London, UK - ETX Capital - February 18, 2013 (www.investorideas.com newswire) Ishaq Siddiqi, a market strategist at spread betting broker ETX Capital, looks at how the European Markets are attempting to kick the Presidents' Day blues.
Regional markets have kicked off the week on a broadly flat note, flipping between small gains and losses with investors welcoming the G20's pledge to avoid currency wars but cautious ahead of ECB head Draghi's speech to the European Parliament later.
At the same time, volumes are depressed as US markets are closed for President's Day. European markets for these reasons are extremely volatile, undecided over which direction to take. Furthermore, a lack of economic data today has given investors another excuse to move to the sidelines and wait for some of this week's key releases [such as the German ZEW and IFO reports and PMI surveys from the euro zone] before getting involved.
The G20 refrained from singling out Japan as the instigator of a currency war as the country attempts to spur economic growth but at the cost of watering down its currency to boost the demand for its exports. The message was clear that FX rates must be left to market forces to decide and countries must pursue domestic policy objectives rather than participating in currency devaluation.
That said, there still remains hesitation surrounding Japan's next move as the new government want to aggressively ease and a sliding yen is ultimately a side-effect of easing measures. Traders are now awaiting for the appointment of a new Bank of Japan governor for further information on how the country decides to kick-start growth but also refrain from weakening the yen much further.
In Europe so far, there has been little out to shake markets with current account data from the euro zone being greeted in a muted manner by markets. Euro zone current account surplus beat expectations again in December but fell short of November's record high. Earnings haven't been too great from Europe with Carlsberg and Telefonica falling on poor numbers. Draghi's speech will be eagerly awaited later with traders looking out for any comments regarding a rate-cut in the months ahead.
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