A day when fear or caution won the day as traders found it difficult to push prices higher. Stocks were lower and the USDJPY continued its recent reversal. The Aussie is essentially becalmed but wanting it seems to break higher at some point.
It’s hard to know what’s different on a Monday that isn’t apparent on a Friday because nothing really happened over the weekend to cause stocks and risk to go off. The answer is that nothing really fresh happened but traders just wanted to focus on the negatives over the past 24 hours. Feeding that negativity was the release overnight of the German Gfk Consumer confidence survey which was weaker than expected at 5.9 from 6.1 last and 6.2 expected. We are also a few days closer to the fiscal cliff, and another day without a resolution to the Greek issue if you add the Catalan election which seems to imply some sort of move toward autonomy plus weaker than expected Chicago Fed (-0.56 v 0.00 last) and Dallas Fed indices (-2.8 v 1.8 last) and there is probably enough marginal negatives to combine to a dour day’s trade.
Equally it could simply be that given the thinness and low volume of last week’s stock rally, markets will really need to see confirmation to kick higher. So when there were no positive catalysts over the weekend or yesterday the short term focus turned negative.