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11/8/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Aug 10, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The greenback could hold most of its last week gains versus the japanese yen which was effected negatively by The better than expected release of the US labor report of July which has shown that the unemployement went down to 9.4$ and the the non-farm payrolls have lost just 247k in July and the market was waiting for 320k and the unemployement to go up to 9.7%. The remarked cheerful thing in this report and the cause of its improving too is the less than expected number of losing jobs of the manfacturing sector which lost just 52k and it was expected to lose 115k. The optimistic data which has shown a staving off the employement falling for the first time since last 1pril 2008. The US Stocks could pare its recent loses because of the weaker than expected services performance and bigger than expected number of lost jobs in the private sector in July earlier this week as we have seen the private sector losing 371k in July while it was expected to lose just 340k while the US July ISM non-manufacturing index came at 46.4 and it was expected to be 48.2 closing above 9300 last week. The greenback came under pressure directly after the jobs data as these better than expected figure should increase the investors' risk appitite before getting back all of these loses across the broad accumulating the pressrue on the japanese yen as there can be more reasons now to buy the greenback than being a safe haven option of the investors after these data which can improve the US economic growth outlook and the position of the US treasuries and creditability in the same time which put the gold under pressure versus the greenback this week too falling below 945 from the 2 months high which it has made just above 971 last thrusday a day before the release of the jobs data.
    As what has been mentioned in the recent analyses, the pressure on the british pound has continued this week too waiting for the release of The BOE quarterly inflation report which is expected to be dovish after The MPC's surprizing decision to extend its bond buying plan to 175 B sterling from just 125 B which effected negatively on the interest rate outlook in UK weighing on the british pound. The central bank said that the broad money growth remain weak and the recessional is deeper than previously thought.and the spare capacity of the exconomy has increased further. The bank seems worried about the economic recession more than what was widely expected and sees that the economy is still in need of further liquidity to move this current strict credit conditions helping the confidence at the current low level of demand. The cable has slumped below 1.685 after the BOE decision which drived the interest rate outlook down as the economy looks in need of a longer than expected time to get out of recession and stablize again. The British pound has got a push earlier this week by the better than expected release of UK PMI manufacturing index of July which reached the expansion territory above 50 for the first time since March 2008 at 50.8 and it was expected to be just 47.7. So, the market was waiting for keeping this 125 B with no further adding. In the previous meeting, The BOE decided to not add more than the £125bn already authorised satisfied by just announcing the probability of reviewing this amount in this meeting.
    God willing, it is important wait for Wednesday US Fed's interest rate decision and its US assessment to know whether or not there is an additional easing steps of its quantitive easing policy like what we have had last week from the BOE or not as the most important key indicator of the Greenback future this week. We wait also this week for the release of US July retail sales which are expected to be up monthly broadly by .3% from .6% in June and excluding the auto sales by .3% as the same as June. The market is watching the current struggling consuming pace closely as the main mover of the economic growth. We have also by the end of this week August University of Michigan Consumer Confidence preliminary reading which is expected to get better to 68 from 66 in July. It is important to have a look on the US CPI indexes next Friday too to know the current inflation pressure and the probability of facing a stagflation pressure at this phase of the recession or the inflation upside risks are still tame and there is no risk from it on the US treasuries attractiveness. July US core CPI is expected to be 1.7% y/y and .2% m/m as the same as June while the broad figure excluding the food and energy is expected to be down y/y by 1.8% and up monthly by .1%.
    Best wishes

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

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