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Posted by fxrecommends@gmail.com on July 22, 2008, 11:26 pm
The oil prices and their volatile actions have contained the markets
sentiments recently as their high effects on both of inflation and
growth at these serious levels of inflation and sluggish growth. The
greenback could extend its gains across the broad because of the Oil
prices easing lower than 140$ per barrel since last Wednesday after
the weekly release of US oil inventories data. The oil is trading
lower than 130$ a barrel currently.
The equity market has gained trust too after the US financial
quarterly earning reports which have given the market the sentiment
that the credit crisis is easing and there can be no worse than what
has been done because of the housing market slump after last summer US
sub-prime mortgages bad loans problems which dragged the home prices
down and caused worries about growth and an ease of the interest rate
to 2% from 5.25%.
The US joint plan of the US treasury and the Fed for bailing out
Freddie Mac and Fannie Mea has given a boost to the financial market
amid better than expected release of JP Morgan quarterly earning
report even after Merrill Lynch the second quarter loss of 4.89
Billion and citigroup loss of 2.5 billion, the believe that the
credit crisis can ease in the future could contain the market
sentiment.
The Japanese yen is still under pressure on this current market
sentiment as the first funding currency of the carry trades as its
very low interest rate. The greenback is trading above 107 versus the
Japanese yen right now.
Last week, The US CPI which has come at 5% and the market was
expecting 4.5% and the core figure which excludes the food and energy
has come at 2.4%has come higher than the market expectations of 2.3%
showing strong inflation upside risks in US in this same time of
struggling growth Which could add to the greenback as it has shown an
increased inflation pressure on the Fed to consider rate hiking in the
face of this building inflation in US and today Plosser the fed member
of Philadelphia has given a push to the greenback after referring to
the probability of tightening for facing inflation. Plosser was one of
the opposing votes which dissented the recent fed's cuts in
consideration of the high inflation current levels.
The currency market was stagnant waiting for a major change to move by
these comments taking keys from the equity market and the oil prices
mainly. We have later today the release of US Beige book which comes 2
weeks before the next fed's meeting to show the current economic
conditions and also the weekly EIA crude oil stocks data and later
this week, we have the release of US building permits of June which
was 1.091m in May and by the end of the week we have US new home sales
which were 512k units in May and are expected to be 510k units in
June. We have also US Michigan consuming sentiment survey which is
expected to be 56 in July.
From EU, we have tomorrow flash releases of this month PMI the service
and manufacturing sectors and both of them are expected to come
slightly below 50 in the contracting territory and also the release of
the germane IFO business climate of July which is expected to be 100.2
from 101.3 in June. These data are very important to the single
currency.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com
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