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23/9/2010 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Sep 23, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The Fed's deflation concerns are still containing the market sentiment putting pressure on the greenback across the broad. The single currency could get over 1.34 versus it but the cable is still skeptical by the growth downside risks amid slowing of US growth in the second half of this year after dovish MPC release minutes showing a tending to having further stimulation easing steps following US. The cable has been trading below 1.56 after the release of UK public sector net borrowing of August today which was expected to be 12.2b Stg from 3.173b Stg and came at 15.3b Stg these data are important after last week King's remarks that debt situation of UK which needs to a plan be much more credible. The cable has been already under pressure across the broad since the release of UK mortgages approvals which came at 45k in August and M4 Money supply which were -.2% while the market was waiting for increasing by .2% from .4% in July showing an easing of the inflation pressure breaking 1.5635 strongly reaching 1.5575 but with Moody's restoring confidence in UK AAA credit rating, the cable could climb to 1.562 but it could not get over 1.5635 to slide back trading below 1.555 unfazed of the gains of the equities markets but after the Fed's new hinting of keeping its stimulating QE policy increasing the market expostulations of stepping up further in buying mortgage backed securities and governmental bonds weighing on negatively on the greenback, the cable could come over 1.56 again but it is still unable to break above 1.571 again.
    The market was waiting optimistically to have better easing Fed's assessment reflecting the improving of August data as US ISM manufacturing index coming back up to 56.3 against the market expectations of easing further to 53.5 from 55.5 in July and US Conference Board's Consumer Confidence which rose to 53.5 from 50.4 in July while it was forecasted to be just 51 and US non-farm payroll which have shown losing of just 56k instead of 110k which have shown losing of just 56k instead of 110k referring to that there is no strong downward momentum of the US economic growth can cause a panic reducing the probabilities of having a double dip recession which has been seen looked a concern of the Fed in its recent meetings with the US labor market struggling performance which can tackle the market trust to spend for consuming and housing at this stage of recovery which is still in need of the Fed's QE easing policy. The fear about the US growth has contained the market sentiment in August after the dovish release of July US non-farm payrolls which have lost another 131k and shown a down revision of June losing of 125k to 221k weighing negatively on the US equities markets pushing USDJPY below its 15 years low reaching 83.57 and the US treasury yields on another wave of losing trust forced the Fed to step forward in its quantitive easing policy buying more Mortgage backed securities and rolling over it’s holdings of treasury securities as they mature before this deterioration can have further negative impacts on the consuming and capital spending and to inform the markets that the Fed will not stand seeing the economy falling back in a second dip recession with no action even with the interest rate near 0%.
    By God's Will, it is important to wait for September EU manufacturing PMI to be 54.6 from 55.1 in August and from UK for BBA mortgages approvals to be 32.3k in August from 33.7k and from US, we wait for US existing home sales of August to be 4.04m from 3.83m in July.

    Best wishes

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

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