Forex continues to provide traders plenty of fireworks. The EUR, GBP, and AUD all continue to be skittish as the weekend approaches. Economic data from all three spheres have been bad to mildly lackluster. The Greenback’s recent rise has not been based on much positive economic news of its own, but is likely based on a combination of a perceived flight to quality as U.S. equity markets transcend reality, and as outlooks from Europe and the U.K. remain shrouded in quantified recessions. The possibility of hidden trading mechanisms coming from the likes of large corporations who are moving more cash around than their normal allotments also may be having short-term ramifications.
Throw in the ramifications from a weakened commodity market and the value of the AUD isn’t so surprising either. However, as always pointed out even if these values represent some type of sudden change in long-term attitudes, traders would be wise to pay heed to reversals. Volatility in short-term ranges can contain enough sudden force to take forex traders out of the ballgame should they be using too much leverage.
Gold as of this morning continues to be slaughtered. The price of the precious metal is around 1372.00 USD and the bears have drawn enough blood to make even the biggest bulls in Gold to question their own tenacity. Crude Oil has managed to range trade in the past twenty-four hours showing the ability in the short-term to sustain itself even if questions about demand pervade.
Yesterday’s Philly Fed Manufacturing Index proved too much even for the three major indexes to merely brush aside. Data from the States continues to show that visions of economic glory will not be easily attained. Today the University of Michigan’s Prelim Consumer Sentiment reading will be published and the expected mark is 77.9 which would be an improvement over last month’s result of 76.4. Like the political news swirling around Washington D.C. lately regarding President Obama, the economic data has provided concerns and investors will not appreciate a bad outcome from the Consumer Sentiment marks today should they occur. However, even though declines took place among the equities on Thursday, they were not sharp retreats and the bulls stand in plain sight for all to see.
While the broad markets continue to display a high degree of nervousness investors have not been seen running for the exits. Bonds and equities continue to find money being thrown at them. Traders should monitor all asset classes carefully when attempting to ride trends for quick gains and had better make sure they are cognizant of the broad markets pulse. Next week will begin with lower trading volumes as some European banks close for the Whit Monday holiday. The BoJ will issue its Monetary Policy Statement on early Wednesday, and Manufacturing PMI readings will come from Germany and France on Thursday. Meaning that forex will continue to prove a consistent testing ground for traders.