With only two weeks left of August trading and investors of large financial institutions predominantly on the side lines, the broad markets have soft volumes and are experiencing range trading. Gold as of this morning has tracked to the lower levels of its short-term support. The precious metal is near 1302.00 USD. Crude Oil is also on the weaker side of support lines.
The markets for the moment have digested geo-political stories. Economic data has been poor from important nations, Friday was not much different as the U.S. saw a very lacklustre reading from the University of Michigan’s Consumer Sentiment results. The combination of seemingly weaker data from Europe and Asia, added to the murky sentiment from the U.S. would typically put investors in a nervous mode.
However, because it is August sentiment is harder to decipher and actually may not come into effect until September rolls around. Equities have been cautious and most bourses have been able to hold onto the gains that have been relatively substantive since the beginning of the year.
Today will be light with data, the U.S. will start to see a trickle of housing information published via the NAHB Housing Market Index. Tuesday will see inflation data from the U.K., inflation data from the States and Building Permits figures. On Wednesday the FOMC Meeting Minutes will be brought forward. Thursday will include PMI Manufacturing and Service marks from Germany and France via the flash reports. The U.K. will issue Retail Sales numbers and the States will release Existing Home Sales and the Philly Fed Manufacturing Index.
Again because the markets are in the midst of a holiday volume mode regarding August trading all results must be looked at with suspicion. Equities, currencies, and commodities have been rather tranquil. Certainly the USD has been stronger the past couple of weeks, but the question is if this is a summertime scenario or a real change that will continue into September and October. The Greenback if long-term charts are taken into consideration has more room to gain in value. The ECB and BoE would not particularly mind a stronger USD which would help the E.U. and U.K. economies via cheaper exports. However if the USD were to get too strong it would hurt the Americans and the Fed would than have to deal with the problems this would cause the States.
Two weeks are left of low volume trading and it is doubtful we will see any particular assets fall off of the table. Expect to see opportunities within known ranges for the time being.