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6/6/2011 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Jun 6, 2011.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The Aussie could get use of the greenback weakness to come over 1.07 after the release of US labor report of May which contained rising of the unemployment rate to 9.1% from 8.9% in April and fewer than expected added jobs to the US non-farm payroll by just 54k while the market was waiting for adding 190k and also the figure of April has been revised down to 332k from 241k to ensure the weakness of the US labor market after the release of US ADP unemployment index which has shown rising by just 38k from 175k in April while the market was waiting for adding 175k and these weak figures can make it much difficult to expect a tightening action soon by the Fed which always care of the labor market and the housing market is still looking depressed with 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% which can increase the Fed's worries about the housing sector, while it is carrying about 900$ billions of mortgage-backed securities and stopping buying more of these MBS at the end of this month on exit of what's called the Fed's QE2 which has been announced on the third of November 2010 can add more difficulties in the face of this sector recovery making taking a tightening action by the Fed very difficult soon putting more weights on the greenback across the broad.
    The Australian dollar has come under pressure last month since the turmoil of the commodities market which dragged it from 1.0110 versus the greenback to 1.0535 before finding a bottom to rebound and go up back again but it failed to go up higher than 1.0887 to form a lower high below the trend line support extended from 0.9704 to 1.0441 and go down deeper reaching 1.044 where it has succeeded to start going up back again on the greenback weakness which has been triggered by series of dovish US economic involved the manufacturing sector performance in May as US ISM Manufacturing index has come down to 53.5 from 60.4 in April and it was foreseen to get down to just 57.5 following the declining of New York Empire manufacturing index which eased also to 11.88 from 21.7 in April and Philadelphia manufacturing index which eased too to 3.9 from 18.5 in April from 43.4 in March and also the big declining of Chicago PMI Manufacturing index to 56.6 from 67.6 which the market was waiting for easing to just 64 and that's beside US industrial production of April which came unchanged from March while the market was waiting for rising by 0.5% after rising by 0.8% in March and also April US Factory orders which came down by 1.2% after rising by 3.8% in March while the markets were waiting for declining by 0.3%.
    By God's will, The Aussie is waiting now for RBA interest rate decision and it's widely expected to have unchanged decision keeping the interest rate again at 4.75% after hiking it 4 times by 0.25% last year as the Australian economy is facing currently growing growth downside risks and easing of the inflation pressure as we have seen recently declining of TD Securities inflation yearly to 3.3% yearly in May from 3.6% in April following easing of May commodities prices yearly to 29.4% from 31.9 in April and 42.2 in March with slower growing rate as AU GDP eased yearly in the first quarter of this year to 1% from 2.7% while the markets were waiting declining to 1.8% and so it has shrunk quarterly by 1.2% after rising by 0.8% in the last quarter of last year while the market was waiting for shrinking by just 0.3% and this data came after soft pace of employment too as AU employment change index has shown losing 22.1k jobs in April after adding 37.8k in March while the markets were forecasted adding another 17.4k and that's beside the recent AIG manufacturing release of May which has shown deeper falling into the contraction territory below 50 reaching 47.7 from 48.4 in April and also May AIG service index which declined into this territory with 49.9 from 51.5 in April.

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

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