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8/6/2009 − The Current Market Sentiment

Mon, Jun 8 2009, 04:25 GMT
by Walid Salah El Din

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The greenback has been supported across the broad by the end of the last week after the release of May US non-farm payroll which has shown a loss of 345k jobs which are lower than the market consensus of 525k. The labor data show that the recession pressure has got down recently and the recovery is aggregating. The market believes is this recovery have increased recently after the release of US Consumers confidence of May which increased to 54.9 and these new labor data came to ensure these believes again. The US stocks indexes future have increased strongly directly after the data and the Dow has opened above 8800 gaining more than 100 before exposing to the profit taken with the beginning of the US session directed it to the red territory before getting back some of its lost gains to close at 8763 up by just 12 points. The greenback has suffered from these strong gains in the beginning before making its strong rally across the broad.

The single currency has fallen below 1.4 by the end of the last week after last Thursday ECB decision to keep the interest rate unchanged at 1%. Trichet has confirmed the ECB executing of its 66B Euros buying of AA covered bonds with mortgage loans or public loans plan to afford liquidity to stimulate growth from the beginning of July. The ECB is expecting the growth in the Euro zone to shrink from 4.1 to 5.1 percent in 2009 and the inflation to be from 0.1% to 0.5%.

The cable which was already undermined by the political concerns around the Labor party future has come under the same pressure to close below 1.60 too. The BOE decided too to keep the interest rate unchanged at .5% keeping its quantitive easing plans of buying 125b pounds of UK bonds affording the required funds to stimulate the current struggling economy. This program has initiated with 75b pounds to be ended by this month but it has been extended to 125b and it can be prolonged to August.

The gold after finding support at 960 $, it could not be sustained above 980 after the labor data and it has fallen too below 960$ again. The gold has found support recently from the worries rising about the US treasuries confidence amid the current increases of the commodities and energy prices which come accompanied with the rises of the market confidence in the recovery.

God Willing, it is important to wait for the release of US Retails sales of May later this week which are expected t be up by .3% after April declining by .5% excluding the auto sales and also, we wait by the end of the week for the preliminary reading of University of Michigan consuming sentiment survey of June which is expected to increase to 69.9 from 68.7 in May.

Best wishes

Published on  Mon, Jun 8 2009, 05:48 GMT

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