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Obama Could Be The Focus

The USD continued a divergent run on Wednesday as it gained versus the EUR, but lost ground versus the other major currencies. There was a lack of major economic data from the States yesterday with only Crude Oil Inventories being brought forth, showing that supply did in fact increase more than estimated. However, the crux of market sentiment certainly continued to focus on the upcoming speech today by President Obama that will be held in New York City and deal with financial reforms. The speech will be packed with rhetoric, and the question is how the Obama administration will push for new regulations, and what their implications will be on the investment world.  Besides Obama at Cooper Union today, the U.S. will release Unemployment Claims and Existing Home Sales figures. Both sets of numbers are anticipated to show improvement and after a week of rather thin economic publications investors will finally have something to sink their teeth into.

Wall Street has provided a good barometer of the markets this week because of quarterly earnings. Yesterday’s results from the major indexes produced mixed results perhaps mirroring the caution that permeates the air for investors who must decipher the manner in which the U.S. government actively seeks to become involved in the financial sector. The story surrounding Goldman Sachs continues to make news and is certain not to disappear anytime soon. Tomorrow the States will release New Home Sales data. The combination of the Obama speech today with unemployment statistics and housing figures over the next two days could be enough to cause widespread impact on the markets. Wednesday’s trading showed that most traders are taking a wait and see approach to the currencies, commodities, and equities. The USD trend against the EUR continues to be strong but its results against the other currencies have met some resistance. The final two days of trading this week may see a test of recent consolidation.

The EUR was met by headwinds again on Wednesday as it lost ground. The EUR continues to be hampered by negative sentiment being generated by the Sovereign Debt issues of Greece. Greek bonds now find themselves having to pay out their highest yields yet. Part of the problem that exist for the EUR is the stream of news that highlights that not everything has been agreed to regarding the system in which Greece would finance its obligations if it is forced to seek a bailout from the E.U. and the IMF.  There were no major economic reports from Europe yesterday, however today will see a parade of PMI data from Germany and France consisting of Flash Services and Manufacturing readings. The projections for these statistics are slightly positive. With today’s large amount of figures and tomorrows German Ifo Business Climate numbers, investors will have plenty to consider regarding the health of the European economy. The question is how much of an impact – if any – will these numbers cause taking into consideration the clouds that shadow the EUR landscape because of the unclear picture which persists because of the debt crisis.

The Sterling turned in a mostly positive day against the USD and this occurred with a better than expected Claimant Count Change number. Today Public Net Borrowing statistics and Retails Sales figures will be published. These two sets of figures will give investors insight into the mindset of U.K. consumers who have been under pressure due to the economic downturn. The data from Britain has shown signs of improving the past couple of months, but pressures still exist. The debate surrounding the upcoming election has focused on the levels of debt caused by the recession and how it will have to be dealt with. There is plenty of data coming from the U.K. today, and tomorrow the Preliminary GDP will be brought forth, meaning that the GBP could be stirred the next two days.

The JPY gained against the USD within well practiced ranges. Equity prices on the Asian bourses highlight that there is still a large amount of caution manifesting within investors who question the strength of a global recovery. Gold traded in a narrow range yesterday and like the broad marketplace, gold traders may be waiting to see today’s news and data before making their moves.
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