The better than expected Intel earning results of the third quarter could increase the pressure on the greenback driving the investors' risk appetite up. These data have released after the closing of Wall Street and Dow future is trading up currently at 9876.

As we have mentioned in our earlier report, the gold is still taking advantage from the bright outlook of the Australian dollar after last week surprising interest rate hike of the RBA by .25% to be 3.25%. The RBA has backed its decision this week to the materialized improving in the current economic conditions which are strongly stimulated by the Chinese growth and demand for the Australian exports which are mainly the raw materials such as the gold. The ties between the Chinese economy and the very rich Australian economy of commodities were working in this direction in the recent decades which could cap it from the negative impacts of the credit crisis in favor of this strong Chinese demand.

The Aussie has got above .91 today and the gold is now trading above 1065 versus the greenback supported from another side by the current investors' optimism which weakening the greenback and increasing demand for commodities and energy which can increase the inflation outlook. By god's will, there can be a rate above 1100 in the next few weeks ahead.

 

The recent mentioned  ECB worries about the single currency strength in Trichet's press conference after the ECB decision to leave the interest rate unchanged at 1% could not cap its progress versus the greenback reaching a new year high at 1.4885 today in the Asian session. Jean Cluade Trichet has given last week a stronger evaluation of the current conditions than the previous meeting when he was saying that Prudence and cautions are of the essence in the present situation. He has just referred to the need of the current easing steps of the ECB as there is no realized inflation pressure yet referring to the new signs of improving in the banking and the financial sectors as the recent stress banking test said that even if the economy took another turn for the worse there will be no major European institutional falling. The market has seen in his stalk a chance to sell the single currency taking some profits but it has quickly come back up after failing to break 1.4665 supporting level.

 

The Cable could find the same technical support with the beginning of this week at 1.573 area and it is now heading to the intermediate resistance at 1.5945 and in breaking this level the cable should try for the third time to stand above 1.61 resistance level. The cable has faced an accumulating pressure recently and a dovish interest rate outlook which pushed the cable below 1.58 with the beginning of this week under the pressure of the disappointing releases of UK manufacturing productions and industrial productions of August .before getting back with the market weakening the greenback preferring taking risk.

Best wishes
 
FX Consultant

Walid Salah El Din

E-Mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

http://www.fx-recommends.com