Mercaforex Analisis, Vicious Cycle Continues

Online, May 15, 2010 (Newswire.com) - A day after tranquility came into the market a vicious amount of risk adverse trading took hold again. The USD gained versus the EUR and GBP in bold moves again. Wall Street on the other hand turned in a negative result. While sentiment surrounding the European Sovereign Debt problems continued to roil, it was the combination of a nervous approach in equities particularly coming from the banking sector that paved the way for a decline on all the major stock exchanges. Retail Sales figures will be released today and the expected number is a gain of 0.3%. Industrial Production numbers and a Consumer Sentiment reading from the University of Michigan are also on the schedule and anticipated to show improvement.
The economic data from the States has pointed towards growth the past couple of months, however earnings reports from Wall Street have pointed out that the recovery is not a particularly strong one and that concerns linger on the corporate front. There have been dark clouds hovering over the broad markets lately but new to the storm are worries for the insurance sector concerning the possibility of bond defaults and the recent oil spill in the Gulf. Retail Sales numbers will be watched closely and a good outcome would likely be appreciated by investors who appear to still be on a razor edge regarding their short term and long term outlooks. After Wednesday's rather calm day of trading, Thursday proved that there are no free lunches these days for traders. The USD simply continued to prove that its trend remains intact and that those who willing to trade against it must be quite attentive to its ranges.

EUR
On a day of no major economic data from Europe the EUR found yet another way to be driven down. Questions and concerns from top officials and executives continued to reverberate and cause a slippery path for the EUR's equilibrium. There will be no releases from the E.U. today but this will not stop the intensive focus that is taking place regarding the economic prospects for the continent. Questions continue to be asked about the ECB's bond buying program and what would actually take place if - down the road - a country like Greece still needs to restructure its debt because its austerity programs are not effective enough. Also over the past couple of days, both Portugal and Spain have stepped up their austerity programs to try and quell doubts that are driving up the amount of money they need to pay on their government bonds. Paul Volcker got into the act last night when at a symposium in London he questioned the capabilities of the EUR to function in a sphere that does not have one unified fiscal policy. The EUR has continued to be taken lower and finds itself grappling with pressure that has it battling in the lower depths of its range going into the weekend.

GBP
The Sterling traded lower on Thursday as a EUR centric flair continued to affect risk sentiment. The Trade Balance numbers from the U.K. did no favors when it came in with a disappointing outcome but the DCLG HPI produced a better than anticipated result. However, the GBP certainly traded under the weight of a EUR that continues to perform under a Sovereign Debt cloud which is now casting doubts upon bystanders. There will be no economic data of significance from the U.K. today and Sterling investors will have to see if the GBP is able to separate itself from EUR centric tendencies today.

JPY
The JPY showed in quick fashion that it remains a strong safe have tool when caution overtakes investors. The JPY gained on the USD and basically went back to the stronger parts of its range versus the greenback. Gold has found some consolidated trading the past two days and should probably be watched carefully taking into consideration the nervousness that seems to be in the market - particularly going into the weekend.