Swift Trading As Questions Mount

Risk appetite took a direct hit on Friday and it impacted the broad marketplace. The political crisis developing in Egypt has put a large dose of caution into the markets and investors sought safe havens, which made the USD stronger against the EUR and GBP. Not only did the Greenback get affected from risk appetite shifting, but international bourses traded lower including the major indexes on Wall Street. Gold gained too. The question now is how investors will react with the overhang of the developing news from the Middle East. The impact on world trade including Crude Oil could be significant if the Suez Canal were to suffer any type of chaos. It must be noted that the Suez has been working normally thus far. Also making news on Friday was the Advance GDP from the U.S. which did not meet expectations and came in with a result of 3.2% instead of anticipated 3.5% gain.

This week will certainly be highlighted by the news from Egypt until an outcome becomes clear, but investors must fully remember that jobless numbers will come from the U.S. this week too. The States will release Chicago PMI marks today and German Retail Sales will be published. This coming Friday the all important Non Farm Employment Change numbers will be delivered from the States. The U.S. has been turning in economic data, which has started to cause some analysts to believe that its recovery is gaining strength. However the jobless situation remains troubling not only because it directly affects consumer sentiment, but because it will become a huge political debate as the Presidential election grows closer. Yes, the Presidential election is nearly two years away, but the campaigning will get underway this summer in earnest. Tomorrow the U.S. will release its ISM Manufacturing PMI statistics. The USD is likely to see plenty of volatility this week as risk sentiment is weighed. The Greenback did find some backing on Friday and it will be more than interesting today to see how investors respond to all of the questions that lurk short term with so much uncertainty.

The EUR and GBP both lost ground as noted on Friday and this had more to do with risk appetite diminishing than anything else. While the underlying foundations of the EUR remain questionable at best regarding Sovereign Debt issues, the fact remains that the ECB has done a relatively good job of presenting the belief that the E.U. will support the Single Currency through thick and thin. German Retail Sales will of interest today and the expectation is a gain of 1.9%. The U.K. will be light with data today, but tomorrow the Nationwide HPI and the Manufacturing PMI will be presented. The Sterling was dealt a blow last week when the GDP numbers from the U.K. showed continued weakness. With plenty of data coming from the U.K. this week and risk sentiment hanging on a thread with the political ramifications from the Middle East being watched, investors may continue to be unsettled, which could set the table for potential opportunities for traders to follow prevailing short tem momentum.

The JPY gained with risk adverse trading erupting Friday and the Japanese currency like the USD has taken its well known position as a safe haven when global questions arise. The AUD held onto its ground Friday and it was backed by a slight rise in Gold prices. The AUD will need to be watched closely this week if volatility should develop in Gold due to the political upheaval and fears rising among investors. Crude Oil also will become a huge barometer of short term sentiment. This week starts off with plenty of questions regarding political news which could have huge implications for investors. Also traders must remember that the U.S. will release plenty of crucial data this week too, highlighted by the jobless numbers. Swift trading will certainly be seen in the coming days.