The equities market could keep its creeping up trying to get back last January high when Dow reached 10729 again which is keeping the pressure on the greenback to lose ground across the broad amid increasing of the investors' risk appetite containing the market sentiment and building momentum at these current levels tending to the upside after bottoming out in Feb just below 10000. We have seen last week an improving of US Trade balance of deficit of January to be just -37.29b$ while the market was waiting for-40.3 b$ and by the end of it, US retails sales of February which were expected to be up monthly excluding the auto sales by .2% coming at .8% and broadly with the auto sales at .3% and also US University of Michigan consuming sentiment preliminary reading which was waited to be 73.5 from 73.6 in February came slightly lower than these expectations at 72.5 helping the US stocks indices to close the week up keeping the pressure on the greenback.
While the recent data are showing that the growing pace in US is still in its gradual pace with no signs of a double dip recession yet, it is still struggling in Europe which put pressure on the single currency from different sides giving the traders the reasons to sell it. We have seen last week the germane trade balance of Jan has fallen to just 8.7b euros while the market was waiting earlier this week for16b euros from 16.7b euros in December and also the germane total industrial productions of that same which were awaited to be up by 1% has come a slower pace at just .6% but the increased risk appetite has weakened the greenback giving relative strength to the single currency which is still negatively impacted by its countries credit lowering rating and the situation in Greece and its governmental tries to get the European acceptance on cutting spending and taxes reforms which caused increased streets riots to hold back its current unsustainable deficit which has become 12% of the Greek GDP as it is required to be back below 3% on Maastricht treaty while it is widely around 6% in Europe at the current struggling growth after the credit crisis even the ECB could not stop any of its accommodative easing actions worrying about the current nascent recovery until now keeping the interest rate at 1% again last in the beginning of this month for a whole year was tackling the single currency recently but it could close above 1.37 finally underpinned by the increased risk appetite and the better than expected Jan industrial productions of EU which were expected to be up monthly by .7% and came at 1.7% after a drop in December by 1.7% and were expected to be down yearly by 1.9% from falling in December by 5% but they came surprising up by 1.4% which made 1.384 the next target now By god's will while the main support is still at 1.343
Also the cable could find support from this increased risk appetite in the recent days finding a place to be traded above 1.5 psychological level closing last week above 151 after a free falling in the beginning of last week to 1.4785.
The cable has become very vulnerable to the downside after forming a lower peak below 1.584 resistance by the end of February and with the breaking 1.51, the selling momentum has increased on news about a huge bargain between AIG and the British insurance company Prudential for buying the Asian parts of the first for about 35$ Bln while it has become politically unstable by UK preliminary elections as the conservatives' opposition party has lost its strong leading versus the labor ruling party on the recent polls results with the exacerbating UK debt after post its first net borrowing deficit month since the beginning of 1993 with the public sector borrowing in Jan reaching 4.3 B Stg while the market was waiting for covering 2.8 B Stg of the debt waiting Feb data which will be closely watched in the next period as these rates can bring its budget deficit ratio to GDP above 12% like Greece otherwise it looks in building up in UK while the efforts are emerging for staving this debt off in Greece and in this same time, it has currently higher inflation rates than Europe which can keep the pressure back on the cable.
God willing, it is important today to wait from US for March NY Fed manufacturing index which is expected to be 22 from 24.91 in February and US capacity utilization of February to be as the same of January at 72.6% and Feb industrial productions to be up monthly by just .1% from .9% in January and also we have today the release of US Jan net long term of TIC flows which expected to be 50b$ and were 63.3b$ in December.
Walid Salah El Din