In spite of the rising of JP Morgan earning of the fourth quarter bringing the total profits of 2009 to 11.7B$ which is nearly the double of 2008, the traders have seen in the data a chance of taking profits pushed by the market worries about the consuming pace in US which are still existing although the improving of December manufacturing sector and service sector data as the chief executive of JP Morgan has repeated that the falling of the consumers' loans is still effecting negatively on the bank operating results which brought back the dovish sentiment to the market which has been triggered earlier last week after the release of US retail sales of December which have slumped by .3% m/m while the market was waiting for rising by .5%.
As what I have mentioned in the recent analysis in the beginning of last week, the greenback came under the pressure of the dovish interest rate outlook which has been triggered after the unexpected losing of the US non-farm payroll of December of further 85k while the market was waiting losing just 20k. The Single currency could get above 1.45 easily breaking 1.4465 but it came back down on rumors about the future of Angela Merkel and her party which affected negatively on the single currency across the broad that's beside Jean Cluade Trichet's comments about the future of the inflation and the growth in EU which have been softer than what was estimated in his press conference after the ECB decision to hold the interest rate unchanged last Thursday at 1%. It looks that he is still seeing that the growth is still benignant and unreliable while the inflation upside risk is not yet concern of the ECB which can extend the period of the current accommodative policy of the bank before taking a tightening action. The single currency is trying to find a support above 1.43 versus the greenback and the main support area currently is at 1.426.
There is no clear indication currently while the market is curiously waiting for the release of the Q4 growth data to give the forex market directions. So, God willing, the side ways are expecting to hold in the coming close period as the market looking waiting for these data. As IT is important to the British pound to see the UK economy getting out from the recession which has persisted in the third quarter in the fourth while the market is waiting for a stronger recovery in US, EU and UK which was the only economy in recession in the western Europe in the third quarter of last year as the UK government has pledged earlier.
Walid Salah El Din