Two Big Days Coming

The Bank of Japan and the Swiss National Bank both intervened in their domestic currencies last night and early this morning, highlighting that governments are becoming nervous about broad market conditions. In an effort to stem the strength in their respective currencies, both the Japanese and Swiss sought to lessen the values of the JPY and CHF in order to block their rising values. Data releases from the U.S. yesterday continued to feed into the frenzy of diminishing economic outlooks. The ISM Non Manufacturing PMI and the Factory Orders numbers both came in below expectations. While the ADP report beat its estimate, it did not do so with any gusto and this leaves today’s weekly Unemployment Claims and tomorrow’s Non Farm Employment Change data waiting front and center for inspection.

There will be plenty of information to digest these next two days. The ECB and BoE both hold their monetary policy meetings today. While neither is going to change their interest rates, both face difficult circumstances. The BoE is likely to remain very dovish and the ECB will continue to face tough questions about European Sovereign Debt. ECB President Trichet is finishing up his domain as leader of the ECB, but this doesn’t mean he will go out in an easy manner. During his last press conference regarding monetary policy, Trichet grew weary about questions about Greece, and today he is likely to face tough questions about Italy and Spain and their bond obligations. Coupled with the jobless data that is coming from the States and signs that the American economy is not exactly in a good place, investors have a large task ahead of themselves in order to pick their financial avenues.

Wall Street gained on Wednesday, but after two serious days of heavy losses, yesterday’s gains will not exactly start any celebrations. The USD did lose ground to the EUR and GBP, but trading appeared to be well within known ranges. The puzzle of range trading and being able to take advantage of it remains tricky. The EUR/USD pair essentially remains locked within a well worn path even as Europe is being confronted head on by its bond crisis which threatens to erupt into contagion among its nations. The counterweight for the EUR has been the policies taken by the Federal Reserve in the States. Two rounds of quantitative easing have come and gone in the U.S. and some analysts are speculating about the specter of a third attempt, if the American economy begins to truly sink into a ‘known’ recession again. Thus the jobless numbers that will come tomorrow will get plenty of attention. In what has become a far reaching Confidence Game by governments internationally, the fact that data has been widely lackluster has not helped, and concern among investors continues to grow.

Gold has stayed near record highs. The price this morning has found some consolidation around 1662.00 USD.  However, the AUD has continued to take it on the chin in the meantime and finds itself in the midst of its lower values in what had been a strong trend upwards.  The JPY has become a treacherous trading environment this morning with the BoJ intervention and must be dealt with in an attentive manner. Long term the Japanese will face an uphill battle to keep the JPY weak if the global economy continues to roil, but short term the BoJ could affect the day’s events.

Commodity prices have been put to the test. Crude Oil finds itself at the lower parts of its range. As questions about demand continue to be asked with growth appearing tough to achieve for the major economies, physical resources will continue to face headwinds if speculation diminishes. The Forex and broad markets are likely to see volatile trading continue today and tomorrow. Traders must monitor data, government officials, and the swirl of news that is being generated.