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8/3/2010 - The current market sentiment

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

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
    Likes Received:
    The risk appetite could come back again containing the market sentiment after losing just 20k jobs out of the farming sector in Feb which shows the gradual pace of recovery in US pace with no signs of a double dip recession yet. The data helped the equities markets to step up further. The Dow which has made a correction to 9900 level in Jan is still tending to the upside closing above 10500 last week which put the greenback under pressure across the broad even the cable which suffered recently from worries about its increasing debt and quantitive easing policy could close the week above 1.51 after reaching 1.4785 last Monday after the news about a huge bargain between AIG and the British insurance company Prudential for buying the Asian parts of the first for about 35$ Bln.

    The market was already cheered by BOC brighter economic assessment of the current after leaving the interest rate unchanged today which refer to a coming tightening action and today RBA rising the interest rate by another .25% earlier last week and the labor data could keep the risk appetite of the investors who are widely not expecting a falling of the economic recovery of US and they are still counting on it .The light crude oil price has been pushed up to close above 81$ a barrel which underpinned the gold too as an inflation mirror to close above 1130$.

    There is no new change of the European situation concerning the Greek waiting for a change from Greece but it looks widely unsustainable to see the Greek deficit to growth ratio above 12% while it is required now to be back below 3% and it is widely around 6% in Europe at the current struggling growth rates which resulted from the credit crisis even the ECB could not stop any of its accommodative easing actions worrying about the current nascent recovery until now keeping the interest rate at 1% for a whole year which is still putting pressure on the reforming plans in Greece and the single currency which could close hardly again above 1.36 but 1.364 is still forming a resistance in front of its progress and breaking it can be if the momentum of the risk appetite increases this week encourage by the US recent labor data and this can be done which can help the single currency to test 1.383 again versus the greenback which can be negatively impacted by this risk appetite as The pair has confirmed the support at 1.344 unable to break it again.

    Also, The cable which has been very vulnerable to the downside after forming a lower peak below 1.584 resistance by the end of last month breaking 1.51 free falling freely to 1.4785 on increased selling momentum last week could find the support above 1.5 psychological level from the greenback weakness to close above 1.51 again. The pressure can come back again on it after last week massive selling to 1.4785. The cable is having now a far away main supporting level at 1.44 whereas the bottom of last April has been formed but with this recent sever action with no containing even to keep it, the pair can face further pressure to test 1.46 in the near term with the worries about the political future in UK by the preliminary elections as the conservatives' opposition party has lost its strong leading versus the labor ruling party on the recent polls results with the exacerbating the case of UK debt at the current higher inflation rates than Europe as UK has started to post its first net borrowing deficit month since the beginning of 1993 with the public sector borrowing in Jan reaching 4.3 B Stg while the market was waiting for covering 2.8 B Stg of the debt waiting Feb data which will be closely watched as this rates can bring its budget deficit ratio to GDP above 12% like Greece otherwise it looks in building up in UK while the efforts are emerging for staving off it in Greece.

    God willing, it is important this week to wait for the release of US trade balance of January to be -40.3 b$ and by the end of this week for US retails sales of February to be up monthly excluding the auto sales by .2% and flat broadly with auto sales and US University of Michigan consuming sentiment preliminary reading to be 73.5 from 73.6 in February.

    Best wishes

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

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