The European stocks have opened down as expected following the US markets dovish closing after the continuous feeble consuming figures from US which do not suggest a solid rising from here calling for a profit taken wave can go on this week too. The worries about the consuming performance in US could contain the market sentiment again driving the US indexes down at the end of last week as August University of Michigan Consumer Confidence preliminary reading which was expected to get better to 68 from 66 in July has come down to 63 after the weak release of US retails sales of July which have come a day before at -1 broadly m/m and they were expected to be up by .3% and at -6% excluding the auto sales and they were expected to be up by .3% too. The consuming pace in US is still struggling losing momentum in the recent 2 months in spite of the gradual pace of recovery in the recent weeks as the fed has just mentioned in its assessment last week with its decision to keep the interest rate unchanged extending its 300 b $ quantitive easing plan to the end of October unworried about the inflation outlook over the medium term as it does about the unemployement which is looking effecting negatively on the consuming in US. The greenback could get use of this investors' losing confidence wave after these recent dovish consuming data which shows the real problem of the US economy at this point of the recession and the news of Colonial bank bankruptcy which is the largest assets holder bank in US and it could keep its gains in the beginning of this week too within a sell off wave of the stockholders. The single currency which is waiting this week for the release of the germane ZEW of August to go up to 45 from 39.5 in July has fallen under 1.42 versus the greenback while it could get above 1.43 by the last US session fueled by the improved market sentiment and the investors' risk appetite after the surprising data of EU GDP of the second quarter which came at just -.1% q/q and -4.6%y/y and it was expected to be -.6% q/q and -5.1% and it has lost further ground trading below 1.41. Also, the cable could not get enough support to close above 1.66 last week forming a lower high pressing on the cable to break its previous low at 1.6485 in the beginning of this week and it is now trading below 1.63 while the investors are still waiting for BOE quarterly inflation report which is expected to be pessmistic after the MPC's surprizing decision to extend its bond buying plan to 175 B sterling from just 125 B which effected negatively on the interest rate outlook in UK weighing on the british pound. The central bank has said that the broad money growth remain weak and the recessional is deeper than previously thought.and the spare capacity of the exconomy has increased further. The bank seems worried about the economic recession more than what was widely expected and sees that the economy is still in need of further liquidity to move this current strict credit conditions helping the confidence at the current low level of demand which can weigh on the british pound in the coming period. By God's Will, it is important this week to wait tomorrow for the release of July UK CPI which was up monthly in June by .3% and y/y by 1.8%. Best wishes
FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com