Markets See A Decline In Risk Appetite

Despite the risk appetite setting back in the beginning of this week, the British pound could spend the night over 1.56 versus the greenback unfazed of the current jitters about Barclays and BOE keeping its earlier gains versus the greenback above 1. Following the dovish release of US retails sales broad figure of June which came down monthly by 0.5% while the market was waiting for rising by 0.2% after decreasing in May by 0.2% and also the figure excluding the auto sales has shown the same pace of declining of May by 0.4% monthly while the consensus was referring to unchanged figures.

The data highlighted to the market again the possibility of taking more easing steps by the Fed, which weighed down on the greenback across the broad after US Michigan consumers sentiment index preliminary reading of July came down to 72 last Friday. Sentiment was expected to rise to 73.4 from 73.2 in June showing the need for spurring demand after the recent Fed's decision of extending its Treasury's Operation Twist by $267, keeping its buying monthly scale at steady at $44.4b till the end of this year.

The market will be waiting today for the release of June UK CPI which is expected to decline monthly by 0.1% as it has done in May with the same rate of rising yearly in May by just 2.8% which has been the lowest rising rate since November 2010 to ensure the BOE expectation of easing of the inflation up side risks which paved the way to it to add another Stg50b to its assets purchasing program on the 5th of this month to rise to Stg375b.

Now after the British pound could form a base recently at 1.5391 versus the greenback to rise to the current level. It can now face a new resistance at 1.5722 before climbing to 1.5777, the highest level it reached following falling to 1.5266 on the first day of last June while easing back again can be met now by a supporting level at 1.5516. THis level could hold yesterday's levels and in the case of breaking it, there can be a possibility again for facing 1.5412 before meeting 1.5391.