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Posted by fxrecommends@gmail.com on August 12, 2007, 9:39 am
Yes, it could be prolonged. Actually there is a difference between
stability and in stability even in case of funding as what has
happened in US from the Fed also in Europe and Japan it is still
instable and exposed.
It is hard to calm the market down and making new highs this year. The
belief of that the stock markets highs have been reached this year
weak the market sentiment and the stocks appetite.
Carry trade unwinding can be on ahead of the coming weeks containing
the market sentiment. Driving the USDJPY lower and causing a
considerable correction versus the high yield currencies as well. The
belief that the recent high yield currency run was excessive could add
to the Japanese currency. The first wave of decline cam earlier this
year after Greenspan's comments concerning the bubble in the Chinese
market but this time it is undermined by the problem of the housing
market sub-prime bad loans in US and the fear to be spread into other
sectors and the crediting market generally as what's happened after
Bear Sterns executive said that credit markets in the US were at their
worst in 22 years
At any case the greenback is still depressed by these same problems
which highlighted prospect of a coming Fed's cut again to support the
stock market injecting more funds to end the current wait and see
stance for the prices to slow down. The market expectations that the
worse has not come yet and there can be a negative prolonged impact to
threat the US economy and the crediting stability in US pushed the Fed
to track these sub-prime bad loans and the equity market should be
reluctant to any surprising bad numbers of these investing loans in
the housing market in the coming days.
The UK quarterly inflation report tone came hawkish as widely expected
smoothing the way for the September MPC waited .25% hike. It came
following the ECB and Trichet's recent comments that it is strongly
vigilant watching the price stability currently which is widely
indicating another hike at its coming meeting next month too. These
waited hikes can keep these currencies supported versus the greenback
from another side but mixed versus the Japanese currency till an end
of the stock market instability as the decreased probability of
another .25% BOJ hike this year can keep the door opened for carry
trade hunting again...and so on!!.
Best wishes
FX Consultant
Walid Salah El Din
Mob: +20 12 465 9143
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com
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