IMF Comments Weigh More Heavily On Sentiment (Midday Snapshot)


Lack of event risk or economic releases in the US leave the markets continuing to trade on broader global macro fundamentals, with the [B]USD [/B]seen as the primary beneficiary. The only release this morning has come out of [B]Canada[/B], with [B]housing starts[/B]managing to come in better than expected. Technically, all of the major currencies are now testing their respective [B]20-Day SMA[/B]s, and it will be interesting to see how the markets react off of the shorter-term moving average. The [B]IMF’s Strauss-Kahn[/B] has been getting some attention this morning after saying that a lot of bank losses have yet to be disclosed. Meanwhile[B] EU Almunia[/B] attempted to express some optimism after saying that the worst was over. In the [B]UK[/B], there has been more talk of [B]negative Sterling M&A[/B] flows with reports that [B]Abu-Dhabi [/B]will sell approximately GBP3.5B of its share in [B]Barclays[/B]. However, a recent article out of the [I][B]Telegraph[/B][/I] today has helped to offset some of the weakness, after reporting that [B]Barclays is closing on the sale of Barclays Global Investors to Blackrock[/B] for over GBP8B. Also seen weighing on investor sentiment has been the overnight downgrade of [B]Ireland[/B] to [B]AA[/B] with a [B]negative outlook [/B]from [B]S&P[/B]. The [B]Yen[/B] is the only currency up against the USD today, while [B]Kiwi[/B] is the weakest major currency. US [B]equities[/B] are all down some 1% or lower, led by the declines in the NASDAQ (-1.35%). [B]Commodities[/B] also trade lower.

[B]Usd/Mxn: [/B]There could be some decent upside ahead for the pair after finally breaking above some multi-day consolidation. The market had traded down to fresh 2009 lows by 12.82 in the end of May, but had since been locked in some very tight trade. Monday’s break above 13.40 now triggers a fresh upside extension and opens the door to some more significant gains over the coming days back towards the 14.00 area. Look for intraday dips to now be well supported ahead of 13.00.

[B]Written by Joel Kruger, Technical Currency Strategist for
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