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3/4/2009 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Apr 4, 2009.

  1. fx-recommends

    fx-recommends Content Contributor

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    The disappointing March US non-farm payroll data was widely expected after the release of US ADP employment of the same month which came at -742k referring to a continuation of the massive pace of contraction in US and further declining of the consuming spending to come. The US has lost another 633k jobs in March out of the farming sector pushing the employment in US to 8.5%.

    The equity market has closed in the green territory in a mixed session. The Dow which could close above 8000 up by .5% has begun the week with a smooth correction after 3 weeks of gains but it could over come this correction closing above this psychological level optimistic by the performance of the G7 meeting corporation and results in London which weighed on the price of gold to close below 900$ and the elevated the prices of the oil on increasing hopes of the recovery elevated the risk appetite pushing the USDJPY to close first time above 100 for the first time since 21 October 2008. These closes can increase this optimism momentum sentiment.

    The cable could get over its previous resistance at 1.4777 closing above 1.28 amid the disappointing jobs data of US and better than expected PMI service figure of March has reached to 45.5 after the earlier release of PMI manufacturing index of UK which could give a support to the British pound across the broad this week. The index came at 39.1 in March and it was expected to be 35. These figures show a smoothing of the recession pressure on UK in March. A reading above 50 means an expansion and a reading lower than 50 means a contraction.

    The single currency was well bought after the ECB decision to cut by just .25% last Thursday but it closed below 1.35 at the end of the week versus the greenback. Trichet's comments have been read as a smoothing of the market to quantitive easing steps in EU by the ECB following US. Trichet said that further nonstandard measures may be taken in May when the central bank meets to set interest rates. Other major counterparts from the Federal Reserve to Bank of England have tapped the so-called quantitative easing measures this year but he has tried to indicate the upside inflation risks which can result from the quantitive easing policy in the press conference adding that technical and legal reasons that make it complicated for the central bank to buy governmental bonds and also Mr. Papa demos the vise president of the ECB said the central bank had made no decision concerning the need for these measures or the nature of these measures and these comments were not meant to prepare the market.
    Anyway the single currency has found support from the lower than expected cut by .25% as the conservative measured way of cutting interest rate in EU to stimulate growth in the face of the recessionary pressures keeping the medium term inflation well-anchored.

    Best wishes

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