The Fed's interest rate decision and assessment came unchanged keeping the interest rate near 0% holding the same cautious stance worrying about the current growth pace and the debt crisis of Europe consequences negative impact on US.
The disappointing drop of May US new home sales which has hit the investors' risk appetite in the beginning of the US session increasing the speculations of having a second dip of the recession which could get out of it in the third quarter of last year has not been subjected in the Fed's assessment but the cautiousness was well read in it. The market was waiting for the new home sales of May to be 470k from 507k in April but they have shocked the market with just 300k falling by 32.7%. Dow dipped on the news below 10250 before creeping up with the fed's interest rate decision to the session high at 10368 to close the session nearly flat. Also the single currency which was trading below 1.222 after these dovish homes sales news could creep up too above 1.23 versus the greenback unfazed of June Germane IFO business climate of June which was waited to come at 101.2 from 101.5 in May but it came better than expected at 101.8 . The Single next resistance should be again at 1.2452 after failing to hold above it yesterday and then 1.2598 then 1.2685 which was the recorded previous high of last May and from it the pair fell breaking 1.2143 while the next support should be at 1.2207 then 1.2165 then 1.2044 and 1.1954 which was the pair low after falling from 1.2073 and it could protect the pair from making a newer low again below 1.1875 which has become the pair main support right now before 1.16 whereas the pair has started its rally to 1.604 before falling to 1.233 and rising back forming a lower high at 1.515 in the beginning of last December.
The Single currency has come under strong pressure earlier this month with the increased worrying about Hungarian financial situation because of the debt crisis and the exposure of the European countries banks to its debt especially after the release of the ECB report which has warned about the long term debt refinancing in Europe which looks in 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. The financing problems have seemed ahead from the ECB report showing a serious need for storing stability and injecting funds into the nerves of the European banks too as the European governments which can transfer the problem to the balance sheet of the ECB threating the single currency again but it has been supported in the beginning of this week on the market optimism which has been sparked by the Chinese decision to take another gradual step from China for re-evaluating its Yuan during the weekend but with the market profit taken and the US stocks giving back its opening gains yesterday, the greenback could be well-buoyed again and the single currency came under pressure easing to 1.2207 versus it while it was trading above 1.245 in the beginning moments of the week as its other Asian counterparts markets have found in the Yuan appreciation a chance to their exports. The Japanese yen could gain strong momentum this week and it is now trading below 90 versus the greenback and also the Aussi has been well supported as Australia is the main commodities recourses provider to China which can buy more by its higher Yuan value. The Aussi has started the week trading above .88 while it has closed last week below .87.
God willing, it is important today to wait from EU for EU industrial orders of May to be up monthly by 1.6% from 5.2% in April and from US for May building permits which were 574k in April and the weekly jobless claim of last week to be 4.56m from 4.571m a week earlier and May durable goods orders which are expected to be down by .9% after rising in April by 2.8%
Walid Salah El Din