The Storm In View

06-10-2011

 

Wall Street continued to mount gains on Wednesday, but it will be put to the test along with the other components of the broad markets these next two days. The ECB holds their monetary policy meeting today and investors will be keen to see if President Trichet indicates that poor growth in the E.U. is going to make the European Central Bank lower their interest rate. Steve Jobs, the Co-founder of Apple, passed away late yesterday and this will have an effect on Apple which is a large portion of the NASDAQ composite index. On top of that, Germany Factory Orders will be presented today and the Americans will publish weekly Unemployment Claims. Then hanging over the heads of investors are the Non Farm Employment Change numbers from the States tomorrow. All of this could add up to an intense two days of trading.

The EUR languished in a fairly stable range on Wednesday a day after finding some footing. The Single Currency is still at the lower depths of its value against the Greenback and before today’s ECB press conference with President Trichet trading may remain somewhat cautious. Trichet is certain to face tough questions today in what will be his last time at the helm of the ECB press conference. Issues on E.U. banking liquidity, Sovereign Debt – particularly Greece’s problems, austerity, and a lack of growth will all find voice. German Factory numbers today will be brushed to the side, but there is no denying that economic data from Europe’s main engine has become lackluster.

The Sterling also is trading in a rather choppy manner as it became relatively cautious ahead of today’s BoE meeting in which some investors believe quantitative easing may be increased. The Final GDP numbers came from the U.K. yesterday and they came slightly under what was already a lackluster expectation with a result of 0.1%. The outcome underscores that growth is not only becoming hard to achieve, but that a technical recession may be just around the corner. Inflation data will come from the U.K. tomorrow, but today the Sterling is certain to trade with the combination of the shadows from its EUR centric mode and own poor economic data.

The price of Gold as of this morning is around 1648.00 USD. The precious metal gained yesterday and it will be of interest to see if Gold slips back to the lower part of its recent range or if some momentum can emerge. Commodity prices did find some stability with the likes of Crude Oil gaining and other physical resources gaining. However, the prices of commodities have shown no signs of suddenly breaking out to the upside and are likely following merely what the equity markets have done the past two days.

The JPY has hardly moved the past two days of trading and remains a fixture for Asian investors who remain drawn to the Japanese currency. The AUD has managed to climb from the lower depths of recent value, but its trading has also been relatively cautious ahead of the Central Bank statements due from Europe today. The AUD appears to be mirroring the global economic outlook which looks challenging.

The broad markets may be quite calm for the first few hours of trading today, but that will change as the ECB, Wall Street, and the Jobless numbers begin to brew a swift storm over the next two days.