EUR/USD

After the market sentiment has been changed on the technical correction. In spite of the economists` expectations of an increase of 175k of the non-farm pay roll in December, the 157k was enough to help the USD and the resume of the rate tightening cycle in US. The rate deferential out look is behind this picture especially after the recent FOMAC meeting minutes which have shown that there is a faster than expected pace of rate tightening in US than what was already discounted. Greenspan has hinted this meaning in Frankfurt conference with Iwata and Trichet. In the same time, the current inflation numbers from EU do not encourage the ECB to start tightening yet but we do not see a rate cut possibility too right now in spite of that. There can be a discounting of taxes in some countries to spur further investment but cutting rates is still not expected as the current high volatile oil prices. God Willing, the Currency market is to focus this week on the release of the germane ZEW of January to see the impact of the high EURO rate on the germane industries. We see that the recent slow down of oil prices can compensate the impact of the EURO appreciation. Further oil prices decline can encourage the European`s to talk down the EURO. It is important to watch this week US trade balance of November and US retail sales of December.



USD/CHF

The expected violence before the Iraqi election is expected to drag the pair down in the coming few weeks before the election and the market is expecting further attacks on the oil pipe lines too. That is beside the growing threats of an action against Syria on its existence in Lebanon by the coming Chirac Bush meeting. This can attract the market focusing and this was expected and we have mentioned this some few months ago. It is also important to watch this week US trade balance of November and US retail sales of December.


GBP/USD

the pair was subjected to a massive selling in the recent week on the weak manufacturing and services performance of December and the weakness of mortgage rates approvals and the slow down of housing prices. The pair can be subjected to further weakness this week as the market does not expecting further MPC`s tightening this week and the rate differential out look is by USD side right now. It is important to watch this week UK Nov Trade Balance, US trade balance of November and US retail sales of December.


USD/JPY

The pair has had a footing last week on the USD technical correction and the market cheeriness of the US non-farm pay roll by the end of the week. The BOJ is still maintaining it`s current not hike policy till an improvement of the current deflation in Japan and this is undermining the JPY. It is important to watch this week JPN Nov Trade Balance, US trade balance of November and US retail sales of December.



Best Wishes

FX consultant
Walid Salah El din
http://www.fx-recommends.com
Cairo, Egypt.