29/6/2011 - The Current Market Sentiment

[walid]

The Canadian dollar is still under pressure following the strong falling of the Canadian Ivey PMI of July to 45.1 in the contracting territory below 50 from 68.2 in June which came after July Canadian non-farm payrolls figures which have shown adding just 7.1k jobs while the markets were waiting for 20k from 28.4k in June by the end of last week helping the US Dollar to get over 0.991 resisting level versus the Canadian dollar on the current risk aversion sentiment which has increased by S&P action of lowering the US long term debt rating to AA+ from AAA after the close of the US markets last week.
In the same time, the worries about the US growth outlook are still weighing negatively on the markets by the next Fed's meeting decision which even if it is to come with new QE3 or hint of doing it buying more treasuries notes, it can face difficulties in stimulating the economy as the current required austerity measures for tightening the governmental deficit by cutting its spending which can tackle the governmental supporting of the US economy which has started to show weak signs of growth as we have seen recently the down revision of US annualized GDP of Q1 to 0.4% from 1.8% in the previous reading and weaker than expected growing in the second quarter by 1.6% while it was foreseen to be 1.9% and also June US PCE which came down monthly by 0.2% while the markets were waiting for rising by rising by 0.2% from 0.1% in May showing worries about the US demand ability to support the economy at the current stance after ending of the US QE2 last June with the interest rate is actually near zero on the subsequences of the credit crisis which is strong reason of this debt crisis which is looking harder to be solved after the governmental carrying of the loss weight of the US housing markets exposing the US creditability of downside risks of revision with the current easing of growth pace and the market strong focusing of the debt in US and EU too.
From another side, The Canadian dollar is under pressure by the growing expectations of lower demand for oil from US as the Canadian economy depends on its exports of the raw materials and specially the oil to the US markets that's beside the collapse of June Canadian CPI to 3.1% yearly in June while the markets were waiting for easing to just 3.5% from 3.7% in May which lowered the market expectations of having a new interest rate hiking decision by BOC which gives much care to the US growth pace.
Although the Canadian dollar can find support from being a good safe haven option during the worries about debt in EU and US too beside the tensions in Libya which are supporting the oil prices too and God willing, further rising of US dollar versus the Canadian dollar can be met now by resistance at the parity psychological level and the breaking of it can be followed by 1.006 then 1.0379 while getting down from here can meet supporting levels at 0.9685, 0.96, 0.9567, 0.949 then 0.9405 again where it has formed its recent main bottom to these current rates.

Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[walid]

The gold could continued making new highs reaching today $1779 per ounce on increasing market expectation of having a new stimulation action by the Fed which came with no new action or hinting of a new action in a form of QE3 which forced the gold to retreat from $1760 per ounce to $1740 following the Fed's statement which has come with just Fed's expectations of having the interest rate between 0% and 0.25% till the middle of 2013 instead of the language of keeping the interest rate at this low levels for extended period of time and also it has come with lower appreciation of the inflation upside risks in the coming period maintaining Fed's long term expectation of inflation unchanged and this is concluded by the growth downside risks impact on the prices.
So, the gold could creep up again of decreasing of the risk appetite again trading currently above 1760 again and also the US indexes came down again after it could rebound in cheeriness of having new stimulating action and S&P 500 came down to 1115 following the statement from 1137 before it after it could rebound earlier from 1080 to 1152 and further easing from here can be met by supporting level at 1080 , 1036 then 1003 again while in the case of rebounding continuation from here it can meet by God's will, resistance at 1152, 1192, 1222, 1267 then 1289 by 1300 psychological level again.

Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[walid]

The greenback bounced up directly after the release of the Fed's assessment which did not include QE3 plan or hinting to it but it came back under pressure on the Fed's decision of keeping the interest rate unchanged between 0% to .25% until the mid 2013 which was not discounted in the markets and weighed down on the US treasuries yields increasing the demand again for the US stocks as this decision can put pressure on the greenback value supporting the assets prices for a longer period of time than what has been discounting by the markets from the language of keeping the interest rate at this low level for extended period of time on the economic conditions which was required again by Fisher, Kocherlakota and Plosser.
The Fed maintained its inflation expectations over the long term expecting the prices to get down in the near future which is also priced in the market by the economic easing pressure negative impact on the inflation upside risks.
The US equities could continue rising after dipping down following the Fed's assessment release as the investors have seen in this decision an easing action has not been expected putting the greenback under pressure by this action which supported the risk appetite as it looked to the markets, what is in the Fed's hand currently with the interest rate has been already near this level on the back of the financial crisis and with new expected ties to be proposed on the Governmental spending which can cap any QE3 plans from stimulating the economy by buying more treasuries providing liquidity to the US bonds market, while the markets are focusing on the US debt which caused downgrading of the US long term debt by S&P to AA+ from AAA causing a strong wave of selling pressure in the equities markets and negative sentiment about the US creditability which can make it difficult to stimulate the economy financially by the government which is asked to do austerities measures for reducing its debt and so that what could be done by the monetary policy decision makers who surprised the market by the first time of determining a certain interest rate for a certain period of time by the Fed.
After S&P 500 index has fallen to 1100 following the statement from 1137, it could continue creeping up without a word about QE3 breaking above 1152 which stopped it during the day to close it at 1172 and God willing, in the case of gaining more momentum, it can meet resistance at 1192, 1222, 1267 then 1289 by 1300 psychological level again, while the way down can meet supporting levels now at 1100, 1080, 1036 then 1003.

Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[الدكتور سعـد]

الله يعطيك العافية

[الدكتور سعـد]

الله يعطيك العافية

[شموخ سعودي]

بارك الله فيك اخووي

[walid]

The Swiss frank has started the week under pressure, as the equities markets gains last Thursday and last Friday have continued in the beginning of this week too supported by the stronger than expected release of Q2 GDP preliminary reading of Japan which has shown shrinking by 1.3% y/y while the markets were waiting for the double of this rate by 2.6% and this optimism has continued into the US session helping the US stocks indexes eliminating all its loses after 5th of August following the US long term debt downgrading by S&P to AA+ from AAA.
In the same time, the investors have managed to take the SNB's worries about the Swiss Frank appreciation seriously with the SNB threatening the markets by taking further easing steps to stave off this appreciation after cutting the interest rate by 0.25% on 3rd of August to be zero despite the rising of Swiss SVEM PMI to 53.5 of July from 53.4 in June while the markets were waiting for easing to 53 while its counterparts indicators in US and EU are facing down pressure.
But from another side, it looks that the appreciation of the Swiss Frank could has its toll on the inflation which eased to 0.5% y/y in July from 0.6% in June falling monthly by 0.8% while the markets were waiting for easing by just 0.5% from decreasing by 0.2% in June which can really open the door for the SNB to take such easing actions with no threat from inflation upside risks currently injecting more liquidities into the markets.
USDCHF has risen from 0.7063 which has been the new recorded historical low last Tuesday to close last week at 0.7772 opening this week on a gap starting from 0.7829 breaking above 0.7950 reaching 0.7995 before easing again to be traded between 0.78 and 0.785 waiting for new clues from the SNB and in the case of rising of the worries about the investors risk positions, the pair cane meet supporting levels now at 0.78 and 0.7546 then 0.7177 before 0.7063 again.
Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[walid]

The falling of EU Manufacturing PMI of August below 50 in the contracting territory to 49 while the markets were waiting for 49.5 from 50.4 in July raised the markets worries about the growth outlook in the Euro zone showing its needs for stimulation while it's required currently from most of the Euro zone countries to implement governmental austerities plans cutting its spending and raising its taxes for improving their financial situation amid continued investors' concerns about the debt crisis in the Euro zone.
These weak manufacturing data have come in line with the falling of Aug Germane IFO last week to 108.7 while the markets were waiting for from decreasing to 111.3 from 112.9 in June following the big drop of Aug EU ZEW to -40 while the consensus was referring to improving to -7.6 from -7 in July and also this week earlier release of EU consuming confidence index falling to -17 in August while it has been forecasted to -12 from -11.6 in July showing increased downside risks facing the European economic growth.
The Single currency has fallen versus the greenback below 1.4327 supporting after inability to get over 1.4383 again and it is now finding support at 1.4262 and in the case of breaking it, this cane open the way by God's will for further falling to another supporting levels at 1.4211, 1.4149, 1.4102 then 1.4054 again before the psychological level at 1.40 while moving up can meet resistances at again at 1.4383, 1.4464, 1.4548 which was the high of this week and the breaking of it can be followed by facing 1.4576 whereas the pair has formed its lower high below 1.4695 which came below 1.4939 which was the formed top in December 2009.
While the markets are waiting now to know more about the manufacturing sector in US waiting for the release of Aug Manufacturing ISM index which is expected to get down below 50 too at 48.5 from 50.9 in July before the focusing turning back again to the US labor markets ahead of the waited release of US labor report of August tomorrow by God's will, which is expected to show new 90k added jobs to the non-farm payrolls from 117k in July with standing of the unemployment rate at 9.1% as it was in July.

Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[walid]

The Single currency came under strong pressure on increasing worries about the Euro area growth outlook after the ECB has downgraded its forecasts of the growth in 2011 and 2012 without hinting about new steps to stimulate the economy. While the worries about the debt crisis worries are still persisting weighing negatively on the current market sentiment.
The single currency has fallen below 1.395 supporting level yesterday following Trichet's comments about the downside risks facing the European economy currently which have elevated since the ECB meeting of August and today with these worries persisting before the G7 meeting this weekend, the single currency downward momentum has increased and with the falling of I.3838 supporting level versus the greenback, the selling pressure has accelerated causing falling of another strong supporting level at 1.3744 versus the greenback which is underpinned by the current risk aversion which is weighing down on the equities markets in EU and US driving up the bonds prices driving the US 10 years treasury bonds yields down to 1.96 below its previous historical level at 1.97 which has been recorded in the beginning of this week after the US markets have opened last Tuesday negatively impacted by the European stocks markets loses because of the rising worries about the economic growth outlook in the euro zone too amid requests for implementing austerities measures
by cutting the governmental spending and hiking the taxes in the European debt ailing economies which can be another hard obstacle in the face of the growth in this area amid growing concerns about the global economic outlook driving the business confidence down with the current great deal of uncertainty about the EU debt crisis.
From another side, The Swiss frank has come under pressure as the SNB's action to put a floor against EURCHF depreciation below 1.2 has helped USDCHF to go up above 0.88 capping the Swiss Franc from getting more benefits as a safe haven from this current dovish sentiment and losing of confidence for taking risks by the investors.
While the greenback is still finding strength from another side by no clear reference about QE3 by the Fed despite the recent dovish release of Beige Book which has shown clear weakness of the US economic performance but there was no hinting again from Bernanke's speech yesterday putting more pressure on the investors' risk appetite.
God willing, further EURUSD declining can be met with another supporting level at 1.3523 and in the case of breaking it, there can be a new supporting level to be faced at 1.3424 and the breaking of it can open the door for further falling to 1.2873 which has been recorded on the 10th of last January while the way of ascending can face difficulties at 1.3838 which has become a resistance then 1.3933 whereas the pair has formed its bottom after failing to get over 1.40 earlier today.

Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[walid]

While the markets were waiting for the European Economic and Financial Affairs Council meeting results, The Single currency has managed to ease back again versus the greenback under the pressure of having €2.5B EU Trade Balance deficit in July while the markets were waiting for €1.7B surplus from €1.5B deficit in June after it had failed to get over its previous resistance at 1.3935 falling below 1.377 whereas it has started its rising following the news of offering 3 months loans by the ECB for the European banks in an coordinated action with the Fed, SNB, BOE and BOJ for underpinning the US dollar liquidity into the European banking system for longer time as this has been allowed for just one week by the ECB.
God willing, further EURUSD declining can meet over the short term supporting levels at 1.3702, 1.3635, 1.3554 then 1.3494 again whereas it has started to correct its loses reaching the current levels and the breaking of it can open the door for further falling to 1.2873 which has been recorded low of this year on the 10th of last January while the way of ascending can face resistance again at 1.3935 then the psychological level at 1.4 and the breaking of it can lead to a higher resistance at 1.4278 which has been reached by the SNB's action to limit the EURCHF drawing down over 1.2 last week but it could not hold its gains falling back again on persisting worries about the European economy after the ECB had downgraded its forecasts of the EU growth in 2011 and 2012 without hinting about new steps to stimulate the economy, while the worries about Greece were ascending by suspending the talking between the lending troika and Greece from a side and from another side by Greece Fin Min announcement about the Greek GDP shrinking this year by more than 5% while it was expected to be by just 3.8% on the back of the negative impact of the taken austerities measures by the Greek government.

Kind Regards
FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com