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30/4/2009 - The current market sentiment

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

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The Fed has kept the interest rate unchanged reffering to the slower pace of contraxction currently in their US assessment with no new taken easing or stimulation steps of their adopted quantitive easing policy. The greenback has found some support from this fed repeating of its pledges to buy 1.25 trillion of the MBS and 300 billion of long term treasuries notes with no more announcement of injecting more funds which dragged the gold down from above 900$ to 893$ after the assessment which referred to a persisting of the prices at the current low level . The worries of suppling more US dollars were weighing on the greenback which was actually suffering from the stocks market appreciation as the current stong return of the risk apitite to the investors who have seen these current low prices are attractive for a recovery may start later this year in spite of the dispointing QI US GDP figure which came lower than the market expectations of -5% y/y at -6.1%. The shrinking of the first quarter came with a broadly increasing of the price deflator by 2.9% while the core figure came as expected at 1.5%. The fed has mentioned today in its assessment that the prices can persist at these current low levels further which dragged the gold down from above 900$ to 893$.
    We have had seen recently an improving of the consuming pace as US 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 show too 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 and now, we should wait to see at least this 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 USDJPY could break 97 finally after the Fed decision triggering stop loss orders pushed it up to 97.96. The pair could get back over this level with improving the market sentiment. The Japanese always 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%. By god's will, we wait for the BOJ interest rate decision which is expected to keep the interest rate unchanged too after the release of the Japanese PMI of April which came at 41.4 from 33.8 in March showing an actual slower pace of contraction as the number above 50 means an expansion and below 50 means a contraction which means that the supply is still leading but by a slower pace. March Industrial Production Preliminary yearly release has come at -34.2% which is better than the market expectations of a declining by 34.7% after Feb declining by 38.4%as the monthly figure has shown a positive rate this time by 1.6% from -.8% in Feb.

    Best wishes

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

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