Marketplace Growth and the Week Ahead

Poor performance data out of Europe and Asia has brought forth yet another major concern in regards to the global marketplace. This has led to people straying away from the Euro and the British pound sterling and has attracted traders to safer havens, such as the U.S. dollar. The dollar has been the best performer over recent trading days, even though the rate of job growth in the U.S. is starting to slow down. Still, progress is progress, no matter how slow it is. Slow growth is still better than a reversal, and global traders have recognized this fact by flocking to the dollar.

The French election has also sparked some concern over the Euro. With incumbent Nicolas Sarkozy losing the first round of voting to the far left candidate Francois Hollande, there seems to be some concern over which direction the country is moving in. Sarkozy will still advance to the final round of voting, but he has another major foe running against him: the far right Marine Le Pen. This nationalist candidate has raised concerns over French and European solidarity, and could mark the beginning of even more intense struggles within the European government. Until this election is finalized, the Euro will probably hang in limbo in comparison to other major currencies.

The Japanese yen is also performing well, even with the given problems faced by the rest of Asia. In fact, this currency is performing better than any of the other major global currencies, including the U.S. dollar. The yen gained about 0.08 percent in early trading on Tuesday and it looks like it will continue to increase in price for the foreseeable future. The Japanese economy is by far the strongest in Europe as of right now, and its currency’s performance is a reflection of this fact.

The dollar is still strong, and it is a better alternative to the European currencies. Even minor currencies, such as the Swiss franc, are performing poorly against the dollar. The franc is doing better than others, as this price chart seems to be going through a period of consolidation. In other words, the USD/CHF price chart is moving sideways. The Swiss currency has a long history of being a safe haven, but for now, the yen seems to be the slightly better choice.

Other widely traded minor currencies, such as the Australian dollar, are also struggling in relations to the USD. In early Tuesday trading, the AUD lost about 0.29 percent of its value against the USD. This trend shows that there are larger doubts looming in regard to the worldwide economy. The dollar and the yen are profiting from these concerns, but this might spell major trouble at some future point.

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