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The Day Ahead - Wednesday's American Session

|Includes: ELEMENTS Australian Dollar (ADE), BEO, BEP, CNY, DJ, ERO, EWA, EZU, FEZ, FXB, FXC, FXE, FXF, FXY, GBB, GLD, GRE, IWB, JYF, JYN, NFP, SPXL, SPY, SPY, UDN, USD, UUP, VCR, XLY, YCL, YCS

 


 

  • The week remains to be weak on economic announcement side. Therefore, expect less volatility in the markets especially after the end of London Session. The trading was relatively subdued in European Session with higher beta currencies slipping to the downside. A timid negative economic performance from the world is weighting down on higher yielding currencies.


 

  • Overnight, we seen a confirmation of world economy cooling off its robust steam of progress. The eyes have certainly turned to a wait and see mode about the world’s economy. There are of course two camps of thoughts in the market right now. One camp is cheering the turnaround of the economy amid deteriorating numbers after most of the world’s governments seized their policies to jumpstart the economies. In the other camp, pessimists are jumping on every opportunity to naysay and contradict the progress. The following camp, speculates of a double dip recession inching back into the markets.


 

  • The poster child of worldwide recovery - Australia – has finally seen a roadblock to the unparallel progress. So far, Australia has been printing superb figures. Nonetheless, the robust growth is finally beginning to look a bit shaky. Construction sector, which on many occasions can affect an economy in either direction, dropped to 46.4 reading from previous month of 53.2. A reading below 50 indicates that the sector is in a contraction, a reading above 50 indicates that the sector is expanding. Such a drastic change might cause a room of a concern.


 

  • Revised figures of the performance of European economy came in line with the expectations. Gross Domestic Product remained at 0.6%, Household Consumption printed at -0.2%, and Government Expenditure showed a reading of 0.2%.


 

  • A lack of any influential events in the US for the remainder of the week, will keep the currencies in a tight range over the upcoming days. Sporadic data coming from respected countries may be the only driver for either direction. Expect risk aversion and appetite flows to dominate directions of each respected currencies.


 



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