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14/1/2014 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Jan 13, 2014.

  1. fx-recommends

    fx-recommends Content Contributor

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    The dovish sentiment which has been triggered by the end of last week following mixed US labor report suggesting having longer time of waiting by taking another Fed’s tightening action and also maintaining the actual prospects of having a slow pace of cutting the Fed’s QE monthly scale.
    This sentiment has been materialized also on new 6 months treasuries auction for buying $26b ended yesterday on 0.055% from 0.080% on the previous auction a week ago. The US treasury could sell also $28b of 3 months bills at 0.035% from 0.055% it has done on last week auction with lower worries about the current political stance in US suggesting reaching a deal for hiking the debt ceiling before the 7th of next month with no new problems.
    The gold could have a well-watched place now over 1250$ as it has become attractive from a side with this falling of the yield in the secondary market and from another side by the falling of the demand for the greenback generally on this current sentiment which weighed down on the risk appetite too.
    USDJPY could attract the eyes too as it has become trading well below 103 level with this risk aversion sentiment which unwinds carry trades directing rebuying of the Japanese against the greenback which has become less attractive in the recent hours as the difference between the yields of the US bonds and their Japanese counterparts generally got tighter.
    The US blue chips could have deeper places to retrace what they could gain on optimism about the US economic growth pace made them well-buoyed in the recent weeks to watch them trading at the lowest rates since the Christmas.
    While the market focusing will be this week on the release of US retail sales which are expected to show rising by 0.4% year on year as the same as November and also US CPI which is foreseen to be up by 1.5% y/y in December from 1.2% in November as important signal about the inflation which is still tame forming quit atmosphere to the Fed to not rush worrying about its upside risks after the release of Nov PCE had shown standing for the third consecutive month lower than 1% y/y by rising by 0.9% while the Fed’s target of PCE which is the Fed’s favorite gauge of inflation is 2% yearly and the Fed has referred in previous statements of it last year that it has the ability to endure inflation higher than this rate by 0.5% for stimulating the economy.
    From another side the single currency could maintain last week gains which it accomplished versus the greenback following the US labor report to be traded near 1.3665 after it had been dampened by the recent dovish comments of Mario Draghi which suggest taking further easing measures in the case of having further retreating of the prices and tightening of the credit conditions in the money markets. Draghi has refused to identify any mean for facing such possible conditions but he assured after keeping interest rate at this current unprecedented low level on that any new stimulating decision will be on the treaty which conducts the ECB mandate!

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