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15/4/2008 − the current market sentiment

Tue, Apr 15 2008, 07:07 GMT
by Walid Salah El Din

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After the G7 could support the dollar during the weekend giving the market the message that this recent USD decline move after its recent meeting was excessive and undesirable looking for a higher value of the USD sticking to the US strong dollar policy which can contain inflation which attack the globe amid the current high energy and commodities prices, the interest rate outlook differential came back on the pot as expected pushing the USD lower again across the broad amid spreading pessimism after the loss of Wachovia in he first quarter to 393$m. the loss bringing back the worries about the financial market losses and the needs for liquidity while the market is waiting for further earning reports from Merrill Lynch and Citigroup.

the USD can be under pressure till the next FOMC rate decision by the end of this month in spite of the market appreciation of  the G7 worries about the excessive volatility in the forex market and decline of the USD particularly. We are still receiving feeble economic performance data from US and there are no signs yet for a rebound of the housing market as what been mentioned in the recent fed's meeting too which persisting the USD dovish sentiment exposing it to further decline especially amid these current all times high of the oil rates which encourage the diversification from the greenback to the gold and the EURO for keeping the value and making a hedge against inflation. At these current high energy prices the rebound will difficult and the current easing actions can be eroded and stemming by the inflation outlook tackling the demand, the consumptions and the business confidence.

Further appreciation of oil prices and releases of weaker earning reports can push the gold higher again to 1000$ level.

So it's important to watch this week inflation reports. Today, we wait from US for Mar PPI figures and tomorrow for Mar US CPI. Also we have today UK Mar CPI which is expected to be .6% m/m and RPI figures and from EU we wait tomorrow for the same inflation data as release HICP figures of Mar. also it is import to watch the germane ZEW survey today which is expected to be 32.5 for the current conditions and -29 for the economic sentiment.

Today we wait also from US for April NY Fed Manufacturing which is expected to come to -17.5 after a decline to -22.23 last month and also we have February Net Long Term TIC Flows which are expected to be 47.2b.

Walid Salah El Din

E-Mail: mail@fx-recommends.com

Published on  Tue, Apr 15 2008, 07:09 GMT