Thread: 30/11/2010 - The current market sentiment

The pressure is still on the single currency on increasing European requests for Portugal to accept a funding loan of its deficit from the IMF and European commission prepared package for the debt problems of the Euro area countries following Ireland but until now there is no signs of acceptance from Portugal and the Spanish government is still tied to its same position that there is no need of getting this package aid satisfied with its current bond market conditions exposure but it looks that the markets are still worrying about the debt conditions inside the Euro area weighing negatively on the European equities market which has had no considerable support from the US first session after long vacation because of the thanksgiving holidays as it is still depressed by the tension in the Korean semi island and Dow has hardly could tighten most of its loses by the end of session yesterday closing down by just 39 points while the demand for the US treasuries is still strong supporting the greenback taking from the investors' interests in the shares as it is still unclear yet to the market that the Fed's new easing steps are to take the wanted effects while we are waiting for very import data later this week as the market is waiting for November ISM Manufacturing to be 56.3 from 56.9 in October and non-manufacturing indexes to be 54.7 from 54.3 in October and also by the end of the week for US non farm payroll to be 145k from 151k in October and the US factory orders of October to get down by .7% after rising in September by 2.1% while the European debt problems are still containing the market sentiment by the Irish waited voting for the new budget next week on the 7th of next month the opening in the beginning of this week which should contain strong spending cuts and tax hikes after the EU finance ministers passing of 85B euros bailing out package plan during this weekend.
The single currency is trading currently below 1.3 psychological level versus the greenback as expected as there were no considerable support before this area between 1.303 to 1.297 as we have mentioned earlier last week and assured yesterday and the failing to have new buying here again can lead to testing the pair recent bottom at 1.26 while the market is still ignoring the good economic data coning out from EU as we have seen recently November EU consumer confidence getting up to new 3 years high and the germane IFO historical recorded new high of November which has not been seen since the beginning of it in 1991 reaching 109.3 getting above October reading which was 107.7 and it is expected to have November EU manufacturing PMI again above 55 and the reading above 50 is meaning that there is an expansion of the sector and below it mean that there is a contraction but even this good economic performance figures were not enough to convince the market that the worst of the debt crisis is over and behind of us to restore confidence about the debt market conditions inside the Euro area despite Spanish government repeated announcement that it has no reason to get use of this offered helping package but the Irish acceptance of this offered package after denying in the beginning is still concerning the market while it looks that there is pressure on Portugal to accept a share of this low interest rate offered aid and there may be there what can encourage it to take from it especially after Greece having new extension of its had loan payment period while its bonds yields differentials with the other bonds inside the Euro zone and specially Germany are expected to have the market interest after the attention got off the Irish bonds driving them up getting down their yields down with less expected exposure of its debt to the market.

Best wishes

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

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