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14/11/2013 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Nov 13, 2013.

  1. fx-recommends

    fx-recommends Content Contributor

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    The cable is still holding most of yesterday gains trading near 1.6040 underpinned by Yellen’s comments which suggest that the recent improvements in the US labor market are not enough to start the tapering process to lower again the forecasts of having tapering next month by God’s will to support the US equities to continue rising again to drive the Asian session to have bullish opening with tendency for loading more risks weighed down again on the Gold which rose following Yellen’s comments.
    The British pound has been already supported by UK labor report of October which has shown easing of ILO unemployment rate which counts the number of unemployed workers divided by the total civilian labor force to 7.6% for the previous 3 months to October while the markets were waiting for unchanged figure at 7.7% like the previous 3 months to September, August and also to July.
    Oct UK claimant count change which counts the number of people claiming unemployment related benefits every month has shown another better sign also by its falling by 41.7k while the consensus was referring to 35k after falling by 41.7k in September have been revised to 44.7k.
    Mark Carney the Chief of BOE has shown appreciation to this recent improvement of the labor market in UK saying following these figure in his press conference which came with BOE inflation quarterly report that the MPC now expects the 7% threshold to be reached earlier than we did in August however the way it is still long to get back about 1 million jobs are still lost since the financial crisis while the economy remains 2.5% smaller than it was in 2008 despite its growing currently at its fastest pace in the last 6 years.
    So, the main the dovish thing to the British pound now is the subdued inflation pressure in UK which can open the way for BOE to keep its easing stance unchanged unworried about the prices up side risks at the current economy activity and in the case of getting back to slower economic growth, it can pave the way for further easing steps.
    Mark Carney has highlighted that too saying that the annual CPI reading slippage from 2.7% to 2.2% was sharper than the projected decline to 2.5% and also far below the BOE’s forecast of 2.8% average inflation for the rest of the year thanks to the recent British pound appreciation but he sees that it may tick up slightly in coming months as recently announced utility price increases take effect.
    Generally, These comments looked like expected upgrading of BOE forecasts of the UK economic, after the better than expected series of data figured out this stance to the markets before this expected appreciation by BOE such as Oct Services PMI which has shown expansion by the strongest pace in the recent 16 years by rising to 62.5 while the consensus was retreating to 59.8 from 60.3 in September which followed CBI up revision of its quarterly forecast of U.K GDP to be up yearly by 1.4% in 2013 and 2.4% in 2014.
    By God’s will, The cable can meet now in the case of retreating again supporting level at 1.5853 which has been reached following the unexpected massive falling of UK CPI to 2.2% y/y to prop it up it to the current levels while falling below it can be met by lower supporting levels have been formed at series of higher lows in its ascending way at 1.5773, 1.5684, 1.5561, 1.5521, 1.5461, 1.5423 whereas it has formed a bottom just above its 200 H4 moving average while going up further can be faced by intermediate resisting level at 1.6117 before 1.626 again which could cap 2 times last month while getting over it can be open the way for testing 1.6380 which is still its recorded high of this year which has been reached in the beginning of it after avoiding the fiscal cliff in US.


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    FX Market Strategist
    Walid Salah El Din
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