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8/11/2010 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Nov 7, 2010.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
    Likes Received:
    The positive US non-farm payrolls release of October by the end of last week which has shown adding 151k after losing 41k in September while the market was waiting for adding just 60k after October ADP Non-farm Employment change came earlier at 43k while it was expected to be 25k has dragged the single currency down to close last week at 1.403 versus the greenback retreating currently below 1.395 as these bullish data encouraging the investors to take profits buying back the greenback after it has faced strong selling across the broad last week after the Fed has decided to provide 600B$ package of buying new debts while the market was waiting for a number from 300B$ to 500B$ but this came as a shock to the greenback which has fallen across the broad getting the Aussi above parity and the Asian currencies which have higher interest rate outlook currently for cooling down the prices and also the cable to 1.6298 and the single currency to cross above 1.417 reaching 1.4281 last Thursday making 1.458 whereas the lower high which has been formed on 13 Jan 2010 the main next resistance of the pair way after bottoming at 1.1876 on 7th June this year amid the debt crisis which effected negatively on the single currency which is expected to get use of the Fed's new easing actions with no market focusing on the debt situation in the Euro area and no expected similar action from the ECB yet.
    The British pound is still getting support from the BOE keeping its buying bonds plan as it is for the second consecutive meeting against wide markets expectations of exceeding its plan more than it is currently at 200B Stg specially after last Wednesday Fed's decision to pump another 600B in the debt market the US treasuries till the end of June 2011 keeping its mortgages baked securities buying program at its same rate which is about 35B$ a month currently making the total planed pumping funds about 880B$ in what's been read as a devaluation of the greenback but BOE kept its plan again as it is unchanged last Thursday which refer to that even if there is adding to this plan, it will not have the MPC approving to the extent which can effect on the British pound negatively specially as the recent MPC minutes have shown 3 split ways in the MPC after Q3 GDP preliminary reading which surprised the market by coming up quarterly by .8% and the inflation which is still nearly at 3% y/y and needs to be contain after the rising of the commodities and energy prices across the broad with the greenback weakness because of the Fed's quantitive easing accommodative policy which has no close end yet driving the gold to close last week just below 1400$ as expected after the Fed's decision. So, it is important to the cable traders to wait for the BOE quarterly inflation report this week which can give keys to the market about the BOE mixed stance currently and appreciation of the current inflation upside risks while the economy is still in need to be underpinned.

    Best wishes

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

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