University of Michigan in October to 69.4 from 73.5 in September
affected negatively on the US stocks encouraging the investors to take
some of their profits out of the equities market which supported the
greenback to have a reprieve after a week of massive selling because
of the improving of the investors risk appetite which have been
underpinned by better than expected earning reports of third quarter
which could store the investors confidence in the US financial sector
after encouraging earning reports from JP Morgan, Goldman Sachs and
Citigroup in the recent last week but last Friday disappointing BOA
earning report could stave off this confidence and the stocks gain
leading Dow to close the week below 10000 psychological level.
But by god's will, the investors are still waiting to have a clear
signal from the fed that there is a starting of tightening and taking
off their quantitive easing policy steps to find a reason to buy the
greenback again but last week, we have seen Fed's September meeting
minutes showing a stronger than anticipated tendency of the Fed's
Governors to buy further Mortgage back security which can put a close
end of this started correction last Friday bringing the pressure back
on the greenback shortly.
The single currency came off its high versus the greenback just shy of
breaking 1.50 last week recording 1.4967 but it looks eying on
breaking this psychological level unfazed of the ECB president recent
mentioned worries about the current EUR appreciation which can affect
negatively on the euro zone products competitivity. The ECB president
language has been turned positively in his recent press conference
after the ECB decision to keep the interest rate unchanged from being
in Prudence and cautiousness to just a referring to the need of the
current easing steps of the ECB as there is no realized inflation
pressure yet highlighting the recent signs of improving in the banking
and the financial sectors as the recent stress banking test have shown
that even if the economy took another turn for the worse there will be
no major European institutional falling. By god's will, it is
important later this week to watch the germane IFO release of October
which is expected to get better to 92 from 91.3 in September.
The Australian dollar which could keep its constant progress on versus
it getting above .925 right has faced a strong selling versus the
greenback before finding support at .91 last Friday closing the week
at .917 as it was still underpinned by surprising interest rate hike
of the RBA by .25% to be 3.25% backing it to the materialized
improving in the current economic conditions which are strongly
stimulated by the Chinese growth and demand for the Australian exports
which are mainly the raw materials such as the gold which pushed it
strongly recently taking advantage from the bright outlook of the
interest rate in Australia which will effect positively on the Aussie.
The Cable has faced the same pressure from the greenback appreciation
by the week end and the red closing of the US stocks reaching 1.625
before finding support and closing the week at 1.635. the cable could
find a strong technical support with the beginning of this week at
1.573 area and it could break the intermediate resistance at 1.5945
getting above the psychological resistance at 1.6 and it could gain
momentum again earlier today breaking 1.61 resistance level after 2
pervious failing tries to break it which lead to stop losing orders
triggering above this level and it is now still trading above 1.63.
The next main resistance currently is still at 1.6466 which was the
former formed lower high on the 23rd of last month after falling from
1.6741 and making a bottom at 1.6135. The cable has been facing an
accumulating pressure recently and a dovish interest rate outlook
which pushed it below 1.58 with the beginning of last week under the
pressure of the recent disappointing releases of UK manufacturing
productions and industrial productions of August before getting back
back up last week with the market weakening pressure on the greenback
preferring taking risk but if there further persisting of these weak
UK data, the cable can come back under pressure again. So it is
important this week to wait for the release of UK retail sales figure
of September which are expected to increase by .5%m/m and 2.8% y/y
from a flat reading monthly and increasing by 2.1% y/y in August and
also the release of UK GDP preliminary reading of the third quarter
which is waited to be down by 4.6% y/y after declining of the second
quarter by 5.5%.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com
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