A typical Monday morning in the global markets so far and especially in the currencies, as traders are still going through last week€™s events and get ready for this on. Asian stocks were down this morning more than 200 points and so far European stocks are trading mixed amid uncertainty of what this week may bring. The yen also fell against the dollar, after Japanese officials indicated that the current economic outlook in Japan may be in danger, if €œexcessive moves€ in currencies are printed. The good old way for Japan to €œintervene€ on its currency is visible again and it€™s clear that the government do not wish to see its currency gaining too much as the economy continues to slide.
The EUR/USD is trading below 1.35 since late Friday and a break of 1.3530 which is important resistance for now, may open the way towards 1.36. The euro outlook remains gloomy as the pair stalled once again towards 1.40. On the downside, watch out 1.3430 ahead of 1.3380 which for now seem to be the next targets.
The economic calendar today is almost empty, and that may give another reason for traders not to be very active today, and get positioned for a more interesting calendar later this week. This week we have speeches by Treasury Geithner and also Ben Bernanke, on the current economic outlook and traders will monitor their words closely for signs of €œgreen shoots€ and general optimism on economic recovery.
The oil has risen since London opening, after a slide last week, which was mainly due to geopolitical events in Nigeria and also bad economic data out of US. Traders are in a wait and see mode, however if rally can sustain current gains, we may see further strength towards $70 in the coming months, because if traders feel that recovery is ongoing, the feel to buy commodities will be even more real.
Things to watch for now, are the pound against the dollar and the euro, as it is trading much higher for the last few days. As we said last week, the EUR/GBP is trading lower, and the first target was reached early this morning at 0.8820. A clear break of the latter level may give us further losses towards 0.8760. The pound has every reason to be stronger than the euro, as the latest data suggested that the worse may be over and also recent comments by ECB€™s Webber, implied that the banks estimations for quicker recovery were €œexaggerated€. Investors are trading with heir emotions lately and comments like that may easily swift their sentiment, hence euro€™s weakness€¦