After Ben Bernenke's announcement about the gradual recovery last Wednesday, the investors encouraged to take profit and reevaluate the current situation pushing the equities markets lower and the greenback up again driving Dow down to close at 7666 but yesterday Dow could find support from the market optimism of a recovery can come later this year pushing the financial sector stocks up and Dow to close at 8750.
The cable was underpinned after the release of UK Halifax house prices index which came up monthly by 2.6% from a decline in April by 1.8% but the cable came under pressure again after the BOE decision to keep the interest rate unchanged at its historical low at .5% keeping its quantitive easing plans of buying 125b pound of UK bonds affording the required funds to stimulate the current struggling economy.
The single currency was under the same pressure after the ECB decision to keep the interest rate unchanged at 1% after a mixed message to the market from Trichet in his press conference has not give a clear direction to the market but it could get off its low after decision at 1.4070 with the equity market compensating of its loses getting back into the green territory.
The gold could come off its low at 960.7$ today to test 980$ again with the current cheeriness. The gold was moving recently after the worries rising about the US treasuries confidence in the same way of the equity market amid the current increases of the commodities and energy prices which come accompanied with the rises of the market confidence in the equity markets.
Recently, the worries about the demand for the US treasuries could contain the market sentiment putting pressure on the greenback from another side. These worries about losing confidence in the US treasuries could temper the market and brought the US debit on Timothy Geithner visit agenda to China this week to store the biggest treasuries buyer confidence in its US treasuries holding in spite of the recent US quantitive easing steps which exposed the US debit to the mortgages bad loans by replacing them with US treasuries. In this same time, the US treasuries are still the Fed's preferred way to pump funds and easing by its adopted quantitive easing policy after losing the cutting interest rate tool to afford the required liquidity for the government to clean the banks balances sheets and to spur growth moving in its rescue financial plans for a promising recovery can start later this year and store the confidence in the US economy again. Timothy's language was very friendly referring to the required strong relationships between US and china to corporate get out of this crisis and China believes in the US ability to recover and from the Chinese side, there is no other option can replace its holding of US dollars currently.
We wait today for the release of May Non-Farm payroll which is expected to show a losing of further 520k jobs from -539k in April. The release of May US ADP employment figure was not encouraging as it has shown losing of 532k jobs in the private sector which weighed on the market optimistic speculation of an improving of the labor market in US can support the consuming spending and the business spending to move the economy back to growth but it looks really gradual in the labor market and there is no major change of it yet.