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25/6/2010 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Jun 25, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The Chinese decision to re-evaluate the Yuan in another gradual pace is expected to save the focusing of the G20 during the weekend on the tension between US which requests for keeping the stimulating plans worrying about the global recovery which is actually losing stream in US fearing of a second dip of the recession which has been caused by the credit crisis as what we have seen recently and mentioned this week out of the Fed's Meeting after strong rebounding in the third quarter of last year and EU which is suffering from unsustainable debt problems threating their creditability currently and raising the calls for capping the governmental spending and taking austerity measures and further imposed taxes on the banks after adopting massive easing steps in the face of the credit crisis for bailing out their economies out of the recession which caused a rapid deterioration of their financial position in the recent years after the crisis.
    By God's Will, If US could succeed taking the EU attentions to the growth and its needs for liquidity, this will be good for the risk appetite weighing on the greenback and the Japanese yen but if the opposite has been done and this is widely expected on the current pressure of the debt crisis in Europe relying on what has been achieved after the credit crisis seeing that its I not serious right now to keep these easing measures as it is needed to face the debt crisis which contain the markets focusing currently, this will do the opposite underpinning the greenback and Japanese yen. The Fed has kept the interest rate unchanged again this week at nearly 0% holding the same cautious stance worrying about the current growth pace which is getting out of stream and the debt crisis of Europe consequences negative impact on US and actually, the market has been chocked this week by the disappointing drop of May US new home sales which have hit the investors' risk appetite and weighed on the equities markets increasing the speculations of having double dip of the recession.
    The market was waiting for the new home sales of May to be 470k from 507k in April but they have shocked the market with just 300k falling by 32.7%. The single currency which was trading near the week low at 1.2207 after these dovish homes sales news could creep up above 1.23 versus the greenback unfazed of June Germane IFO business climate of June which was waited to come at 101.2 from 101.5 in May but it came better than expected at 101.8 but it is now having difficulty to stand above it ahead of the G20 meeting.
    The Single next resistance should be again at 1.2452 after failing to hold above it yesterday and then 1.2598 then 1.2685 which was the recorded previous high of last May and from it the pair fell breaking 1.2143 while the next support should be at 1.2207 then 1.2165 then 1.2044 and 1.1954 which was the pair low after falling from 1.2073 and it could protect the pair from making a newer low again below 1.1875 which has become the pair main defending line before 1.16 whereas the pair has started its rally to 1.604 before falling again to 1.233 amid the credit crisis and rising back forming a lower high at 1.515 in the beginning of last December to ease back to the current levels on the pressure on the debt crisis which has been started in Greece attracting the market focusing.
    The Single currency has come under strong pressure earlier this month with the increased worrying about Hungarian financial situation because of the debt crisis and the exposure of the European countries banks to its debt especially after the release of the ECB report which has warned about the long term debt refinancing in Europe which looks in need of 800 billion euros by the end of 2012 suggesting that the European banks are in need to be ready for facing bad loans following the debt crisis which can reach 123 billion euros for 2010 and 2011 to reach 105 for 2011 and for facing the bad loans from 2007 till 2009 they should be ready with 238 billion euros. The financing problems have seemed ahead from the ECB report showing a serious need for storing stability and injecting funds into the nerves of the European banks too as the European governments which can transfer the problem to the balance sheet of the ECB threating the single currency again but it has been supported in the beginning of this week on the market optimism which has been sparked by the Chinese decision to take another gradual step from China for re-evaluating its Yuan during the weekend but with the market profit taken and the US stocks giving back its opening gains yesterday, the greenback could be well-buoyed again and the single currency came under pressure easing to 1.2207 versus it while it was trading above 1.245 in the beginning moments of the week as its other Asian counterparts markets have found in the Yuan appreciation a chance to their exports. The Japanese yen could gain strong momentum this week and it is now trading below 90 versus the greenback and also the Aussi has been well supported as Australia is the main commodities recourses provider to China which can buy more by its higher Yuan value. The Aussi has started the week trading above .88 while it has closed last week below .87 but it is now easing back with the fading of risk appetite and the equities market loses this week after strong opening to trade currently at .865.
    God willing, it is important today to wait from US for the final reading of Q1 GDP which is expected to be 3% and June US UN Michigan consuming sentiment to be 75.

    Best wishes

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

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