General strikes will greet the Portuguese and Spanish public today and protests will take place in Italy and Greece as well. This as unions and other organized groups demonstrate against economic conditions and austerity measures in their respective countries. While the disruptions will have their effect, the centerpiece of today’s ‘action’ is the fact that the strikes have been organized in unison and this could be a cause for alarm among investors. Meanwhile in France, President Hollande held a press conference yesterday in order to try to express his ideas for going forward as his political ratings fall to new lows. Hollande has only been in power six months but is finding that the economic problems in France have not given him any room for mistakes. Hollande tried to get the message out that he is more concerned about the prospects of France five years from now and that is what he is working towards, but his message his likely to fall on deaf ears which are growing increasingly worried about their immediate future. On top of all this the German ZEW Economic Sentiment reading yesterday produced a very negative result of minus -15.7 compared to the estimate of minus -9.9. The results highlight that institutional investors and analysts from Germany are expecting an increasingly difficult economic climate.
The EUR is trading near the lower boundaries of its short-term range, but its values are still above the lows of mid-July when Mario Draghi took it upon himself to instill stability by discussing the possibility of ECB purchases of Sovereign Debt. Industrial Production numbers will come from the continent today, but plenty of focus will be on the gyrations of the general strikes and their aftermath. The ‘confidence game’ via the European financial crisis is at a fragile stage, but today nor tomorrow appear to be some type of end game. On Thursday GDP reports will come from Germany and France and this should provide additional insight for investors.
The GBP has continued to lose value and like the EUR finds itself approaching short-term lows not seen since September. However, like the Single Currency the Sterling is well above its low water marks of May and July. Inflation data from the U.K. produced higher figures than estimated via the CPI and PPI yesterday. Today BoE Governor Mervyn King will hold a press conference to discuss the Inflation Report and this could provide GBP traders with fireworks as he discusses his outlook for the U.K. economy which is struggling still.
The JPY has moved to a new consolidated avenue above its usual stronger values. As questions continue to mount about the global economy and health of Japanese corporations, it could be expected to eventually produce a stronger JPY based on the notion of preservation among investors. The Yen should be watched carefully because when it does break consolidated grounds within forex markets it tends to do so with a rather quick move.
Wall Street continued to disappoint on Tuesday. For much of the day the major indexes tried to trade upwards but continued to meet headwinds. And in the last couple of hours of trading the Dow, the S&P, and NASDAQ all showed more fatigue and an inability to put in positive results. Thus, after a long weekend break (taking into consideration the low volumes because of Monday’s Veteran Day holiday) investors were not able to show any signs of optimism. In fact bond yields from the U.S. grew stronger on Monday pointing towards a mood for preservation instead of risk. Retail Sales figures will come from the States today and these numbers will be watched closely.
While Crude Oil via WTI continues to trade near its lows in a consolidated fashion, Gold somehow is maintaining a rather nice perch around 1727.00 USD. The precious metal should be watched closely because it has somehow kept its higher values even as the USD has grown stronger in recent trading. Meaning that one of them, Gold and the Greenback, is likely to see some type of corrective movement relatively soon. Commodity prices like the international equity bourses have become hard pressed to gain as doubts about the global economy grow via the outlook for 2013.