Speculators by nature have to be optimistic about perceived outcomes. As risk adverse conditions hit global markets both financial institutions and traders are still engaged with tomorrow and the days ahead. Tomorrow is definitely going to happen. Calmer heads at some point will prevail. Current nervousness will subside. Thus far today relatively tranquil trading has been seen as prices remain within known technical equilibriums.
While people contemplate the tensions from the Middle East the markets remain quite active. Gold as of this writing is near 2,650.00 USD per ounce. And WTI Crude Oil is trading around 72.00 USD per barrel. The value of Gold has been in a strong bullish trend the past year it could be argued, and WTI has been bearish throughout the mid-term.
While saber rattling in the Middle East threatens to escalate, financial institutions are still gearing towards Friday's Non-Farm Employment Change numbers. The data is expected to come within the grasp of last month's hiring figures, but Average Hourly Earnings are expected to drop slightly. If the jobs numbers come in weaker this could spark USD centric weakness. That is if risk adverse trading moderates.
The past day has seen heightened nervousness, but it must be pointed out that value realms are still maintaining rather optimistic outlooks regarding the Fed's ability to remain dovish. What needs to happen now for the markets to turn tranquil are jobs reports on Friday to confirm outlooks, and for Israel and Iran not to engage in an all encompassing war. A look at the USD Cash Index shows a slight uptick, but it is definitely maintaining lower realms.
While risk adverse trading can be blamed for the results seen in the markets the past couple of days, it should also be pointed out that cautious perspectives are being practiced by some financial institutions who simply may believe values via USD centric weakness may have been overdone in the near-term. While many financial houses certainly believe the USD is bound to be weaker mid-term because of the Federal Reserve, do not mistake their short-term trading with their long-term outlooks.
Many people believe banks do not bet on the direction of Forex. But a look at the cash forward trading that banks do for their commercial clients demonstrates banks have skin in the game, and are trying to protect themselves via a multitude of layered hedging which still amounts to speculation.
Leaving us with the final point, day traders need to protect their accounts too by understanding market conditions. Volatility in the near-term is almost a certainty. Speculators should be careful not to get caught up in the amplitude of fear that is being generated by media sources looking to gain viewers. Betting blindly on outcomes because of fear will lead to costly mistakes. Eliminate the noise.
Optimistic attitudes frequently win. Day traders need to remain patient, keep an eye on developing news from the Middle East, but understand that U.S economic data results still provide the most navigable winds. Impetus will move gold, WTI Crude Oil, the USD, and equity indices via dynamic thrusts over the next few days.
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