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27/1/2014 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Jan 26, 2014.

  1. fx-recommends

    fx-recommends Content Contributor

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    The market sentiment continued to be possessed by the sake of liquidity in many Emerging economies which weighed down on the market risk appetite by the weekend amid worries about the financial stability in the South American countries after Argentina decided to afford further easing conditions in the forex market to tighten the gap between the official exchange rates of the Peso and the black market lead to falling of its value by more than 15% this year.
    The worries about this crisis extension can gain momentum by POBC’s decision to suspend the cash transfer into foreign currencies 9 days ahead of the new lunar year for technical needs to maintain its system.
    While the Fed’s decision to start tapering its QE last month is still looking weighing on the credit conditions in the banking sectors of these emerging countries as most prospects refer currently to increasing of the USD borrowing costs by continued cutting of the Fed’s monthly scale of buying can be in a gradual way to ended by 2015 by God’s will.
    While the market is still divided about the next step of the Fed by its meeting this week as the Fed can find in the recent mixed data about the labor market an excuse to wait ahead the end of talking about the US debt ceiling hiking which is scheduled to be by the 7th of next month before cutting its QE again after its decision last month to reduce its monthly MBS buying by $5b to be $35b and also its Treasuries buying a month by $5b to be $40b.
    The single currency retreated to be traded again versus the greenback around 1.368 by the end of last week after reaching 1.3738 and the cable also managed to start the new week below 1.65 psychological level after falling from 1.6667 which has been its highest reached rate since the beginning of May 2011 as the markets have started speculations of having new ILO unemployment rate threshold after reaching 7.1% last November from BOE which is still looking eager of keeping its monetary easing unchanged at this current historical ample keeping BOE’s APP unchanged at Stg375b as it has been since July 2012 and also the interest rate at 0.5% as it has been since Feb 2009 unfazed of what has happened in the UK labor market but supported from another side by the falling of the inflation in UK to its yearly target at 2% in December.
    BOE has actually mentioned in its recent inflation quarterly report that the MPC now expects the 7% threshold to be reached earlier than what has been expected before in last August when it said that it is expected to be by 2016 however the way it is still long to get back about 1 million jobs are still lost since the financial crisis while the economy remains 2.5% smaller than it was in 2008 despite its current growing pace which is the fastest in the last 6 years.
    While USDJPY is now trading just above 102 after the release of Dec total trade deficit which came at yen1.302b while the market was waiting for 1.222 from 1.292 in November. These trade data which show rising of the Japanese trade deficit in 2013 by about 65% could weigh on the Japanese yen again to support USDJPY which has resumed its falling with this dovish sentiment which tightened the yield gap between the US treasuries and its Japanese counterparts to reach 101.75 in the beginning hour of the new week maintaining what has been mentioned in the previous reports about it when I have named it “The volatile USDJPY” as it is expected to continue to be sensitive to the QE changes and also the market risk appetite by God’s will.

    The Gold has spiked again in the beginning of the new week to reach its previous resisting level at 1279 per ounce with this sentiment which came accompanied with relative strong falling of the US treasuries yields made the yellow metal more attractive while the market is watching currently UST 10YR yield well below 2.8% psychological level reaching 2.72% after breaking by end of last week 2.83% whereas it has stood following the release of US labor report of December.
    God willing, XAUUSD which could have a bullish sign last week by having a higher bottom at 1231 over its H4 Moving average can meet in the case of rising further breaking its 1279$, it can face another resistance at 1294$ before 1300$ psychological level and it can meet above it other resisting levels at 1327$, 1361$, 1375$, 1400$, 1416$ before 1433$ which has been reached on previous worries about imposing US military action against the Syrian regime fueled the energy prices while going down again from here can be met by supporting 1231 again which can be followed by another support at 1218 before 1200$ psychological level which can be followed by the lowest level of last year at 1180$ which could hold supporting it again at the end of it to rebound from 1182$ to the current levels.


    Kind Regards

    FX Market Strategist
    Walid Salah El Din
    Mob: +20 12 2465 9143
    E-Mail: mail@fx-recommends.com
    http://www.fx-recommends.com
     
    #1 fx-recommends, Jan 26, 2014
    Last edited: Jan 26, 2014
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