Continuing its strong run under a haze of nervous trading in equities the USD propelled to higher values against the EUR and GBP. The greenback is starting to approach its spring time values against both the currencies as risk adverse movement has taken hold. The U.S. didn’t release major data on Monday, but today Existing Homes Sales figures are on schedule and investors have been warned that housing sector numbers may prove ugly. The estimated outcome is 4.68m, which would be well below the previous month’s result of 5.37m. Tomorrow New Home Sales and Core Durable Goods Orders statistics will be brought forth. The housing sector remains a critical lynchpin as a barometer for investors because of the impact it has on American consumers.
Part of the entire bubble that developed in the U.S. included the fact that Americans were able to borrow money against the rising values of their property. Those days of merriment are long gone, and with a rather gruesome jobless situation lingering there can be little doubt as to why spending remains on a tight budget. The so-called recovery that the U.S. government has been spouting is now being confronted by many investors and a chagrined public. The results from Wall Street the past two weeks which have been negative and the sudden reemergence of the USD is no coincidence. The greenback has found backing as global sentiment has once again began to lean towards a less than bright outlook. Today and tomorrow’s housing sector releases will have an effect on the marketplace..
EUR
The EUR has taken more hits and now finds itself under the suspicious gaze of investors who are questioning its overall health. While the Sovereign Debt saga has been put to bed, it has shown signs of waking up as ratings services warn that struggling economies within the E.U. will hinder circumstances. News has begun to trickle again from Greece that its current economic conditions are severe and things are not so bright for several other nations either. Today Industrial New Orders will be released and the estimate carries an anticipated gain of 1.6%. Tomorrow the German Ifo Business Climate reading is on schedule. The troubling prospect for the E.U. is that while Germany continues to show signs of being able to be stable, other countries are facing tough economic conditions. How long is Germany going to be willing to pay the bill for many of its E.U. brethren and how long can it afford to do so? The EUR enjoyed a summer of gains versus the USD, but it finds itself confronted by risk adverse trading and it will take a reversal in sentiment to stabilize the Single Currency.
GBP
The Sterling continued to find a tough path on Monday as it lost more ground to the USD. There was no major economic data from the U.K. yesterday and today the BBA Mortgage Approvals are only coming forth. The expected result today is 35.3k, which would be a slightly better mark than the previous report. However it is unlikely that these numbers will have much of an effect on the market unless there is an overwhelming surprise. Most traders are firmly entrenched in a risk sentiment mode and as long as bourses continue to falter it may prove difficult to find GBP backers.
JPY & AUD
Asian bourses continued to struggle mirroring their global counterparts as negative sentiment held sway. The JPY continues to foster gains versus the USD in what has become an ever increasing risk adverse move. The JPY finds itself at highs against the greenback and Japanese export companies will suffer if this continues. The BoJ has failed to convince market participants thus far that it has the ability to provide any type of policy which would stop the JPY from gaining strength. The AUD also is struggling as the results from its election this past weekend offer little in the way of clarity. It appears that the Australian government may be gridlocked for the next week and the uncertainty will allow for a test of the AUD.