The retracement of the equities markets recent declines could support the single currency putting pressure on the gold and the greenback.

The stock markets could gain on better than expected outlook of Citibank profits in the beginning of this year. Citibank stock has fallen last week below 1$ before creeping up on the current market expectations of achieving profits in the first quarter of this year.

The banking sector stocks could drive the indices higher pushing Dow above 6900 and S&P 500 above 700 again.

The gold has fallen below 900$ on this same optimistic market sentiment yesterday but it is trading above it right now on doubts about the ability of keeping these gains and confidence.

The British pound could not enjoy the single currency appreciation versus the greenback on this optimism as the recent BOE announcement that it is ready to buy further governmental gilts in a quantitive easing policy could contain the market sentiment putting pressure on the British pound since last week BOE cutting interest rate by another .5% to be just .5%.

In this same time and in the beginning of this week, the single currency has had underpinning from the European finance ministers' rejection of new stimulation packages in Brussels in spite of the US encouraging for these actions which should increase the government's role changing the current fiscal structure position in the face of the crisis.

This quantitive easing policies should put pressure on the currency from increasing the supplied money from a side and from increasing the budget deficit from another side which can threat total economy creditability and the currency buying value and this European refusing of widening their current budget liabilities could underpin the single currency versus the pound and the greenback on the market focusing on the central banks actions after reaching very low interest rate levels and this sentiment can continue supporting the single currency as this current European conservative position comparing with US.

There was no data to move the currency market in the recent few days but we wait later this week the release of US retails sales of Feb which is expected to fall by .4% monthly and also the US trade balance deficit which is expected to be shrunk to 38.2b$ in Jan.

Best wishes

FX Consultant

Walid Salah El Din

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