This is an important week for data. Yesterday’s inflation figures from Europe fell short and continue to highlight ‘deflation’ as much as ECB and European government officials want to avoid using the reference. The EUR has actually gotten stronger since yesterday after suffering a sell off the past week. It is quite possible that some investors have already ‘digested’ poor European statistics and having watched the Single Currency slip lower since the FOMC Statement from the U.S. – are ready to make a contrarian move which may send the EUR higher.
Gold continues to flounder near critical support levels having gone into the 1280.00 range. The question is what happens now. With inflation data still extremely mute investors will NOT be casting their eyes on the precious metal as a wealth preservation in the short-term, although traders will certainly continue to find a taste for owning Gold it is a purely a speculative play. The precious metal is near 1286.00 as of this writing.
Data from China early this morning was negative from the HSBC Final Manufacturing PMI reading. Asian bourses received the news without a sell off which is interesting, stability in the Asian equity markets will be seen as a positive today by Europe and North America, particularly on Wall Street which had a positive day of trading on Monday.
Final PMI Manufacturing will come from Europe very soon. Later today the ISM Manufacturing PMI will come from the States. Yesterday’s Chicago PMI reading from the U.S. was lacklustre coming in below expectations.
As said above it is a big week for data and news potential. The ECB will hold their monetary policy Press Conference tomorrow, and then the U.S. will begin to kick off its jobs data parade culminating with the Non-Farm Employment Change numbers on Friday.
Crude Oil although trading slightly lower in recent hours has climbed back to short-term resistance levels. WTI is just above 101.00 USD as of this writing.
The crux of the situation in the FX market and equities continues to be a confidence game. While investors have had the illusion of perhaps trading on data based information recently, Digital Markets Advisor believes that Central Banks and governments continue to be a large factor in trading.
The EUR, GBP, AUD, and JPY have all had good trend runs the past couple of weeks. Traders have the potential to take advantage of moves that are certain to come.