The greenback is still unable to get back what it has lost versus its rival currencies on the back of the market shifting to the prospect of having longer period of keeping the Fed’s QE unchanged at $85b on the recent comments of Janet Yellen which is still containing the market sentiment weighing down on the US Treasuries yields driving the US blue chips to new historical highs as she sees that the recent achievements of the US economy is not enough to take a decision of tapering soon.
Yellen has assured also in front of the financial committee of the Senate that she does not find a threat of having new bubble in assets markets because of the continued QE pace since 12th of last December, while the prices data show that the US economy is still facing prices down side pressure, as what has been see with the falling of PCE which is the Fed’s favorite gauge of inflation to 0.9% y/y in September while the market was waiting for 1.1% from 1.2% in August.
The other Fed’s officials have started to echo this same dovish message to lower the markets’ prospects of having tapering decision next month after it had grown obviously following the bullish US labor report of October which has shown amazing rising of US non-farm payrolls to 204k while the markets were waiting for 125k in appreciation of the negative impact of the US governmental shutdown from 148k in September have been revised up to 163k showing solider than expected recovery of the labor market unfazed of the political tension in October.
The markets have already started to believe in a close tapering and trusting in the US economy ability to grow further, the US equities continued rising and the US treasuries came under pressure but these comments from the current Fed’s vice president and awaited first female to be the next chief of it were enough to cap 10yr note yield from rising over 2.8% and to give S&P 500 green light to rise further to be near 1800 level right now.
God willing, the market will be waiting to hear again more warning messages from the Treasury Secretary Lew when he talks today before the next cycle of negotiations about the debt ceiling hiking which seems to be easier than October round with lower expectations of having another governmental shutdown and there will be also waiting for the Federal Reserve Bank of Chicago President Charles Evans who is expected to adopt the same dovish message of Yellen after he has actually said previously that the fiscal strife in Washington will probably delay the central bank’s tapering of its monthly bond purchases.
From another side, The OECD came today to lower its growth forecast of the global economy to 3.6% from 4% it has guessed previously Last may highlighting the risk of the uncertainty about the US fiscal policy as one of the major risks for the global economy and it has urged the Federal Reserve too to maintain its accommodative stance for some more time before cutting it.
While the markets looked unfazed of PBOC chief Zhou’s comments during the Asian session which suggested undertaking a series of reforms of its capital markets including wider expanding the Yuan exchange bands to find the major Asian stocks indexes nearly unchanged from its opening rates while the US equities indexes are expected to watch a downside pressure with their European counterparts in the red territory undermined by OECD chief economist Pier Carlo Padoan’s expectation of having harder times in EU which is expected to be uneven this year before growing by 1% in 2014 with persisting of the current subdued prices pressure and high employment rate which should guarantee maintaining of the ECB monetary easing stance.
While the single currency is still living in balance against the greenback around 1.35 psychological level, after successful creeping up from 1.3294 which has been reached following the ECB’s decision of cutting the refinancing interest rate by 0.25% and in the case of rising up further over 1.3542 which could cap it yesterday, it can meet higher resisting level at 1.3567, 1.3655, 1.3738 before the 61.8% correcting Fibonacci level of the falling from 1.4938 to 1.2042 at 1.3831 which could hold the pair back last month while getting over it can be followed by 1.3866 before 1.40 psychological level while the pair which is still below its 200 H4 moving average can meet in the case of retreating again intermediate supporting levels have been initiated during its recent creeping up at 1.3416, 1.3360 before its recent formed bottom at 1.3294 again while the expected standing supporting levels below it are still existing at 1.3229, 1.3104 before 1.30 psychological level.
.
Kind Regards
FX Market Strategist
Walid Salah El Din
Mob: +20 12 2465 9143
E-Mail:
mail@fx-recommends.com
http://www.fx-recommends.com