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31/8/2010 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Aug 30, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

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    The BOJ easing decision to provide another10 trillion at a special fixed rate to reach 30 trillion from just 20 could contain the market sentiment with the Japanese yen slide back below 85 after this decision which looked not enough to spark a change of the struggling rate of growth in Japan which unexpectedly grew in the second quarter of this year by just .1% while it was waited to be .6% increasing the probability of having further persisting deflation forces because of the suffering consuming pace in US which has not reached its end as it looks yet in a time of cooling growth tries in China which has increased worrying about prices currently as we have seen it in the beginning of this month calling for banking stress test suggesting declining of the housing prices by 60% which is the double of what was initially made at just 30% and it has obeyed for demand for further re-evaluation step used to be named gradual action by PBOC after it has actually reduced the banks lending percentage to their capitals from the beginning of this year which worked too for the demands of cooling this overheating economy which caused prices rising risks could be appreciated finally by PBOC which can effect negatively on its demand for capitals goods from Japan and we have seen the Chinese PMI index coming down in July to just 51.2 while the Euro zone as a counterpart competitor of Japan is getting use of the EUR exchange rates which is falling in this same time across the broad trading currently below 107 versus the Japanese yen and this can continue if BOJ let the greenback trading freely below 85 versus the Japanese yen. Nikkei 225 is trading currently below 9000 around 8900 after it was trading just below 9300 before the BOJ decision yesterday under another pressure from a weak US session has watched Dow losing of 140 points to close just above 10000 again in another risk aversion selling wave pushing now USDJPY below 84.5 as the market is waiting anxiously for very important data from US which can give more details about the current US growth slowdown.
    We wait today for August Chicago PMI which unexpectedly rose in July to 62.3 from 59.1 in June to be 58.5 down 56.5 and also August US Conference Board's Consumer Confidence of August to be 51 from 50.4 in July after a massive falling in June to 52.9 and we have tomorrow US ISM manufacturing index which is expected to slide further to 53.5 from 55.5 in July while we have by the end of this week US non-farm payrolls of August to be -108k after losing 131k in July and down revision of June losing of 125k to 221kweakening the US equities markets and the treasury yields by triggering another losing trust wave in the markets forced the Fed to step forward in its quantitive easing policy buying more Mortgage backed securities and rolling over it’s holdings of treasury securities as they mature before this deterioration can have further negative impacts on the consuming and capital spending and to inform the markets that the Fed will not stand seeing the economy falling back in a second dip recession with no action even with the interest rate near 0% as they have tried to assure in their meeting in the weekend.
    The selling pressure came on the single currency again today with the investors getting back to the greenback and the Japanese yen preferring taking safer positions. The single currency downward trend versus the greenback has gained momentum recently with the breaking 1.3117, 1.3096 and the psychological level at 1.30 breaking 1.2735 by the end of last week has carried on again this week forcing the pair to be traded below 1.26 reaching 1.2586 after the single currency could get above 1.332 touching 1.333 with the weaker than expected labor report of July release underpinned by Trichet's comments that the debt crisis negative effects on the growth in the Euro zone are easing back expecting it to be better than what was initially estimated welcoming the stress test results which calmed down the markets relatively but the worries about the possibility of the European following of the US growth slowdown could revolve again to the market sentiment pushing the single currency down after its inability to get back above 1.293 again adding more technical pressure on the pair which could not hold above 1.2735 today. By god's will, The next major supporting levels are now at 1.2586 then 1.255, 1.2452, 1.2165, 1.2044, 1.1954 and 1.1875 from 1.1875 which has been reached amid the increased worries about the debt crisis and could cap the pair from falling to 1.16 whereas the pair has started its rally to 1.604 before falling again to 1.233 amid the credit crisis and rising back forming a lower high at 1.515 in the beginning of last December while the major resistances are at 1.293, 1.30, 1.333, 1.3352, 1.3415, 1.3704 and 1.3885 which is 61.8% Fibonacci retracement level of this same recent declining from 1.5142 to 1.1874.
    Best wishes

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