In a quiet trade, the EUR/USD traded slightly better after results showed that Spanish Minister Mariano Rajoy’s party hung on to power in his home region of Galica. This vote was an important test of his popularity and power as it came during a period of austerity. Many traders have been thinking that the Spanish government has been reluctant to make a formal request for financial aid from the European Central Bank because it would cause it to lose support of the people.
Although traders believe today’s vote will prevent the Euro from selling off further, there are still lingering concerns that any more delays by Spain to ask for financial aid is going to make investors nervous enough to pare positions, thus weakening the single-currency. Worries over Greece are another concern; however prices are expected to hover around 1.3000 over the near-term.
With no major economic events to react to today, the GBP/USD followed the direction of the Euro. That being said, the Sterling is trading slightly better as traders turned optimistic that Spain would be able to resolve its election issues and finally make a request for money from the ECB. Although the U.K. economy faces major problems of its own, much of its success is directly correlated to the performance of the Euro.
December Gold continues to linger around support with buyers showing little interest at current price levels although there appears to be a bid in the market preventing it from collapsing. Since the Fed announced in mid-September to provide additional stimulus, gold has been slowly drifting lower. Additionally, the ECB’s decision to begin buying distressed bonds has also stripped the market of its uncertainty, causing a drop in demand for gold. Gold is being treated as an investment rather than a reserve currency which may mean that it is headed lower towards a value zone.
December Crude Oil is trading mixed. Oversupply concerns are providing the bearish pressure while optimism about an improving economy is helping to underpin the market. Because of improvements in the job and housing markets, bullish traders believe that the worst could be over for crude oil and that increased demand should soon begin to drive the market higher.