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6/6/2008 − The Current Market Sentient
Fri, Jun 6 2008, 15:38 GMT
by Walid Salah El Din
The most waited non-farm payroll of May came at -49k with high unemployment rate at 5.5%. The data were dovish after the optimistic the release of May ADP which could underpin the greenback by the release of the non-farm payroll of April. May ADP was expected to be -30k and it has come positively by 40k surprising the market. What added to the greenback owes was its huge one day decline versus the oil which reached more than 6$ until now.
The single currency could add more gains today versus the greenback after yesterday massive change from the ECB president Trichet's comments in his press conference after the ECB decision to hold the interest rate unchanged. Trichet has hinted that there can be a rate hike for stalling price stability over the medium term after the increased threats of inflation recently which can expose the Euro zone to a second round effect of inflation which is desirable and should be frightened. The comments were clear enough to spur EURUSD buying pushing it above 1.55 after Ben Bernanke's comments which derived the pair lower earlier this week. The fed chairman has said that the policy is well positioned which hinted that there can be no further cuts and he has added that economic conditions are to get better in the second half and to pick up in 2009 but the growth risks are still to the downside but he is worried about the high inflation rates amid the current high energy and commodities prices and the weak dollar levels which were negatively impacted by the cutting interest rate which lowered its yields making it less attractive.. The comments were optimistic enough to push the greenback higher. His saying that the policy seems well positioned could change the current priced interest rate outlook which was not taking off further cuts to come soon.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
Published on Fri, Jun 6 2008, 15:40 GMT
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