Today will be relatively light with economic data except for the broad Consumer Confidence reading from Europe and the Existing Home Sales figures from the States later. On early Tuesday China will see a PMI Manufacturing reading from HSBC which will certainly be watched. Following that up will be PMI data from Germany, France, and the United States. The Chinese data will be featured prominently because recent GDP and exporting numbers from China have been lackluster.
Over the weekend the Italian government proved again that it stands close to the precipice politically as its Parliament was not able to elect a new President and in the end simply choose the previous one. While the Italian President is largely a ceremonial position, it nevertheless carries the ability to call new elections. And although President Napolitano may be well respected, his second term is a result of paralysis within the political and economic circles of Italy that shows that its leaders would rather throw its hands up in the air and say ‘there is nothing we can do’ instead of actually taking responsibility. A major problem is that Italy will eventually be forced into a position to act and it is doubtful a coalition government will be able to be patched together in the coming weeks. Napoliatano will try to desperately avoid a June election, but at some point reality will have to be dealt with. On this coming Wednesday a 10-Y Bond Auction is tentatively scheduled for Italy and if it goes forth investors will get an opportunity to become part of the process.
The E.U. was able to embrace a British trait this past weekend and walked around the G-20 meetings with ‘a stiff upper lip’. Officials from the E.U. were able for the most part to present a unified front and turn topics around not allowing the focus to come down too hard publicly on the economic crisis that grips the continent. The EUR as of this morning is trading in a tight range quite similar to its value before going into the weekend. In the meantime the JPY has weakened further this morning, and the USD has gained on the GBP and AUD also.
Gold is trading higher and is near 1421.00 USD as of this writing. Expect volatility to shadow the precious metal. Crude Oil has range traded. Commodity prices were able to stabilize on Friday and will have to be watched closely this week. The Chinese PMI numbers early tomorrow could add a dose of impetus to the fragile metals sphere.
There will be a lot of important economic data coming this week and quarterly earnings will continue to be reported from the States too. The broad markets have shown quite a bit of nervousness recently and traders should expect equities, commodities, and forex values to be tested. Market psychology appears sound as of this morning, but as investors start casting their ‘votes’ today and throughout the week it will be quite interesting to see the results of their sentiment.