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30/5/2011 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, May 30, 2011.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
    Likes Received:
    The single currency could open the week trading above 1.43 versus the greenback on the interest rate outlook differential containing the market sentiment after the sudden declining of US pending home sales of April by 11.6% after rising in March by 3.5% while the markets were waiting for easing by just 1% as the Fed is still worrying about the housing sector and see that it is depressed and further depression in this sector can delay any tightening action by the Fed which is carrying about 900$ billions of mortgage-backed securities and stopping buying more of them because of the ending of what's called the Fed's QE2 next month can cap its recovery. So, what about unwinding its loading of them which can put much more pressures on this sector which caused the credit crisis in the last quarter of 2008 and also by God's will, the market will be waiting by the end of this week for the release of US labor report of May to know more about the labor sector too which is the second sector which is containing the Fed's most interests and capping it from tightening as its gradual pace of recovery since the end of the credit crisis until now.
    In this same time, the ECB is still expecting inflation upside risks and this has been materialized by ascending rising of EU CPI to 2.8% y/y in April from 2.7% in March and so it can really take another tightening action later this year after hiking the interest rate by .25% in April for anchoring the inflation over the medium term despite Trichet's avoiding saying that strong vigilance warranted for watching the prices after the ECB press conferences after its members meetings for determining the interest rate earlier this month which is suggesting that there is no rate hiking in June and its pace of tightening can go in a gradual way for smoothing this action negative impact on growth and not causing stronger rising of the European bonds yields which are already boomed by the worries about the debt crisis specially by the recent increased worries about Greece debt outlook with no reached deal among its parties for taking another package of austerity measures which are required by its lenders and the IMF for having another 12 billions euros God willing by the end of June and without it, Greece will be exposed to default by the end of July.

    Kind Regards
    FX Market Strategist
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com

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