Forex Today Update and Wrapup

US ISM MANUFACTURING INDEX RISE TO 42.9

ISM Non-Manufacturing for January surprised analysts with a rise to 42.9 from a revised 40.1 in the previous month; analysts surveyed had expected the indicator to decline to 39.0. The higher figure reflects a similar move with the ISM's Manufacturing and Prices Paid indicators on Monday which also beat expectations of a decline and showed a rise. ISM Non-Manufacturing has been below 50 for the 4th month though improvements in ISM data this week signals that contraction may be less in the months ahead. ISM data is now well off its low of 37.4 in November and continued improvements may signal a bottoming in the first half of 2009.

US ADP DECREASED TO 522000

According to Automated Data Processing (ADP) nonfarm private employment decreased by 522,000 from December 2008 to January 2009 on a seasonally adjusted basis, an indication the worst recession in the post-war period is worsening. The Fed believes employment will weaken going into 2010. Today's report showed that sharply falling employment at small to medium size businesses clearly indicates that the recession continues to spread beyond manufacturing and housing-related activities.

UK PMI IMPROVED TO 42.5

U.K. services PMI improved more than expected in January, reaching 42.5 against our survey median for a pick-up to 40.5 from 40.2 in December, suggesting that sentiments now appear to be bottoming and the impact from recent aggressive rate cuts and fiscal stimulus measures starting to have an impact. The employment index fell further, however, to 40.2 from 40.5, the lowest since the series began in 1996.

US ISM Manufacturing Index Bettered. First Rise Since June 2008

The ISM manufacturing survey rose slightly to 35.6 in January from December's 32.9 (revised up from 32.4). The market was expecting a reading of 32.5. New orders rose to 33.2 from the prior month's 23.1 (revised up from 22.7). Prices paid rose to 29 from December's reading of 18. Employment remained at a weak 29.9 for the second month in a row. The revisions to the prior month's numbers were based on the Institute of Supply Management's annual seasonal adjustments that are released at the beginning of each year.

US Personal Spending Falls, Could Trigger Down GDP Revision

US personal spending fell a greater-than-expected 1 percent during the month of December, marking the sixth straight month of declines. At the same time, personal income slipped 0.2 percent to cap off the longest stretch of declines since November 1953 - January 1954.

U.K. Manufacturing Unexpectedly Improved

The U.K. January manufacturing PMI unexpectedly improved to 35.8 from 34.9 in the previous month. Our forecast and median was 34.8, so data was much better than anticipated and the rebound came unexpectedly, even though it is in line with the improvement in the Euro-Zone PMIs that month. The outlook is uncertain and setbacks are still possible, but the numbers raise hopes that confidence is slowly starting to bottom out in Europe, which supports expectations for a gradual improvement in economic activity later in the year.