Italian Industrial Production unexpectedly turned in a negative result earlier today and while it may not mean the second coming of the European crisis it should signal to traders that not all that glimmers is pasta. Gold in the meantime has taken a nosedive in the past twenty-four hours as it has broken through critical short-term support. The precious metal is near 1342.00 as of this afternoon. And with about an hour before American investors get into their offices in mass, traders should be on the look out for additional volatility in the coming hours.
Weekly Unemployment Claims data will come from the States shortly, but it is unlikely to play a significant role in existing sentiment. The EUR continues to hold onto its higher ground against the USD. The GBP has also kept its run upwards and is testing resistance values not seen since early this year.
Tomorrow plenty of data will make its way across trading terminals as Core Retail Sales, inflation statistics, and the Preliminary University of Michigan Consumer Sentiment reading come from the States. Recent economic reports from the U.S. have been lackluster and investors would like to get another dose of optimism served to them before going into the weekend, but will reality be that kind?
The psychology of the market has shown that while the equity markets continue to turn in rather terrific marks particularly among the indexes from Wall Street, that investors remain unconvinced about the long-term health of the global economy. Yes, China has turned in some better numbers the past two weeks, but the sudden turnaround in data is likely to raise some suspicious glances towards the centralized government offices that are often more keen to show a ‘good face’. And as much as many would like to think Europe is out of the woods, the landscape may get rougher once again.
These are likely to be the last tranquil days of trading for sometime. Not that the apocalypse is on the schedule next week, but trading is likely to return to full volume with summer almost cleared out-of-the-way and many holidays completed. Data and news next week will be LARGE. Expect plenty of caution on Monday and Tuesday in the markets as traders try to find an equilibrium. On top of the many economic reports due throughout the week, the Federal Reserve will get into the act next Wednesday and give a large indication regarding the months long rumors that have been circulating concerning any actions on monetary policy. The German election will also be part of the landscape, which means that when it is over that talk about the woes of certain member nations among the E.U. may begin to come into focus again. After all the dirt can only be kept under the rug for so long – meaning that discussions regarding the health of Greece, Spain, and Italy might become talking points again. In the coming weeks traders might get a chance to glimpse what is behind the curtain.