Early trading in Europe is negative upon the heels of a vote in Catalonia, Spain which gives the political parties seeking more independence the upper hand in terms of power for the important Spanish region. The weekend also failed to produce any significant movement forward regarding an E.U. budget compromise, nor a structured agreement for Greece in order to receive its additional aid. The European financial saga simply continues to grow more complex.
Eurogroup meetings between the nations finance ministers will take place in Brussels today, but a miracle should not be expected. The GfK German Consumer Climate will be released today too. The Single Currency is trading a bit lower in the last couple of hours, but it is still near short-term highs and traders may be tempted to speculate that the EUR could trade lower. Also look for some additional weakness in the Spanish bond market as a possibility, as investors try to contemplate an additional worry on their plates via the outcome of the Catalonia vote on Sunday which is still being deciphered.
The GBP is also maintaining its short-terms highs against the USD, but traders should stay aware and know that the U.K. will release its Revised GDP numbers tomorrow and this could be an important factor for the Sterling. The BoE has been fairly clear as it has warned the public that it expects the U.K. economy to struggle further and possibly slip into a recessionary mode again in the near future, thus this GDP number will be watched by many.
Added into the mix is the volume of trading that will surge into the market for the first time since early last week, this as American investors return from their long Thanksgiving holiday. Wall Street and other international bourses were able to turn in positive trading with a lack of full market participation, and it will be more than interesting to see how risk is gauged as desks get busy. There will be little hard data for traders to contemplate from the States today, except for rumors about retail shopping outcomes from the first weekend for holiday crowds. But tomorrow Core Durable Goods and the CB Consumer Confidence figures will be published, housing data will also start to make its way into the looking-glass with the S&P/CS Composite-20 HPI. On Wednesday the U.S. will see New Home Sales.
Additionally investors will need to be on guard for a ramp up in ‘fiscal cliff’ rhetoric from the States as Republicans and Democrats start to jockey for political positions via various media outlets.
Gold as of this writing is slightly off of its highs, trading around 1748.00. The precious metal has gained in tandem with the EUR against the USD. The question is what will happen to Gold short-term if risk starts to come off of the tables and full volumes start to have an impact on the broad markets. Crude Oil is near a very short-term high, but it must be said that WTI remains nears the lower boundaries of its value and looks unlikely to gain strongly. Most commodity prices including grains have consolidated without full trading volume and today may be a day that smaller traders will want to practice risk management carefully. If equities find volatility in today’s sessions the forex market will not be far behind.