Dow has got its turn of falling following the European and Asian equities market which were under pressure from the tension in Libya while the US market was closed for holiday in the beginning day of the week. Dow could close last week up by 117 points for the third consecutive week despite the Chinese second interest rate hike this year which was weighing negatively on the stocks but US last session moments of last week have been contained by market optimism sentiment of having further extended time of fed's keeping of its easing policy which supports the stock and in the same time the market is expected to have better growth signs and earning reports to come supporting the US stocks markets which have been still contained by the earlier better than expected release of US Philadelphia Fed Manufacturing Index of February which was expected to be 21 from 19.3 in January and it has surprised the market by 35.9. The Dow which could not find use from US CB Consumers confidence reaching 70.4 from 64.8 in January while the market was waiting for 65 and US Richmond manufacturing survey reaching 25 while the market was foreseen 17 from 18 in January has lost 178 points in its first session in a dovish strong reversing sign containing all of the 117 gaining of last week.
Also the greenback which have been under pressure across the broad by this optimism of better economic growth outlook got a new pushing up by the market worries about the oil supplies from the middle east which could trigger market squaring of the risky position buying back the US dollar as a safe haven and as it is a widely used currency for carrying risks on its low yielding.
The gold which has been already supported by rising of US Philadelphia Fed Manufacturing price paid significantly to 67.2 from just 54.3 showing strong pricing power following the release of US CPI of January which was expected to be .2% m/m and came higher at .3% while the core figure excluding the food and energy was expected to be .1% m/m and came also up at .2% from .1% in December and this stronger than expected prices data over the consuming level have come also following earlier rising of Jan broad figure of US PPI by .8% monthly and also the core figure excluding the food and energy by .5% while it was foreseen to be just .2% as the same of December showing growing prices over the producing and wholesales levels too which can be resulted from the rising of the commodities and oil prices which are underpinned by anticipated stronger than expected demand from US on its current held accommodative policy and better than expected signs of growth which can encourage the demand for the row materials utilization while their prices are still getting pushes from the concerns about the current unrests in the Middle East countries which ends in country to start in another one threating the oil supplies from this strategic important area rich of oil and because of that the gold has been able to get over its recent resistance at 1394$ and the psychological level at 1400$ facing now its recent top of it at 1423$ and breaking it can lead to its recorded high at 1430$.
And also The single currency which has come under pressure last week as the market sentiment has been contained by seen weakness in the germane industrial pace by the end of last year as the falling of December germane industrial productions by 1.5% while they were expected to be up by .2% from decreasing by .6% in November and also the dovish falling of Germany factory orders by 3.4% monthly in December from gaining 5.4% in November while the market was waiting for shrinking by 1.4% to show easing of the demand of capital good from Germany which affected negatively on its 2010 Q4 GDP preliminary reading to be lower than the market expectation of .5% at just .4% and these dovish figure has come with the release of February germane economic sentiment ZEW which was expected to be 20 from 15.4 in January shocking the market by getting back again to 15.7 to weigh negatively on the single currency which was depressed by the European financial ministers announcing about their eagerness for moving up their ability for lending to 500 billion euros from the beginning of 2013 which show to the markets that their current 250b euros sharing package with the IMF is not enough to save the expected requests of borrowing and also by increased probability of the needs of rescue WestLB bank in Germany and but the pressure on the single currency has eased by its announcement of selling four parts of it having new structure to get over its accumulating loses by 2015 starting ascending back again and getting momentum by its ability to make a new higher low at 1.3545 following 1.346 and 1.3427 to break 1.364 resistance before getting back again to 1.3527 from it again unable to get over1.374 as the single currency selling because of the markets worries about the tension in Libya which is one of the most important and nearest oil and gas suppliers to Europe giving Italy 35% of its needs of gas and its supplies are really exposed to be cut currently but the Euro could find support again the increased markets expectations of having a closer interest rate hike by the ECB for tackling the prices upside risks pressure which can accumulate in EU in a fast way following UK and the market has had clear stress on that from the ECB Member Mr. Mersch's warning about the inflation upside risks and it is now facing again 1.374 and getting over it can open the way to the previous formed top at 1.386
And also the cable which had better than expected Public Sector Net Borrowing of January at -5.3b Stg while the market was waiting for -.7b following increasing by 14.5b in December and has been supported by the release of Feb UK CBI industrial output which surged to 32 from 17 in January and exports orders which came at 11 from 0 in January which is the highest rising since 1995 and stronger than expected UK retails sales of January which jumped monthly by 1.5% while the market was waiting for just .5% got also under pressure on the greenback buying back sentiment easing from 1.627 again which has been reached previously with the bullish release of UK Service PMI of January rising above 50 again into the expansion territory at 54.5 above the market expectations of 53.5 from 49.7 in December but it could not even get the formed main resistance at the top formed at 1.6296 which has been reached in the beginning of last November when the greenback was under pressure from the Fed's decision to add another 600b$ in another step of its QE policy for stimulating the economic growth in US while its next expected supporting level is at 1.5962 and it can be followed by 1.582 and the breaking of it can lead to testing 1.5747 again.
FX Market Strategist
Walid Salah El Din