The declines of the equity markets today was putting pressure on the high yielding currency and British pound which is waiting for a new MPC cut later this week. In this same time of negative investing sentiment and trust in the equity markets, The Japanese yen and the greenback have got support across the broad on the current expectations of further negative impacts from the credit crisis on the manufacturing sector. We were waiting today for UK manufacturing PMI which has come at 35.8 slightly better than December which came at
34.9, The EU PMI of Jan came also weaker and weaker at 34.4 putting weights on the single currency and also the US ISM manufacturing index has come strongly diving in the contracting territory below 50 at 35.6 in Jan. These show no close turning back and indicating further losing jobs and negative investing and consuming sentiment which can lead to a persisting of the current recession and deflation forces. As we have waited last week, the cable could not hold its gains and stand above 1.444 and it has come lower below 1.41 today with the FTSEE 100 just above 4000 as The Dow is trading below 8000 on this same current negative market sentiment.We wait later this week for the release of US labor report and it is important to be watched. The non-farm payrolls of Jan are expected to be -500k and the unemployment to be worsen to 7.4% from 7.2% in December and the manufacturing sector to lose another 125k jobs.
Best wishes
FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com