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Tentative Trading Abounds

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Jun 2, 2010.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The first day back from a long holiday proved cautious for the USD and broad markets. Tuesday produced gains for the Greenback versus the Single Currency, but it did lose some ground to the Sterling. Wall Street treaded water for much of the session, but at the end of the day found itself in negative territory. The ISM Manufacturing PMI was released and had a reading of 59.7, better than the estimate of 59.3. The Construction Spending numbers had a gain of 2.7%, which was significantly improved over the forecast of 0.1%. Today the Pending Home Sales numbers are on the calendar and this will give some additional insight into the housing sector which finds itself under a microscope. Tomorrow the weekly Unemployment Claims and ADP Non Farm Employment Change figures will be published. The climax for the week’s data from the State will come on Friday with the government’s Non Farm statistics. A cocktail including EUR centric nervousness and a debate regarding the true health of the American economy are the dynamics most investors are geared towards.

    Tuesday’s positive data will fuel the argument about the direction of the U.S. recovery, but Friday’s jobless number will have a significant impact on the sound of the quarrel. Wall Street continues to produce lackluster results and developing stories such as the criminal investigation launched by the Federal government against oil giant BP yesterday may have spooked investors. The Sovereign Debt problem which appears that it could turn into a prolonged financial crisis has certainly not helped international investors feel any better about their risk sentiment. The economic data from the U.S. has not been all wine and roses, and road bumps have been testing the fortitude of the markets. Friday’s jobless report will play into this combustible tonic and the next two trading days leading into the vital statistics could produce further tentative returns.

    eur in usd

    The EUR continued to face pressure on Tuesday in a cautious market. With full volume returning to the marketplace as traders from the U.S. and U.K. made their way into offices, the Single Currency has found that it still faces the wrath of many questions from international investors who have not been convinced by many of the pronouncements from European governments and officials. In essence, the blizzard of pronouncements from various nations and autocrats has proven to have brought upon even greater concern, because many of the proposed plans do not exactly follow a cohesive formula, and in fact show that there is disagreement among important players in the Sovereign Debt picture. German Retail Sales were released yesterday and they actually came in slightly better than expected, but the gain of 1.0% was not much to write home about. Today will be relatively quiet with statistics from the E.U. and the crux of attention will be on the debt situation and the implications that this poses for the prospects of growth on the continent. The EUR continues to face headwinds and is near the lower end of a weak range versus the USD.

    The Sterling gained strongly on the USD on Tuesday. Manufacturing PMI was released and produced a positive reading of 58.0, slightly above the estimate of 57.8. Today Net Lending to Individuals and Construction PMI data will be published along with Final Mortgage Approvals. All three reports are forecasted to show an improvement and investors will pay close attention. The recovery in the GBP yesterday showed once again that the Sterling is able on occasion to break free from the grasp of the EUR centric saga it has been shadowed by. The divergence in trading shows that there are enough investors and financial institutions that can and need to act on their own. Tomorrow the Services PMI number will brought forth. The wave of data that will be released in the U.K. today and tomorrow will throw new ‘evidence’ into the sphere and could have an impact on trading.

    The Japanese Prime Minister stepped down after only nine months in office last night because of political pressure. The JPY did lose some ground to the USD on the heels of the government shake up, but this is a situation that has occurred in Japan before and one that investors for the most part are accustomed to. Asian bourses did turn in slightly negative performances mirroring their counterparts. Risk sentiment will be the key ingredient for trading today for the JPY and USD pair. The political crisis in Japan while important may prove a mere nuisance for investors within a week.

    Tentative Trading Abounds

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