28/7/2009 - The Current Market Sentiment



The greenback is still under the pressure of the gains of the equities
markets and the increases of the investors risk appetite joining this
rally of the stocks. Dow could cross its year high last week closing
above 9000 giving further momentum to this pulse wave which has been
triggered just above 8000 since nearly 2 weeks by Meredith Whitney's
upgrading of Goldman sacks stocks to buy from neutral expecting it go
up 30% which means about 186$ per share which put pressure on the
greenback supporting the investors asking for the British pound and
the single currencies for taking risk and joining this wave which
continued this week too after last week strong containing and bullish
closing which brought S&P future from 865 to 940 at its close and it
is now trying for making a new year high breaking 960 trading right
now at 955.
The Japanese yen has come under accumulated pressure from the gains of
the equities markets too which encouraged the investors risk appetite
to carry high yielding currencies selling the low yielding currencies
for taking risk again joining the current market confidence with the
optimistic release of US new home sales which of June which reached to
384k and they were forecasted to go up to 350k from 342k in May.
last week, Bernenke has refereed in his testimony in from of the
congress to the current weakness of the labor market which can effect
negatively on the consuming spending downplaying the inflation upside
risks in the next 2 years and there is no change of the fed's easing
policy before an improving of the labor market and he has repeated
during the weekend the increasing possibility of recovery amid further
loses of jobs can bring the unemployment rate above 10%.
God willing, the market eyes will be focusing today on the release of
July US Conference Board's Consumer Confidence consumers survey which
is expected to be 50. The release of June has triggered a selling off
in the equities market as it was expected to be 57 and it has come
down to 49.3 giving doubts about the pace of this halting recovery. By
the end of last week, we have seen US July consuming sentiment survey
of University of Michigan final reading coming down to 66 and it was
expected to be 70 after the dovish preliminary reading which came down
to 64.6 and it was expected to be 71. The market is in need to see the
consuming pace in a better look to keep driving the stocks higher
restoring the confidence in the recovery. So, if we are to have
further disappointing release, this can cause a shock today to the
stocks holders which can cause a profit taken in the equities markets
in a times may be earlier than it was expected widely bringing the
weakness of the recovery on the spot.
Best wishes

FX Consultant
Walid Salah El Din
E-Mail: (e-mail address removed)


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