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Stability Returns To The Market

The USD essentially traded in range on Friday as the currencies moved in a rather tentative manner. The U.S. released its Retail Sales statistics and the outcome was negative.  A result of minus -1.1 was produced by the Core Retail Sales figures and the broad numbers were less than impressive too. The estimate for the Core data was a gain of 0.1%. The Prelim Consumer Sentiment from the University of Michigan turned in a 75.5 reading, which was better than the anticipated 74.7. Investors who were taken aback by the weak retail numbers were given enough fortitude by the consumer statistics to keep Wall Street steady. However, the less than encouraging news will leave both sides of the coin in the equities markets hotly debated. There will be no major economic releases from the U.S. today and the lack of publications will allow for plenty of interpretations to be translated into the markets.

The USD has traded weaker against the EUR and GBP the past few sessions, but still finds itself within the stronger parts of its near term ranges. Wall Street turned in a rather roller coaster type performance last week while it suffered swift declines followed by rapid gains. Going into this week investors could feel rather perplexed looking at the financial landscape as they try to decipher the terrain and decide on what the long term prospects are for the major economies. The Sovereign Debt concerns emanating from Europe have not gone away though the fear seems to have subsided for the time being. However, what has taken place is that concerns have arisen and found voice regarding the possibility of double dip recessions finding the global economic powers. The U.S. continues to be under a cloud from a poor employment environment and has left many analysts asking how and where job creation from the private sector is going to develop. Important data this week will come from the Empire State Manufacturing Index tomorrow, Building Permits on Wednesday, and the weekly Unemployment Claims on Thursday. Last week presented traders with an opportunity to test ranges as some stability made its way into the markets, but investors cannot be faulted for considering a cautious approach when entering today’s fray.

The EUR has enjoyed a few trading sessions with relative stability and on Friday it was able to hold onto its gains against the USD. The Single Currency still finds itself at the lower depths of its range against the Greenback, but nevertheless may have found some backers as the fears of an imminent collapse of Sovereign Debt in Europe has subsided. The EUR finds itself having been able to withstand the lower end of its range and appears for the time being to be in a position that will allow traders to test its fair value. Industrial Production numbers will be released from Europe today and are expected to post a gain of 0.7%. Tomorrow the German ZEW Economic Sentiment report will be published and this will be followed on Wednesday by European CPI statistics. Trading in the EUR closing out last week suggested that for the time being the worst of the crisis may have been digested and this was reflected among the European bonds which showed differences between the Spanish and German debt retracing. The EUR may find itself within a curious light going into this week’s trading and for those with risk appetite could provide an interesting ride.

The Sterling continued to find stability on Friday even as another dose of poor U.K. economic data was published. The Manufacturing Production and Industrial Production figures turned in negative results with a matching decline of minus -0.4%. Both numbers were projected to show gains and the outcomes reflect the growing belief that the U.K. is facing a tough road ahead economically. Over the weekend reports circulated that the government is going to revise its economic outlook downward in the coming month. Today the RICS House Price Balance figures will be presented and tomorrow a parade of inflation data is on the schedule. The GBP has performed relatively calm the past few trading sessions and this has mirrored the global market place which has shown better sentiment.

The JPY lost ground to the USD on Friday as traders continued to show a tad more risk appetite within the Asian equity markets reflecting their global counterparts. The JPY and USD remain in a well practiced range and one that is a barometer of sentiment within the global markets. Gold finds itself in the higher parts of its range which continues to show that some in the markets remain nervous.

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