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14/5/2010 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, May 14, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

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    The current market sentiment is still dominated by the debt crisis in the Euro zone and its consequences which can effect negatively on the growth outlook in the Euro area which is already struggling. The equities markets could have a breathe with the beginning of this week after a massive selling on growing worries about the European financial system and the European countries ability to cap the credit crisis from spreading out to other countries as The EU Fin Ministers could reach an agreement with the IMF to provide 750 billion euros in a rescue package plan under the request of the European countries which are facing debt problems opening the door for the ECB to start discussing and buying European bonds by the volume which it sees suitable after the market has been disappointed by Trichet's comments about not discussing this issue in the ECB meeting last week!. It is not a functional deficit in the ECB but there should be a joint decision after the financial ministers take their decision.
    The market has digested the new news which could calm down the investors in the beginning of this week focusing on the impacts of the new announced package over the long term at the current low economic growth rate in the Euro zone which has not yet negatively impacted by the debt crisis and the requested austerity measures from IMF, the ECB and the European governments which will cap the governmental spending affecting negatively as well on the GDP of the EU countries which are actually struggling lagged behind US encouraging the risk aversion underpinning the greenback from another side. The single currency could have a strong opening this week above 1.2875 which was its previous support of April 2009 getting momentum to continue its rally to reach 1.31 after the rescue package announcement before losing it falling back again below its psychological level at 1.3 in a continuous selling could break its low of last week at 1.252 reaching 1.243 today which can expose the formed main bottom of October 2008 amid the credit crisis at 1.233 to be broken then the main support level of the pair will be 1.16 by god's will, whereas the pair has started its rally to 1.604 before falling to 1.233 and rising back forming a lower high at 1.515 in the beginning of last December.
    After the new European announcement of affording 750B euros to rescue the subjected economies in the Euro zone to the debt crisis, the worries about the impact of it got back to the market sentiment driving the European equities markets and the US indexes future down helping the gold to creep up again above 1200$ breaking its previous recorded high on the third of December 2009 at 1226$ trading currently above 1240$ after it has exposed to profit taken last week with the strong falling of the oil prices but it could come back again to its uptrend getting back above 1200$ finding support above 1150$ closing.
    The gold is still well-chosen option to the investors who are looking for the best safe haven with the current global missing trust in the bonds attractiveness and increased worries about its rewarding as a fixed income option to the investors who are looking for a saving option of their money value and that's rather than the increasing of the commodities and energy prices which are still pushed up by the current low accommodative levels of interest rate across the broad which is lowering the cost of borrowing from a side and the value of the currency from another side.
    God Willing, it is important to wait for the preliminary release of US Michigan consuming sentiment survey of May which is expected to come at 73.2 from 72.2 in April after the release of April US retail sales which were expected to increase by just .1% and came up by .4% monthly and April US industrial productions which have risen by .8% from .2% in March and they were expected to be .6% while the capacity utilization has come slightly lower than 73.8 of March at 73.7

    Best wishes

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