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22/6/2011 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Jun 22, 2011.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The Fed has anticipated again slower rate of inflation in the future to come attributing the recent picking up of inflation to the rising of commodities and energy prices which can be temporary. The fed has appreciated again the slow down of the labor market recovery and the depression in the housing market. The Fed has voted for keeping the interest rate unchanged between 0 to 0.25% unanimously. The fed's chair man has repeated the reasons of the economic slowing down which have been released in the recent Beige Book that the high oil and commodities prices have effected negatively on the consuming pace and the disaster of the Japanese earthquake which cut the supplies from Japan causing troubles in the industrial and consuming pace of recovery. The Fed has lowered its forecasts of the US economic growth and elevated its expectations of the unemployment rates despite naming the downside risks to growth as temporary.
    The statement of the Fed has not brought what's away from the market expectations of keeping the interest rate for extended period of time appreciating the current growth downside risks recently referring to the recent rising of prices which can be temporary on the recent rising of oil and energy prices and the Japanese earth quake negative impact which has been repeated into this meeting statement too but the uncertainty was higher than before in this cautious statement and that was the new thing in this statement which tried to not give any new clues about coming actions of the Fed which kept what's called the Q2 valued 600 billion dollars to its planed ending by the end of this month with no clear reference to the markets for buying new amounts of treasuries later and so there was some negative impact on the treasuries prices and the greenback rose on no new clues about a Q3 package to support the economy injecting more funds by the Fed.
    The British pound has continued falling been below 1.61 versus the greenback after this statement as it has been already under pressure after the MPC recent meeting minutes release which have shown stronger than expected appreciation of the growth downside risks and although they have kept the probability of inflation rising to 5% yearly over the short term, they have seen that the weak demand can bring this rate down. The MPC voted 7 to 2 for keeping the interest rate unchanged at 0.5% as Sentence who was voting for hiking by .5% has been replaced by Broadbent who preferred the majority stance against Dale and Weale who are still voting for hiking the interest rate by .25%. God Willing, The cable next supporting level is now at 1.6057 whereas it has formed its recent bottom to 1.6545 which became its formed lower high below 1.6744 which has been the highest point of it since 25th November 2009.

    Kind Regards
    FX Market Strategist
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com

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