In the stroke of a Friday the EUR managed to climb and Wall Street and international bourses gain. Appetite for risk came into vogue and as of this morning Gold stands near 1610.00 USD an ounce and WTI Crude Oil is above 91.00 USD a barrel. The Non Farm Employment Change numbers came in more positive than expected but the total number of jobs added in the report 163K were not exactly numbers that point towards a strong economic rebound. The Unemployment Rate did climb to 8.3%.
Today will be a light day of data as only the Halifax HPI from the U.K. stands out. The Home Price Index has an estimate of minus -0.5% this morning. Fed Chairman Ben Bernanke is schedule to speak today but the talk will likely be rather esoteric and not have much influence on the market. His counterpart Mario Draghi of the ECB pulled a magic trick of some magnitude last week as the EUR climbed back from its lower depths, but did the gain of the Single Currency really have anything to do with him? Many are still questioning a lack of substance from the E.U. and the ECB collectively.
In essence the strength the EUR had against the USD going into the weekend may be more a symptom of investors trying to take advantage of psychologically ‘low values’ counting on a rebound back to ‘more acceptable’ norms. Short-term the EUR certainly made a case that it isn’t about to vanish overnight and has the ability to fight. Investors are now about to embark into the dog days of August where broad market volume drops and sudden bursts of volatility can erupt – meaning there are days ahead to take advantage of prevailing sentiments.
Friday’s broad market gains among equities and some commodities will be welcomed. Politicians will certainly point towards the results and use them as a resting point to try to claim everything will be OK, but at some point illusions will have to deal with reality and the numbers coming from via the financial crisis in Europe cannot be sugar-coated so easily. The results from the markets were definitely a slap against Euro skeptics but merely a slap nonetheless.
The GBP and AUD also gained against the USD on Friday. The JPY lost a bit of ground. All of this follows the fact that the broad equities internationally gained and Sovereign Bond yields stabilized. Tomorrow U.K. Manufacturing Production figures and German Factory Orders data will be released. Following in Friday’s footsteps we may see some continued risk taking in Forex, commodities, and equities today, the question is how long the party will continue.