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4/3/2014 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Mar 3, 2014.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The commodities are still able to maintain the beginning of the week gain on the back of the Russian intervention in Crimea.
    The conflict could have a direct impact on the energy as the crisis can easily tackle the oil and gas supplies from Russia.
    The gold could be supported from a side as a hedge against inflation with the current considerable rising oil prices and from another side as a safe haven on the current named act of war by the Ukrainian government.
    The commodities currencies which can be also supported as a safe haven especially the Canadian dollar which can be fueled by the rising of the oil prices directly could get over the shock of the beginning of the week with the general rising of the commodities prices despite the risk aversion sentiment which underpinned the greenback broadly.
    AUDUSD is trading currently little changed from last week closing after opening the week on a down gap waiting for the RBA interest rate decision of the first Tuesday of the month as usual to come in the Asian session which is mostly to come with no change keeping the interest rate unchanged at 2.5% however it is not totally ruled out to have another easing action after the release of the Australian labor report of January which has shown rising of the unemployment rate to 6% as the employment change has show losing of 3.7k of jobs while the market was waiting for adding 15k after losing 23k in December.
    The UST 10YR yield is now at 2.6% with combined falling of the US blue chips as the equities markets have come under continued pressure since the beginning of the week across the globe while the bonds yields outside the eastern European countries were under pressure on demand for safer investment.
    But the yields in those countries which are close to the conflict have seen rising cross the broad with rising demand of the greenback versus their currencies and their backed-securities generally while Russia managed to raise the interest rate to 7% from 5.5% to support the rubble which has fallen to the lowest level since 2009 against the greenback which equals right now 36 rubbles while it looks ahead of US and EU sanctions can drive the inflation inside of it up further.
    The single currency came also under pressure versus the greenback negatively impacted by the risk aversion down although the worries about the crisis in Ukraine which drive the commodities prices up can calm down the fear of reaching weaker yearly inflation rates in EU supporting the current ECB stance of waiting for seeing a clearer picture. The fear of watching lower inflation upside risks have already receded by last Friday release of Feb EU HICP flash reading which came at 0.8% as the same as January while the market was waiting for easing to 0.7%.
    God willing, the market will be waiting for new ECB’s growth and inflation projections to come next Thursday in appreciation of these current geopolitical developments are containing the market sentiment currently to ignore today’s data which have shown decline of Feb EU Manufacturing PMI to 53.2 while the market was waiting for 53 from 54 in January.
    Anyway, the investors and pundits will be waiting the ECB reading of this new event which can be a reason to raise the inflation outlook initially over the short term and can be also read as new undermining element can be added to the obstacles faced by current struggling EU economic growth to be in much need of further stimulating steps.
    UK Feb EU Manufacturing PMI have come also better than expected by rising to 56.9 while the consensus was referring to 56.5 from 56.6 in Jan but the cable could not endure the greenback pressure with investors’ tendency to unwind risks to fall below 1.67 trading currently around 1.666 while the FTSEE 100 was trading around 6700 before ending its first session of the week losing 101 points at 6708.

    Kind Regards

    FX Market Strategist
    Walid Salah El Din
    Mob: +20 12 2465 9143
    E-Mail: mail@fx-recommends.com
    #1 fx-recommends, Mar 3, 2014
    Last edited: Mar 3, 2014

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