The EUR continues to meander this morning near its short-term lows. The German Ifo Business Climate reading will be released shortly and this is playing into early cautiousness. The European bourses are trading slighty better for the moment, but the FTSE is showing some early struggles this morning. Gold has jumped to short-term highs after facing headwinds on Tuesday. The precious metal is around 1428.00 as of this writing.
The Flash PMI Manufacturing and Services data from Germany did prove disappointing yesterday. The core of Europe has begun to show clear signs of distress as it tries to maintain an equilibrium with its southern European nations struggling severely. An estimate of 106.4 is the mark investors will gauge their reactions to for the Ifo results from Germany, and if the outcome is poor it could set back what has been rather stable sentiment via trading for the DAX the past few sessions.
Core Durable Goods Orders figures will be released from the States today and get attention, but some talk will certainly focus on Apple Inc.. The estimates for the coming quarters from Apple announced last night did not meet expectations. However, Apple announced that it was increasing its dividend payout to investors and this helped the stock climb in afterhours trading for about an hour until it met headwinds again. Almost like the Fed’s quantitative easing, while the cash payouts from Apple Inc. will make some shareholders happy, many analysts will question the ability of the company to dominate market share as its competitors gain in technology and time. And while it is not spoken about except in whispers, the Steve Jobs marketing magic cannot be relied upon anymore, and Apple’s share price is certainly under pressure in what has been a bull market for many other corporations.
The ECB will hold their monetary policy meetings in just over a week and forex traders should take this into consideration. Recessionary data is not only coming from Spain, Italy, and Greece, but France appears to be lurching into the economic cauldron too. If Germany’s Ifo number is poor today it could help determine the ECB’s interest rate decision next week. Mario Draghi does have some room for a cut a quarter of a point rate cut next week, but the ECB President has been trying to ‘sell’ his belief that growth will return to the continent sometime this summer. With the May 2nd meeting just around the corner it may be time for President Draghi to admit growth remains hard to attain.
(The German Ifo Business Climate just missed its mark with a result of 104.4.) The EUR needs to be watched carefully.