The single currency could find support again today from the demand for the Spanish bonds which was not expected after yesterday Moody's announcement to have the Spanish crediting under revision currently for further downgrading. The single currency could be underpinned yesterday by the lower than expected demand for l31.9 billion euros on the ECB program financing program for 3 month has helped the market which was worried about the long term debt refinancing in Europe after the earlier released report of the ECB which highlighted the need of 800 billion euros by the end of 2012 suggesting that the European banks are in need to be ready for facing bad loans following the debt crisis which can reach 123 billion euros for 2010 and 2011 to reach 105 for 2011 and for facing the bad loans from 2007 till 2009 they should be ready with 238 billion euros. The single currency could reach 1.23 versus the greenback yesterday but it could not keep these gains but today after the Spanish auction results it is trading currently above it targeting 1.2452 again after failing to hold above it 2 weeks ago and then 1.2598 then 1.2685 which was the recorded previous high of last May and from it the pair fell breaking 1.2143 while the next support should be at 1.2165 then 1.2044 whereas it has found support earlier this week and 1.1954 which was the pair low after falling from 1.2073 and it could protect the pair from making a newer low again below 1.1875 which has become the pair main defending line before 1.16 whereas the pair has started its rally to 1.604 before falling again to 1.233 amid the credit crisis and rising back forming a lower high at 1.515 in the beginning of last December.

The dovish release of June US ADP Employment which came at just 13k while the market was waiting for 60k from 55k in May could put further pressure on the equities markets which has been actually hit by the slide of US consumer confidence of June below 55 again to 52.9 while the market was waiting for 62.9 by the most waited release of this week which is US non-farm payroll of June tomorrow and it is widely expected to have losing of 100k after adding 431k in May. The market is curiously waiting today for US ISM manufacturing index too which is expected to be 59 from 59.7 in May after the release of June US Chicago PMI which could be just above 59 at 59.1 from 59.7 in May.

The greenback and the Japanese yen were well-supported yesterday with the slump of the equities market and the falling of the investors' risk appetite which has been prolonged to the Asian markets although the release of Tankan survey of the second quarter which has shown better than expected market expectation of the big manufacturing coming positively at 1 which the market was waiting for -3 but the weaker than expected PMI of China which weakened to 52.5 from 53 in May has brought back the selling pressure to contain the market sentiment to put pressure on the European stocks opening today which were actually depressed by the US stocks loses yesterday too and the red future of the US indices and focusing on the worries about the growth pace in US which have started to started to emerge last week with the release of the disappointing new home sales of May which were waited to be 470k from 507k in April but they have shocked the market with just 300k falling by 32.7 and have been highlighted in the recent Fed's assessment last week when it has decided to keep the interest rate unchanged at nearly 0% maintaining its same cautious stance worrying about the current growth pace which is getting out of stream and the debt crisis of Europe consequences negative impact on US encouraging the investors to settle their taken risks positions even by the release of US confidence of June which came actually disappointing last Tuesday affirming the growth easing worries in the second half of this year which have watched actually losing of the US equities markets indices around 10% in the first half of it.

Best wishes

FX Consultant

Walid Salah El Din