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7/7/2009 − The Current Market Sentiment

Tue, Jul 7 2009, 04:04 GMT
by Walid Salah El Din

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The US equities market could find support today from the release of June ISM non-manufacturing index which came at 49.8 from 44 in May and it was widely expected to be 45.5. Dow could rose by 44.13 while its future was trading down by more than 90 points by the US session. S&P 500 index could cover its loses too which reached 884 level again closing up at 898. Technically, we have made the US indexes have made white hammers today but they need a stronger buying volume to carry them up again preventing the current exposure to making lower highs can continue the pressing down. By God's will, if we closed the week below today's lows the situation of the US stocks can be difficult and heading lower next week seeking for a new bottom. Dow can meet a psychological support at 8000 but the main supporting area stands between 7791 and 7804 whereas it rebound on 21st April and 23rd April of this year and it is strongly in need to close above last week high at 8580 to find a new upward momentum to regain this year high which has been made on 11 June at 8875.

The greenback has given back most of its earlier gains in the beginning of the week with improving of the US stocks performance today. The Cable which has slided below 1.61 could get back above 1.62 again. The British pound is actually under pressure this week from the increased current market expectations of further easing steps of the quantitive easing policy of BOE can be taken in the next MPC meeting which can contain further buying of the governmental bonds which can effect on the demand for the British pound negatively. If 1.62 could not hold again as a support after today's dovish breaking of it to 1.6095 in an increased downward momentum in the beginning of this, this can lead to a test of the psychological level at 1.6 and the breaking of it can test the main supporting area at 1.58 while the upward way can face an intermediate resistance to stand above 1.6325 then a difficulty to break 1.644. by God's will, it is important today to watch May UK Manufacturing productions which are expected to be up by .1% m/m and UK Industrial productions which are expected to be up by .2% m/m and if we have seen negative rates this can further pressure on the British pound before the MPC meeting next Thursday.

The Japanese yen has been supported across the broad in the beginning of this week and it could break 95 level reaching 94.65 versus the greenback as the frustrating jobs figure of June in US could increase the carry trades unwinding momentum in the favor of the low yielding currencies such as the greenback and the Japanese yen which has an interest rate at just .1%. Nikkei 225 has followed the US stocks market as expected in the beginning of this week too losing further 135 to close at 9680 and it could not follow the US stocks rebound and the index is still trading in the red territory at 9659 negatively impacted by the strong yen which can hurt the Japanese exports at this time of sluggish global demand which effected negatively on the Japanese Tankan survey of the big manufacturing of the second quarter which came last week at -9.4% and it was expected to be 6.9% putting further pressure on the Japanese stocks which could not even get out of the negative impact of the disappointing release of June US consumers confidence survey.

Best wishes

FX Consultant

Walid Salah El Din

E-Mail: mail@fx-recommends.com

http://www.fx-recommends.com

Published on  Tue, Jul 7 2009, 04:05 GMT