It is the same market sentiment which contained the market and
provided sup****t to the greenback that there is a close end of the
fed's easing cycle which started since the beginning on the sub-prime
mortgage bad loan which followed by the credit crisis and loses of the
financial market across the broad. The mistrust in the growth
performance and the need of liquidity for covering loses and
reinforcing the capitals put pressure on the fed to cut the interest
rate from 5.25% to 2.25% until now while the inflation is still
building up on the current high oil and commodities prices tackling
the fed's efforts to spur demand. Actually, the consuming confidence
data are coming lower month by month without a stop lowering the
investments targets and spending as well.
By God's Will, today, we are just waiting for the release of the
consuming confidence of April which is expected to decline to 62 from
64.5 in March. The market wants to know whether there is a pause of
the US disappointing consuming data or not. By the end of last week
the US Michigan consuming sentiment survey declined again to 62.6 from
69.6 last month. The high oil and commodities prices are forming a
real tackle of the consumers besides the current slowing down of
demand and growth outlook.
In the same time the housing slump is still looking for an end as last
week we have had new weak new home sales decline by 8.5% in March too.
The figure was the lowest since 1991 It is clear to the market that
there are no signs yet for a close end of this continued slump. It is
im****tant to look into the fed's coming *****sments words which will
come out with its interest rate decision tomorrow to know how much
they are worried about inflation currently.
An optimistic wave helped the equity market recently on increased
expectations that the biggest loses of the crediting crisis has come
and there will not be this massive impact again. The Japanese yen was
under pressure in spite of the high CPI data which has shown an
increase by 1.2% while the core came .7% showing increased inflation
pressure in Japan too which may change the BOJ language tone at their
meeting later this week. The demand for Japanese yen increases at
these cheering times of equity market as its lower cost makes it the
favorite currency for carry trade transactions.
The single currency was under pressure recently after disappointing
IFO business climate figure which has fallen from 104.3 in March to
102.4 in April following the flash disappointing figure of April PMI
manufacturing which came lower than the market expectations of 51.6 at
just 50.8 increasing the market worries about the strong single
currency negative impact on the manufacturers and the side effect of
the slowing down demand from US but in an empty day of data the single
currency got a sup****t from The germane leading consuming indicator
GFK Consumer Confidence which came up for May to 5.9 from 4.8 this
month.
The BOE 50 billion pound plan of exchanging mortgages back securities
for governmental bonds could help the British pound last week but the
mortgage approving data forced it to give back most of it gains. The
British pound was under the pressure of a slump of the mortgage
approvals last week showing further worries about the housing and
crediting markets fueling the market expectations of further interest
cuts to come. We have just the UK consuming credit of March to be
watched which is expected to decline to 1.2bln from 2.353bln.
Best wishes
FX-Recommends
FX Consultant
Walid Salah El Din
E-Mail: mail@[EMAIL PROTECTED]
