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29/12/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Dec 29, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The forex market is still trading in a mixed way on the current low volume because of the year ending holidays around the globe. The greenback could gain this month on the increased market speculations of a near coming tightening action from the Fed next year which can have a change of the central banks monetary easing policies after reaching these current massive low interest rate levels with the credit crisis impact on the economy which can make changes in the currencies market as well after the recent leading US improvement of November in the consuming and labor sectors which have been appreciated by the Fed's recent US assessment last week after its decision to keep the interest rate unchanged which has been read as a smoothing statement to this coming waited action. Fed has announced earlier this month after its decision to keep the interest rate unchanged that the current financial situation of the banking system is helping the growth and the labor market deterioration is abating which has been read as a sign of a turning point of Fed's monetary policy as it has previously repeated that it is waiting for a change in the labor market which is still struggling losing jobs. So, it has become widely concluded that the Fed has closed the door of taking further easing steps. We are waiting again today for the release of the US consumers' confidence of December to see weather this improvement of the consuming pace has continued into this month too or not. It is expected to be 52.3 from 49.5 in November.

    The British pound was negatively impacted by the surprising falling of November UK retail sales by 0.3% monthly which was opposing the market waiting for rising by .6% and yearly by 3.7% but they have risen yearly by just 3.1% which pushed it down breaking its major support versus the greenback at 1.61 and it is now struggling to get a place above 1.60 again as the only economy in recession in the western Europe is still the British economy which give a negative sentiment toward holding the British pound, in spite of the governmental promises of a close recovery next year.

    The single currency has been hit this month by the negative impact of the Greece huge unsustainable debts worries and the worries about the Austrian banking system and its weakness has continued containing the market sentiment with Goldman Sachs's expecting the third of them to be Spain but it could compensate some of its loses which have been staved off just above 1.42 versus the greenback trading currently above 1.44 from this year high on the third of this month when it reached 1.513.

    After The greenback had been underpinned by these recent optimistic consuming and labor data which have met a Fed's appreciation, the surging of the stocks have started to put pressure on the Japanese yen pushing the USDJPY up above 90 in the recent days of the year trading currently just below 92 amid the current new year highs of the US stocks leading market as the greenback has a better interest rate differential outlook right now comparing to the yen which is still attracting the interest of the investors carry trades transactions to be the most hurt currency after these recent data which have been interpreted widely to a nearer coming Fed's tightening action than what has been discounted before them.

    Best wishes

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

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