Good day Koalas.
Today is mid week and i hope everyone is still green on profit!
Yesterday brought us bearish momentum for the EUR/USD. Reports stating that the Greek government may be seeking ways to renegotiate the condition of any potential aid solution surfaced. It was reported that this was to avoid the involvement of the IMF and it’s conditions for a loan solution. Knee jerk reactions brought the EUR/USD down. Testing the support of 1.3660.
After a slight relief over the day, the EUR/USD once again confronted the support of 1.3660 and is currently below it.
While the US economy apparently enjoys a phrase of optimism, the market is still a global one and it is currently suffering from the effects of the risk aversion.
Oil is hovering around $86 now. As long as it does not go below $80 again, we may really be in the next phrase of recovery.
Gold is .. are you ready? …. NOW VALUED AT $1144. If you read my article on Gold and the US Dollar, you would know that gold is priced in USD. The US Dollar is getting stronger and yet gold is getting higher in value . . . RISK AVERSION! We know that gold is probably an investment of choice when it comes to stormy weather and we may be witnessing that in action now!
So what is striking fear across the markets? GREECE !
Probably like how Darth Vader strikes fear in Star Wars, Greece is = to extremely better get out of here before you lose your shirt crazy margin call risk.
Why am i so negative? Cause the market is now! Despite Greece’s efforts to plan and promise budget cuts, investors are not taking any chances. Even with the strong words of support from the Euro Zone leaders and IMF, nothing seems to give them the confidence they need.
Concerns about a Greece default is so high that the premium to hold Greek bonds widened to the most since 1998! Investors are probably tired of the words of “support” and they need to see concrete solutions. Greece faces massive upcoming debt redemption and time is running out!
To further complicate the issue, the Euro Zone is not at it’s best of performance of late. GDP remained the same for the fourth quarter and this is sending shivers down the spines of many investors. It seems that companies spending and economy activities were cut back. Unemployment remains high too.
Fed Chairman Bernanke is due at a speech later and hence be careful for unexpected moves.
Tomorrow also bring us important economic data such as the Euro minimum bid rate and US Unemployment Claims.
Bullish relief may take us to 1.3400/55.
Bearish momentum may see us at 1.3285 next.
Koalas did you notice some subtle changes to the site layout? Part of my continued effort to tidy up the tree.. hopefully as days go by, the website will be cleaner and better.. let me know your opinions ok?
We are facing a new challenge with this Euro crisis and hence stay focused and practice proper money management.