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5/11/2009 − The Current Market Sentiment

Thu, Nov 5 2009, 14:25 GMT
by Walid Salah El Din

FX Recommends

The Fed has decided yesterday that in spite of the recent improvement of the economic conditions and the better than expected growth rate of the third quarter, the economy is still in need of all of its easing stimulating policy steps further for storing confidence and improving the labor market conditions which can suffer further next year expecting the unemployment rate to get over 10%. The Fed's worries about the employment and this halting recovery were widely expected and there was no a major change in the market as expected.

The ECB has done the same repeating its mantra that the inflation is firmly anchored over the medium term and the demand is still sluggish and in need of the ECB current easing monetary policy for further.

The BOE has kept the interest rate unchanged too and as we have been waiting it has added 25bln Stg more to its current 175bln Stg governmental buying bonds plan which was good for keeping the assets value in UK to be 200 Bln Stg and left its 3 months period revision to the economic development and the central bank evaluation mentioning that the need and the importance of this step surely for stimulating the sluggish economy which faced a contraction in the third quarter of this year too but it looks that there was a higher discounting in the market of increasing this plan by more than this, So the British pound has got direct strong push across the broad after the decision.

The British pound was already well-supported today by stronger than expected releases of UK industrial productions of September coming up by 1.6% m/m from -2.5% in August while the market was waiting for just 1% and manufacturing productions of that same month have come at 1.7% monthly while the market was waiting for 1% monthly after declining by 1.9% in August but the cable is expected to face a strong resistance to be above 1.66 at the current risk appetite aversion in the stocks markets waiting for tomorrow US labor report of October release, by god's will which is expected to show losing of further 175k out of the farming sector. The market cares very much of the labor market conditions 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 and this could be obviously concluded again from the Fed's Assessment yesterday.

Best wishes

FX Consultant

Walid Salah El Din

E-Mail: mail@fx-recommends.com

Published on  Thu, Nov 5 2009, 14:26 GMT