There will be plenty of data this week from the States and Europe. Retail Sales figures will be published on Wednesday from the U.S. and on Thursday PMI Flash statistics will come from Germany and France for the Manufacturing and Services sectors. Since the interest rate cut from the ECB the Single Currency has managed to find support levels after nose diving from the highs it was making. With an interest rate amount similar to the U.K. and U.S. all three entities have seemingly put themselves into a position in which there is very little room to manipulate borrowing costs lower.
The question now becomes how growth prospects will affect further central bank policy from the BoE, Fed, and ECB. The reality is that the Fed appears ready to keep a fairly predictable path with Janet Yellen getting ready to take over the helm. Drastic changes are not expected from the Federal Reserve. Yes, there are concerns about how and when the Fed will begin to alter its quantitative easing measures, but investors have been warned in essence and have begun to act based on the forecasted tapering. The Single Currency has gained in the past week against the Greenback. Sterling has followed suit and also picked up value against the USD.
Gold is trading near the lower realms of support areas, this after putting some fear into bears who have kept the precious metal market on its heels this year. As of this writing Gold is near 1284.00 USD late this morning. Crude Oil continues to languish near lower values. Before going into the holiday season which kicks off late next week with Thanksgiving in the States the broad commodity market finds itself with downside pressure. Equities have certainly done well based on the year’s results, Wall Street has continued to feed off of cheap money as have European and Asian bourses.
The FX markets finds itself entering this week with the possible notion that the USD is vulnerable short-term. While JPY has traded lower this morning and finds itself near important resistance levels, the other major currencies are showing an ability to bounce back against the Greenback. After the late October massacre which saw quick declines in value against the USD when news spread that the Fed may act sooner than thought regarding tapering, traders have found their nerve again and seem intent on testing the ability of the dollar to sustain the strength it showed up essentially until the beginning of last week.
Trade Balance numbers will come from Europe shortly and later today the TIC Long-Term Purchases report will come from the States.