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Caution and tentative trading came back into the broad markets swiftly on Wednesday as economic data from the U.S. managed once again to emphasize that not all is well. The USD gained on the EUR and GBP after the Building Permits and Housing Starts both proved negative. The gains by the Greenback were not accomplished with much volatility, but there is no denying that risk appetite took a hit and investors promptly began to express weary trading on Wall Street too. The Building Permits outcome was .57 million compared to the anticipated figure of .63 million and the Housing Starts numbers were equally disappointing. Crude Oil Inventories also showed an increase, perhaps indicating that even though Americans are driving in their historically high usage months that demand is not significant. Today the States will release weekly Unemployment Claims and the Philly Fed Manufacturing Index.

Although risk appetite did raise its head earlier, it does appear that the bad data yesterday combined with previously discouraging retail and jobless reports put a dent into sentiment. The Fed report from Philadelphia and the Unemployment numbers today could be enough to cause volatility if they do not provide better outlooks – and it should be noted that both publications are anticipated to be rather flat. Meaning that Wall Street could use any additional bad news today to trade lower and the USD may find investors grasping for safe havens. Tomorrow there will be a lack of economic news from the States and this means that today is likely to be heavily influenced by the data on the calendar and the prospects for a robust recovery. Having seen rather lackluster releases come from the U.S. the past two weeks, investors could not be faulted for thinking that negative news may highlight the day.

Economic data from Europe was rather light and the EUR traded under the gyrations of risk sentiment. CPI releases from the E.U. proved lackluster, demonstrating once again that inflation is not a predominant theme in the current environment. Europe continues to demonstrate that its prospects for a strong recovery will remain a difficult task. However, the EUR lost ground to the USD probably due to a decrease in risk appetite coming from dollar centric developments because of poor data across the ocean. The E.U. will be holding another crisis summit in Brussels today to discuss the Sovereign Debt issues and austerity measures that its nations are being asked to consider. While investors have shown a certain degree of comfort in recent days with the EUR and allowed it to find stability there should be little doubt that the wrong turn of a card could cause it to stutter step again. The EUR enjoyed a few steady days of sunshine, but traders will have to watch for risk adverse clouds.

The Sterling turned in a rather flat trading session while losing a bit of ground to the USD on faltering sentiment. Today will be a big day of data from the U.K. with Retail Sales and CBI Industrial Order Expectations. Both sets of numbers will be watched by investors with the knowledge that recent publications from the U.K. have been at best a mixed bag. There is plenty of talk that the government is going to revise existing growth expectations downward in the coming weeks and because of this ‘the market’ has been braced for bad news. The GBP was able to gain earlier this week with increased risk sentiment, but this may have been a short term move within a trend that has put the Sterling under pressure.

The consolidated range that the JPY and USD has been undertaking for months continues. Asian bourses found themselves in weaker territory on the heels of less than promising data from the U.S. yesterday. With important data ready to come from the States today and Wall Street showing signs of nervousness it would not be surprising to see risk adverse trading increase these next two days of trading.

The ECB will be thrown directly into the EUR debate this afternoon. The EUR traded stronger against the USD on Wednesday, but remains in a weak trend versus the Greenback. ECB President Trichet will step into the spotlight today and will certainly face questions about the risk of a double dip recession, debt risk ratios, E.U balance sheets, and interbank liquidity issues which have arisen. As if that is not enough for one person’s plate, Trichet may find himself under additional pressure because of a lack of credibility that is now becoming evident. Investors certainly remember that Trichet claimed last month that the ECB had not discussed buying European Bonds and that this was promptly followed a few days later by the Central Bank admitting that they were going to get active in this respect. A lack of clarity and an uncoordinated plan has hurt the EUR the past month as the Sovereign Debt crisis has grown in stature. The EUR is certainly looking for stability and investors will be more than interested to see if Claude Trichet can deliver some.

The currency and equity markets traded in rather consolidated fashion on Tuesday. Market participants continue to exhibit nervousness and there has been little in the way of economic data so far this week in order to push them off of the fence. The USD traded in range against the EUR and GBP as traders displayed little conviction. Wednesday’s calendar will be rather light for data as Crude Oil Inventories and Wholesale Inventories numbers come forth, along with Beige Book figures. Ben Bernanke may find himself the focus for many in what may prove to be an otherwise quiet day of news. Tomorrow Trade Balance, weekly Unemployment Claims, and the Federal Budget Balance will all be reported and if today proves to be another tentative session, it could be Thursday that sees data cause an impact. Wrapping up the week on Friday will be Retail Sales and Consumer Sentiment statistics.

Thus, investors who last week reacted badly to a poor Non Farm Employment Change number may be holding their breath as they wait to see where American consumers are lining up (or not lining up as may be the case). The GDP from the States relies heavily upon the American pocketbook – as do many export nations – and unless people begin to spend more there stands the chance that stagnation will become the byword instead of recovery. Until powerhouse economic data is produced from the jobless front it remains doubtful that the Retail or Consumer numbers will astonish anybody. The additional problem now exist – which is still being played down by American officials – that if the European financial crisis truly ruptures and causes contagion, that international economies including the States are likely going to find themselves effected by the spillover and it will not be in a positive manner. The USD finds itself holding serve and traders in the meantime may find some opportunistic ranges.

The EUR managed to trade in range on Tuesday as investors cautiously moved in what are still nervous circumstances. German Industrial Production data was released and turned in a slightly positive outcome, but as mentioned yesterday the numbers were not exactly the talking point of the day. Instead what remains in focus are stories about Spanish banks and their liquidity and what are the real possibilities of a restructuring of Sovereign Debt unfolding among troubled E.U. nations. Tomorrow the ECB will hold their monetary policy meeting and press conference. And going into the event, investors will be well aware that the previous press conference did not go too well for ECB President Trichet who fumbled for answers and promptly sent the EUR into a spiral. The EUR finds itself at a critical juncture in terms of value and there can be no doubt that traders are viewing its current levels carefully. Europe will be quiet regarding data today and risk sentiment is sure to be determined largely by news and rumors that are circulating among market participants.

The USD made a strong start on Monday and then allowed the EUR and GBP to bounce back from their lows. Powering to new highs the USD started to find some resistance as the day developed and began to range trade. Wall Street began the day on a slightly positive note, but was not able to sustain its gains and market uncertainty took its toll by the end of the trading session as the major indexes suffered. There was no economic data from the U.S. yesterday, but Ben Bernanke did make an appearance in the evening and said he believes the American economy remains on the path of recovery, but he cautioned that it would not feel strong until the unemployment numbers improve. Bernanke went onto say that the U.S. has the capability of avoiding a double dip recession. Today will remain quiet for government data and it will only be on Thursday with the weekly Unemployment Claims and on Friday with the Retail statistics, that investors will have numbers to really bite into.

Until the U.S. releases formidable data, investors will be left to work off of existing sentiment and news which is being generated from the corporate front and the European Sovereign Debt saga. A bad start on Monday for Wall Street usually does not bode well for equities and certainly will not provide any level of comfort for investors going into today’s trading. The USD continues to find itself well within the strongest parts of its range against the EUR and GBP. The Greenback has also made a potent move against the AUD as of late. Commodity prices – excluding Gold – continue to show that they are under pressure and this highlights that demand for resources remains lackluster. In essence the broad market place continues to be a chess board that matches long term thinking versus short term strategic safe haven moves. Investors have serious questions about structural fiscal policy and how this will affect the prospects for a recovery. The USD is likely to find itself within a range trading mode today.

The EUR traded to new lows early on Monday but was able to bounce back and push itself at least into stronger parts of its intraday ranges. The EUR found some stability as Hungarian officials stepped forward and said that they had essentially been ‘misunderstood’ regarding the depths of its financial concerns. The Hungarian financial minister pointed out the country believes they can manage their fiscal environment without further need of assistance and maintain its stated budget. The E.U. is also holding talks in order to formulate its debt rescue plan with a ‘super fund’ that would back nations who face a monetary crisis. The question that investors are asking more than anything is if the EUR has found its fair value and if enough of its ‘premium’ has now been priced out of the Single Currency due to the Sovereign Debt issues. Fed Chairman Ben Bernanke gave the EUR his own backing last night, and said he believes the E.U. will act in a coordinated fashion and the EUR will remain a viable currency. German Industrial Production figures will be brought today, but investors may pay as much attention to strikes going on in Spain as these economic numbers. The EUR remains a currency with plenty of questions and risk sentiment will hold sway again today.

The JPY and USD traded in a consolidated motion as some of the risk adverse fervor lessened and the Asian bourses actually turned in slight gains on their own going into the European trading session on Tuesday. Gold climbed and now finds itself above 1240.00 USD, perhaps signaling that a flight to quality remains a priority in these nervous markets.