Lots of speculations have emerged in the recent days containing the market sentiment telling stories about the greenback outlook after Obama's winning of another presidential period for years to come by God's will.
The greenback has got use of these stories which refer to tendency to taking a safe haven stance putting pressure on the equities markets as it is expected now to have the same solid underpinning stance by the fed with Bernanke after 2014 when he finishes his current period which watched unprecedented way of supporting the economy by fuelling the purchasing power in the bond market till we have faster pace of recovery and stronger positive signs from the housing and labor markets as he has announced.
But this is not enough also to convince the market as the economy should reach the point it can endure the possibility of unfolding the fed's current holding of mortgage backed securities and treasuries which widened the balance sheet of it by more than 3 trillions and turning back to a tightening stance can face then the accumulating inflation pressure.
while there is more to come with the current named QE3 by injecting the 40b$ announced monthly last September for buying more of mortgage backed securities to help the economy as long as there is no clear inflation upside risks can tackle this accommodative monetary policy which is expected to support the economy ahead of the waited fiscal cliff in the beginning of next year when bush's tax cuts to fade out and the governmental spending to be cut in the same time for sustaining the US creditability by God's will.
So, you can see the greenback strong against the risky currencies while it is under pressure versus the Japanese yen and also the gold which outpaced the others as its property of being the inflation outlook mirror.
the gold could rebound from 1672$ per ounce to 1730s$ as there can be also the risk of having rising of prices can outpace the pace of recovery and may erode it too with this current fed's policy which put pressure on other exporting economies like the Asian by fueling the prices of commodities by this fund printing policy.
God willing, The gold can meet now resisting level at 1753$ before 1795$ whereas the it has retreated back after failing again to surpass 1802$ which can be followed by 1827$ which its breaking can open the way for its highest recorded level at $1920 on the 6th of September 2010 while easing back from here can be met with supporting levels at 17672$, 1646$, 1584$, 1548$ before 1523$ whereas it has stopped its falling from 1920$.
FX Market Strategist
Walid Salah El Din
Mob: +20 12 2465 9143
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