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29/4/2009 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Apr 28, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The single currency could get back some of its lost ground versus the greenback getting above 1.3 again after the release of the germane CPI which came slightly better than expected at .7% y/y and unchanged from March monthly and the market was waiting for .8%y/y and .1%m/m. The single currency was suffering recently from the weak inflation rates in the EU which can open the door to the ECB to cut the key interest rate in the eurozone further and taking untraditional easing stimulation steps to spur the current cooled invetments. The market is waiting for the ECB to adopt the quatitive easing policy which can increase the inflation preassure as what has been mentioned by the ECB president Jean Claude Trichet on 2 april meeting downplaying the deflation risks in the Eurozone but these current low inflation rate can help the ECB to take this step which can be by buying eurpean bonds for affording liquidity to the european governements to spend further and helping the ailing economy in the next ECB meeting in the 7th of next month and the single currency can be under pressure if he elevated the ECB appreciation of the deflation risks in this coming meeting. By god's will, we wait today for the release of April EU Industrial sentiment which is expected get better to -36 from -38 in March and consuming sentiment which is expected to improve to -33 from -34 and April EU which is expected to go up to 66.2 from 64.6 in March.
    There was no major change in the forex market resulted from April US Consumer Confidence index which was expected to go up to 29.5 from 26 in March and it has come better than expected at 39.2 following the preliminary release of April University of Michigan Confidence index which came which came better than the market expectations of 58.5 at 61.9. These better consuming data can ensure that the worst has become behind of us and it is a matter of time to have the demand that can lead the growth again.
    The market has seen recently some promising profits in the first quarter earning reports of the banking sectors which can show that the situation has become stable and the crisis massive impact is over and there are no more bankruptcies in the banking sectors which formed the credit crisis. We wait now as analysts to see at least slower pace of contracting in the ISM manufacturing and services indexes of April next week to install these believes however the continued huge number release of laying off in US can dampen this sentiment and effect negatively on the consuming pace and the current feeble level of business spending too. So, it is important to have fewer numbers of the lost jobs in US in the US labor report of April too. The confidence can not come back to the investors before these serious tests of the US economy performance. By god's will, we wait today for the release of Q1 US GDP of the first quarter which is expected to shrink by 5%y/y after a yearly shrinking of the last quarter of the last month by 6.3% and we wait to read between the US assessment lines of the fed after its meeting today which is expected to come with no change of the interest rate again.
    USDJPY is still trading eyeing on 97 breaking after bottoming out at 95.7. The Japanese gets use of the unwinding of the carry trades at the times of the risk aversion and mistrust in the holding assets and investing as its very low interest rate levels which reside currently at just .1%. The pair can get back soon over this level with improving the market sentiment. By god's will, we wait tomorrow for the Japanese session for the release of Japanese PMI of April which was 33.8 in March and March Industrial Production Preliminary yearly release which is expected to be down by 34.7% after Feb declining by 38.4% and also we wait for the BOJ interest rate decision which is expected to keep the interest rate unchanged too.

    Best wishes

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

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