The US equities market could get over its owes after a red opening because of the disappointing earning of Goldman Sacks which shrank by 82% in the second quarter because of the fraud settlements after accusing it of hiding the real financial position of some sub-prime mortgage securities from the investors who have been exposed to defaulting later because of this misleading position of it subtracting 550$m from its earning beside 600$m from Britain new imposed taxes on its bounces. 78 cents a share from $4.93 a share a year earning of Goldman Sacks last quarter could not help the market to forget the weak earning of Bank of America and Citigroup but joined them to add more doubts about the credit market earning ability within a widely expected slow down of growth in the second half of this year in US after a long series of dovish economic data from US had continued today too with June housing starts units coming at 549k from 593k and the market was waiting for 570k. Recently, We have seen July University of Michigan consuming sentiment preliminary reading falling to 66.5 from 76.0 in June while the market was waiting for declining by just 2 figures to 74 to increased the worries about the moving consuming pace of the economy after the slide of US consumer confidence of June to 52.9 which was waiting to be 62.9 and June US ISM manufacturing index which was expected to be 59 from 59.7 in May came at 56.2 besides the increasing worries about the housing market performance in US which has deteriorated in May as the pending home sales have fallen by 30% while the market was waiting for decreasing by just 10% after the disappointing new home sales of May which were awaited to be 470k from 507k in April but they have shocked the market with just 300k falling by 32.7% and again we have returned to the losing of jobs in June by another 125k of the non-farm payroll after adding 413k in May while the market was waiting for losing just 100k and also last week the market has had another shock from June US retail sales which declined by .5% giving more worries about this consuming pace even on the business spending direction, we have seen US July Empire State Manufacturing which was forecasted to be 18.95 from 19.57 in June and it has fallen to 5.08 and also US July Philadelphia Fed Business Survey which was waited to be 11.5 from 8.0 in June and dropped to 5.1. The greenback has been really hurt recently by these recent weak economic data from US which put doubts about the growth solidity in US suggesting a weaker than expected interest rate outlook as the fed will face difficulty in withdrawing it's accommodative easing policy steps while the growth is still struggling and the economy losing back jobs which can exacerbate the consuming and business sentiment again turning back down.
After the greenback could have some of its lost ground across the broad pressing the single currency down from above 1.3 to end last week at 1.2926, it could repeat this again today in a stronger way and the single currency is trading below 1.29 versus the greenback currently after finding support at 1.2838 with the market increased worries about the waited stress test results next Friday and its ability to move the current market sentiment toward the single currency holding up with the current market expectations of having slow down of the EU growth and limited ability to push it up by further governmental spending on the current austerity adopted direction to cap their debt situation which worried the investors and dampened the single currency this year and the market is in need now to get that the worst of the debt crisis is over in the Euro area which is essential to the single currency to continue its rebound. So, God Willing, The markets will be anxiously waiting next Friday for the EU banking stress tests results which are expected to give clarifications about the current financial situations of the major banks in EU by the end of this month to know further from the banks itself to how far they are exposed to the unsustainable debts of the struggling small countries inside the EU and outside of it to know its right needing for further funding to sustain their financial position as the market is still worrying about this position after the ECB had announced last month that the long term debt refinancing problems in Europe highlighted the need of 800 billion euros by the end of 2012 suggesting that the European banks are in need to be ready for facing bad loans following the debt crisis which can reach 123 billion euros for 2010 and 2011 to reach 105 for 2011 and for facing the bad loans from 2007 till 2009 they should be ready with 238 billion euros. God Willing, the next main resistance should be at again at 1.3 psychological level then 1.3096 and 1.3114 which is the 38.2% Fibonacci retracement level of the falling from 1.5142 to 1.1874 from and the pair can face difficulty by god's will in crossing this area while the next major support is still at 1.255, 1.2452, 1.2165, 1.2044 and 1.1954 and 1.1875 which has become the pair main defending line before 1.16 whereas the pair has started its rally to 1.604 before falling again to 1.233 amid the credit crisis and rising back forming a lower high at 1.515 in the beginning of last December.
Walid Salah El Din