EUR/USD

The pair was mixed recently. USD is negatively impacted by the US trade deficit records but in the same time, the FOMAC pace of tightening is helping it. So there was no clear market direction. The inflation data has shown that it is really well contained and there is no need to a fast pace of tightening. In the same time there is a modest constant pace of recovery in the consuming sector and the labor market which is expected to show another 180k added jobs in Jan. so the market is discounted another .25% rate hike this week
and waiting for an upbeat assessment indicating this decision. USD can be stronger this week as it is expected to listen to the same dovish comments from the ECB that the inflation in the eurozone is to calm down to 2% and they have not discussed a rate hike. These comments have dragged the pair down to 1.295 again and they can break it out this week! We have a very busy week of data ahead of the G7 meeting. So please be wise and try to appreciate the market current discounting and the significant data that can change the market sentiment. So please try to wait from US Jan Chicago PMI, Jan Services ISM, Dec Factory Orders, and Jan Non-farm Payrolls plus this week assessment of the FOMAC.

USD/CHF

The violence before the Iraqi election is has weighed on the pair before the Iraqi elections but the market is still expecting further attacks on the oil pipe lines in spite of the cheeriness of election success. That is beside the growing threats of an action against Syria on its existence in Lebanon by the G7 meeting. This can always attract the market focusing in the new geopolitical concerns period of Bush!


GBP/USD

the pair was subjected to a massive selling in the recent weeks on a slow down in the manufacturing and services performance of December and the weakness of mortgage rates approvals and the slow down of housing prices but the pair was well supported above 1.86 and The probability of a rate cut has been diminished and the pair has found the support after the 1.6% CPI rise in Dec and UK Q4 GDP which has come at 0.7% faster than the market expectation of only.5% q/q thanks to the service sector. We should wait again for UK PMI of the manufacturing and the service sectors.

USD/JPY

There is a reevaluation of the Yuan, There is no reevaluation of the Yuan and the pair market swings between these two decisions but this week and ahead of the G7 meeting there can be a reevaluation of the Yuan! SO this can weigh on the pair this week. It may not be important to wait for the Japanese Dec Coincident Indicators rather than waiting for the US non-farm payroll of Jan.


Best Wishes