April ISM Manufacturing index came better than expected at 40.1 feeding the believe which is containing the current market sentiment that the contraction is at a slower pace currently saving last week gains of the equity market and the optimism for the beginning of this week which carry many important data like the release of the US ISM non-manufacturing index and the US labor report of April by the end of it and the market is looking for a slower pace of laying off too as the unemployment can undermine the consuming sentiment which have improved recently as we have seen US April US Consumer Confidence index which was expected to go up to 29.5 from 26 in March coming better than expected at 39.2 following the preliminary release of April University of Michigan Confidence index which came better than the market expectations of 58.5 at 61.9 and the final reading came higher at 65.1 ensuring this improving.

The european stocks markets were closed after thrusday gains following Dow which reached 9300 is this same day before retracing back but it could close the week above 8200 at 8212. by god's will, we wait later today  for the release of the PMI manfacturing index figure 36.7 in April from 33.9 in March. The single currency could get benefits from the increased risk apitite versus the greenback last week edging above 1.33. The single currency was suffering recently from the low level of inflation and the increased probability of deflation which can enable ECB to cut the key interest rate in the eurozone further and taking untraditional easing stimulation step forward in its current easing policy to spur the current cooled invetments. The market is waiting too for the ECB to adopt the quatitive easing policy which can increase the inflation preassure as what has been mentioned by the ECB president Jean Claude Trichet on 2 april meeting downplaying the deflation risks in the Eurozone but these current low inflation rate can help the ECB to take this step which can be by buying eurpean bonds for affording liquidity to the european governements to spend further and helping the ailing economy in the next ECB meeting in the 7th of next month and the single currency can be under pressure if he elevated the ECB appreciation of the deflation risks in this coming meeting.

The japanese yen has suffered from both side .last week. The optimism of taking risks in the equity market at these current low prices as it funding the carry trades and the deflation pressure as we have seen March Overall National CPI falls to -.3% from just -.1% in Feb and the declining of April Overall Tokyo CPI to -.2% from .2% in March which is the leading indicator of prices in Japan. USDJPY could break out 97 finally after the fed rate decision last week and the US economic assessment of it which seemed optimistic and increasing the speculations of a recovery can start closer than expected this year.

Best wishes

FX Consultant

Walid Salah El Din
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