Greece Is The Word, Again
November 04, 2011 | 07:51 AM
Posted by Robert Petrucci
The Greek saga has grown into a full blown drama with twists and turns. The Greek government let it be known yesterday via their Finance Minister that a referendum would not be held. Unfortunately that will not stop the No Confidence vote that is still scheduled for today. If the current Greek leadership fails to win this vote it will trigger a national election within a few months time that could effectively put a government in place that does not agree with the current measures as outlined. Also rumors are mounting that even if the No Confidence vote fails that top leadership within the government could still resign. Thus we have been given a bit more clarity but with the promise of further developing stories later this evening.
The above prelude fails to mention that the ECB actually cut its main interest rate yesterday in a surprise move. Mario Draghi, the ECB President, also said that Europe is likely to enter a recession and difficult challenges for the E.U. will persist. And what did the EUR do yesterday with the Greek saga and ECB combining for a blistering day of shock news – it gained. The EUR is now within a middling range and it will have to deal with rumors from Greece today, the G20 meetings, and continuing discussions about the overall health of E.U. financial landscape. The EUR/USD pair will get plenty of attention today from global investors who will have to be prepared for sudden bursts of volatility.
And from across the Atlantic the States will present the Non Farm Employment Change numbers and it carries an anticipated result of 97k. Typically the jobless numbers are a key indicator and investors focus on the data’s outcome intently. However, it is hard to say what kind of impetus the jobless numbers will have under this haze of European centric news that is permeating the air. Yesterday’s weekly Unemployment Claims results from the U.S. came in slightly better than expected with a figure of 397k, but the ISM Non Manufacturing PMI actually underperformed and came in below its estimate with a reading of 52.9 compared to the forecast 53.7. And what did the U.S. equity markets do upon all of the news from Europe and mixed economic data, Wall Street turned in gains. Today’s jobless numbers will be critical but the outcome might have a tempered affect taking into consideration what is happening on the other side of the ocean.
The JPY remains locked in tight consolidated holding pattern. Gold climbed yesterday and as of this morning is around 1760.00 USD an ounce. The precious metal must be watched closely considering the amount of nervous sentiment that investors are dealing with. The broad markets are within a gauntlet of risk events that are hard to measure considering the dynamic of politics and economics that are unfolding in a swift manner. Traders need to make sure they look at the market with a short term focus taking into account risk management and the potential for sudden bursts of news that can alter the landscape. The markets may try to lean to a more optimistic sphere today while trying to ride the hopes that Greece will somehow come out of their most recent entanglement on a better footing.