Market Review June 18 2012
This review is being written before the final release of elections throughout the world are tallied. Greece, France and Egypt are voting on Sunday and due to time differences and reporting times, the results remain up in the air so please keep a close eye on the markets as they will be volatile today and subject to news flow. Remember, the outcomes are not final until they are officially announced. After votes are tabulated, each party will then have to form a government and this is not a guarantee as we saw 6 weeks ago in Greece, think back a bit to the UK elections a year ago, which brought David Cameron to the post of Prime Minister and remember the negotiates with Nick Clegg and how the formation of a government between these two opposing parties surprised the world.
Market mood was buoyed after reports that major central banks and governments have contingency plans ready to counter any volatility in aftermath of Greek elections.
With elections in Greece due on Sunday, markets would be hoping for a desirable outcome to rejuvenate their scruffy sentiments. An uncanny outcome of the elections could throw the markets into a state of doldrums and periods of long liquidation. After ditching hopes of a QE3 last week, Federal Reserve is all set to take centre stage with much anticipated FOMC meeting slated for 19th-20th June. The timing of the FOMC meeting follows the outcome of Greece election results and financial markets could be in for a twist.
Looking into the twilight session, U.S. industrial production and consumer confidence would be the key economic events and it is more likely to weigh on evening trades. The projections of these data are bleak and could reinstate optimism that the Fed could act in the coming days to bring the economy back on track.
On the whole, penultimate week ahead of the Greek elections has seen yields on Spanish and Italian bonds peaking, muddled US numbers and optimism over a Fed action. Gazing into the crucial week ahead, Greece election outcome and FOMC decision are more likely to set the tone for market moves.
Euro Dollar:
EURUSD (1.26.39) As stated above watch, watch out for the volatility of the markets. The euro is trading at a recent high, because of weakness in the USD.
The Great British Pound
GBPUSD (1.5715) The sterling, has gained this week with the annoucemtn of a joint effort between George Osborne and the BoE to offer monetary stimulus to help the ailing economy. Also an agreement between the BoE and the SNB has helped support the pair.
Asian –Pacific Currency
USDJPY (78.71) The USD continues to decline against the JPY reaching new recent lows, as investors remain in risk aversion mode but move from the US on negative eco data and the possibility of monetary easing in the US. The BoJ kept their policies on hold this week.
Gold
Gold (1628.15) has found a bit of direction moving up steadily this week as investors move back to gold for safety and on the weakness in the USD. Possible Fed monetary stimulus has added strength to gold
Crude Oil
Crude Oil (84.05) prices have remained level, moving up slightly on the weakness of the USD. OPEC concluded their meeting after deciding to maintain current quotas. Iran remains quiet as things begin to ease around the world. This week the EIA reported additional inventories.
« The EUR/GBP and the BOE and The Greeks and the Spaniards Greece – Gas and Oil Survive »
