The japanese yen came under strong pressure after today release of the US labor report which has shown that the unemployement went down to 9.4$ and the losing of just 247k of July non farm payroll and the market was waiting for 320k and the unemployement to go up to 9.7%. The remarked cheerful thing in this report and the cause of its improving too is the less than expected number of losing jobs of the manfacturing sector which lost just 52k and it was expected to lose 115k. The US Stocks could pare its recent loses because of the weaker than expected services performance and bigger than expected number of lost jobs in the private sector in July earlier this week as we have seen the private sector losing 371k in July while it was expected to lose just 340k while the US July ISM non-manufacturing index came at 46.4 and it was expected to be 48.2.. The US future indexes are in the green territory right now. Dow is up by 87 points trading above 9300. The greenback came under pressure directly after the jobs data as these better than expected figure should increase the investors' risk appitite before getting back all of these loses across the broad gaining further versus the japanese yen and it is now well supported above 96.

The cable was trading at 1.677 before the release of the data which pushed it above 1.683 where it has met the strong profit taken selling which drived it down below 1.67 and it is trading right now nearly at the same levels by the data. By God's will, The british pound is expected to be under pressure in the coming period untill the release of the BOE quarterly inflation report which is expected to be dovish after The MPC's surprizing decision to extend its bond buying plan to 175 B str from just 125 b. The central bank 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. The cable has slumped below 1.685 after the BOE decision which drived the interest rate outlook down as the economy looks in need of a longer than expected time to get out of recession and stablize again. The British pound has got a push earlier this week by the better than expected release of UK PMI manufacturing index of July which reached the expansion territory above 50 for the first time since March 2008 at 50.8 and it was expected to be just 47.7. So, the market was waiting for keeping this 125 B with no further adding. In the previous meeting, The BOE decided to not add more than the £125bn already authorised satisfied by just announcing the probability of reviewing this amount in this meeting.

Best wishes

FX Consultant

Walid Salah El Din
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