6/2/2008 - the current market sentiment

By God's will, after 1.25%fed's cut in less than 2 weeks the market
eye should turn to Trichet's press conference tomorrow. The ECB member
Mersch's comments recently have shown that there were just 2 options
discussed in the last meeting which were the hike or the keeping but
now, there is a growing probability of cutting following the fed on
slowing growth signs and stock markets weakness which can cause a
single currency depreciation by the meeting as it was not discounted
yet this degree.

As The UK growth pace is expected to be negatively impacted by the
same crediting problems of US after the sub-prime mortgage
undiminished problems and the increased probabilities of recession in
US.  It is widely expected to have another .25% MPC cut tomorrow but
it's become clear to the market that the inflation upside risks is to
tackle the MPC following to the Fed's by the same considerable way for
spurring investment bringing back the risk appetite and trust in the
equity markets.

the Japanese yen can keep gaining from this current interest rate
outlook differential tightening, the mistrust in the stock market amid
the current crediting problems sentiment and the increased
expectations of a US recession which can spread out especially, If the
US growth could not get uses of the easing package of 150 Bln Bush's
plan and the fed monetary easing.
From the other side the Japanese yen could find some difficulties of
appreciation, if the BOJ repeated that there is a need for further
flexibility as this opens the door for a probability of an interest
rate cut back again to .25%. The market has translated the comments
into yen weakness at the beginning of this week pu****ng it above 107
versus the greenback.

Best wishes

FX Consultant
Walid Salah El Din
Mob: +20 12 465 9143
E-Mail: mail@[EMAIL PROTECTED]