The US equities market has found its way to add more gains again driving the demand for bonds down and the US Treasuries yield up again despite the IMF estimation of the US growth this year which it has lowered to be 1.7% from 1.9% it has mentioned it April and for 2014 it has lowered its forecast too to be 2.7% from 3% it has Guessed in April. The IMF has lowered again its global growth forecast to be 3.1%this year from 3.3% it has previously estimated last April and it has also lowered its expectation of 2014 to be 3.8% from 4% it has foreseen last April.
The single currency has lost its previous supporting level versus the greenback at 1.2796 to be traded around 1.277 currently despite the 3 billion Euros disbursement approval to Greece from its creditors’ troika. The single currency has been already under pressure since last Thursday when the ECB has given the market a clear forward guidance that it is to keep the interest rate at its current level as long as it is possible if it is not to me cut again considering the option of driving the deposit rate below zero as a possibility it is able to do technically currently.
But it looks anyway that the market is getting ready for tomorrow minutes release of last 19th of June meeting of the Fed which can show tendency of cutting its monthly scale of buying while the US labor market is still giving improving signs as we have seen with June labor report which has shown reduction of the unemployment rate to 7.5% and increasing of the UN non-farm payroll by 195k jobs while the market was waiting for 175k with a revision of May reading to be 195k also from 165k has been released previously driving the US treasuries yields up broadly substantially. The IMF has lowered the growth forecast of EU and China too but it has seen the growth in Japan, Canada and UK is to get better.
By God's will, EURUSD can face now in the case of falling further supporting level at 1.2734 before 1.2661 again whereas it could rebound after the market worries about Greece got down last November and breaking of it can open the way for another supporting level at 1.2464 while getting back up from here can be met by resisting levels at 1.2931, 1.3031, 1.3102, 1.3150, 1.3253, 1.3305, 1.3433, 1.3519, 1.3598 before 1.3709 which has been reached in the beginning of last February.
Kind Regards
FX Market Strategist
Walid Salah El Din
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