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The BOJ easing decision to
provide another10 trillion at a special fixed rate to reach 30
trillion from just 20 could contain the market sentiment with
the Japanese yen slide back below 85 after this decision which
looked not enough to spark a change of the struggling rate of
growth in Japan which unexpectedly grew in the second quarter
of this year by just .1% while it was waited to be .6%
increasing the probability of having further persisting
deflation forces because of the suffering consuming pace in US
which has not reached its end as it looks yet in a time of
cooling growth tries in China which has increased worrying
about prices currently as we have seen it in the beginning of
this month calling for banking stress test suggesting
declining of the housing prices by 60% which is the double of
what was initially made at just 30% and it has obeyed for
demand for further re-evaluation step used to be named gradual
action by PBOC after it has actually reduced the banks lending
percentage to their capitals from the beginning of this year
which worked too for the demands of cooling this overheating
economy which caused prices rising risks could be appreciated
finally by PBOC which can effect negatively on its demand for
capitals goods from Japan and we have seen the Chinese PMI
index coming down in July to just 51.2 while the Euro zone as
a counterpart competitor of Japan is getting use of the EUR
exchange rates which is falling in this same time across the
broad trading currently below 107 versus the Japanese yen and
this can continue if BOJ let the greenback trading freely
below 85 versus the Japanese yen. Nikkei 225 is trading
currently below 9000 around 8900 after it was trading just
below 9300 before the BOJ decision yesterday under another
pressure from a weak US session has watched Dow losing of 140
points to close just above 10000 again in another risk
aversion selling wave pushing now USDJPY below 84.5 as the
market is waiting anxiously for very important data from US
which can give more details about the current US growth
slowdown.
We wait today for August Chicago
PMI which unexpectedly rose in July to 62.3 from 59.1 in June
to be 58.5 down 56.5 and also August US Conference Board's
Consumer Confidence of August to be 51 from 50.4 in July after
a massive falling in June to 52.9 and we have tomorrow US ISM
manufacturing index which is expected to slide further to 53.5
from 55.5 in July while we have by the end of this week US
non-farm payrolls of August to be -108k after losing 131k in
July and down revision of June losing of 125k to 221kweakening
the US equities markets and the treasury yields by triggering
another losing trust wave in the markets forced the Fed to
step forward in its quantitive easing policy buying more
Mortgage backed securities and rolling over it’s holdings of
treasury securities as they mature before this deterioration
can have further negative impacts on the consuming and capital
spending and to inform the markets that the Fed will not stand
seeing the economy falling back in a second dip recession with
no action even with the interest rate near 0% as they have
tried to assure in their meeting in the weekend.
The selling pressure came on the
single currency again today with the investors getting back to
the greenback and the Japanese yen preferring taking safer
positions. The single currency downward trend versus the
greenback has gained momentum recently with the breaking
1.3117, 1.3096 and the psychological level at 1.30 breaking
1.2735 by the end of last week has carried on again this week
forcing the pair to be traded below 1.26 reaching 1.2586 after
the single currency could get above 1.332 touching 1.333 with
the weaker than expected labor report of July release
underpinned by Trichet's comments that the debt crisis
negative effects on the growth in the Euro zone are easing
back expecting it to be better than what was initially
estimated welcoming the stress test results which calmed down
the markets relatively but the worries about the possibility
of the European following of the US growth slowdown could
revolve again to the market sentiment pushing the single
currency down after its inability to get back above 1.293
again adding more technical pressure on the pair which could
not hold above 1.2735 today. By god's will, The next major
supporting levels are now at 1.2586 then 1.255, 1.2452,
1.2165, 1.2044, 1.1954 and 1.1875 from 1.1875 which has been
reached amid the increased worries about the debt crisis and
could cap the pair from falling to 1.16 whereas the pair has
started its rally to 1.604 before falling again to 1.233 amid
the credit crisis and rising back forming a lower high at
1.515 in the beginning of last December while the major
resistances are at 1.293, 1.30, 1.333, 1.3352, 1.3415, 1.3704
and 1.3885 which is 61.8% Fibonacci retracement level of this
same recent declining from 1.5142 to 1.1874.
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