The Current Market Sentiment‏

As expected and as what has been mentioned several times in the recent reports since the minutes of the recent Fed's meeting release, the expectations of having a close QE3 decision by the Fed have increased significantly following a release of another nonfarm payrolls number below 100k. The US labor report of August came lowering the reading of them in June to 45k from 64k and in July to 141k from 163k previously and in August the number came at 96k while the market was waiting for 125k to be the fourth reading this year below 100k following the 3 months before July.

The greenback came under pressure following these data which suggest that the Fed which always cares about the labor report, is close to a new stimulus package. QE3 may be announced at this week's meeting under the current pressure from the markets and after a long period of anticipation. Market anticipation has increased in a remarkable way as sentiment following the release of the minutes from the recent Fed meeting in August which showed a leaning towards new easing action if the economy does not improve. Markets have been pricing in such an action, if the economic conditions to deteriorate further driving the greenback down with this new aspect.

EUR/USD could close the week above 1.28 but it has started this one giving back some of these gains waiting for the results of the new visit of the Troika creditors to Greece. However, the gold could keep these gains ahead of the Fed's coming meeting next Tuesday, reaching $1739 in the beginning of this week after closing the last one at $1736 well above its previous resistance at $1725 but the cable has chosen to be traded around 1.60 psychological level.

The beginning of this week after it has find it easy to end the last one well above it reaching 1.6031 underpinned from another side by better than expected industrial productions in August rose by 2.9% monthly after falling by 2.4% in July and manufacturing productions came up by 3.2% m/m after decreasing by 2.9% in July and these figures have been followed by rising of the NIESR expectations of UK GDP in the previous 3 months to August to 0.2% from contraction by 0.2% in the previous 3 months to July.

The cable can meet now after taking out its previous resisting levels at 1.5777 and at 1.5853 crossing above 1.60 psychological level in its rising way another resisting levels at 1.6121, 1.6199, 1.6245 before 1.6201 again while easing back again from here can be met with supporting levels at 1.5822, 1.575, 1.5456 before 1.5391 whereas it has formed its bottom on 12th of last July to these current levels and the breaking of it can lead to 1.5266 which the lowest level since the beginning day of last June.