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17/3/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Mar 16, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The rebound of the equity market is facing resistance currently with a repeated inability of the Dow to break above 7400 which could support the greenback lately across the broad with the US equity market giving back today's gains. This retracement of the equity market has already continued to the third session last Friday on doubts about the ability of it to keep these gains after reaching new lows of this year widely on 9th of this month.
    The pessimism can easily come back to the spot containing the current market sentiment pushing the greenback and the gold higher on a safe haven and risk aversion sentiment.

    The talking about the possibility of Barclays selling of its Ishare which is the American unit managing funds of it to improve its liquidity and crediting position to get rid off the risks of the government transactions into its management as this can satisfy its lack of liquidity in the credit crisis. This talking could help the FTSEE and the British pound in the beginning of the week pushing it above 1.42 for the first time since the 9th of this month. The British pound was negatively impacted by the BOE adopting of the Fed's quantitive easing policy which pressed of the cable to get lower than 1.38 level last week before getting back some of its loses with the improvement of the risk appetite last week which weighed on the greenback across the broad recently.

    The single currency has joined the British pound appreciation getting above 1.3 versus the greenback before coming down lower than 1.30 because of the equity market loses later in the US session and we wait later today for the release of the ZEW which is expected to be -9.3 in March from-5.3% in February.

    The SNB adopting of the quantitive easing policy of the fed and BOE is weighing of the Swiss frank. The SNB has announced its worries about the Swiss frank value especially versus the single currency the SNB has cut the interest rate to .75%-0% and intervened against the Swiss frank appreciation as the markets turmoil because of the credit crisis which drives the investors to get safe haven positions which could affect negatively on the EURCHF which was trading at just 1.4765 before the intervention which drove it higher to 1.53 after this intervention which can open the door of these actions which can help the growth surely in the exporting countries which depend on their depreciated national currency like Japan and the euro area.

    In this recession, the increasing supply can force the central banks to do such action for defending their local industries in the face of the strong supply which can dampen these industries and effect negatively on the growth increasing the recession forces. So, this action can be a block in front of the outsider supply pressure and it can be appreciated as a strong protection and it can be understandable and joint too. In spite of what it can do in the forex market volatility in the short term, as we have not seen any a mentioned criticism against this action from other central banks.

    The repatriations of March of each year could underpin the Japanese yen which is getting support from the risk aversion sentiment with the greenback on its very low level of interest rate which is just .1% currently. At this time of each year by the ending of March the funds of the Japanese investors comes back to Japan for accounting proposals as the end of the financial year of the Japanese which can contain the market sentiment at this part of the year putting pressure on the USDJPY which can cap it again from cross 100 which is actually strong psychological resistance and last week, the pair get lower than 96 on the market focusing on these repatriations impact before getting above 98 and closing above it.

    We wait today for the release of US PPI figure of March which is expected to be .3% monthly from .8% in Feb and also the release of US Feb housing starts figure which is expected to be .45m from .466 in Jan and the housing permits which is expected to be .51m in Feb from .531m in Jan

    Best wishes

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

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