8/2/2010 - The current market sentiment
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jobs out of the farming sector. The manufacturing sector could add 11k
jobs in January to the non-farm payroll for the first time since the
beginning of this recession which caused a losing of 8.42 M until now.
The unemployment of January has fallen to 9.7% from 10% in December
but the non-farm pay roll of December has been revised down to -150k
from -85k in the first reading.
There was a mixed impact after the data on the greenback which could
keep its gains again at the end of the week underpinned by uncovered
loses in the equities markets.
The loses in the equities market have increased last Thursdays on
worries about the Jobs market outlook and the debt which has increased
in an excessive way recently in Europe after unconvincing comments
from Trichet in his press conference in Frankfurt after the ECB
decision to keep the interest rate unchanged at 1%. Trichet seemed
convinced with Greece, Spain and Portugal abilities to get over their
deficits problems Trichet has appreciated the current Greece efforts
in fighting the consolidation of its deficit repeating that it is the
same for all the European countries to take the required steps for
driving down the deficit rate below 3% of the GDP as the treaty of
Maastricht referring to the IMF calling for driving this ratio below
just 6% and the excessive deficit of other industrial countries like
US and Japan which have become more than 10% of the GDP while the 16
members of the Euro obligate themselves to keep it below 3% but this
tried looked not enough to calm down the market who was strongly
possessed by these worries.
The single currency has lost further after his comments which
contained that inflation is anchored over the medium and the short
term in the Euro zone and the growth will be moderated this year and
the current interest rate in appropriate but after he has mentioned
that he is appreciate the strong dollar policy of US answering a
question about the Single currency value whether it is over valued
currently or not which has shown to the market that he can accept a
lower exchange rate even after this recent massive falling of the
single currency from above 1.51 in the beginning of last December.
Also his comments about withdrawing the easing measures of the ECB for
providing required liquidity for buying covered bonds have shown that
there is no action by the second quarter of this year which shows that
the growth in EU is still fragile and in need of further underpinning
from the ECB. The single currency has broken 1.3820 directly after his
comments about the strong dollar policy of US and now the next support
is standing at 1.343 while the resistance is emerging just above 1.40
psychological level when it failed to break above 1.404 earlier last
week as the breaking below 1.40 could add momentum to the currency
downward trend and from another side, The single currency can be
capped by dovish investing sentiment can underpin the greenback on the
loses of the equities markets which are still looking for a bottom of
the correction which has started earlier last month when Dow reached
10729.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: ma...@fx-recommends.com
http://www.fx-recommends.com