The US Q2 productivity has been revised up today to 6.6% from 6.4% but the ADP employment figure of August has come worse than the market expectations of -250k at -298k and these data show that there is still worries about hiring but the current labor unit is high utilized meeting an increasing of the demand which can be hopeful for the recovery. the US stocks have not reacted positively to the data to continue the profit taken wave which was waited to be continued after the rally we have mentioned in the recent analysis which started from the 9th of March when the Dow was trading below 6600 to touch 9600 last week but the forex market is still trading in a mixed way in a very tight ranges since the end of last week with no major change of the market sentiment which has been effected negatively by the rising worries about the sustainability of the recent better than expected economic performance in US the recent few weeks to spur the required solid growth.

The single currency is still struggling to get above 1.43 again after testing 1.42 on the greenback buying because of the deterioration of the investors' risk appetite in the recent few days as the market has seen the recent waited bright figures as a profit taken chance more than building new positions from here. The US ISM manufacturing index has come above 50 finally in August reaching 52.9 which is the highest figure since June 2007 reflecting an expansion in the manufacturing sector. We have seen yesterday too a continuous improving of the housing market conditions as the US pending home sales of July have come up for the sixth consecutive month by 3.2% after rising of the US new home sales of July too by 9.6% m/m which shows that there is a new demand growing in a faster pace than what was expected but the question now is this is reliable enough to move the growth up in a sustainable way? as Ben Bernenke has hinted recently when he indicated that the worst of the credit crisis is looking behind of us currently and the focusing is now on the current obstacles in front of a reliable economic growth after the credit crisis.

By God's Will, we wait today for the PMI service figure of August from EU, 49.5 from 45.7 in July and from UK, to be 53.9 from 53.2 in July and from US, August ISM non-manufacturing index 48 from 46.4 in July and it is important tomorrow to wait for the release of August US non-farm payroll which is expected to show a losing of 230k.

Best wishes


FX Consultant
Walid Salah El Din

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