Confidence Boosted by Italy’s Austerity program

A slight wave of optimism was seen across the broad markets, as Italy’s Prime Minister Mario Monti will unveil today a 30 billion euro package of austerity measures to parliament, boosting confidence ahead of the European Summit later this week.

Investors targeted higher yielding assets as European leaders extend their efforts to solve the debt crisis that threatens the euro unity, where French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet today in Paris to overcome their differences till Friday’s summit.

Confidence is also boosted by the improved outlook for the U.S .economy after the jobs report last week showed unemployment dropped unexpectedly to 8.6%, while the ECB is expected to cut rates this week  to help ease the mounting tensions from the debt crisis.

Investors will continue to focus on the new developments from Europe this week, since strong resolutions that would end the debt crisis are more than welcomed. Italy’s austerity program brought gains in Asia and Europe today, where Nikkei 225 ended higher by 0.60%, while DAX rose 0.87% as of this writing.

Today’s’ economic data however was not that cheerful, since in China the services PMI fell to 52.5 in Nov., the weakest growth in three months, confirming that the economy is slowing quickly. In Germany and EU the services PMI also fell below expectations, while in the US the ISM services may rise to 53.8 in Nov.

The euro is trading with bullish momentum around the 1.3444 level as of this writing. The pound gained today after UK reported a better than expected PMI services report, where the currency is trading around 1.5630. The AUD is trading with some bullish momentum too around the 1.0254 level.

As investors felt some appetite for risk, the safe haven USD is weakening, trading around the 78.40 level as of this writing. The Yen is trading around the 77.95 level, while the commodities are almost unchanged, where oil is trading around $101.75 per barrel, while gold is trading around $1744.50 per ounce.

Monthly USD CHF Update – First Objective Reached

The Swiss National Bank pegged the EUR CHF at 1.20 during the September 6 trading session. This form of devaluation helped trigger a breakout to the upside in the USD CHF. With the SNB likely to vigorously intervene to defend its currency, traders should continue to look for further upside action.

Technically, the closing price reversal bottom formed in August 2011 at .7066 was confirmed when the market crossed the August high at .8240. The ensuing rally took the USD CHF into the first objective at .8567. This price represented 50% of the break from the December 2010 top at 1.0065 to the August 2011 bottom.

Should upside momentum continue, then look for a rally into the 61.8% level at .8922. Further upside action may take the market into a downtrending Gann angle at .9330. Now that the first objective has been reached ahead of scheduled, don’t be surprised if profit-takers hit the USD CHF for a short-term break.

In order for the pegging of the Swiss Franc to work, the SNB is going to have to continue to weaken its currency by purchasing foreign currencies. This action will help drive up the U.S. Dollar versus the Swiss Franc.

Forex Markets Eager for Signal from Bernanke

The low volume and tight ranges this week in the Forex markets indicate the table has been set for a possible volatile day of trading as all eyes will be on Federal Reserve Chairman Ben Bernanke as he delivers his speech today at theJackson Holecentral banker’s summit.

Financial markets are bracing for Bernanke to deliver the speech that could unveil the plan to stimulate the sluggishU.S.economy. Last year he used this opportunity to launch the idea of quantitative easing, a move that provided the equity and commodity markets with the liquidity to rally sharply higher while pressuring the U.S. Dollar.

While expectations may have been high at the onset of the week, recent trading action has been signaling that perhaps Ben will not have the firepower this time to rock the markets like he did last year. Having seen the not too positive effects of QE2 on theU.S.economy, it is becoming highly likely that Bernanke will refrain from signaling the start of a third round of quantitative easing.

If a trader retained the slight bullishness seen in the equity markets earlier in the week, he could be in for a big disappointment. To begin with, economic conditions have changed somewhat since last year.

Inflation is higher which means throwing new money at the economy may not be as beneficial. Secondly, the situation has changed inWashingtonfollowing this summer’s highly publicized fight between the spend-happy Democrats and the spending-cut happy Republicans.

It is going to be much hard to sell the idea of providing more funds to the economy after the recent effort failed to create jobs and served as a launching pad for higher corporate and consumer expenses. Finally, Bernanke doesn’t have the total support of the Fed at this time because of the three dissenters who oppose the Fed’s decision to keep interest rates at historically low levels until mid-2013.

Based on these fresh developments, it is hard to see Bernanke delivering more than a candy-coated speech stating the Fed’s objective to keep inflation under control while promoting growth. He may even make a speech that is so general that it triggers a volatile two-sided trade because this would likely provide more uncertainty for both bullish and bearish traders.

Given the Fed’s low interest rate stance for the next 20 plus months and the slim possibility of additional stimuli, it’s hard to believe that Bernanke can say anything that will support the U.S. Dollar. It appears the long-term path of the Dollar is likely to remain down; however, there may be a knee-jerk reaction to the upside if investor’s decide to dump riskier assets.

Expectations of Further Monetary Policy Easing Boost Confidence Despite Weak Housing Data

Traders continue to speculate that the Federal Reserve Bank’s Chairman will announce later this week new monetary easing measures to help aid the economic recovery amid recent signs of slowing economic activities in the United States, and accordingly, confidence remained high among investors, as they continued to target higher yielding and more risky assets on Tuesday.

Meanwhile, data from the U.S. housing market confirmed the ongoing deterioration in housing activities, where the new home sales index fell in July to 298,000 units, compared with median estimates of 310,000 units, nonetheless, investors were still focused on speculations of a third round of quantitative easing.

Stocks in the United States rose by opening on Tuesday, where the Dow Jones Industrial Average was up by nearly 1.20% to trade around 10,985, while the S&P 500 index was up by nearly 1.30% to trade around 1138. European stock indexes were mixed before closing on Tuesday, where FTSE 100 was nearly unchanged to trade at 5095 and the DAX was up by nearly 0.30% to trade around 5490.

The U.S. dollar fell against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 73.92, compared with the opening level at 74.06. The Euro rose against the Dollar, where the EUR/USD pair gained to trade at $1.4410, compared with the opening level at $1.4357, and the British Pound rose against the Dollar, where the GBP/USD pair traded around $1.6527, compared with the opening level at $1.6457.

Gold prices fell on Tuesday from a record high above $1900 an ounce to trade around $1877 an ounce, and crude oil prices were little changed to trade around $84 a barrel.

Sharp Losses For the USD as Risk Appetite Improves

Speculations that the U.S. will announce later this week a third quantitative easing program in an attempt to sustain the economic recovery, has been improving investors sentiment and demand for the higher yielding assets.

The Asian and European stocks are rising since this morning as the appetite for risk improved, while the dollar index is loosing ground as demand for safe heaven narrowed, trading around 73.65 as of this writing.

Also supporting confidence today was the Chinese manufacturing data, which indicated that the manufacturing sector shrank in August at a slower pace, fueling believes that China’s growth will continue to sustain the region.

The euro is trading near 1.4450 while the GBP is trading around 1.6550, especially after Germany and Europe released a better than expected PMI manufacturing report, while U.K. released an improved BBA home loans for July.

Worries aboutEurope’s sovereign debt crisis and the European banking structure continue to affect sentiment in the region. As a resultGermany’s ZEW survey for the economic sentiment fell to -37.6 in August from -15.1 previous.

Meanwhile Europe’s ZEW survey for the current situation fell to -40.0 from -7.0 previous. The effect on the euro was limited as markets are anxiously awaiting the developments from the U.S. by the end of this week.

Gold broke the $1900.00 barrier today, reaching a new record high early this morning at $1911.45, indicating that nervousness continues to affect some investors. Yet as risk appetite improved it fell near $1886.35 as of this writing.

Although demand on safe haven was limited today, the yen and the CHF managed to gain today as the dollar is weakening. The JPY is trading near 76.63, while the Swiss Frank is trading around 0.7873.

The AUD gained today after equity markets managed to stabilize, trading around 1.0500; while crude oil found additional support on believes the U.S .economy might find support soon, and now is trading near $85.55.

The U.S. will release today its new home sales for July, and no good news is expected as the housing sector continues to be depressed. Yet of more interest will be tomorrow’s durable goods orders and Ben Bernanke’s speech on Friday.

The uncertainties regarding the global recovery will keep volatility and caution within the financial markets this week, yet any good news may create buying opportunities within the equity, commodity and currency markets.

Speculations of QE3 Boost Risk Appetite, as Equity Markets Rise, and US Dollar Drops

Speculations of further stimulus from the Federal Reserve Bank increased risk appetite around global financial markets, where traders are hopeful that the Fed will announce a third round of quantitative easing to support economic growth in the United States, which boosted demand for higher yielding currencies and pushed the U.S. dollar lower against major currencies.

Stocks in the United States rose by opening on Monday, where the Dow Jones Industrial Average was up by nearly 1.50% to trade around 10,979, while the S&P 500 index was up by nearly 1.35% to trade around 1139. European stock indexes were also higher before closing on Monday, where FTSE 100 was up by nearly 2% to trade at 5142 and the DAX was up by nearly 1.40% to trade around 5558.

The U.S. dollar fell against a basket of major currencies on Monday, where the U.S. dollar index was trading at 73.89, compared with the opening level at 74.09. The Euro rose against the Dollar, where the EUR/USD pair gained to trade at $1.4408, compared with the opening level at $1.4366, and the British Pound rose against the Dollar, where the GBP/USD pair traded around $1.6495, compared with the opening level at $1.6475.

Gold prices extended the gains earlier on Monday to set a new record high above $1890 an ounce, but eased slightly to trade around $1876 an ounce, and crude oil prices rose to trade around $83 a barrel.

A New Week of Instability

Speculations that the U.S. will announce later this week a third quantitative easing program, while Europe still suffers from a deepening credit crisis, fueled fears, increased demand on safe haven and weakened the USD.

Gold climbed to a new record high today at $1894.85 and as of this writing is trading around $1888.50 per ounce, which highlights that nervousness continues to dominate the broad markets.

The safe haven JPY and CHF still have plenty of attention as questions about the global economic recovery grow. The yen is moving with a downside bias near 76.65, while the Swiss Franc is getting stronger trading around 0.7858.

There will be no major data today from either Europe, U.K. or the United States. Yet this week investors will await the manufacturing and services PMI reports from Europe and the GDP report from the U.S.

The Fed’s Chairman Ben Bernanke will speak later this week, and he might ignite a major storm in the markets if he announces a third quantitative easing program, that will raise fears about a possible recession.

Those fears have been weakening the USD this morning, which is trading near 73.90, giving the opportunity for crude oil to rise slightly to $72.60, and for the euro to rise to 1.4405, despite the fears that dominate the financial markets.

Meanwhile the GBP remained almost flat at 1.6468, while the Australian dollar rose to 1.0425. Investors were hoping to find some stability in the markets this week, but as uncertainties remain high, that will be a very hard task.

Spain’s Budget Cuts Ease Some of the Fears in Markets, but Jitters Continue to Dominate

Jitters remained spread across global financial markets, where traders were worried over the outlook for global growth amid signs the U.S. economy is slowing down, while a looming liquidity crisis in Europe kept investors on their toes, as the European debt crisis continues to weigh down on confidence levels in financial markets.

Traders were feeling pessimistic on Friday after data released from the United States on Thursday signaled activities in the manufacturing sector contracted in August, while data from the labor and housing markets signaled deteriorating activities as well, which put higher yielding assets under huge selling pressure, while boosting demand for safety assets including gold, which rose to a new record high on Friday above $1870 an ounce. Nonetheless, fears eased in markets after Spain announced it approved more spending cuts in order to help solve the country’s swelling deficit, which provided investors with some optimism.

Stocks in the United States dropped by opening on Friday, where the Dow Jones Industrial Average was down by nearly 0.80% to trade around 10,905, while the S&P 500 index was down by nearly 0.50% to trade around 1135. European stock indexes were also lower before closing on Friday, where FTSE 100 was down by nearly 1.40% to trade at 5020 and the DAX was down by nearly 2.80% to trade around 5445.

The U.S. dollar fell against a basket of major currencies on Friday, where the U.S. dollar index was trading at 73.82, compared with the opening level at 74.27. The Euro rose back against the Dollar, where the EUR/USD pair gained to trade at $1.4418, compared with the opening level at $1.4297, and the British Pound rose against the Dollar for the sixth time in seven days, where the GBP/USD pair traded around $1.6581, compared with the opening level at $1.6477.

Gold prices extended the gains earlier on Friday to set a new record high above $1870 an ounce, but eased slightly to trade around $1855 an ounce, and crude oil prices rose to trade around $82 a barrel.

Contraction Fears Preserve Demand on Safe Haven

Fears from Europe’s debt crisis, the challenging conditions in the U.S. and the slowing global economy, is preserving demand on safe haven and fuels risk aversion as sentiment continues to be fragile.

Asian and European stock markets sank today although there will be no significant data today from Europe or the U.S. Crude oil fell below $80.00 and now is trading near $80.70 on fears a possible global contraction will lower demand for crude.

Gold climbed to a new record high at $1868.52 per ounce and as of this writing is trading around $1862.00, highlighting that investors are pushing their money towards safe haven vehicles instead of seeking profits.

The Japanese yen and the Swiss Franck continue to attract buyers as markets are straggling with fears that a new recession in the U.S. is around the corner. The JPY is trading near 76.40 while the CHF is trading around 0.7905.

Renewed worries over the health of Europe’s banks due to their exposure to the region’s debt crisis and the fears from a possible U.S. recession due to the downbeat economic data, will keep broad markets volatile and cautious.

The euro is losing ground against the dollar today and as of this writing is trading near 1.4315. The GBP is almost unchanged trading around 1.6515 after U.K. released a better than expected public finances and borrowing report.

The dollar index is trading near 74.25, while the Australian dollar is trading around 1.0370 on risk aversion. The “confidence game” will continue to be played while investors are no longer believing in what officials are trying to display.

EU Debt Crisis, U.S. Data, and Morgan Stanley’s Revised Growth Forecasts Send Fear in Markets

Jitters dominated global financial markets on Thursday, where rising pessimism from the European debt crisis and the health of the European financial system spread fears among traders and led investors to shun risky assets, as equity indexes, commodities, and major currencies dropped, while worse than expected jobless claims and rising CPI inflation in the United States only added to the pessimism in markets, as investors are concerned over the outlook for global growth.

Morgan Stanley announced that it revised its growth forecasts for the global economy lower for 2011 and 2012, and signaled the U.S. and the Euro Zone economies are on the brink of recession, which intensified the rising wave of risk aversion, as investors sold higher yielding assets, and headed to safety, which pushed gold prices to rise and set a new record high above $1820 an ounce.

Moreover, the Philadelphia Fed manufacturing index was released for August, where the Philly Fed index contracted to reach -30.7, well below median estimates of 2.0 and the prior estimate of 3.2, while existing home sales fell below estimates in July, as existing home sales fell by 3.5% to an annual rate of 4.67 million, compared with median estimates of 4.90 million units, which added to pessimism in markets and sent equity indexes tumbling to the ground.

Stocks in the United States fell sharply by opening on Thursday, where the Dow Jones Industrial Average was down by nearly 4% to trade around 10,950, while the S&P 500 index was down by nearly 4.45% to trade around 1140. European stock indexes were also lower before closing on Thursday, where FTSE 100 was down by nearly 3.75% to trade at 5131 and the DAX was down by nearly 5.20% to trade around 5638.

The U.S. dollar rose against a basket of major currencies on Thursday, where the U.S. dollar index was trading at 74.19, compared with the opening level at 73.88. The Euro fell against the Dollar, where the EUR/USD pair fell to trade at $1.4301, compared with the opening level at $1.4428, and the British Pound dropped against the Dollar for the first time in five days, where the GBP/USD pair traded around $1.6450, compared with the opening level at $1.6533.

Gold prices extended the gains on Thursday to set a new record high above $1820 an ounce, as gold rose to trade around $1825 an ounce, and crude oil prices fell to trade around $83 a barrel.

Rising Uncertainties Fuel Risk Aversion

Markets are losing momentum today as confidence is fragile and caution prevails. Investors seam to be alert for any sudden developments, since the downbeat outlook and the uncertainties continues to be high.

Losses were seen across the Asian and European stock markers since demand for higher-yielding assets weakened after Morgan Stanley lowered its 2011 global growth to 3.9% from 4.2%, and fears from Europe’s debt crisis persist.

As fears of a slowing global recovery reemerged and the flow of weak economic data continues, demand for safe haven will keep the yen and the precious metal to the upside. As of this writing the yen in trading around 76.56 and gold around $1795.00.

The CHF however failed to gain today, and is trading with losses around 0.7945, on believes the SNB was pumping liquidity in the forwards market. The AUD fell today trading around 1.0460 as risk aversion lowered demand for higher-yielding assets. Crude oil is falling today, trading around $86.33.

The euro is losing momentum trading around 1.4400, while the GBP weakened and is trading around 1.6510 after the U.K. retail sales fell in July more than expected, while EU’s construction output for June came worse than the previous month.

The dollar index is gaining positive momentum trading around 73.90, as markets await the release of the consumer price index, the weekly unemployment claims, the existing home sales and the Philly Fed manufacturing index from the U.S.

While the manufacturing sector is presenting disappointing outcomes for a couple of months, the unemployment claims are also expected to disappoint today since they may rise, while the CPI may show price inclined by 0.2% in July.

If inflation will confirm today it started to incline, it will diminish the possibilities for a third quantitative easing program, since it will be hard for the Feds to ease their monetary policy further. This will spread more pessimism within the broad markets.

U.S. Markets Gain on Improving Confidence, While European Debt Crisis Jitters Continue

Mixed sentiments spread through global financial markets on Wednesday, where U.S. equity markets rose by opening supported by better than expected earnings, and rising energy prices, which boosted energy shares, while European markets will still feeling some pessimism, as traders were concerned over the outlook of the European debt crisis, despite talks between French President Nicolas Sarkozy and German Chancellor Angela Merkel, since investors doubted the two leaders will be able to solve the European debt crisis from spreading into the Euro Zone region.

Meanwhile, the United States released the producer price index for the month of July, where PPI showed that pries pressures mounted in July at the fastest pace in six months on higher tobacco and light truck prices.

Stocks in the United States rose by opening on Wednesday, where the Dow Jones Industrial Average was up by nearly 0.80% to trade around 11,500, while the S&P 500 index was up by nearly 1.20% to trade around 1207. European stock indexes were mixed before closing on Wednesday, where FTSE 100 was down by nearly 0.20% to trade at 5346 and the DAX was down by nearly 0.55% to trade around 5961.

The U.S. dollar fell against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 73.53, compared with the opening level at 74.05. The Euro rose against the Dollar, where the EUR/USD pair rose to trade at $1.4499, compared with the opening level at $1.4380, and the British Pound extended its gains against the Dollar for a fifth day, where the GBP/USD pair traded around $1.6550, compared with the opening level at $1.6442.

Gold prices gained on Wednesday, as gold rose to trade around $1792 an ounce, and crude oil prices rose to trade around $88 a barrel.

Caution Keeping Gains Limited

Forex markets witnessed limited gains today, since investors were encouraged to avoid safe haven due to the rise seen this morning in the equity markets; yet the uncertainties surrounding the outlook for global growth is putting negative pressures on the higher yielding assets.

The European debt crisis plays a big role in the caution prevailing on markets. The French and German meeting in Paris proved ineffective yesterday. Merkel and Sarkozy proposed a eurozone government to oversee EU’s finances for a greater economic discipline within the European nations.

But since no immediate financial measures to counter the accelerating debt crisis in Europe were seen and no other details were revealed, market participants were disappointed, which brought losses to the euro and the European stocks early this morning.

But as the day passed investors were encouraged by the rising equity markets in Asia, which rose on improved earnings, while in Australia a report indicated that wages grew at a faster pace which improves the country’s economic outlook. This drove the AUD higher today, trading around 1.0526 as of this writing.

As investors started targeting the higher yielding assets once again, the euro rose today and now is trading around 1.4430. The pound however fell trading around 1.6405 after the jobless claims rose in July, while BoE minutes indicated that there were no votes for a rate hike this month.

The dollar index is trading with a downside bias around the 73.80 level. The U.S. will release today its PPI report for July in addition to the EIA crude oil inventories data expected to show an improvement from last week, giving an upside push to oil prices, which is trading around $87.78 level.

The Japanese yen, the CHF and the precious metal continued to climb, showing that caution is still present, where the yen is trading around 76.54, gold is trading around $1792.85, while the Swiss Franc is trading around the 0.7860  level especially after the fresh SNB steps were disappointing.

Pessimism Dominates Markets again on Euro Zone Growth and U.S. Housing

Another wave of pessimism dominated markets on Tuesday after data from the U.S. housing market showed deteriorating activities in July, while growth in Germany and the Euro Zone disappointed investors, which spread fears over the outlook for global growth and pushed equity indexes lower, as traders targeted lower yielding and more safe assets.

The U.S. released the housing starts and building permits for the month of July, where both housing starts and building permits showed easing activities, as elevated unemployment, tightened credit conditions, and elevated foreclosures continued to weigh down on housing market activities.

Meanwhile, Germany reported growth that failed to meet estimates, while the Euro Zone also reported growth eased in the second quarter, which raised concerns over the outlook for global growth.

Stocks in the United States fell by opening on Tuesday, where the Dow Jones Industrial Average was down by nearly 0.70% to trade around 11,405, while the S&P 500 index was down by nearly 0.90% to trade around 1194. European stock indexes were lower as well before closing on Tuesday, where FTSE 100 was down by nearly 0.70% to trade at 5311 and the DAX was down by nearly 1.50% to trade around 5932.

The U.S. dollar rose slightly against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 74.00, compared with the opening level at 73.93. The Euro fell against the Dollar, where the EUR/USD pair rose to trade at $1.4391, compared with the opening level at $1.4436, and the British Pound rose against the Dollar for a fourth day, where the GBP/USD pair traded around $1.6389, compared with the opening level at $1.6377.

Gold prices gained on Tuesday amid rising concerns in markets, as gold rose to trade around $1774 an ounce, and crude oil prices dropped to trade around $86 a barrel.

Weak German GDP Increased Demand on Safe Haven

Although some optimism was seen within the financial markets this morning after Google agreed to buy Motorola Mobility for $12.5 billion in its largest acquisition while Warren Buffett said “I like buying on sale”, the release of the German and EU’s GDP managed to increase demand on safe haven once again.

Germany released a worse than expected GDP report today. Growth slowed in the second quarter to 0.1% from 0.5% expected and 1.5% previous, sparking concerns about a possible slowdown in the region. Growth also slowed in the EU to 0.2% from 0.3% expected, confirming those fears.

This data is adding pressures on the policymakers to act fast and solve the region’s debt problems. Thereby the leaders of Germany and France, Chancellor Angela Merkel and President Nicolas Sarkozy, will meet today in Paris to discuss potential solutions to Europe’s debt crisis.

No concrete solution are expected, thereby investors started looking for safe haven. Meanwhile the yen continues to trade within the strongest parts of its range around 76.77. The CHF strengthened today trading around 0.7805 despite a possible invention by the Swiss National Bank.

Gold continues to trade near its highs around $1777.00 per ounce, while oil fell slightly trading around $86.90. The dollar index is trading near today’s highest of 74.16 although the empire manufacturing index was very disappointing yesterday which puts the manufacturing sector in an alarming position.

Today the U.S. will release its building permits and housing starts numbers along with the industrial production for the month of July, yet eyes will be Europe today, since the global conditions are deteriorating and a possible recession started being discussed.

The euro fell today from a three-week high versus the dollar trading as of this writing around the 1.4395 level. The GBP however saw some limited losses, trading around the 1.6375 as of this writing, after a report showed than inflation rose more than expected during July to 4.4% from 4.2% previous, adding pressures on BoE to increase rates.

Optimism Spreads Across Global Markets, as Rising Stock Markets Boost Risky Assets

Optimism spread through global financial markets on Monday, leading global equity markets to rise, which supported confidence among traders and boosted demand for higher yielding assets, as Japan reported a better than expected economic contraction during the second quarter of this year, which encouraged investors to target risky assets.

Moreover, Google announced it agreed a deal to buy Motorola Mobility Holdings Inc for $12.5 billion in cash, where the deal was struck at $40 per share, offering more than 60% in premium, which boosted confidence among traders, as stock valuations dropped to multi-year lows after the recent selloff.

The United States though released the empire manufacturing index for the month of August, where the empire manufacturing index showed a bigger than expected contraction, however, markets shrugged the empire manufacturing report and focused on the positive data.

Stocks in the United States rose by opening on Monday, where the Dow Jones Industrial Average was up by nearly 1.20% to trade around 11,405, while the S&P 500 index was up by nearly 1.35% to trade around 1194. European stock indexes were higher as well before closing on Monday, where FTSE 100 was up by nearly 0.85% to trade at 53644and the DAX was up by nearly 1.15% to trade around 6067.

The U.S. dollar fell against a basket of major currencies on Monday, where the U.S. dollar index was trading at 73.97, compared with the opening level at 74.48. The Euro gained strongly against the Dollar, where the EUR/USD pair rose to trade at $1.4451, compared with the opening level at $1.4283, and the British Pound extended its gains against the Dollar for a third day, where the GBP/USD pair traded around $1.6373, compared with the opening level at $1.6283.

Gold prices extended the drop for a third day on Monday after rising to a new record high above $1800 an ounce last week, as gold dropped to trade around $1739 an ounce, and crude oil prices extended the rise to trade around $86 a barrel.

Risk Appetite on Improved Data

Some optimism was felt within the broad markets today. Asian and European stock markets gained after finding support from an improved retail sales report from the U.S. on Friday and a better than expected Q2 GDP report from Japan.

Sentiment has improved as conditions in the global economy don’t seam to be as bad as previously anticipated, while many buying opportunities started to be seen after markets tumbled last week on fears a recession is around the corner.

As Europe and U.K. will be light with economic data today, the euro and the pound are moving within their known ranges, yet with an upside bias as sentiment is improving, increasing demand on the higher yielding assets.

The yen and the Swiss frank continue to be safe haven assets, yet the CHF fell today to a two-week low against the dollar on speculations the SNB will set an exchange rate target against the euro.

The yen is trading around 76.80 while the CHF is trading around 0.7940. The USD fell today as risk appetite improved, trading around 74.40, as markets await today the release of the U.S. empire state manufacturing expected to improve.

The commodities face pressures today as worries about demand persist, where crude oil is trading around the $85.70 level. Gold is trading with a downside bias around $1740.0 level, yet the AUD gained today trading around 1.0420.

Mixed Feelings Spread in Markets after Rising Retail Sales and Falling Confidence

Despite starting strong on Friday after the better than expected rise in retail sales, yet U.S. equity markets trimmed their gains, as the University of Michigan confidence index fell below expectations, which raised concerns over the outlook of the U.S. economy.

Meanwhile, European markets also rose on Friday supported by a short-selling ban in several European countries, in addition to data from the European Central Bank, which showed demand for the overnight loan facility eased noticeably compared with a day earlier, which eased concerns from the European debt crisis.

The retail sales for July rose by 0.5% in line with expectations, while retail sales excluding autos rose above estimates, and retail sales excluding autos and gas also rose above expectations.

The University of Michigan released the preliminary estimate for consumer confidence for August, where consumer confidence eased to 54.9, compared with the prior estimate of 63.7 and below median estimates of 62.0. The economic conditions index eased to 69.3 from 75.8, and the economic outlook index eased to 45.7 from 56.0.

Stocks in the United States rebounded to the upside by opening on Thursday, where the Dow Jones Industrial Average was up by nearly 1.30% to trade around 10,857, while the S&P 500 index was up by nearly 1.25% to trade around 1135.

European stock indexes were mixed before closing on Thursday, where FTSE 100 was up by nearly 0.60% to trade at 5037 and the DAX was down by nearly 0.15% to trade around 5605.

The U.S. dollar fell against a basket of major currencies on Friday, where the U.S. dollar index was trading at 74.41, compared with the opening level at 74.76. The Euro gained slightly against the Dollar, where the EUR/USD pair fell to trade at $1.4237, compared with the opening level at $1.4215, and the British Pound extended its gains against the Dollar for a second day, where the GBP/USD pair traded around $1.6287, compared with the opening level at $1.6229.
Gold prices extended the drop for a second day on Friday after rising to a new record high above $1800 an ounce on Wednesday, as gold dropped to trade around $1733 an ounce, and crude oil prices extended the rise to trade around $86 a barrel.

Volatile Markets on Fragile Sentiment

The European debt crisis combined with fears global growth is losing momentum is keeping sentiment fragile. Thereby volatility was seen today within the financial markets, which are moving in relatively tight ranges.

The euro fell today to the lowest of 1.4148 on worries from the region’s debt crisis which could spread to other countries including the U.S. The downside pressures on the euro were supported by the disappointing industrial production report for June.

But as of this writing it regained strength and is trading around the 1.4244 level while the pound is trading around 1.6080 after France, Spain, Italy and Belgium decided to ban short-selling starting today, improving investors’ confidence in the banking sector.

The CHF weakened further today, and is trading around 0.7725 as of this writing, after the Swiss National Bank signaled it will continue its efforts to curb the Franc’s gains. Some reports even suggested the SNB could peg the Franc to the Euro, giving a stronger upside movement to the pair.

However gains could be limited since the uncertainties that surround the global recovery remain high, therefore demand for safe haven may be triggered at any moment. Today Asian and European stocks were volatile as well.

Meanwhile the yen continues to be strong, and is trading around the 76.66 level as of this writing. This is warring investors since it could determine the officials to intervene once again to weaken the currency’s gains which is damaging the country’s exports.

Traders will be eyeing today the U.S. retail sales figures later in the day, and if the outcome will be disappointing, it could trigger demand for the low yielding assets. For now the dollar index is almost unchanged trading around 74.50.

Crude oil is almost unchanged as well, trading around the $75.50 level, meanwhile gold extended yesterday’s losses and is trading around the $1748.00 level since the CME decided to increase the margin on gold contracts.

Jobless Claims Boost Confidence in U.S. Markets, while EU Debt Crisis Continues

Optimism returned to U.S. markets on Thursday after strong earnings from Cisco Systems Inc and better than expected jobless claims eased concerns over the outlook for the U.S. economy, nonetheless, investors remain cautious, as fears the European debt crisis is worsening continued to cast doubts among traders.

The U.S. Labor Department released the jobless claims for the week ending August 5, where jobless claims fell to 395,000 below expectations of 405,000, marking the lowest in four months, where the drop in jobless claims eased concerns over the outlook for the U.S. economy amid recent signs that suggested economic activities are slowing down.

The U.S. trade balance was released from the Commerce Department for June, where the trade deficit widened in June worse than expectations. Moreover, concerns continue to mount that the European debt crisis is spreading into major economies within the Euro Zone area, where traders are now speculating the debt crisis could hit France, the second largest economy in the Euro Zone area.

Stocks in the United States rebounded to the upside by opening on Thursday, where the Dow Jones Industrial Average was up by nearly 1.30% to trade around 10,857, while the S&P 500 index was up by nearly 1.25% to trade around 1135. European stock indexes were mixed before closing on Thursday, where FTSE 100 was up by nearly 0.60% to trade at 5037 and the DAX was down by nearly 0.15% to trade around 5605.

The U.S. dollar extended its gains for a second day against a basket of major currencies on Thursday, where the U.S. dollar index was trading at 74.77, compared with the opening level at 74.56. The Euro gained slightly against the Dollar, where the EUR/USD pair fell to trade at $1.4192, compared with the opening level at $1.4136, and the British Pound rose back against the Dollar, where the GBP/USD pair traded around $1.6197, compared with the opening level at $1.6111.

Gold prices dropped on Thursday after rising to a new record high above $1800 an ounce on Wednesday, as gold dropped to trade around $1763 an ounce, and crude oil prices extended the rise to trade around $82 a barrel.