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14/12/2009 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Dec 13, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

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    The release of US November retail sales which were expected to be up monthly by just .6% and came at 1.4% and the preliminary release of US UN Michigan University consuming sentiment survey of December which was forecasted to be 68.5 from 67.4 in November and came at 73.4 could add to the current market speculations of a near coming tightening action staving off the US quantitive easing policy of the Fed. The market was already fueled by the better than expected labor data of November which have been releaser more than a week earlier which have shown falling of the unemployment rate to 10% from 10.2% in October and losing of just 11k in US out of the farming sector. The greenback has been underpinned by these new cheering consuming data despite the surging of the US stocks which effected negatively on the Japanese yen as the greenback has a better interest rate differential outlook right now comparing to the yen which is still attracting the interest of the investors carry trades transactions to be the most hurt currency after these data which have been interpreted to a nearer coming Fed's tightening action than what has been discounted.

    The single currency which was still trying to get out of the negative impact of the Greece huge unsustainable debts worries could not stand further above 1.47 to end the week hardly above 1.46 after reaching 1.4586 versus the greenback, in spite of the current market optimism which were always supporting the single currency versus the greenback in the past as these data increase the interest rate out look more than encouraging the investors to sell the greenback taking risk of investing in higher yielding currency. The greenback could gain a technical momentum support last week after the better than expected labor data of November and these new consuming data can add to this momentum today and this firm closing of the week of the USD can increase USD buying by the Fed's next meeting next Wednesday which is expected to show a firmer talking about the inflation upside risks in appreciating of the recent improving of the consuming pace and the labor market.

    The gold could hardly close above 1110$ as the greenback has added more gains versus the crude oil at the end of last week weighing on the inflation upside risks in a time of waiting a closer tightening action by the fed or at least an optimistic assessment next Wednesday can smooth to this action and the persisting of this current market sentiment can make it difficult to the gold to keep its gains above 1100$ which can lead to a testing of 1025$ support. The Gold could get benefits last month from the dovish interest rate outlook across the globe with the current great ample of liquidities which provided from the central banks for capping the impact of the financial crisis on the real economy providing the required money for the governmental rescue plans and stimulating the banks to lend and the investors to take risks again for making and possible operational profits at the current lower cost of money which can save jobs and help the consuming which is essential for the economic recovery which weighed on the low yielding currency with the increasing of the investors risk appetite such as the Japanese yen and the greenback but now with the storing of the market confidence, the interest rate outlook differential is expected to play its main role in moving the forex market again.

    Best wishes

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