29/12/2009 - The Current Market Sentiment
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volume because of the year ending holidays around the globe. The
greenback could gain this month on the increased market speculations
of a near coming tightening action from the Fed next year which can
have a change of the central banks monetary easing policies after
reaching these current massive low interest rate levels with the
credit crisis impact on the economy which can make changes in the
currencies market as well after the recent leading US improvement of
November in the consuming and labor sectors 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
earlier this month after its decision to keep the interest rate
unchanged that the current financial situation of the banking system
is helping the growth and the labor market deterioration is abating
which has been read as a sign of a turning point of Fed's monetary
policy as it has previously repeated that it is waiting for a change
in the labor market which is still struggling losing jobs. So, it has
become widely concluded that the Fed has closed the door of taking
further easing steps. We are waiting again today for the release of
the US consumers' confidence of December to see weather this
improvement of the consuming pace has continued into this month too or
not. It is expected to be 52.3 from 49.5 in November.
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% which pushed it down breaking its major support
versus the greenback at 1.61 and it is now struggling to get a place
above 1.60 again as the only economy in recession in the western
Europe is still the British economy which give a negative sentiment
toward holding the British pound, in spite of the governmental
promises of a close recovery next year.
The single currency has been hit this month by the negative impact of
the Greece huge unsustainable debts worries and the worries about the
Austrian banking system and its weakness has continued containing the
market sentiment with Goldman Sachs's expecting the third of them to
be Spain but it could compensate some of its loses which have been
staved off just above 1.42 versus the greenback trading currently
above 1.44 from this year high on the third of this month when it
reached 1.513.
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 started to put pressure on the Japanese yen
pushing the USDJPY up above 90 in the recent days of the year trading
currently just below 92 amid the current new year highs of the US
stocks leading market 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