1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

21/4/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Apr 20, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
    Likes Received:
    A strong profit taken wave in the equity market has underpinned the Japanese yen and the greenback across the broad. The Japanese yen and the greenback are the most funding currencies of investing in the equity markets because of their very low level of interest rate. The gold was well supported too as a safe haven and it could creep back above 880$. The Dow has fallen to 7841 and the next major support is expected to be at 7550.

    There was a spreading believe recently that the worst of the crisis is over after the recent earning reports of the first quarter last month which referred to an ability of making profits again and improving of the consuming sentiment in US but the jobs shrugging off is still on for drawing down the costs and shrinking the activities for meeting the demand that can spur growth back again which can cause a second round effect and the market has focused on the huge amount of the toxic assets which are still existing in the balance sheets of the banking sector which can exceed 4 trillion$ as the recent evaluation by the IMF and it is well known to the market that these toxic assets have been actually underestimated by about 20% because of the FASB changing of the accounting rules.
    From another side, the deflation risks are uprising currently capping the spending over the producing level and the consuming level as the recent release of US PPI of March came below the market expectations of -2.2% yearly and 0% m/m at -3.5%y/y and 1.2% monthly and US CPI broad figure has followed it coming down by .1% monthly and .4% yearly ensuring the deflation pressure. In this same, the uncertainty has increased about the future of the housing market after the housing starts slumping in March to .51m and the building permits falling to .513m which can temper the investing sentiment.

    The greenback could break 1.458 versus the British pound which waits later today for the release of UK CPI data of March which are expected come lower again to 2.9%y/y and .2% m/m from 3.2% y/y and .9% m/m in Feb. the cable has been met by profit taken directly after crossing 1.5 with no major change of the current market sentiment to support it further and last week dovish closing could help the greenback to make further momentum gains versus the British pound breaking 1.458 today. By god's will, the next support is at 1.448 and then the major support level at 1.41 and the way up can meet a resistance at 1.458 then 1.477 again.

    The single currency was under pressure versus the greenback in the beginning of this week trading below 1.3. The single currency suffered recently after the release of March HICP which came as expected and as the same of Feb at .4% m/m and .6% y/y which weighed on the single currency to break 1.3 versus the greenback waiting for further stimulation steps to come from the ECB as the current low level of inflation which can come lower further exposing the EU economy to deflation risks which have been a downplayed probability by the ECB president Jean Claude Trichet in his press conference after the ECB recent cut by just .25% on the second day of this month. God Willing, We wait today for the release of the germane ZEW of April which is expected to show improving of the current conditions to -87.2 from -89.4 in March and the economic sentiment to 1 from -3.5.
    Best wishes

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

Share This Page