Trading Avenues Explored
18-08-2011
Investors sat on the fence in many respects on Wednesday as equities turned in relatively flat performances globally showing little direction. Market participants are still displaying signs of safe heaven investing as Gold continued to climb to its upper reaches. Crude Oil faced some pressure yesterday as it consolidated once more. The EUR/USD slumped ever so slightly as apprehension about both currencies has traders rather perplexed. The GBP and AUD did gain, but it was most likely mere range trading that took these two currencies higher against the USD. Not much in the way of economic data was released yesterday, but that will change today as the U.S. and U.K. both present rather important information. Retail Sales will come from the U.K. this morning and the U.S. will have a slew of results as the weekly Unemployment Claims, Existing Home Sales, and the Philly Fed Manufacturing Index are all brought forward. As market sentiment continues to sputter these numbers could prove rather interesting for investors who are keen to monitor economic conditions.
However, it is political news that continues to stir the broad markets. Europe is still awash within a fresh wave from the recent German & French summit that has left investors with unanswered questions regarding how the debt crisis and growing counterparty risk concerns will be resolved. From the States a ‘leaked’ announcement came to light yesterday that President Obama is going to unveil ‘new’ economic proposals in September. The problem regarding both Europe and the United States is that investors largely see through the smoke and mirrors that politicians are putting forward and what they are left with are serious concerns regarding credibility as both spheres lurch towards possible stagnation.
Safe haven plays as Gold continue to mount and the JPY and CHF continue to be bastions for beleaguered investors who seek preservation. This doesn’t necessarily make any of these particular ‘plays’ safe however. Gold is clearly suffering from rampant speculation, but there is no doubt that it has gained as fear has grown in the markets. And both the JPY and CHF continue to uneasily trade at highs even though their respective governments essentially say that both are overvalued. However, until proven otherwise investors appear ready to continue to try their luck with these avenues.
The Forex markets have been somewhat stable in light of the massive concerns that pervade the broad financial spectrum. The rollercoaster ride that the equity markets have provided does not appear over and yesterday’s somewhat stable performance (compared to the past week) may have provided welcomed relief. There is no doubt that many concerns exist and investors are gearing themselves less to reports about revenue produced by corporations than they are growth expectations which appear to be undergoing downward revisions.
The range trading seen through the currencies on Wednesday offered opportunities for traders with the stomach to enter the fray and it is possible that these conditions will exist today and tomorrow. Today will be a crucial day for economic data, but tomorrow will be relatively quiet with only the Public Sector Net Borrowing from the U.K. on the schedule. Caution prevails and traders need to remain alert for any cloud bursts.
