The risk appetite has been brought back to the markets strongly after the release of January ISM Manufacturing index which jumped to 60.8 while the market was waiting for 58.2 from 58.5 in December which shows that the pace of recovery in US is still going well reinforcing the business spending weighing asking for the high yielding currencies for carrying risks such as the Aussi and Kiwi which are well-supported by commodities prices rising because of the Egyptian turmoil which reinforced the worries about the stability on the middle east geopolitical position as the events in Egypt continued pushing the commodities priced up on increased speculations of strong demand from the Egyptian government for resorting stabilities in its markets after as the turmoil caused strong shortages in its markets and it is important at this point to mention that there have been existing worries about the commodities prices from BOJ and the Fed earlier last month when their economic assessments earlier last month. The oil prices are also still trading around 100$ per barrel as the markets fear about the Suez channel exposure to these recent riots in the Egyptian streets which can threats the supplies from the Arabia rich of oil countries. Mubarak has come out for the second time expressing this time that he has no intention for new presidency period after the left 6 consecutive times referring to his commands for making new constitution modifications of the presidency terms under the pressure of the Egyptian street.
The British pound is still well supported by increased market speculations of having new adopted tightening stance from the BOE for fighting the inflation which has been surged recently with UK CPI index reaching 3.7% yearly, in the time of facing growth down side risks as we have seen the falling of UK Q4 GDP into the negative territory at -.5% quarterly emerging stagflation risks to face the UK economy capping the MPC from hiking the interest rate in the well required pace to anchor the inflation fearing of accumulating the risks facing the growth tackling the investments which is needed for stimulating growth. The cable could get over 1.62 and god willing, it should face now the resistance at 1.6296 in the beginning of last November when the greenback was under pressure from the Fed's decision to add another 600b$ in another step of its QE policy for stimulating the economic growth in US.
God willing, we are waiting today for January ADP Employment release to be 150k after outstanding December ADP Employment release had come at nearly triple of the market expectations of just 100k at 297k added jobs from 93k in November.
FX Market Strategist
Walid Salah El Din