The greenback is still the currency of the crisis taking use of the current risk aversion sentiment. the market has read from the Trichet's comments after the ECB decision to cut interest rate by another .5% to be 1.5% that cutting further is expected as the growth conditions have exacerbated and the inflation will be will anchored over the medium term in spite of this current low interest rate level as the recessionary forces accumulation which can tackle any underling inflation risks building up over the medium term. it has been obvious that the way out from this crisis should be from the US which can underpin the greenback versus the single currency on the growth fundamentals economical prospects and there will not be appeal for taking risk investing in other currencies before a realized change in US.

The current downplaying of the inflation risks can affect negatively on the gold as it is the mirror of the inflation but from other side the gold can take reinforcement from being a store of value of the cold investment which accumulated recently in the gold as a safe haven in the current market pessimism and losing of trust. The gold is still trading well below 920$ right now as the market was optimistic after the severe declines of the recent few days pushing it lower amid retracement of the equity market recent declines. The next support right now is at 988$ then the main support at 850$ level and the way up should meet a resistance 932$ then 960$ and on the break of it, the main resistance should be at the 1000$ psychological level. The gold has faced high volume profit taken wave after reaching this level could which contain the rise from 964$ to pushing lower to the current levels.

The release of US ADP employment change which came at -697k yesterday has given a gloomy prospect of the coming US non-farm pay roll of the same month which is waited tomorrow which can increase the consuming shrinking expectations in US as Feb consuming sentiment of Michigan university final reading came down to 56.3 following the weak release of US consuming Confidence survey of the same month which reached 25 and further losing jobs should effect negatively in the consuming sentiment and the business spending which is already hurt by the current weak demand....

Best wishes

FX Consultant

Walid Salah El Din

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