Thread: The Current Market Sentiment

The USD has become the weakest major recently on the wider than expected US current account deficit as it has looked unsustainable more than expected in the coming months putting much weights on the greenback. CHF has got further gains on the unexpected SNB rate hike last Thursday. That is beside the continued geopolitical concerns in the Middle East as Thursday Iraqi explosions which were accompanied with a rise in oil and gold prices too. EUR/USD can be fueled with good industrial and business data from Germany containing the current market sentiment this week.

Last week Greenspan has shifted the market focusing towards the inflation in US and the FOMAC readiness to act to steam this inflation off which changed the current market sentiment towards a faster pace of tightening interest rate in US.
This was very obvious on GBP/USD as the market has started this discount after the MPC hiking decision to lift the interest rate on sterling to be 4.5% to widen the yield difference between the USD and GBP to 3.5%. But this last hike has been met with clear objection from the manufacturers in UK this time as it has looked not necessary and hurting the business investment more than helping curbing the inflation rises.
So we expect the USD to be well supported till the end of this month on the FOMAC rate decision and as the market want to see how far the FOMAC read the inflation in US. In the beginning the FOMAC was leaving its rate monetary policy accommodative on the weak US labor market but after the recent consecutive non-farm payroll added jobs then it has become just the inflation in US and how it can be contained on this growth of spending of these added jobs.
It is expected to see a selling in the stock market in these coming days too on this rate out look in US making the stock less attractive as it will need a real demand to rely on than the low interest rate raising the doubts of growth especially as the oil prices case is not over yet.

Best Wishes


FX consultant
Walid Salah El din
http://www.fx-recommends.com
Cairo, Egypt.