October opened with a rather cautious day of trading. The hype machine that has come down the turnpike from central banks, rather suspicious stress tests, and undying words of loyalty from various governments face an everlasting test. Because as the old song goes, “The Sun Will Come Out Tomorrow” and there is little doubt that the markets will always have their skeptical participants.
The EUR/USD is in a rather consolidated range. The AUD has lost some value this morning as the RBA cut its interest rate by a quarter of point to 3.25% fulfilling expectations and the wishes of the Australian business community which has seen the economy Down Under show some signs of stress. Gold remains staunchly in tact around 1780.00 as of this morning as it has frustrated doubters (including Digital Markets Advisor) who believe it may be overvalued, but as the Single Currency has refused so far to go below its short-term support levels so has the precious metal.
U.K. Manufacturing PMI data on Monday proved negative and this morning’s Nationwide HPI has followed with a disappointing outcome of minus -0.4% compared to the expected gain of 0.1%. The result highlights that the U.K. remains well within the clutches of recession. From the States yesterday the ISM Manufacturing PMI beat its forecast with an outcome of 51.5 – which should give optimists in the U.S. another dose of invigoration to keep them going. However, the jobless parade figures will begin to venture forth tomorrow with the ADP reports to be followed on Thursday by weekly Unemployment Claims and be capped off with the Non-Farm Employment Change numbers on Friday.
So as the hype machine tries its best to convince all that the financial crisis is under control in Europe, American growth is sustainable, and that they know the answer to what ails the global economy, investors and the broad market will find their own way to quantify the problems. And it is our conjecture that many obstacles are ahead and numbers that may prove sour.