Europe The Focus
November 07, 2011 | 07:49 AM
Posted by Robert Petrucci
After a week of wild and swift trading in the broad markets, investors will have to be ready for further outbreaks of volatility. The EUR/USD pair has delivered wide ranges and is in a tight pattern as of this morning coming off Friday when a cautious air dominated. There will be relatively quiet data this week, but the U.K. has numbers that will be watched today. The Halifax HPI results will be released, but these results are not going to ring many bells unless a completely unexpectedly good outcome were to arise – and that in unlikely. The GBP and AUD have traded lock step with the EUR centric mode for a considerable amount of time based on cautious investor sentiment which remains vulnerable. And the crux of the story is that Europe remains an ugly focal point and the U.S. economic outlook still has question marks.
The situation in Europe remains murky regarding it financial crisis. Greece seems to have escaped a political firefight and now must choose a new leader for a proposed unity government which will supposedly take charge of the debt and austerity problems the nation faces. Italy has become lynchpin of doubt too and its bond yields have been punished the past week due to a growing political quagmire regarding its leadership and its dealings with the E.U. and IMF. From the States worse than expected Non Farm Employment Change numbers were seen on Friday. Although the Official Unemployment Rate ‘improved’ to 9.0% the better number is highly suspicious and certainly not enough to even bring about ‘false’ gloating from American politicians. The U.S. will have no major data today or tomorrow and it is likely that investors based in the States will remain focused on the European saga like their counterparts.
The German Industrial Production numbers will be brought forth today and carries an estimate of minus -0.7%. Economic data from Europe’s main engine have been underperforming as of late. And although the German number is not a vital statistic it may raise more eyebrows if the outcome is lackluster. The confidence game being played will be the main driver of investor sentiment this week and politicians will be watched globally. While European officials have done their best to deal with the ‘round of poker’ that the Greek leadership confronted them with last week there is no doubt that several games will still need to be played and the result is not entirely known. Clarity remains in short supply for investors and this has led to heightened tension.
The price of Gold as of this morning is around 1770.00 USD an ounce which is a short term high. The precious metal has once again gained attention as the European saga has heightened. Crude Oil is near stubborn highs and remains an interesting physical commodity for traders who suspect that demand is not quite as strong as the price is indicating. Speculative forces are certainly around in the broad markets and commodities and Forex have certainly seen their share of fast trading because of this.
The JPY has been cemented recently into its current value and looks as if it is stuck in a battle between a BoJ that does not have a huge amount of ammunition to weaken the Japanese currency and investors who still see it as a safe haven.
The broad markets this week are likely to be led by a scenario in which politics mix with economic pronouncements and creates opportunities for traders who can take advantage of short term trends.