The worries about the Europeans debts have brought back again containing the current market sentiment with the beginning of the European session. The European indexes are down and the single currency is under pressure across the broad trading below 1.34 again after last Friday rally on strong germane IFO release of August reached 106.8 could push it up from 1.332 to 1.349 by the end of last week but the cable could find some support from a narrower than expected current account deficit of the second quarter came at 7.4b Stg while the market was waiting for 9.7b Stg.

Last week, The Fed's deflation concerns could put pressure on the greenback across the broad. The single currency could get over 1.34 and the cable could follow it breaking 1.575 resistance last Friday after it had been skeptical by the growth downside risks amid slowing of the US growth in the second half of this year depressed by the release of UK public sector net borrowing of August which was expected to be 12.2b Stg from 3.173b Stg and came at 15.3b Stg and the dovish MPC release minutes have shown tending for further stimulation easing steps following the Fed which shocked the market by the need of taking new QE measures concerning about the growth outlook while it were expected to provide better Fed's assessment reflecting the improving of August data last week as US ISM manufacturing index coming back up to 56.3 against the market expectations of easing further to 53.5 from 55.5 in July and US non-farm payroll which have shown losing of just 56k instead of 110k which have shown losing of just 56k instead of 110k and US Conference Board's Consumer Confidence which rose to 53.5 from 50.4 in July while it was forecasted to be just 51 and we wait today by god's will for September figure to be 52.9 which could refer again to that there is no strong downward momentum of the US economic growth can cause a panic reducing the probabilities of having a double dip recession but the US labor market struggling remains to be the Fed's main concern as it can tackle the market confidence in spending for consuming and housing at this stage of recovery which is waiting for a second round of the Fed's QE easing policy as the fear about the US growth has contained the market sentiment in August after series of dovish releases of July started with a slump of the US non-farm payrolls losing another 131k revising up June loss of 125k to 221k weighing negatively on the US equities markets pushing USDJPY below its 15 years low reaching 83.57 and the US treasury yields on another wave of losing trust forced the Fed to step forward in its quantitive easing policy buying more Mortgage backed securities and rolling over it’s holdings of treasury securities as they mature before this deterioration can have further negative impacts on the consuming and capital spending and to inform the markets that the Fed will not stand seeing the economy falling back in a second dip recession with no action even with the interest rate near 0% which is keeping the greenback under pressure across the broad until now.

Best wishes

FX Consultant

Walid Salah El Din

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