Germany will publish its Unemployment Change results, and the U.S. will bring forth its weekly Unemployment Claims. On Friday the German Retail Sales are on the calendar along with the U.K. Manufacturing PMI. The States has the ISM Manufacturing PMI on the schedule.

Trading continues to be volatile among the major currencies. Commodity prices, particularly among the precious metals have shown sharp gains. The comfort zone for traders has been uneasy, but certainly opportunities have been abundant for those who have taken advantage of momentum. Central Banks will continue to be a focal point. Fundamental data has been relatively poor from the U.S., Europe, and the U.K. and this is unlikely to change anytime soon. Thus the broad markets are moving based on risk sentiment and the ability of investors to act swiftly.