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10/2/2014 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Feb 10, 2014.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    However the market was waiting for 180k jobs to be added out of the farming sector last month in US, it has not found in US Jan labor report a reason can cause a pause of the Fed’s pace of incremental gradual QE tapering which has been maintained by the Fed’s governor Rosenberg’s recent comment saying that we should only gradually be reducing accommodation because we are only seeing gradual improvement in the economy.
    As the Fed has decided by the end of last month to cut its monthly scale of buying by another $10b with weaker number of added jobs out of the farming sector in December came at 74k before revising to 75k with Jan report which has shown adding 113k and lower unemployment rate at 6.6% to be closer to the Fed’s announced target at 6.5% as it has pledged several times last year to keep the interest rate at this current low level till the unemployment to fall to 6.5% or the inflation to go up to 0.5% above its 2% yearly target.
    The markets are taking waiting stance in the beginning of the week ahead of the first semi-annual testimony of the new Fed’s Chief Yellen. It looks now to the market participants that the Fed is eager to watch the economy without the QE by adopting a gradual pace of tapering and this direction is expected to be maintained by Yellen who was well-known by her tendency to stimulate the economy by the Fed’s possible available means unworried about forming a bubble in the financial and the housing markets.
    There can be discrepancy between these 2 stances before taking the office of the chief and after it and the market is willing surely to know more about her view and evaluation especially of the prices direction and the labor market.
    The Yields of the US Treasuries could be able to hold its recent gain following these labor data as there is less worry about pausing of the Fed’s QE cutting scale right now.
    The Asian and European equities markets could have bullish opening after their US counterpart gains by the end of last week to show improving of the markets risk appetite weighed relatively on the Japanese yen and the greenback in the beginning of the week.
    With no major data during the European session to move the market, the single currency is still able to hold last week gains versus the greenback underpinned by the ECB announced stance to wait before taking another easing step as it sees the current economic situation is still complex unworried about deflation pressure and also about rising of the yields in the money market while the prices are expected to watch extended period of easing power in EU.
    The cable also could book its place around1.64 with BOE willing to hold its current accommodative stance for longer time despite the progress that has been done in the labor market while there is no considerable inflation upside risk can put pressure on it to raise the interest rate meanwhile.
    USDJPY could hold its place also over 102 with the greenback supported by the market expectation of keeping the tapering with no change and the JPY undermined by the Japanese unadjusted current account deficit record of November which reached Yen638.6B rising by 176.8% y/y on continued dependence of importing oil for producing energy while the yen is suffering the abenomics policy of Abe and BOE’s Chief Krouda which sent the Japanese yen down 18% last year.

    Kind Regards

    FX Market Strategist
    Walid Salah El Din
    Mob: +20 12 2465 9143
    E-Mail: mail@fx-recommends.com

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