21/12/2009 - The Current Market Sentiment
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Christmas holidays after the greenback recent rally on the market
increased speculation that there is a near coming tightening action
from the Fed after the recent improvement of November consuming and
labor data which have been appreciated by the Fed's recent US
assessment last week after its decision to keep the interest rate
unchanged which has been read as a smoothing statement to this coming
waited action. Fed has announced last Wednesday that the current
financial situation of the banking system is helping the growth and
the labor market deterioration is abating. It has become widely
concluded that the Fed has closed the door of taking further easing
steps. The Fed has indicated that it is to slow its current buying of
bonds and mortgage backed securities which are planed to end by next
July and most of such purchasing easing plans for providing liquidity
are to be ended by next February.
The British pound was negatively impacted by the surprising falling of
November UK retail sales by 0.3% monthly which was opposing the market
waiting for rising by .6% and yearly by 3.7% but they have risen
yearly by just 3.1%. The Cable major support level at 1.61 has become
more vulnerable than before reaching but the cable could close above
it at the end of the last week after falling to 1.6051.
The single currency is still the most hurt currency versus the
greenback as the negative impact of the Greece huge unsustainable
debts worries and the new worries about the Austrian banking system
and its weakness has continued containing the market sentiment.
the releases of the Germane ZEW of economic sentiment of December
which came down to 50.4 from 51 in November and the germane IFO of
December tomorrow which was expected to be 94.1 from 93.9 and it came
at 94.7 could not change this sentiment but it could get back some of
its loses with the greenback easing across the broad with the stocks
rising by the end of the last week getting back from 1.4261 to close
above 1.433 and it is now still trading just above it.
The Japanese yen has looked unfazed by the recent unexpected rising of
Japanese exports in November which increased by a way has not been
seen since 2003 affecting positively on the trade balance of November
which reached 373B yen while the market was waiting for just 300B Yen.
We have seen last week the BOJ leaving its stimulating plan as it's
giving just worries about the current deflation pressure. After The
greenback had been underpinned by these recent optimistic consuming
and labor data which have met a Fed's appreciation, the surging of the
stocks have become putting was putting pressure on the Japanese yen
pushing the USDJPY up to close above 90 last week as the greenback has
a better interest rate differential outlook right now comparing to the
yen which is still attracting the interest of the investors carry
trades transactions to be the most hurt currency after these recent
data which have been interpreted widely to a nearer coming Fed's
tightening action than what has been discounted before them.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: ma...@fx-recommends.com
http://www.fx-recommends.com