The EUR continues to test support levels after the ECB’s monetary policy decision last week which in effect created a negative interest rate.
Gold as of this morning is near 1260.00 USD having gained slightly the past few days of trading. The question is if the precious metal will be able to hold onto any rise in values within an economic environment that simply does not exhibit much inflation.
There was little in the way of major data from Europe on Tuesday. Although the Wholesale Inventories data did show an increase in the States, the report is a rather questionable way of interpreting economic conditions sometimes. There are those who will say inventories are increasing because wholesalers are anticipating better days, while others will say they have not been able to sell their goods fast enough.
Employment data will come from the U.K. shortly. Sterling has tracked lower against the Greenback in recent trading.
The U.S. will hold a 10-Y bond auction today. Crude Oil Inventories figures will be released. WTI remains near resistance and it will be interesting to see if Crude Oil can maintain this higher values. The real question is if the U.S. economy will prove its optimists correct and show that it is growing or if cynics will be able to say “I told you so” in the coming months.
Japan will issue a Core Machinery Orders stat sheet late tonight. Asia continues to also be under the microscope via global analysts who find themselves arguing diverse opinions regarding the health of the world’s business particularly what China and Japan face economically.
Digital Markets Advisor remains sceptical about the global economy. While the U.S. and talking heads point to ‘good’ employment rates, there remains a large bay of sensitive issues that are unanswered regarding real unemployment, underemployment, and a lack of growth regarding household wealth. In other words stagnation remains a troubling part of the landscape. Europe is certainly within the grasp of stagnation that continuously threatens to break out into a deeper recession.
The ECB has essentially created a new frontier regarding its interest rates. Spanish bonds are now yielding less that U.S. bonds in some instances and if that doesn’t raise question marks among long-term investors nothing will. So while the optimists continue to sing loudly about gains among the equities on the major bourses particularly from Wall Street, skeptics should be listened to as they warn the public that we aren’t out of the woods.
FX and commodities seem bound to test ranges as the week plays out over the next few days.