The forex market is looking trading in a mixed way by the year end Christmas holidays after the greenback recent rally on the market increased speculation that there is a near coming tightening action from the Fed after the recent improvement of November consuming and labor data which have been appreciated by the Fed's recent US assessment last week after its decision to keep the interest rate unchanged which has been read as a smoothing statement to this coming waited action. Fed has announced last Wednesday that the current financial situation of the banking system is helping the growth and the labor market deterioration is abating. It has become widely concluded that the Fed has closed the door of taking further easing steps. The Fed has indicated that it is to slow its current buying of bonds and mortgage backed securities which are planed to end by next July and most of such purchasing easing plans for providing liquidity are to be ended by next February.
The British pound was negatively impacted by the surprising falling of November UK retail sales by 0.3% monthly which was opposing the market waiting for rising by .6% and yearly by 3.7% but they have risen yearly by just 3.1%. The Cable major support level at 1.61 has become more vulnerable than before reaching but the cable could close above it at the end of the last week after falling to 1.6051.
The single currency is still the most hurt currency versus the greenback as the negative impact of the Greece huge unsustainable debts worries and the new worries about the Austrian banking system and its weakness has continued containing the market sentiment.
the releases of the Germane ZEW of economic sentiment of December which came down to 50.4 from 51 in November and the germane IFO of December tomorrow which was expected to be 94.1 from 93.9 and it came at 94.7 could not change this sentiment but it could get back some of its loses with the greenback easing across the broad with the stocks rising by the end of the last week getting back from 1.4261 to close above 1.433 and it is now still trading just above it.
The Japanese yen has looked unfazed by the recent unexpected rising of Japanese exports in November which increased by a way has not been seen since 2003 affecting positively on the trade balance of November which reached 373B yen while the market was waiting for just 300B Yen. We have seen last week the BOJ leaving its stimulating plan as it's giving just worries about the current deflation pressure. After The greenback had been underpinned by these recent optimistic consuming and labor data which have met a Fed's appreciation, the surging of the stocks have become putting was putting pressure on the Japanese yen pushing the USDJPY up to close above 90 last week as the greenback has a better interest rate differential outlook right now comparing to the yen which is still attracting the interest of the investors carry trades transactions to be the most hurt currency after these recent data which have been interpreted widely to a nearer coming Fed's tightening action than what has been discounted before them.
Walid Salah El Din
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