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15/1/2014 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Jan 15, 2014.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The risk appetite could find its way back to the market after over-extended reaction to the US labor report which has come actually mixed but the market has found in this report calling for taking profits sending the US treasuries up driving its yields down by an excessive way sent UST 10YR yield to retreat to 2.83% with sharp drop of the US blue chips in the beginning of the week too from 2.96% before this mixed report release which maintained the actual prospects of having a slow pace of cutting the Fed’s QE monthly scale.
    With this current rebound of the risk appetite, the yield of this note could rise again and it looks to try stabilize again near 2.9% by God’s will waiting for new clues from the Fed which can find in these data an excuse to wait before cutting its QE again after cutting last month the Fed’s monthly MBS buying by $5b to be $35b and also its Treasuries buying a month by $5b to be $40b.
    The volatile USDJPY which is sensitive to the QE changes and also the market risk appetite could find its way back to have a place over 104 after retreating could gain momentum with breaking of its previous supporting level at 103.74 to reach 102.84 before this rising back which could be fueled by the release of November current account deficit which reached Yen592.8b while the market was waiting for Yen380b because of the tendency to purchasing before the waited rising of sales tax hike to be this year which can be added to the continued dependence on importing oil for producing energy since March 2011 earthquake.
    Also the gold which could be watched over 1250$ in the beginning of this week retreated again to be traded now below 1240$ with the rising back of yields which made it less attractive again and also reloading risks sent the equities markets up again.
    The greenback could get back also some of its lost ground versus the British pound which has been undermined by another falling of UK CPI to the yearly target of BOE to 2% yearly in December as the lowest level in nearly 4 years giving BOE to keep its accommodative policy further to be traded again now below 1.64
    The single currency retreated again also versus the greenback after failing to get back 1.37 as it is still looking negatively impacted 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!
    From another side, it seems too that the ECB is hoping for a recovery of EU to come following US can fuel the prices even gradually but it looks that the EU economy can continue to be lagged behind on the current imposed austerities measures which are still weighing on the growth outlook, the labor market, the confidence in business spending and also consuming generally even in the European main economies like Germany which has shown today GDP growth by only 0.4% in 2013 while the market was waiting for 0.5% after growing by 0.7% in 2012

    Kind Regards

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

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