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18/3/2010 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Mar 18, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The Britains got jobs in February surprising the market by 32.3k added jobs in a pace has not been seen since November 1997 while the market was waiting for losing .5k after a massive losing in January by 23.5k. The UK labor report of February has shown that the adjusted jobless claimant has come down to 4.9% while it was expected to be up to 5.1%. These optimistic data could push the British pound up across the broad. The cable rose more than 2 figures and half in less than an hour from 1.522 before the data triggering stop loses orders to 1.538 changing the market sentiment towards the British pound holding before retreating back during the day in a profit taken wave to 1.528 and it is now trying to hold above 1.53. The next support now is at 1.521 then 1.512 and 1.497 whereas the higher bottom of this recent rally while the next main support is at 1.487 as the lower bottom and after that the main bottom of this year which has been reached in the beginning of this month at 1.4782 when the pressure accumulated on it after announcing about a huge bargain between AIG and the British insurance company Prudential for buying the Asian parts of the first for about 35$ Bln while it has become politically unstable by UK preliminary elections as the conservatives' opposition party has lost its strong leading versus the labor ruling party on the recent polls results with the exacerbating UK debt after post its first net borrowing deficit month since the beginning of 1993 with the public sector borrowing in Jan reaching 4.3 B Stg while the market was waiting for covering 2.8 B Stg of the debt waiting Feb data which will be closely watched in the next period as these rates can bring its budget deficit ratio to GDP above 12% like Greece otherwise it looks in building up in UK while the efforts are emerging for staving this debt off in Greece and in this same time, it has currently higher inflation rates than Europe which can back the pressure on the cable again and weighed on its rally today by the release of the new data of the public sector net borrowing today which is expected to get up further to 14.5b Stg from 4.3b Stg in January bringing back the market focusing on UK creditability doubts with the debt worries containing the market sentiment recently after it had been possessed by the governmental rescue plans and injecting liquidity in the recent 2 years in the nerves of the economy by increasing its stimulating spending, tax cuts and easing the monetary policies for spurring the investment and moving the economy out of the recession after the credit crisis, it's now focusing on the cost of these rescue plans which has accumulated in the countries debts and the negative impact on its creditability amid the current slow economic recovery specially in Europe which is suffering both of these problems of slow growth and debt rising which has been highlighted earlier this week by Moody's warning about the triple A crediting countries.

    The pressure on the single currency has eased in the beginning of this week to get above 1.38 yesterday versus the greenback after the worries about the Greek debt had calm down as the market is waiting for an expected unwarranted financial support from the other EU member for capping this problem from spreading in the Euro zone which is actually causing a downgrading of its countries creditability and the Euro holding in the recent period with the deficit to GDP ratio average is at 6%, while it should be below 3% on Maastricht treaty of the Euro area which is making it incapable to hold its gains above 1.382 before the release of a certain rescue plan until now in spite of the increasing of the risk appetite in the market after the fed's decision of keeping the interest rate unchanged between 0 to .25% keeping the phrase for extended period of time helping US stocks creeping up pace from falling and DOW to get October 2008 levels above to close above the previous high of this year at 10729 could add another 43 points looking for January high at 10729.

    So, God willing, it is important to see Feb US CPI core rate which is expected to be 1.5%y/y and .1% m/m from - .1% in Jan and broadly with the food and energy at .1% monthly and 2.3% years and further lower rate can support the Fed to keep its current accommodative monetary stance further and weigh on the greenback. We have also today from US Philadelphia fed business survey of March to be 18 from 17 and the weekly initial jobless claims to be down by 7k to 455k from 462k last week.

    Best wishes

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

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