The Blame Game
23-11-2011
The U.S. may be about to begin its holiday season but investors were not exactly welcomed by holiday cheer on Tuesday. The Preliminary GDP report came in below expectations with only a result of 2.0%, which was below the expectation of 2.4%. Wall Street promptly declined and the bad news which has continued from Europe combined with the American saga to help create worse sentiment. The EUR which was range trading began to come under pressure and it finished last night’s late session near lows once again, followed in tandem by the GBP and AUD which continue to act like long lost dogs. The broad markets are being hit by sell offs in ‘riskier’ assets as safe havens are sought. And the ultimate safe haven in the short term has been the USD and some very selective bond markets.
Now before everyone runs out to purchase the USD, traders will be quick to note sunshine doesn’t exactly seem like it is shining on the States either. Today the U.S. will release Core Durable Goods Orders data, along with weekly Unemployment Claims. Tomorrow the Thanksgiving holiday is celebrated in the States, meaning that volumes will begin to drop in earnest late in the American session today as investors begin their long holiday escape which will last until next Monday in most cases. The U.S. markets will be totally closed tomorrow, but will be open on Friday - but have only a small handful of participants. Meaning that today, Wednesday, will see investors taking positions as seemingly dark storm clouds hover. And the question is this, who will want to hold positions for the next four days given the amount of economic turmoil and rumors that are circulating globally? Thus short term trading will be heavily in vogue today and ranges and psychological support levels will get tests from many corners. The USD has had a good run of value the past two weeks as the E.U. Sovereign Debt market has stumbled in Italy, Spain, and France. Investors tend to seek equilibrium and are likely wondering if and when the E.U. will offer some words of confidence. Unfortunately what investors are witnessing now from the E.U. is finger pointing among officials who seem to be playing a ‘blame game’ instead.
Gold is around 1706.00 USD as of this morning, off of its lows from yesterday. This has taken place as questions are rippling not only across Europe but the U.S. and China as of this morning regarding economic outlooks. The precious metal has been taken lower on the strength of the USD, but long term cynics may be laying the groundwork for Gold purchases. Crude Oil and other physical resources have found headwinds this week and may continue to face poor sentiment today.
The JPY has traded in a tight range as investors likely are putting on buy positions with their eyes towards the BoJ which remains outwardly opposed to a strong JPY. The consolidated range of the JPY takes patience to trade, but does offer some range movement for the brave to take advantage of.
Today will be the last full volume day of trading this week as the Americans largely disappear thereafter. In what has become an increasingly nervous market, volatility is likely to make its way into the broad markets.
