As expected and as what has been mentioned several times in the recent reports since the minutes of the recent Fed's meeting release, the expectations of having a close QE3 decision by the Fed have increased significantly following a release of another non-farm payrolls number below 100k as the US labor report of August came lowering the reading of them in June to 45k from 64k and in July to 141k from 163k previously and in August the number came at 96k while the market was waiting for 125k to be the fourth reading this year below 100k following the 3 months before July.
The greenback came under pressure following these data which suggest that the Fed which always cares about the labor is close to a new stimulating package can be with this week meeting under the current pressure from the markets and after long period of anticipations have been increased in a remarkable way containing the market sentiment after the release of the minutes of its recent meeting in August which have shown tending for taking a new easing action by the Fed, if the economy is not to improve ahead while the market was mostly pricing in such an action, if the economic conditions to deteriorate further driving the greenback down with this new aspect.
EURUSD could close last week above 1.28 but it has started this one giving back some of these gains waiting for the results of the new visit of the creditors troika to Greece but the gold could keep these gains ahead of the Fed's coming meeting next Tuesday by God's will reaching 1739$ in the beginning of this week after closing the last one at 1736$ well above its previous resistance at 1725$ but the cable has chosen to be traded around 1.60 psychological level with the beginning of this week after it has find it easy to end the last one well above it reaching 1.6031 underpinned from another side by better than expected industrial productions in August rose by 2.9% monthly after falling by 2.4% in July and manufacturing productions came up by 3.2% m/m after decreasing by 2.9% in July and these figures have been followed by rising of the NIESR expectations of UK GDP in the previous 3 months to August to 0.2% from contraction by 0.2% in the previous 3 months to July.
God willing the cable can meet now after taking out its previous resisting levels at 1.5777 and at 1.5853 crossing above 1.60 psychological level in its rising way another resisting levels at 1.6121, 1.6199, 1.6245 before 1.6201 again while easing back again from here can be met with supporting levels at 1.5822, 1.575, 1.5456 before 1.5391 whereas it has formed its bottom on 12th of last July to these current levels and the breaking of it can lead to 1.5266 which the lowest level since the beginning day of last June.
FX Market Strategist
Walid Salah El Din