Currency wars continue as the Bank of Japan continues to attempt to verbally lower the yen while the euro catches a bid higher as sentiment strengthens that the euro zone is indeed stabilizing sending the EUR/JPY to nearly a 3 year high, the pair has not been seen this high since May of 2010.
If the last 3 weeks weren’t crazy enough, this week’s economic calendar could very well make this week even crazier. As the U.S. three-day weekend comes to an end and traders are stuffed full of BBQ, the economic calendar swings into high gear during the overnight session Monday night.
The Federal Reserve announced on Wednesday that it will not raise interest rates until at least late 2014 in its latest attempt to fuel the economic recovery, but global stocks kept an eye on the situation in Greece as well. Markets in Australia, China, India and Taiwan were closed for public holidays.
Gold and silver started the first trading week of 2012 with bang. Gold sharply rose on Tuesday by 2.15% to $1,600.5; silver also followed and sharply inclined by 5.94% to reach $29.57. The January effect could be playing a role here.
The euro dropped to $1.3352 against the U.S. dollar in early trade today as Germany government officials down played the expectations of seeing a positive outcome from this week’s summit meeting and created headwinds for the euro for the remainder of the week.
Markets are circulating reports that Standard & Poor’s has warned at least six European countries that their top-tier credit rating is at risk of a downgrade in the next three months.
Gold prices dropped over $63 last week among some increasing negative headlines out of the euro zone and with traders now turning their attention to the supper committee and its lack of progress ahead of the November 23 deadline. One can’t help but wonder why gold dropping with all the global turmoil? After reaching the entire weekend it all boils down to speculation.
China is not the problem with the commodity markets, as far as Goldman Sachs is concerned. Instead, their analysts see the prospect of a “mild” recession in Europe knocking copper prices downward.