So just how high and over valued can the EUR become? It is testing short-term resistance on a daily basis and continues to do so today, even as Manufacturing PMI readings from the continent sour, as Retail Sales under perform, and sentiment remains lackluster at best. Yet we have politicians and their officials pointing towards new plans, buy backs, mandates, and a full menu of other ‘treats’ to investors and the public in which to become intoxicated. Not to mention the shenanigans coming from across the Atlantic as politicians in the States deliver on an increasingly tension packed game of ‘truth or consequence’.
Gold interestingly is hovering near short-term lows and as of this writing is around 1704.00 USD. Crude Oil however has maintained a slightly better outlook as it consolidates near 88.00 per barrel for WTI.
The Construction PMI has been published from the U.K. this morning and proved disappointing with a mark of 49.3 – unfortunately for British politicians hurricane Sandy cannot be blamed for the results. The result points toward what the BoE has been steadily warning about, regarding a quantified return to recessionary figures for economic data. Having pointed that out, the GBP remains rather strong against the Greenback, much like the Single Currency does.
The remainder of the day will be rather light for official data from governments, excluding the Bank of Canada which announces its interest rate decision soon. Canada has also been showing distinct signs of reverting into a recession.
This remains a traders market, one in which trends rule the day. There will be a slew of Services PMI data from Europe tomorrow, along with a Spanish 10-Y Bond Auction, and the beginning of the jobless data parade from the States with the ADP numbers. On Thursday the BoE and ECB will take central stage only to give up the limelight on Friday with the Non-Farm Employment Change outcome from the United States. What traders need to understand and stay mindful of is that the broad markets are seeing some rather tell-tale signs of stress and divergence. Gold has been trading lower while the USD has been getting hammered the past few sessions. Bourses including Wall Street have seen choppy sessions. While some markets in Asia have risen on the hopes of better days ahead for the Chinese economy, not everyone agrees on outlook even for the export giant.
And while it remains doubtful that U.S. politicians will allow talks surrounding the budget to collapse completely, it does not look like they are going to find anything but a ‘limited agreement’ at best. In other words the U.S. like its counterparts in Europe are essentially going to tell everyone that all is well, but grumble about the real mess behind closed doors hoping most investors can stay fooled.