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28/9/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Sep 27, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The greenback could keep its gains at the closing of last week amid a profit taken wave in the equities markets. The greenback has driven the gold down breaking 1000$ psychological level triggering stop loses orders under it and the gold could close hardly at 988$. The pressure on the gold has started last week after the Fed's decision to keep the interest rate unchanged extending its MBS program to the 1Q of 2010 from 4Q 2009 as it has been downplaying the inflation upside risks in the near term. The Fed's assessment have shown inherited to the inventors its current existing worries about the unemployment and the solidity of the recovery which weighed negatively on the US stocks by the end of the week pushing the commodities and the energy prices down and the gold prices as well as a mirror of the inflation. The US stocks could not get use of the US UN. Michigan consuming sentiment survey of September increasing to 73.1 from a preliminary reading was just 70.2 suffering from the falling of US durable goods orders of august by 2.4% while they were expected to be up by .3% m/m after July rising by 5.1% and Dow has closed the week down by 151 at 9665 after getting above 9800 earlier last week on a profit taken wave after the Fed's assessment which was widely expected to show a diminishing of the recession pressure but cautious and in favor of keeping all the easing steps in the same time waiting for a solider growth can trigger jobs asking as the economic conditions are still fragile and in need of the fed's reinforcement to store the market confidence in consuming and investing. By god's will, it is important to wait this week to see Sep US ISM manufacturing index which is expected be 54 after rising in August to 52,9 and the US labor report of September which is expected to show a rising of the unemployment rate to 9.8% from 9.7% in August and a losing of the non-farm payrolls by another188k jobs.

    The pressure on the British pound could continue this week too after a dovish closing below 1.6 versus the greenback which got use of the investor risk apatite aversion. The cable has closed at 1.5930 trading now below 1.58 support after Marvin King reference to the use of a weaker British pound for increasing the exports and getting out of this recession last Thursday. These dovish comments of King could contain the market sentiment again after his recent talking in front of the parliamentary committee when he said that further deposit interest rate cut might be a useful supplement. King's view seemed to be still dovish to the market after his opposing in the MPC meeting July preferring adding 75bln Stg instead of just 50bln Stg to the bank buying bonds plan. The British pound conditions have changed severely last week as it was well-supported after last Wednesday release of the recent MPC minutes which were much more optimistic than the market expectations and discounting showing that the MPC decision of this month of holding the buying bonds plan unchanged at 175 Bln Stg was unanimously this time but this reinforcement was short lived as the cable could not get over 1.65 at the end satisfied by being well supported above 1.633 which has been broken by King's dovish comments about the British pound.

    Best wishes

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

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