The EUR has fallen through short-term support levels and faces pressure as political and economic questions surrounding the continent converge. Investors are clearly worried about where the possibility of growing sanctions could have on European nations via their collective business deals with Russia. While contracts have not been cancelled outright, the discussion of joint projects for example between Russia and France for high-priced naval ships has caused tremors in the marketplace.
While data from Europe has been relatively light the past couple of days, PMI data tomorrow from Germany and France will be certain to play into sentiment. However geo political turmoil has appeared to have decreased risk appetite and the Single Currency has felt the effects. The question now becomes how long this turmoil will last, traders need to practice risk management and continue to look at the EUR via the short-term and long-term which are likely to produce different results regarding value.
Gold as of this writing remains rather stable and has not climbed on developing from the Ukraine, nor the Middle East. The precious metal is around 1309.00 this morning, not far from its mark when the week began. Crude Oil has also remained rather stable and WTI has not shown and tendency to gain on turmoil. A Crude Oil Inventories report will come from the States later today.
While the EUR has slumped against the USD, the GBP and AUD have continued their stronger stance against the Greenback. Thus showing that the trading affecting the Single Currency is largely about sentiment stemming from political strife. Investors have known for some time that Europe’s economy is lacklustre, what they fear now is that heightened trouble with Russia could impact what is already weak growth and turn it into a negative run. Having said that, risk management is crucial as traders weigh short-term concerns versus possible turning points which could develop on positive sound bytes should they come.
It should be pointed out that equity investors within the major indexes have shown some stamina as they have produced gains on most of the major global indexes including the Dow Jones, S&P, FTSE, and Hong Kong Hang Seng among others.