As we mentioned yesterday, the fact that pertinent and concrete economic data has taken a holiday (alongside everyone else) has allowed triviality and speculation to run amuck in the markets. Today’s culprits seem to be print articles coming out of both Japan and Germany. The Japanese newspaper Sankei reported that the BoJ is considering expanding their injections of liquidity through “new…

Fundamentals have clearly taken the back seat to fable mongering and inflated headlines this morning. The hot-cold risk-appetite trades have picked up a schizophrenia-like pattern and Forex has yet to develop a sustainable trend across any major pair. We are still seeing a level of divergence between treasuries, stocks and commodities which hasn’t assisted in providing some much needed clarity. …

The buzz this morning is China’s sudden lack of interest in US debt and renewed concern over some EU economies. Looking at market behaviors in Forex, stocks and bonds verse the economic data and global events coming out, it is becoming increasingly difficult to identify a comprehensive trading theme. Perhaps it’s a function of news flow hitting the liquidity markets with exaggerated reactions…

Without a doubt, the most important currency to be watching this week will be sterling. The big story in the UK is the persistently high level of inflation which has been well in excess of the MPC’s 2.0% target and indeed the 3.0% threshold set by the Treasury throughout 2010. For much of the year, this surge has been disregarded or overshadowed by the BoE’s unwavering focus on vulnerable growth…