Almost August and the EUR continues to struggle. The EUR/USD pair has seen a steady downward trend as many of the E.U. politicians and ministers ‘tricks’ have started to land on ears which have been intentionally muted. The burden of the EUR crisis continues to play out in international markets and business. McDonald’s quarterly earnings that were published yesterday showed that its profit suffered due to existing FX difficulties. The USD certainly has questions of its own but at this time they are less significant than the problems that shadow the E.U. and its Single Currency. Spain is now well within the cross hairs of FX traders who are observers of fundamental yields data. Sovereign Bonds are a key focal point and good barometer of current market conditions and sentiment. Equities remain fragile.
Commodities among the grains have seen positive momentum but this is weather driven and not based on demand. So seasonal bearings must be monitored. As we approach what is typically a quiet trading month, investors and traders will be far from comfortable unless they go on their summer holidays with no positions. For those that stay around to observe the markets it is expected that the conditions will continue to be stormy.
Favorably viewed mid-term are the USD and GBP this as safe havens are sought. The CHF is a long time favorite and remains so but questions exist about the Swiss governments pledge to try to keep the CHF linked to the value of the EUR in order that the CHF does not become too strong for its own good.
Gold finds itself in muddled waters. It seemingly has found a rather consolidated ground as its speculators and those who seek preservation against the winds circulating in the FX markets prove difficult to navigate. Gold has had an incredible long-term run upwards, but with the USD remaining strong Gold’s next move upwards may have to wait.