Jun 2, 2011

Forex Analysis: Japanese Woes Persist – 2 May 2011

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Wall Street New York

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Wall Street responded to a negative ADM Non Employment Change number and weak outcomes from the ISM Manufacturing PMI with strong downhill momentum. The USD did gain against the EUR in late trading, and the pair finds itself well within a middling range as investors check out both currencies and essentially are left pondering which currency looks less promising. Today the weekly Unemployment Claims will be released, but tomorrow the official Non Farm Employment Change figures are on schedule. The surprising outcomes from recent U.S. stats outcomes have vaulted the notion that the global economy is on the verge of yet another recession.

Europe has not exactly helped risk sentiment either as the Greek debt disaster endures. While officials argue that Greece will receive a bailout package towards the end of June will still be unclear what measures the Greek authorities will be forced to achieve regarding austerity measures. And though a short term alternative for Greece’s obligations may be acquired, it doesn’t necessarily indicate that they are truly solving their overall challenges
Investors remain assessing risks on many levels. Thus a flight to quality once again started in earnest yesterday upon the poor economic data from the U.S.. Europe, the U.K., and the United States have all shared in an associated distress the past month with poor outcomes. Global equity markets have essentially traded south with a very fragile perspective. Commodity prices which jumped constantly for a while have all at once come across varied results. Gold as of this morning is trading around 1540.00 USD an ounce, which is in the most powerful parts of its range, but much of this is because not only an inflation fear but a byproduct of safe havens being needed. With the Non Farm Employment Change figures coming for tomorrow it is certain that the broad markets will stay leery today.

Europe will be very light with new stats as many nations commemorate a holiday. The U.K. will release Construction PMI figures. A day ago the United Kingdom introduced their Manufacturing PMI outcomes and much like the U.S. submitted unsatisfying numbers. Mortgage Approval statistics were also under anticipation the previous day from the U.K.. The Gbp did shed further ground Wednesday to the USD. Tomorrow the U.K. will publish their Services PMI information.

The CHF remains a really active currency and continues to make gains as investors seek out safe havens. While investors still show a belief in the Swiss, investors need to taken into account that the Swiss government is not very enthusiastic about the CHF being too powerful. As much as Switzerland is a financial services economy, it is also an export powered economy and thus the reason behind the issue. With that in mind, the CHF has many supporters who are seeking a reliable and rather calm currency to stand strong.
The AUD did shed some value to the USD on Wednesday. The GDP numbers from Australia have provided investors cause to stop and ponder the notion not all is wine and roses for the economy. The AUD is likely to trade in ranges until the monetary policy statement from the Australian Central Bank next week. Tests for the AUD will probably find traction from afar as risk adverse trading is considered globally.

The Japanese Yen has traded to the more robust section of its range still and it has achieved this as the Japanese government experiences a crisis and the economic info remains undesirable. The Japanese Yen is a classic example of a currency that has mitigating outlooks. In short term the JPY looks determined to trade in a range that keeps it on the stronger sides of its value, long term the JPY is positioned to lose value as a way to help jump start the Japanese economy. The thing is that Japan’s economic troubles are so extreme that handling the challenges is a continuous battle.

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