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Last Friday, we closed the week with a sell off of the US Dollar. The US Non-Farm Payroll was much worst than expected and together with the increase of the unemployment rate to 9.8%, traders were rushing to jump out of the sinking ship. However is the other “ship” the Euro not sinking?
Looking at the EUR/USD chart above, we note that the bullish momentum did not follow through the weekend as the currency pair dips below 1.33.
The S&P 500 is currently shaky as investors are probably getting down to understanding the market after Friday’s US NFP.
It was reported that Mr Bernanke of the US Fed did not rule out the possibility of further quantitative easing. A policy aimed to stimulate an economic recovery of the US, investors are probably apprehensive. The US deficit is massive and any additional inflation of the deficit adds on to the strain felt by the nation. There are also questions on the usefulness of the policy as previous attempts on quantitative easing apparently did not yield much success.
The Euro Zone is facing increasing pressure on it’s ability to curb the current deficit crisis. First was Greece and next was Ireland. Which nation is next? Speculations are spreading like wildfire and the complications surrounding an actionable solution due to the region’s diversity are weighing sentiments down. There are talks of a possible Euro Zone bond to better manage the risks but nothing concrete has been drafted.
Watch out for more economic data due tomorrow such as the German Factory Orders. Poor numbers will probably depress the sentiments more.
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