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6/9/2010 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Sep 6, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

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    The better than expected release of the US non-farm payroll of August which have shown losing of just 56k instead of 110k as they were widely waited is still effecting positively on the market sentiment pushing the equities markets up. The Asian and the European stocks markets have opened up this week while the US markets are closed for holiday but its stocks indexes future are still referring to a green opening.
    The greenback and the Japanese yen came under pressure across the broad directly after these new jobs data which reduced the probability of having a double dip recession in US calming the investors unwinding of their risky position buying back the low yielding currencies worrying about the current US growth slow down. The investors have found in the jobs data another reason to calm down after the US ISM manufacturing index came up to 56.3 in august against the market expectation of easing further to 53.5 from 55.5 in July and August US Conference Board's Consumer Confidence of August which rose to 53.5 from 50.4 in July which it was waited to be just 51 which meant to the investors that there is no strong down momentum of the US economic performance can cause a panic but it is just slowing of growth and weak performance of the US labor market tackling the market trust to spend for consuming and housing at until now at this stage of recovery which is still in need of the Fed's QE easing policy. The fear about the US growth has contained the market sentiment in August after the dovish release of July US non-farm payrolls which have lost another 131k and shown a down revision of June losing of 125k to 221k weighing negatively on the US equities markets pushing USDJPY below its 15 years low reaching 83.57 and the US treasury yields on another wave of losing trust 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%.
    The BOJ has decided last week to provide another10 trillion at a special fixed rate to reach 30 trillion from just 20 but this decision could not find the required reaction even on the Japanese yen which slided back below 84.5 after trading just below .86 by the release of this underestimated decision by the investors who sold on the fact pushing Nikkei 225 below 9000 after it was trading just below 9300. the Decision 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.
    While the germane economy is looking in good shape having better than expected rates of growth containing the market sentiment currently underpinned by the massive falling of the single currency by the end of last year. The single currency digested this new good signs from Germany and it is trying now to get over 1.293 again versus the greenback which has been well buoyed after the breaking 1.3117, 1.3096 and the psychological level at 1.30 breaking 1.2735 forcing the pair to be traded below 1.26 reaching 1.2586. The single currency could get above 1.332 touching 1.333 with the weaker than expected labor report of July release and Trichet's reference to 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 with the worries about the possibility of the European following of the US growth slowdown containing of the market sentiment, the single currency suffered last month. By god's will, The next major resistances are at 1.293 then 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 while the supporting levels are 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.
    Best wishes

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