30/6/2009 - The current market sentiment
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again pushing the greenback down across the broad with improving of
the investors' risk apitite which could push Dow up by 1.08% to close
its first session this week at 8529 after its second consecutive week
of losing after reaching this year high at 8875 on 11st of this month
from this recorded low on 9th of last March when it reached 6469. By
god's will, the market is expected to focus today on US June Chicago
PMI which is expected to come at 38.3 from 34.9 in May and later this
week on the pace of the US manufacturing recovery and the current
recession impact on the US labor market in May. As we wait tomorrow
for the US manufacturing index of June to be 44 from 42.8 in May and
as this Friday is US is off because of the independence day, we have
this Thursday the release of June US non-farm payroll which is
expected to lose further 368k jobs and the US unemployment rate to
increase to 9.6%. If we had weaker performances of these important
indicators, the market expectations of a halting unreliable recovery
can increase weighing negatively on the equities market and the risk
appetite which can support the greenback.
The cable could get above the resistance which has been formed in this
same day we have aforementioned when Dow reached this year high and
it is trying currently to get above its year high at 1.666 whereas it
has fallen on 3rd of this month. The cable was already supported by UK
June GFK Consumer Confidence Survey which came at -25 from -27 in May.
By God's Will, We wait later today for UK GDP Q1 final reading which
is expected show falling quarterly by 2.1% and yearly by 4.3% and it
is important to watch tomorrow release of June UK CIPS manufacturing
index which came at 45.4 in May well below 50 in the contracting area.
If we can have a higher number this can be good for the British pound
and refer to a diminishing of the contracting pace.
The single currency has been support by the same reasons versus the
suffering greenback to be traded now above 1.41 underpinned by an
optimistic consuming confidence figure of June came at -25 from 28 in
May and it was expected to get worse to -30 which helped the European
stocks in the beginning of this week. Last week the flash release of
June PMI manufacturing index which was expected to get better to 40
from 39.6 coming at 40.5 and PMI services index of this same month
which was expected to be 45.6 from 45.2 in May coming at 44.5 but
these data could not make a major change of the single currency
direction last week waiting god willing for this week final releases
of EU Manufacturing PMI index which is expected to improve to 42.4
from 40.7 in May and EU PMI Services index of June which is expected
to be 44.5 from 44.8 in May. Also it is important this week to wait
for the release of EU CPI preliminary release of June which was
unchanged in May y/y and the ECB president Mr. Trichet has indicated
in his recent press conference after the ECB decision to keep the
interest rate unchanged at 1% on the 4th of this month that the ECB is
expecting the inflation to be from 0.1% to 0.5% and if we have had
negative rates this week this can dampen the single currency. We wait
also to see the ECB interest rate decision which is widely expected to
be unchanged at 1% and Trichet press conference to know its recent
evaluation after its decision last week to extend its lending offering
to the European countries to 442Bln Euros for one year in another
extra easing decision in which can move current economic recession.
The gold could find support from the greenback falling today versus
the commodities and oil to get above 940$ hardly again. The gold has
suffered recently from the easing of oil and commodities prices and
the correction of the stocks market in the recent 2 weeks which pushed
underpinned the greenback and downplayed the inflation upside risks
which came tamed negatively impacted by the recessionary in May. As we
have seen US CPI Index decreased by 1.3% y/y broadly and the core
figure excluding the food and energy decreasing to 1.8% y/y could add
pressure on the gold which is the mirror of the inflation as the
market was waiting for a slide by just .9% after April slide by .7%
broadly and was waiting for the core to be as the same as April at
1.9% and also May PCE came broadly yearly at just .1% from .4% in
April and the core came at 1.8% and monthly the figure came broadly as
the same as April at just .1% while the core came lower than the
market forecast of .2% and lower than the .3% of April at just .1%.
The gold came under strong pressure after sliding from 960 to be under
further technical pressure to drove it down below 942.8$ to reach a
new low at 912.8 after its previous low at 925.88 before rebounding to
948 but it could not even close above 940 which has been taken out
hardly today. The gold should face a difficulty again to get above 948
to retest 960 as a resistance.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: ma...@fx-recommends.com
http://www.fx-recommends.com