9/6/2009 - The Current Market Sentiment

After a strong beginning of the greenback this week underpinned by
loses in the equities markets, the greenback has started losing its
upside momentum today giving back most of its earlier gains across the
broad after the release of the US labor report of May which has shown
losing of 345k jobs and these were lower than the markets forecasts of
losing 525k.

The single currency could creep up above 1.40 after its suffering
yesterday from the S&P downgrading of The Irish economy to negative on
the credit crisis consequences. The single currency could make a
bottom yesterday versus the greenback at 1.38 while it was trading by
the US labor data last Friday at 1.42 before joining the gains of the
equities market right directly after the release and giving back the
lead to the greenback to drive it down to close below 1.4 support
which helped the greenback technically to record this level. The
single currency is still the biggest loser in the recent few days and
it was undermined today too by the weak germane industrial production
of April which came down by 1.8% monthly and the market was waiting
for a marginal decline by just .2% after March rising by .3% which
made the single currency lagged behind the other European currencies
versus the suffering greenback.

The cable which was already undermined by the political concerns
around the Labor party future could compensate today all of its recent
loses versus the greenback trading right now above 1.625 again after
reaching 1.58 yesterday and the next support is expected to be at
1.6435 then this year high which it has made last week at 1.666. The
BOE decided recently to keep the interest rate unchanged at .5%
keeping its quantitive easing plans of buying 125b pounds of UK bonds
affording the required funds to stimulate the current struggling
economy. This program has initiated with 75b pounds to be ended by
this month but it has been extended to 125b and it can be prolonged to
August.

The gold after finding support last week at 960$, it could not be
sustained above 980$ after the labor data and it has fallen below 960$
and it is still suffering under this level increasing the technical
pressure on it to reach 942.8$ yesterday before joining the currencies
advances versus the greenback today and trading right now at 955$.
The gold has found support which pushed it above 980$ recently from
the worries rising about the US treasuries confidence amid the current
increases of the commodities and energy prices which come accompanied
with the rises of the market confidence in the recovery.

God Willing, it is important to wait for the release of US Retails
sales of May later this week which are expected t be up by .3% after
April declining by .5% excluding the auto sales and also, we wait by
the end of the week for the preliminary reading of University of
Michigan consuming sentiment survey of June which is expected to
increase to 69.9 from 68.7 in May.

Best wishes

FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com
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