Political turmoil and disappointing data in Europe helped fuel a rise in the commodity markets and the US Dollar as investors too advantage of nicely priced positions following on from political unease in Europe and disappointing data coming from the largest economy in Europe – Germany.
Gold reached a two – week low after French election results in which Right-wing candidate Marine Le Pen took nearly 20 percent of the votes leaving President Nicolas Sarkozy trailing Socialist challenger François Hollande meaning both candidates are headed towards a runoff next month. Top of the agenda in the political race was the effect of the austerity measures with both investors and voters showing their concern.
Contributing towards a move away from the Euro, which up and till recently has enjoyed a relative calm, was also the collapse of the Dutch Government after a breakdown in negotiations over the budget prompted Dutch Prime Minister Mark Rutte to offer his resignation and dissolve the parliament.
Meanwhile over in Germany – the guiding light for all other 16 members that make up the Eurozone – announced its Purchasing managers index falling to its lowest level since 2009, falling to 46.3 in April ,way below the expected 49.0 level and down from March’s figure of 48.4.
All the worries helped push investors into the safe haven currencies such as the USD and the JPY which caused the commodity markets to fall. However, bottom feeders in the market snapped up nicely priced positions which saw an increase in the commodity markets and putting pressure on the USD. Currently Gold was up 0.24% trading at 1636.55 and Silver was up 0.62%, valued at 30.788. The US Dollar index, which measures the USD against a basket of 6 weighted currencies, was down slightly – 0.05%, valued at 79.44.
Today at 10.30am is the 2year debt auction in Italy, whilst at 1.30pm core retail sales figures are released in Canada. After that there is a raft of data being released from the US, so keep an eye on the USD.
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