4/6/2009 - The Current Market Sentiment

Yesterday, Ben Bernenke's announcement about the gradual recovery have
encourage the traders to take profit and reevaluate the current
situation pushing the equities markets lower and the greenback up
again. Dow came down to close at 8666 and the dollar could get off its
year low versus the British pound but today the risk appetite has been
brought back to the market pushing DOW above 8700 again putting the
greenback under pressure.
The cable was underpinned this morning after the release of UK Halifax
house prices index which came up monthly by 2.6% from a decline in
April by 1.8% but the cable came under pressure again after the BOE
decision to keep the interest rate unchanged at its historical low at .
5% keeping its quantitive easing plans of buying 125b pound of UK
bonds affording the required funds to stimulate the current struggling
economy.
The single currency was under the same pressure after the ECB decision
to keep the interest rate unchanged at 1% after a mixed message to the
market from Trichet in his press conference has not give a clear
direction to the market but it could get off its low after decision at
1.4070 with the equity market compensating of its loses getting back
into the green territory.
The gold could come off its low at 960.7$ today to test 980$ again
with the current cheeriness. The gold was moving recently after the
worries rising about the US treasuries confidence in the same way of
the equity market amid the current increases of the commodities and
energy prices which come accompanied with the rises of the market
confidence in the equity markets.
Recently, the worries about the demand for the US treasuries could
contain the market sentiment putting pressure on the greenback from
another side. These worries about losing confidence in the US
treasuries could temper the market and brought the US debit on Timothy
Geithner visit agenda to China this week to store the biggest
treasuries buyer confidence in its US treasuries holding in spite of
the recent US quantitive easing steps which exposed the US debit to
the mortgages bad loans by replacing them with US treasuries. In this
same time, the US treasuries are still the Fed's preferred way to pump
funds and easing by its adopted quantitive easing policy after losing
the cutting interest rate tool to afford the required liquidity for
the government to clean the banks balances sheets and to spur growth
moving in its rescue financial plans for a promising recovery can
start later this year and store the confidence in the US economy
again. Timothy's language was very friendly referring to the required
strong relationships between US and china to corporate get out of this
crisis and China believes in the US ability to recover and from the
Chinese side, there is no other option can replace its holding of US
dollars currently.
We wait tomorrow for the release of May Non-Farm payroll which is
expected to show a losing of further 520k jobs from -539k in April.
The release of May US ADP employment figure was not encouraging as it
has shown a losing of another 532k job in the private sector which
weighed on the market optimistic speculation of an improving of the
labor market in US can support the consuming spending and the business
spending to move the economy back to growth but it looks really
gradual in the labor market and there is no major change of it yet.

Best wishes

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