The EUR continues to sit amidst a crowd of traders in essentially the same space it has had the past few trading sessions. Its range is a reflection of the upcoming ECB monetary policy meeting that will happen today with its monthly press conference led by Mario Draghi. While some analysts are expecting that the ECB may cut its interest rate today, there does not seem to be enough willingness quite yet to muster a move. European data continues to be weak, German economic figures have been lackluster at best, but the ECB has proven rather stubborn regarding an additional interest rate cut. German Industrial Production results missed their mark with an outcome of only 0.2% yesterday, the expectation was a gain of 1.1%. The day before Factory Orders also fell short turning in a decline of minus -1.8%. On top of that Final GDP statistics for the continent remained recessionary with a minus -0.1% outcome.
While the bad numbers continue throughout much of Europe, the illusion that their financial crisis is under control remains steadfast. Therefore Digital Markets Advisor believes there will be no interest rate cut today from the ECB. Traders have shown the desire thus far to remain within the ‘control’ of Central Bank ‘confidence games’ and continue to look for short-term gains among the equities.
Gold has seen volatility the past couple of days but it has been unable to leave its range. As of this morning the precious metal is near 1657.00 USD. Crude Oil turned in slight gains yesterday and is showing signs of speculative action, though it must be admitted that recent data from the Baltic Dry Index – regarding international shipping contracts – has shown an overall increase in physical resource volume with more demand for Iron Ore apparent.
Without little in the way of government data from the States yesterday equity markets did turn in some gains on the major indexes, but the gains were not enough to extinguish some of the losses from the day before. Quarterly earnings reports will march forward again today. The three major indexes are all hovering near one month highs and risk appetite does appear to be finding some short-term favor on trading floors. Weekly Unemployment Claims data will be released today. Tomorrow the U.S. will release Trade Balance numbers and among quarterly earnings Friday will be Wells Fargo.
Besides the ECB taking the podium today, the BoE will also release its monetary policy status but no change is expected from the U.K. either. Certainly the Bank of England has been an aggressor regarding austerity the past few years, but the U.K. economy also continues to be rather uninspiring. Although it must be pointed out that perhaps this is exactly what should have been expected when taken into consideration that the foremost task of the BoE and the U.K. government was its desire to stop an economic free fall. Stability may in fact prove more appetizing compared to the ongoing concerns that hamper some of its E.U. neighbors across the English Channel.
Expect rather tentative forex trading among the EUR and the GBP versus the USD today. However traders may be tempted to go long the Single Currency and Sterling against the Greenback for a short-term endeavor. The AUD has continued to show some demand and is near a three-week high. Also the JPY has not shown much inclination to gain and may continue to test weakness. The psychology of the broad market remains transfixed on short-term gains, while the whispers delicately mumble fears about long-term pain.