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2/11/2009 − The Current Market Sentiment

Mon, Nov 2 2009, 12:17 GMT
by Walid Salah El Din

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As we have mentioned in the recent analyses, the greenback has found support from the stocks tumbling after its accomplished gains after the release of the US Q3 GDP first reading which came better than the market expectations of 3.2% at 3.5% last throusday as the blur consuming picture could contain the market sentiment again after the release of the weak personal spending of October which came at -.5% after 5 months of gains and the US consuming sentiment of UN. Michigan surevy which came at 70.6 from 73.5 in September and these dovish data come after the disppointing release of US consumers Confidence which have come last Tuesday at 47.7 from 53.1 and it was expected to be 54.3. The market has looked at these data as key leading indicators of the current recovery pace which show that it is still halting as expected and exposed to a second higher low formation at least which could drag the US stocks down again and this time it looks a looking for a higher low above the low of the 9th of last March when the market has seen signs of new beginning of the banking and the finanacial sectors in US when vercim pendit of  Citigroup announced that it has made profits in the first 2 months of this year showing a staving off the banks detrioration after the credit crisis which lead to the recent months strong rebound in the equities market around the globe surely in favor of the high governmental spending which contributed in a great deal percentage of the GDP and the montary easing steps which provided the required liquidity for operating and writing off the toxic assets of the banks balance sheets of the banks but now and we are ahead of withdrawing of these steps, the market is waiting for a test of the strength of this recovery and to what extent it can depend on the current actual demand which is suffering from a struggling consuming rates and increasing of the jobs losing numbers untill now.

So, it is very important this week to wait for the US labor report of October by the end of this week and it ios expected to show losing of further 175k out of the farming sector especially as it is widely read that there is no waited action from the fed concerning its stimulation easing steps before a materilized improving of the labor market conditions. The US stocks market closing down could lead to a strong beginning of the greenback this week on increased probabilities of have further lows this week which can underin the risk appitite aversion sentiment of the investors and the greenback as well.

By God's will, while the market is waiting for the G8 Meeting starting from next Friday, There are many key important data are waited to be out from US like today's US October ISM manfacturing index which is expected to be 53 from 52.6 in September and later this week US October ISM non-manfacturing index which is expected to be 51.8 from 50.9 in September and also US September factory orders which are expected to increase by 1% from a declining last August by .8%.

we are waiting too for RBA, BOE, Fed the ECB interest rate decsions. the frist is expected to increase the interest rate by another .25% to be 3.5% while the second is expected to extend its buying bonds plan from 175 bln strling to 200 or may be 225 while the third and the fourth are expected to leave everything unchanged which can put weights on the british pound which suffered recently from the dispointing release of UK Q3 GDP which came at -.4%.

Best wishes

FX Consultant

Walid Salah El Din

E-Mail: mail@fx-recommends.com

http://www.fx-recommends.com

Published on  Mon, Nov 2 2009, 12:18 GMT