German data has continued a disappointing run already on Thursday. Earlier this morning the German Industrial Production number produced a mere gain of 0.3% compared to the expectation of 1.4%. Yesterday’s German Factory Orders were far worse coming in with a result of -3.2%.
This will put the EUR under continued pressure from a sentiment standpoint and due to that the Single Currency continues to test lows. The ECB has its monetary policy meeting today and there could be some fireworks at the press conference held by Mario Draghi. With Germany showing almost recession like numbers this will add fuel to the volatile mix of bad economic data from Europe including France and a lagging Italy.
The BoE will also bring forth its MPC Rate Statement today. Later today the weekly Unemployment Claims will come from the States.
The FX markets have shown an abundance of strong USD reactions. The EUR, GBP, AUD all continue to move towards support levels. And central bank activity today could provide impetus into the markets, but it is likely bigger investors believe that they ‘know’ today’s news already and do not expect too many surprises. Short-term the USD has been strong, but how long will it continue?
Gold as of this morning is trading near 1306.00 USD. The question is how much of the rise in value the past two days has come about because investors are seeking a safe haven. While economic news has not been outstanding, nor has inflation shown much in the way of rising, geo-politics continue to show possible bad scenarios which could have some investors nervous. But having said that, Crude Oil continues to trade near lows, meaning that it is more likely that the move in Gold was a speculative move on strong buying with little to do with anything except buyers outnumbered sellers for the time being. The precious metal has been in a two-year bear market and this has not changed in the last two days. However, traders can certainly take advantage of range movements and Gold may have some additional room to gain value short-term. Thus, Gold could be good, but traders must be nimble.
The Russia and Ukrainian situation is making news. The Middle East is ever present on the front page of newspapers. The question is how much investors have become accustomed to these problems and if they will keep a steady hand.
Equities have turned in gains on most major bourses, but the moves appear cautious (and probably for good reason). While money from the likes of the Fed, ECB, and BoE besides other central banks will remain ‘cheap’ for the foreseeable future, trends are seldom one way moves. And while it is foolish to stand in front of moving trains, it would be wise to look at Wall Street and its cousins with some added skepticism.