The EUR has continued its climb up and above short-term trend lines and now is threatening to challenge highs not seen since late winter/ early spring 2012. Gold however is finding less demand and as of this writing is near 1674.00 USD, which is testing what some perceived as support levels. As traders approach the long holiday the equity markets have shown the desire for a Christmas rally.
Talk of an agreement on the U.S. budget has helped ease the fear of a potential ‘fiscal cliff’ calamity. Republicans and Democrats are showing signs of a compromise and this has helped ease investor sentiment. If a signed mandate should occur within the next week it could spur on more optimism. The question certainly arises about if skeptics have been proven wrong? However it must always be remembered that there is short-term and long-term. As a function of the marketplace and global economy too, confidence is needed to make transactions that have the trust of the participants in which good faith is shared. For the time being it appears that the measures taken by the E.U. and the ECB on the continent, and the actions of the Federal Reserve and U.S government have been enough to generate better faith.
But economic data continues to be an ever-present reminder that consumers and corporations are still being tested. On Monday via the U.S. the Empire State Manufacturing Index came in with a very negative result of minus -8.1. Yesterday Current Account statistics from the States missed its estimate. And while today the German Ifo Business Climate reading was slightly better than forecast, Europe’s broad Current Account numbers were worse than anticipated and from the U.K. the CBI Realized Sales marks missed their projections and showed Retail Sales continue to be sluggish.The U.S. will release Building Permits and Housing Starts data shortly.
Yes, the Shanghai bourse is riding new highs, commodities such as Crude Oil have even gained the past few days, and within forex there is no denying that the EUR, GBP, and AUD are all doing well against the Greenback. Tick, tick, tock is the sound from the clock and traders who have been able to take advantage of trends have reason to smile, but for how much longer? Rumors are swirling that some of the bigger equity investors have slowly but surely been dumping bank and consumer stocks. And while Crude Oil via the likes of WTI has done better the past few days, physical resources continue to show signs of consolidation, questionable demand, and the belief that the global recession is not about to be negated quite yet. Holiday cheer for some yes, but a gauntlet could be waiting on the other side of the calendar.