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17/3/2011 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Mar 17, 2011.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The panic of selling has come back again because of the increased market worries about the radiation situation in Japan driving Nikkei 225 down and the Japanese yen up in the beginning of the Asian session after further loses in US equities markets pared back 2011 gains with market worries about direct withdrawing of the Asian investments for covering the exacerbated financial positions in Asia.
    The Japanese yen has got strong demand from the investors who are looking for squaring their risky positions in Japan after the Japanese earth quake and this has started from the first minutes of the week as the markets have realized the negative impacts of it on the Japanese economy and so the USD JPY has opened the week at 80.56 after closing at 81.87 and with repeating this again today, Nikkei 225 came down to 8639 coincide with strong liquidation in the favor of the Japanese yen while the Japanese governmental bonds yields are going up back again in the sack of liquidity which pressed on the USDJPY to deepen its diving below 80 after breaking 80.27 which was the side way down barrier limit of the pair trading movements recently after reaching it on the beginning of last November while the upside limit of this way was at 84.53 which has been reached in the middle of last December triggering stop loses orders below 80 reaching 76.39 during today Asian session and what has added to this reversal exchanged impact between Nikkei 225 and the Japanese yen was not only the risk aversion and the increased demand of liquidity from inside of Japan or even the usual transferring by the end of Japanese fiscal year bat the end of this month but also the exports hedge positions against rising of the Japanese yen which always compensate their products loses and cause these sever market reaction which we have seen in the recent days.
    The BOJ has started the week providing liquidity 7 trillions yens to the same day operations in the Japanese markets adding about 15 trillions yens or about 183b$ followed by about 98b$ to its buying bonds plans for providing stability to the markets but these 2 tries did not make a even a block in the way of falling of the Japanese stocks especially after with the panic because of the radiation increasing in Tokyo which started last Tuesday which the winds were coming directly from Fukushima to Tokyo which means that there are increased probabilities of injecting bigger amounts of funds for resorting confidence and stability to the markets which can put weights on the Japanese yen as it is not accepted to appreciate further from BOJ while the Japanese exports are struggling the world fear of nuclear radiated products to come out from Japan which can effect negatively on the Japanese exports costs in the coming period.
    The worries about the single currency and its backed securities which are negatively impacted also by the risk aversion sentiment currently have renewed again by the new downgrading of Portuguese long term bonds by Moody's 2 notches to A3 came which suggest a closer request from Portugal to the aid of the extended European package from 250b Euros for aiding the ailing European countries of debt to 440b Euros during the weekend to the next following Ireland.
    The single currency has been under pressure recently by Moody's downgrading of the Greek sovereign debt 3 notches to B1 and Spain's debt to Aa2 triggering further worries about the debt risks evaluation in the Euro area while the markets are preparing for a tightening cycle to be entered by the ECB for containing the prices which should increase the cost of borrowing and covering the bonds auctions in Europe lowering the bonds and stocks prices after they have been underpinned by the adopted easing stance of the ECB after the credit crisis until now.
    The Swiss frank could have the investors' interests also as the worries about the tension in the middle east as a safe have option to the investments and as the recent increased worries about the debt crisis in US and finally by the expected negative impacts of the Japanese earthquake which is containing the market sentiment currently and so USDCHF has made a new low at .8915 during the Asian session which is still under the pressure of bigger than expected radiations to come to Tokyo threating about 35 million living in it.
    Kind Regards
    FX Market Strategist
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com

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