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21/4/2008 − The Current Market Sentiment

Mon, Apr 21 2008, 12:03 GMT
by Walid Salah El Din

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The greenback buying wave faded after the weekend on the anticipation of further interest rate cuts to be done. A Rally in the stock markets has been triggered helping the USD weakening the Japanese yen across the broad last Friday after the release of the loss of 5.11B$ of the Citigroup in the first quarter. The investors sell the Japanese yen buying the higher yielding currencies like the greenback for taking risk and speculate in the equity market. This wave dragged the gold lower than 915$ versus the greenback as a result of the taking risk optimism and an close end of the financial market loses as it looks that the biggest loses has been done after the release of Citigroup third consecutive loses which has not come massive as some speculators anticipated earlier after Merrill Lynch third consecutive quarter of loses too. The news of planning of cutting 9000 jobs after the 4000 cuts planning of Merrill Lynch too helped these shares from another side calming the markets as there will be lower costs to endure.

The BOE talked today about exchanging mortgages back securities for governmental bonds in an action to reduce the written down loans to bring back stability to the financial market. The current talking is about 50 billion Stg. It seems the second governmental action after the northern rock governmental publication and it looks like that Gordon Brown's idea to solve the current financial problems in UK. While the giant banks are looking for liquidity one after one after the recorded loses of the US housing loses. The royal bank of Scotland is looking for 12 billion pound too. There was not enough market optimism to help the British pound further to cross 2 versus the greenback. The pound resided just above 1.98 after a buying wave of the British pound has helped it to correct versus the single currency which slumped versus the British pound last Friday after reaching .8094 pushing the British pound to rally in justifying of this pair driving it lower than .79 in a repeated inability to break higher above 1.6 versus the greenback..

The single currency was already hurt by The financial minister of Luxemburg Jean-Claude Juncker's comments that the financial markets misunderstood the Group of Seven's concerns about the volatility of major currencies that the last  forex market movement was volatile since the G7 pervious meeting and his adding that further EUR appreciation is not desired.

This week is looking calm as there are few keys out. The most important key from US is new home sales of March which is expected to be .58m from .59m in February and also from EU the germane IFO business climate of April which is expected to edge lower to 104.3 from 104.8 in March.

Best wishes

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FX Consultant

Walid Salah El Din

E-Mail: mail@fx-recommends.com

Published on  Mon, Apr 21 2008, 12:04 GMT