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11/11/2009 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Nov 11, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

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    The greenback is still in a defensive position after its weak beginning this week as the market optimism could contain the market sentiment pushing the stocks up across the broad increasing the investors' risk appetite again putting pressure on the greenback which was negatively impacted by the G20 fin ministers ignorance of its recent weakness in their meeting during the weekend considering the new greenback feature as a funding currency of the carry trade investing transactions as its current very low interest rate level and the current held quantitive easing policy of the Fed which is seemed to stand longer waiting for a crucial materialized change of the US labor market as it has announced last week in its statement after holding the interest rate unchanged that in spite of the recent improvement of the economic conditions and the better than expected growth rate of the third quarter, the economy is still in need of all of its easing stimulating policy steps further for storing confidence and improving the labor market conditions which can suffer further next year expecting the unemployment rate to get over 10%. The Fed's worries about the employment and this halting recovery were widely expected and there was no a major change in the market as expected but we have seen last Friday that the labor market is still struggling in the Labor report release of October which included a revising up of the non-farm payroll of September by 63k but in the same time, we have seen an increasing of the unemployment rate to 10.2% and another increasing of the non-farm payroll lost jobs by 190k and the market was waiting for losing just 175k which were not far from the market expectations. The market has got out of that that the easing monetary policy is to be hold further and the G20 fin Ministers statement language contained this same meaning which caused the current weakness of the greenback versus the Gold and the other higher yielding currencies such as the Australian which enjoy a higher interest rate outlook differential currently after the RBA recent 2 meeting hikes by .25% on the growing pace of china which keep the demand for the Australian commodities. The Aussi is trading now above .93.

    The cable could join the gains versus the greenback to reach 1.684 but it came under the pressure of the market concerning about its sovereign rating as David Riley who is the current co-head of the global sovereign of Fitch said in his Reuters interview today but the British pound could get back most of its loses with the equities market ability to hold its recent gains and Dow existing above 10200 for another session. By god's will, it is very important today to listen to the BOE inflation quarterly inflation report after BOE had kept the interest rate unchanged too last week adding 25bln Stg more to its current 175bln Stg governmental buying bonds plan which was good for keeping the assets value in UK to be 200 Bln Stg and left its 3 months period revision to the economic development and the central bank evaluation mentioning that the need and the importance of this step for stimulating the sluggish economy which faced another contraction in the third quarter of this year.

    Best wishes

    FX Consultant
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com
    http://www.fx-recommends.com
     
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