Sentiment Still Positive after Takeover as Stocks Rally

Daily Forex Fundamentals | Written by Crown Forex | Sep 08 08 13:56 GMT |

The positive impact of the Treasury's decision to take over Freddie and Fannie still lingers in financial markets as stock markets react with increasing positive sentiment towards the soon ending of the credit crisis as financials weather the storm as they lead gains today, while currencies are moving again as they where within their bearish trends against a stronger dollar! The euro lacked economic fundamentals today as Trichet commented favoring the US decision, as he again reiterating that fighting second round effects is of the essence while assuring price stability. The euro gave up its early gains against the dollar to cover the morning gap; the euro set the low of 1.4162 rising from there to trade around 1.42 levels yet as the euro continues to fail to breach and consolidate trading above 1.4250s at least the downside pressures will remains evident. Though the euro found support from renewed risk appetite as the euro gained against the yen in early trade as well to peak at 156.98 though trading now at 154.20s it still did not totally cover the gap. Heading to the other European star, the British pound is still one of the worst performing as the prolonged weak recessionary outlook for the economy is setting investors to dump their holds from pound denominated assets and pound weakens VS the dollar and a basket of currencies. The bearish attitude towards the pound set it to lose its early gains easy especially after easing Producer Prices supported the notion that the BoE are start cutting rates soon to support the economy and the worst housing conditions in 18 years. Sterling struck a low of 1.7563 after racing in early trade to near 1.80 levels, still the pair targets 50% correction level for the long-term upside wave at 1.7278 and the initial support levels facing the pound now still rely at 1.7500-10. The risk appetite after the take over has weakened the yen against majors and especially the US dollar as the currency was unlike its rivals as it did not salvage the opening gap left. The pair continued to trade in tight ranges above 108 levels as the high as set at 109.07 and the pair failed to remain above 108.50s falling as low as 108.23 and still not able to trade lower as well intraday and daily momentum indicators are giving mixed signals and for that we expect the session to continue volatile and as far as the pair remains above 108 we will favor the upside. Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.