Vicious Cycle Of News

As if on cue in a horror movie, Greece announced on late Sunday that it will have a difficult time keeping up with their austerity measures, will not meet their growth expectations, and will likely need further rounds of aid. This did not go over well as early morning trading began in Asia today, and will certainly build upon the already negative sentiment that exist within investors. On Friday the global equity markets were taken mostly lower. Wall Street finished the third quarter with steep losses. The USD gained versus the EUR again on Friday and as trading begins today looks set to continue to test its safe haven strength further against the Single Currency.

It would be hard to overstate the amount of distaste investors have for the continuing saga from Greece and the E.U. regarding the financial crisis that has shown no let up. Last week when the German government approved the latest measures from the E.U. some investors were soothed, but it was pointed out that it would probably be a case of too little too late. The focus certainly will continue to be on how Germany reacts to this crisis. The German government has outwardly supported Greece, but at what point does it all become too much? The EUR stands in the wake. Today Manufacturing PMI data will be presented by Europe, the U.K., and the States. However it is the debt saga and fear of banking contagion that plagues investor sentiment and is causing declines in the EUR and global bourses as a flight to quality continues.

It is a potentially huge news week. The Greeks unfortunately seem prepared to spook the broad markets, the ECB will make their monetary policy statement on Thursday and it will be the last appearance by President Trichet as head of the Central Bank, and Jobless numbers come from the States on Friday. In other words traders have got to be ready and stay attentive to all trends. Short term trading will not only be in vogue, but it will be essential. This is the first day of trading for October, a month which has traditionally produced challenging forays in equities. As investors try to quantify just what the challenges are for the Sovereign Debt crisis, what alarms them is the fact that additional facts keep being thrown into the firestorm.

The GBP and AUD have found themselves caught in downward momentum also. The Sterling is being shadowed by the saga of a rather poor EUR, and its own lackluster economic data that encompasses the U.K. and does not appear to be improving. The AUD has been caught up in the concerns that continue to mount for the global economy. The U.S. and Europe have certainly been the focus for growth that looks difficult to attain, but China is beginning to show signs of struggling too, and this has not helped sentiment. The JPY did lose ground to the USD in early trading this morning, but it remains to be seen if the Japanese currency will break out of what has been a vast and solid consolidation.

Commodity prices have continued to take a hit. Crude Oil has seen headwinds. Gold which is not only a commodity, but seen as a safe haven faces an interesting test. The precious metal has found itself in a tight range and is near 1632.00 as of this morning, but volatility must be watched out for. The strength of the USD may be putting some pressure on Gold, but a slew of opinions surround the precious metal and it remains a likely volatile trade.

The broad markets including Forex appear set for an absolutely swift week of trading. Plenty of news and data is certain to cause tremors. Investors have shown a keen interest in preservation. Opportunities abound for traders who are willing to test ranges and use proper risk management.