The Return Of The Americans

07-09-2010

A flat day of trading pervaded the broad markets globally on Monday with the Americans absent because of the Labor Day holiday. There was little in the way of economic data released too, and this helped make for a cautious day of movement. Today will remain fairly light with statistics as Germany releases its Factory Order figures, but both the U.K. and U.S. essentially will be muted with data. Yesterday the U.K. did release its BRC Retail Sales Monitor and it produced a mark of 1.0%, which was an improvement over the previous month. However, the number was basically unspoken about.

Making news early today was the announcement by the Bank of Japan that it would not change its monetary policy, in essence supporting the notion that the Japanese government has little ammunition to counter the strong JPY until there is a reversal in risk adverse trading among some investors.
The AUD got an interesting dose of new also earlier today as the Labor government was given backing by independent parliament members, which will leave the government in power. The initial response to the announcement that Labor remains the majority (albeit by the slimmest of margins) had little effect on the AUD and thus far its range remains rather stagnate.

Investors worldwide may wait for the U.S. session to get underway before they choose to take overt positions. Even though Wall Street showed a taste for risk appetite on Friday, it remains to be seen if investors will show up after the holiday with the same hunger. President Obama kicked off the true election season in the U.S. yesterday by announcing that he would try to push through a fifty billion dollar package for businesses and infrastructure. Unfortunately for President Obama is that many skeptics may interpret his proposal as the act of a desperate politician who is doing badly in the polls and is worried that his ‘party’ may find itself under immense pressure after the November elections.

Tomorrow will be a bit busier for data as Germany will release its Industrial Production numbers and the U.K. will publish its Manufacturing Production results. The U.S. will again be relatively quiet with only the Beige Book coming forth from the Federal Reserve. Thus, today will likely remain the domain of existing risk sentiment that is generated more from a general mood among investors instead of pure fundamentals.

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