USD
With no major economic reports from the States the USD was left to trade in rough waters caused by investor uncertainty. The USD gained strongly against the EUR and GBP as it resumed the high parts of its range against the two currencies. This occurred as traders were forced to deal with the political maneuverings of President Obama who was in the midst of trying to push his healthcare initiative through Congress (which he succeeded on doing Sunday). Also playing no small part in the greenbacks momentum was the continued EUR centric sentiment. Today will be another day of little data. Wall Street finished the week with some slight losses and this highlights the sense of caution that pervades the marketplace.
Tomorrow Existing Home Sales will be released and Wednesday will see the New Home Sales numbers and Core Durable Goods statistics. The key issue for investors today may be the fallout on Wall Street regarding the reaction to Congress passing the healthcare initiatives this weekend. Huge questions about the costs of the program and the implications over the long term are yet to be answered. The challenge for investors will be to separate truths from falsehoods, but procuring this evidence may be hard. What traders will likely be forced to deal with in early trading this week is a storm of debates regarding the economic implications of the bill that some say will cost a trillion dollars over the next ten years. With a lack of economic data today, traders will find their sentiment and fortitude tested.
EUR
Just when EUR bull investors thought it might be safe to go back into the waters, the single currency proved that its storm has not gone away. The EUR lost steady ground to the USD on Friday and finds itself at the lower realms of its range against the greenback. The situation regarding the Greek crisis remains unresolved. The E.U. is set to have a summit at the end of this week, which will certainly focus in on the whirlwinds surrounding the EUR. At best it appears that Europe is divided on how the Sovereign debt questions should be solved. Chancellor Angela Merkel continues to offer rather strong words which oppose – at least publically – any type of helping hand from Germany. ECB President Trichet is set to testify today before the European Parliament and this could provide some impetus, other than that the day will be void of major data. Tomorrow will be quiet with economic releases also. On Wednesday a large amount of PMI data will be brought forth, which could give some fundamental insight into the conditions facing the European nations. The EUR now finds itself being pressured and the question traders will have to ask is where ‘fair value’ stands.
GBP
In the midst of winds coming from the European continent and continued questions regarding the debt levels of the U.K, the Sterling found itself trading downward against the USD. There was little economic data on Friday and the calendar is empty today. Tomorrow Mortgage Approval data from the BBA will be published. The whispers about what ramifications could play out depending on the outcome of the national election which will have to be held relatively soon, could be having an effect on the GBP. Like its major counterparts the U.K. is facing an unsure recovery and investors have real concerns. On Wednesday the Annual Budget Release is on schedule and this has the capability of setting off a firestorm of rancor in Parliament. The GBP is at the lower depth of its range against the
and is certain to find an attentive audience.
JPY
The lack of movement within the JPY and USD has been extraordinary taking into account the trading surrounding many of the other major currency pairs. The JPY and USD have proven that its range is locked into a risk adverse sentiment which has proven to be nearly impossible to move the past two weeks. Gold traded lower on Friday as the greenback did perform well against the other major currencies, but the question is if Gold is merely participating in a rather interesting range of its own as it trades around 1106.00 USD per ounce.
Politics Could Provide Volatility
22nd March 2010, 12:47
Politics Could Provide Volatility
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