11/11/2009 - The current market sentiment

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The greenback is still in a defensive position after its weak
beginning this week as the market optimism could contain the market
sentiment pushing the stocks up across the broad increasing the
investors' risk appetite again putting pressure on the greenback which
was negatively impacted by the G20 fin ministers ignorance of its
recent weakness in their meeting during the weekend considering the
new greenback feature as a funding currency of the carry trade
investing transactions as its current very low interest rate level and
the current held quantitive easing policy of the Fed which is seemed
to stand longer waiting for a crucial materialized change of the US
labor market as it has announced last week in its statement after
holding the interest rate unchanged that in spite of the recent
improvement of the economic conditions and the better than expected
growth rate of the third quarter, the economy is still in need of all
of its easing stimulating policy steps further for storing confidence
and improving the labor market conditions which can suffer further
next year expecting the unemployment rate to get over 10%. The Fed's
worries about the employment and this halting recovery were widely
expected and there was no a major change in the market as expected but
we have seen last Friday that the labor market is still struggling in
the Labor report release of October which included a revising up of
the non-farm payroll of September by 63k but in the same time, we have
seen an increasing of the unemployment rate to 10.2% and another
increasing of the non-farm payroll lost jobs by 190k and the market
was waiting for losing just 175k which were not far from the market
expectations. The market has got out of that that the easing monetary
policy is to be hold further and the G20 fin Ministers statement
language contained this same meaning which caused the current weakness
of the greenback versus the Gold and the other higher yielding
currencies such as the Australian which enjoy a higher interest rate
outlook differential currently after the RBA recent 2 meeting hikes
by .25% on the growing pace of china which keep the demand for the
Australian commodities. The Aussi is trading now above .93.

The cable could join the gains versus the greenback to reach 1.684 but
it came under the pressure of the market concerning about its
sovereign rating as David Riley who is the current co-head of the
global sovereign of Fitch said in his Reuters interview today but the
British pound could get back most of its loses with the equities
market ability to hold its recent gains and Dow existing above 10200
for another session. By god's will, it is very important today to
listen to the BOE inflation quarterly inflation report after BOE had
kept the interest rate unchanged too last week adding 25bln Stg more
to its current 175bln Stg governmental buying bonds plan which was
good for keeping the assets value in UK to be 200 Bln Stg and left its
3 months period revision to the economic development and the central
bank evaluation mentioning that the need and the importance of this
step for stimulating the sluggish economy which faced another
contraction in the third quarter of this year.

Best wishes

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