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| Subject: 29/6/2009 - The Current Market Sentiment
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Posted on: Mon, 29 Jun 2009 05:07:29 +0000 (UTC)
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Last Friday release of June US consuming sentiment has shown a
continued improving of the consuming apetite the final number of June
came at 70.8 and it was 68.7 in May and US personal income which has
come strongly better than the market forecasts of just .4% at 1.4% in
May but These figures have not made a considerable change of the
greenback current tight ranges of trading. Dow has lost 34 points in
its last session to close at 8438 with no major change of its opening.
The Fed's come out last week with a new US assessment downplaying the
deflation risks with no new added easing steps of its quattitive
easing policy. The fed has not mentioned the deflation risks as it has
done it its April meeting and the concerns about the US treasuries
attractivness amid rising of the comodities and energy prices seemed
caping the Fed as By god's will, if these huge Fed's quatitive easing
steps could cause the inflation preasure which can hurt the demand for
the US treasuries, this can lead to a hike of the interest rate and
tackling of further easing steps of the current quantitive easing
policy of the fed to add some attractivness to the US treasuries to
convince the bonds holders to keep their holding of US debits to
prevent a second round effect of the credit crisis by the this current
waited halting recovery. The US treasuries notes were the first option
of the Fed's quantitive easing policy by offering an exchange of them
by the mortgages back securities which caused the financial problem
and became known as toxic assets which can poison the US creditability
itself and they are still the Fed's preferred way to pump funds and
easing by its adopted quantitive easing policy after losing the
cutting interest rate tool to afford the required liquidity for the
government to clean the banks balances sheets and to spur growth
moving in its rescue financial plans for a promising recovery can
start later this year and store the confidence in the US economy again
to cover its debits worries. So, by god's will, it is important this
week to watch the pace of the US manufacturing recovery and the
current recession impact on the US labor market in May. We wait the US
manufacturing index of June to be 44 from 42.8 in May and also the US
non-farm payroll to lose more 368k jobs in June and the US
unemployment rate to increase to 9.6%. If we had weaker performances
of these important indicators, the market expectations of a halting
unreliable recovery can increase weighing negatively on the equities
market and the risk appetite which can support the greenback.
The single currency came under the same pressure versus the greenback
to slide from above 1.41 to stand above 1.39 currently. We have seen
the beginning of this week the germane IFO of June which was expected
to be 85 coming at 85.9 after last week release Germane ZEW of June
which surged to 44.8 from 35 in May while the current conditions
figure improved to -89 from -93 in May and we have seen also the flash
reading of June PMI manufacturing index which was expected to get
better to 40 from 39.6 coming at 40.5 and PMI services index of this
same month which was expected to be 45.6 from 45.2 in May coming at
44.5 but these data could not make a major change of the single
currency direction last week waiting god willing for this week final
releases of EU Manufacturing PMI index which is expected to improve to
42.4 from 40.7 in May and EU PMI Services index of June which is
expected to be 44.5 from 44.8 in May. Also it is important this week
to wait for the release of EU CPI preliminary release of June which
was unchanged in May y/y and the ECB president Mr. Trichet has
indicated in his recent press conference after the ECB decision to
keep the interest rate unchanged at 1% on the 4th of this month that
the ECB is expecting the inflation to be from 0.1% to 0.5% and if we
have had negative rates this week this can dampen the single currency.
We wait also to see the ECB interest rate decision which is widely
expected to be unchanged at 1% and Trichet press conference to know
its recent evaluation after its decision last week to extend its
lending offering to the European countries to 442Bln Euros for one
year in another extra easing decision in which can move current
economic recession.
The gold is still under the pressure of the commodities and energy
prices easing and the correction of the stocks market in the recent 2
weeks which downplayed the inflation upside risks. From another side,
the recent US inflation data show that the inflation pressure is still
tamed negatively impacted by the recessionary as May US CPI Index
decreased by 1.3% y/y broadly and the core figure excluding the food
and energy decreasing to 1.8% y/y could add pressure on the gold which
is the mirror of the inflation as the market was waiting for a slide
by just .9% after April slide by .7% broadly and was waiting for the
core to be as the same as April at 1.9% and also May PCE came broadly
yearly at just .1% from .4% in April and the core came at 1.8% and
monthly the figure came broadly as the same as April at just .1% while
the core came lower than the market forecast of .2% and lower than
the .3% of April at just .1%. The gold came under strong pressure
after sliding from 960 to be under further technical pressure to drove
it down below 942.8$ to reach a new low at 912.8 after its previous
low at 925.88 before rebounding to 948 but it could not close above
940 again.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com |
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