The market sentiment has been changed today again contained by the market optimism about the Chinese economy despite PBOC yesterday tightening action to stave off borrowing cooling down its overheating economy. The greenback has been pushed down again across the broad and the single currency could have another supporting from Merkel's comments about an exit of the stimulus program. 

The US equities markets are still getting benefits from this awaited new stimulation package which is expected to be announced when the FOMAC meets next month, by god's will which could actually weaken the greenback value across the broad since the Fed's reference to it in its recent meeting to fight the deflation emerging pressure in US helping the stocks prices which are waited for the economic growth to be pushed up by these new easing measures which is not expected to have an exit soon with no expected inflation pressure as the Fed's repeated recently and as we have seen last Friday the U.S. consumer prices of September rising up by just 0.1 percent and its core unchanged for the second month monthly.

Dow could close today above 11100 as the risk appetite has been pushed up by this optimism about the Chinese economy which has been hurt by PBOC recent tightening action for curbing the lending preferring this way for cooling their economy than obeying to the American calls for a stronger Yuan directly. The Chinese action can be followed by further actions to work in containing the inflation which has been ascended recently by the demand for commodities and energy and the rising of their prices while the greenback is negatively impacted by slowing down in growth and the waiting for further liquidity to come to the market by the fed in a second round of its quantitive easing plan to stimulate the economy after easing back in the second half of this year buying more Mortgage backed securities and rolling over it’s holdings of treasury securities as they mature before the 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% which pushed the gold up again today trading above 1345$ after falling a day before below 1330$.

The greenback has started to correct its recent loses across the broad last Friday after Bernanke's speech last Friday by the US session repeating of the same conclusion that the fed is ready to take further easing action whenever its needed to support the economic growth pushing the single currency down to close last week below 1.4 versus the greenback after reaching 1.4158 and the British pound to finish the week below 1.6 psychological level after touching 1.61 containing most of its week gains versus the greenback while the Aussie could touch a parity with the US dollar for the first since 1983.

God willing, we are waiting right now for the Chinese GDP figure of the third quarter and the Chinese consumer price index to be up in September by 3.6 yearly from 3.5% in August while  we are waiting today for October EU PMI preliminary Manufacturing reading to be 53.2 from 53.7 in September and service reading to be 53.7 from 54.1 in September and from UK we are for the retail sales figure of September to be up by monthly by .3% after declining in August by .5% and from US, we are waiting for weekly initial jobless claim to be 453k down from 462k a week earlier, US Philadelphia fed manufacturing index of September to be 1.4 from -.7 in August and the monthly leading index to be as the same as August at .3%.

Best wishes

FX Consultant
Walid Salah El Din
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