The EUR has creeped lower as of yesterday against the USD but it still is well within a known range. The ECB will hold their monetary policy meeting and press conference today and it will get the attention of many. Having said that, Mario Draghi has made it clear that he would like to see more pragmatic powers be given to the ECB in order to handle the financial crisis across Europe. However in order to get that done the nations comprising the E.U. would have to change their constitutional mandates and that is not going to happen overnight – actually it is likely not to happen at all. Also on the calendar today is the Spanish 10-year Bond Auction and the yields that are produced from this sale will be watched closely, which brings up the question about the possibility of having a ‘force’ enter this sale in order to help stabilize it…….the ECB……..yes, that is conjecture but intervention has happened before.
Yesterday’s Fed Statement showed that even its central bankers have had to finally admit that the U.S. economy is also slowing and the ISM Manufacturing PMI came in with a recessionary outcome of 49.8. Today the weekly Unemployment Claims will be released in the States and this will turn all attention to tomorrow’s Non-Farm Employment Change numbers. The data and news from the U.S. on Wednesday basically cemented the notion that the U.S. is faltering towards another official recession.
The EUR/USD has dangerous notions hovering over both currencies. Economic philosophies are meeting reality and the outcome has not been pretty for officials on either side of the Atlantic. In essence the pair like all fiat currencies at this juncture is a parade of ugly contestants. The AUD lost value also to the USD yesterday and that is likely to continue under tough economic conditions. Gold also lost value again and is trading near 1603.00 USD as of this morning. The precious metal remains strongly tied to its inverse relationship to the Greenback. Equities in the U.S. and Germany both faltered slightly while the FTSE gained in London. It is likely that global bourses will increase in volatility later today and Friday.
The JPY stood firm yesterday and continues to consolidate around its current value. Short term traders with a taste for speculation still have opportunities to take advantage of the JPY range.
All eyes will be on the ECB today as it tries desperately to put its best foot forward.