The markets will return to full force today as American investors return from their long holiday weekend. Cautious range trading has been the standard throughout the past few sessions, but risk taking appears still the flavor of the day. Gold as of this morning is around 1693.00 and Crude Oil – WTI – is bouncing along near its highs. The EUR has kept near its upper range too.

Germany will see the ZEW Economic Sentiment reading today and the States will issue Existing Home Sales. While the confidence game remains heavily in vogue among politicians and officials, last week’s economic news particularly from the Fed’s Manufacturing Indexes did not paint a pretty picture.  Also, before the week came to a close on Friday Consumer Sentiment via the University of Michigan showed a surprising miss on expectations.

Yesterday’s American Presidential inauguration and celebration of Martin Luther King Jr. Day kept most investors on the sidelines. While Wall Street has managed to hold onto its current high levels a palpable taste of doubt still hovers over much of the equity markets as the lofty values are questioned. The Fed and other central banks have no doubt made equity markets the place to be for investors looking for opportunities short-term, but economically plenty of data suggest challenges ahead. Quarterly earnings also suggest a divergent reality to come.

Germany and Europe will get attention this week because of the ZEW reading today and the Manufacturing PMI numbers on schedule for Thursday. Germany should be watched closely and will be a lynchpin moving forward for the European Union and its financial crisis. A Germany that is doing well economically may not argue as much about certain mandates regarding its ‘responsibility’ as a Germany that is struggling and bordering on recession. Greece, Spain, and Italy will no doubt continue to have problems and there is nothing better than a rich neighbor who is willing to help, providing there is a rich neighbor that is in the mood to do so.

Asian investors will be keeping a lot of attention on the JPY and the Bank of Japan. The Japanese government is undertaking an ambitious growth mandate, but its actions will have to start speaking louder than their words to prove the muscle exist to push forth its program of trying to weaken the JPY.

With full volume in the forex, equities, and commodities markets today after a light day of trading on Monday, traders should expect early volatility and a quick market – particularly as the Americans return to their offices starting in a few hours.