U.S. Stock-Index Futures Are Little Changed; Anheuser Declines

By Henrietta Rumberger

May 27 (Bloomberg) -- U.S. stock-index futures were little changed before reports on new-home sales and consumer confidence.

Anheuser-Busch Cos., the largest U.S. brewer, declined in Europe after Deutsche Bank AG cut its recommendation on the shares. Exxon Mobil Corp., the world's largest oil company, rose after crude climbed above $133 a barrel. Schlumberger Ltd. gained as Merrill Lynch & Co. raised its price estimate for the stock.

Standard & Poor's 500 Index futures expiring in June slipped 0.1, or less than 0.1 percent, to 1,373.3 as of 10:06 a.m. in London. Dow Jones Industrial Average futures lost 3 to 12,468 and Nasdaq-100 Index futures added 3 to 1,961.25.

Purchases of new homes probably dropped 1.1 percent in April to an annual pace of 520,000, the fewest since September 1991, according to the median forecast in a Bloomberg News survey. A separate report may show a measure of consumer confidence fell this month to the lowest since 1993. The figures are due at 10 a.m. in Washington.

``The housing crisis still weighs on the market,'' Joerg de Vries-Hippen, who oversees about $26 billion as chief investment officer for European stocks at Allianz Global Investors in Frankfurt, said in a Bloomberg Television interview. ``After the long weekend, investors come back and adjust their portfolios.''

Stock exchanges were closed yesterday for the Memorial Day holiday. U.S. stocks last week had the biggest weekly drop in almost four months on concern the economy will weaken as banks and brokerages face deeper losses and record energy costs depress consumer spending.

Europe, Asia

European shares fell for a third day, led by GlaxoSmithKline Plc after Morgan Stanley downgraded Europe's largest drugmaker, while higher oil prices weighed on the outlook for economic and profit growth. Asian stocks advanced.

``Market participants will focus on the upcoming economic data today,'' Petra von Kerssenbrock, an analyst at Commerzbank AG in Frankfurt, said in a Bloomberg Television interview.

Anheuser-Busch declined 16 cents to $56.45 in Germany. Deutsche Bank cut its recommendation on the brewer's shares to ``hold'' from ``buy,'' saying the stock price has been driven by press reports indicating a cash offer of $65 a share by InBev NV.

``Such a high price requires aggressive cost reduction and risks harming brands, distribution and execution,'' analysts Marc Greenberg and Andrew Kieley wrote in a research note dated May 26. ``These are not positive changes, but simply what's necessary to feed an ever-hungry global deal machine.''

Exxon, Schlumberger

Anheuser made its board easier to replace and abandoned its so-called poison pill earlier this decade, moves that will make it harder to fend off a takeover attempt by InBev.

Exxon Mobil increased 15 cents to $90.85 in Germany. Crude oil rose above $133 a barrel in New York as a militant attack in Nigeria disrupted supplies and on speculation fuel subsidies in Asian countries will continue to spur demand.

Schlumberger climbed 97 cents to $101 in Germany. Merrill Lynch raised its price estimate on shares of the world's biggest oilfield contractor 18 percent to $130.

``With oil comfortably above $100 a barrel, we expect demand for Schlumberger's services to continue to grow with the expansion of global oil and gas spending by producers,'' the analysts including Alan D. Laws in Calgary wrote in a note to investors today.

Pfizer Inc., the world's largest drugmaker, increased 22 cents to $19.75 in Germany. The company asked a judge to bar insurers from objecting to the bankruptcy plan of former unit Quigley Co., saying their interests conflict with those of creditors with asbestos-injury claims.

Asian Stocks Rise for First Time in Six Days; Takeda Advances

By Hanny Wan and Chua Kong Ho
Enlarge Image/Details

May 27 (Bloomberg) -- Asian stocks rose for the first time in six days, rebounding from a slump that left share prices at the cheapest relative to earnings in five weeks.

Toyota Motor Corp., Japan's biggest carmaker, gained after it sank to the lowest in more than a month compared with profit. Samsung Electronics Co. advanced in Seoul after Nomura Holdings Inc. raised its rating, citing improved prospects for memory-chip sales. Takeda Pharmaceutical Co. climbed in Tokyo on speculation an experimental drug will get approval in the U.S.

``Asian stocks are looking a lot more attractive on a valuation standpoint, and the underlying economies are still doing well,'' said Leslie Phang, Singapore-based head of private client investments at Schroders Plc, which manages $275 billion.

The MSCI Asia Pacific Index added 1.1 percent to 149.01 as of 3:38 p.m. in Tokyo. Almost three stocks advanced for each that declined, and all 10 industry groups rose. MSCI's gauge has fallen 5.8 percent this year in its worst performance since 2000, when the Internet bubble burst.

Most Asian benchmark indexes rose today. Japan's Nikkei 225 Stock Average added 1.5 percent to 13,893.31, the biggest move in the region, with trading volumes on the Tokyo Stock Exchange the second-lowest for a full day this year.

Futures for European and U.S. indexes advanced. U.S. and U.K. markets were closed for a public holiday yesterday.

MSCI's Asian index dropped 4.5 percent in the past five sessions, the longest losing streak since March 5. Optimism that the worst of credit-market losses was over was overshadowed as crude oil rose to a record above $135 a barrel, raising costs. The stock-market decline left the MSCI index valued at 15.5 times estimated earnings, the lowest since April 18.

Toyota, Samsung Electronics

Toyota climbed 1.8 percent to 5,100 yen, halting a five-day, 8.6 percent decline that valued the company at 9.3 times reported earnings, the lowest since April 17.

``We are definitely closer to the bottom than to the top and there are really very attractive values emerging,'' said Tahnoon Pasha, head of Asian equities in Hong Kong at Manulife Asset Management, which manages about $240 billion globally.

Samsung Electronics gained 3.4 percent to 702,000 won, its sharpest increase since May 15, after Nomura lifted its rating to ``buy'' from ``neutral.''

Trading volumes in Asian stock markets were below average today, ahead of U.S. economic reports that may show new-home sales fell to a 17-year low in April and that consumer confidence sank this month to the lowest since 1993.

Selling Prices, Costs

Some stocks gained on speculation they will be able to raise selling prices to counter higher raw-materials costs. The price of crude oil has doubled in the past year and rose to a record last week on speculation supply disruptions and the falling U.S. dollar may sustain investor demand for the commodity.

Cathay Pacific Airways Ltd., Hong Kong's largest airline, rose 0.8 percent to HK$15.04. The company will raise fuel surcharges by 37 percent, the biggest increase since 2004.

SK Energy Co., South Korea's biggest refiner, jumped 8.4 percent to 128,500 won, the largest gain since Feb. 14. Margins from processing crude oil into kerosene climbed to a record $47 a barrel on May 23 and returns into diesel increased to $46 a barrel, according to Korea National Oil Corp., increasing speculation earnings from processing crude oil into cleaner- burning fuels will boost profits.

Oji Paper Co., Japan's largest paper maker by revenue, added 3.1 percent to 502 yen, its sharpest gain since May 2. Nippon Paper Group Inc., the second-biggest, climbed 2.5 percent to 287,000 yen. UBS AG lifted its share-price estimate on Nippon Paper by 7.1 percent to 300,000 yen. Higher selling prices will help papermakers counter rising fuel costs and boost earnings, UBS said.

Pulp, Paper, Pharmacy

An index of pulp and paper companies climbed 3.4 percent, the second-biggest gain among the 33 industry groups in Japan's Topix index, while a measure of pharmaceutical shares on the benchmark climbed 2.1 percent.

Takeda, Japan's largest drugmaker, added 2.8 percent to 5,930 yen after analysts said a possible successor to its bestselling Actos diabetes medicine may get approval.

In Hong Kong, shares of Sun Hung Kai Properties Ltd., the city's biggest developer, rose 1.7 percent to HK$127.80, set for their highest close since May 21. The company voted today to oust Walter Kwok as chairman and chief executive officer after 18 years, as the city's second-richest family feuds over how to run the business.

Nóng:

WASHINGTON -(Dow Jones)- U.S. Treasury Secretary Henry Paulson said Tuesday that the weak dollar isn't to blame for surging oil prices.

Paulson, answering questions after a speech, said people are focused on the "wrong thing," and that supply and demand is behind rising oil prices.

He said "aggressive investing" in oil production is needed, adding that speculators also aren't the driving force.

Calling rising commodity prices a "big burden" on U.S. consumers and the economy, he warned that there is a risk of "prolonging our economic slowdown."


-By Tom Barkley, Dow Jones Newswires; 202-862-9255; tom.barkley@dowjones.com


(END) Dow Jones Newswires

June 10, 2008 11:08 ET (15:08 GMT)

13/06/2008:


Close Change
USD/KRW 1,041.00 +7.00
JPY/KRW 9.6532 +0.0167
3-Year Treasurys 5.74% unchanged
5-Year Treasurys 5.85% -1 bp
10-Year Treasurys 5.91% -2 bps
20-Year Treasurys 5.92% -2 bps

SEOUL (Dow Jones)--The South Korean won ended lower Friday for a third consecutive session, largely due to selling of domestic shares by foreign investors and dollar short-covering, traders said.

There seems to have been "active fund repatriation" related to foreigner investors' recent stock-selling, a foreign bank trader said.

Foreign investors were net sellers of shares worth about KRW2.046 trillion this week.

A second foreign bank trader said, "The market was overly cautious over possible (dollar-selling) intervention by the authorities."

But with no intervention in sight toward the end of the session, someinvestors who had gone short on the dollar decided to cover their positions.

The dollar rose nearly 1% against the won this week.

A local bank trader said that the authorities may sell the dollar Monday if "they see players taking aggressive long-dollar positions."

Still, if the authorities keep away from the market, traders expect the dollar to head up on continued weakness in domestic shares and import settlements.

Traders tipped a trading range of KRW1,035 to KRW1,050.

Domestic treasury bonds and bond futures endednearly flat.

Bonds fell earlier in the session, tracking losses in U.S. treasurys overnight, with the market still fretting about inflation risks, said analysts.

However, bonds recouped their early losses after the release of May import data as the 10.7% on-month increase in prices "had largely been expected", Hana Daetoo Securities analyst Kong Dong-rak said.

The three-year paper may trade between 5.65% and 5.80% Monday and the five-year paper between 5.75% and 5.90%, Kong said.


-By Min-Jeong Lee, contributing to Dow Jones Newswires; 822-2198-2230; min-jeong.lee@dowjones.com


(END) Dow Jones Newswires

June 13, 2008 04:43 ET (08:43 GMT)


"We have currently no information that News Corp. intends to raise its stake," Chief Executive Michael Boernicke said Thursday, in response to shareholders' questions.

("Premiere CFO: News Corp Made No Due Diligence At Premiere," published at 1222 GMT, misstated Michael Boernicke's title as CFO.)


(END) Dow Jones Newswires.
June 12, 2008 08:50 ET (12:50 GMT)

HSBC dẫn đầu top 1.000 ngân hàng lớn nhất thế giới


Theo điều tra thường niên mới nhất của Ngân hàng thế giới (WB), ngân hàng HSBC đã leo từ vị trí thứ ba lên ngôi đầu bảng trong Top 1.000 ngân hàng lớn nhất hành tinh.

Trong 9 năm qua, HSBC là ngân hàng đầu tiên không phải của Mỹ dẫn đầu danh sách này, xếp bậc 1 về vốn và lợi nhuận trước thuế - đã lập mức cao kỷ lục mới trong năm 2007.

Kết quả điều tra cho thấy, các ngân hàng của Mỹ hiện chỉ chiếm 14% trong tổng lợi nhuận trước thuế của Top 1.000, so với 24% năm 2007, trong khi tỷ trọng của các ngân hàng châu Á đã tăng từ 12% lên 19%, còn của các ngân hàng châu Âu vẫn giữ nguyên mức 41%.

Trong tháng 4/2008, HSBC cũng dẫn đầu danh sách 2.000 công ty lớn nhất thế giới do tạp chí Forbes bình chọn. Đây cũng là lần đầu tiên một công ty không phải của Mỹ dẫn đầu danh sách này. Trong 5 năm qua, tốc độ tăng trưởng doanh thu và lợi nhuận ròng của HSBC đạt lần lượt là 26% và 31%.

Với khẩu hiệu "ngân hàng toàn cầu am hiểu địa phương", HSBC Holdings Plc có hơn 128 triệu khách hàng trên thế giới, thông qua 10.000 văn phòng tại 83 quốc gia và vùng lãnh thổ tại châu Âu, khu vực châu Á-Thái Bình Dương, châu Mỹ, Trung Đông và châu Phi.

Với giá trị tài sản tính đến ngày 31/12/07 đạt khoảng 2.354 tỷ USD, HSBC hiện là một trong những tổ chức dịch vụ tài chính và ngân hàng lớn nhất thế giới./.

Trung Quốc: Dự trữ ngoại tệ hơn 1,8 nghìn tỷ USD

14/07/2008 -- 11:47 PM

Hà Nội (TTXVN) - Dự trữ ngoại tệ của Trung Quốc đã lên tới trên 1,8 nghìn tỷ USD tính tới cuối tháng 6, tăng 35,7% so với cùng kỳ năm ngoái và cao hơn 18% so với thời điểm cuối năm 2007.

Như vậy, Trung Quốc tiếp tục là quốc gia có dự trữ ngoại tệ lớn nhất thế giới, tiếp sau là Nhật Bản với 973 tỷ USD tính đến cuối tháng 6.

Theo số liệu mới nhất do Ngân hàng Nhân dân Trung Quốc công bố ngày 14/7, trong 6 tháng đầu năm nay, dự trữ ngoại tệ của nước này đã tăng thêm 280,6 tỷ USD. Tính riêng trong tháng 6 vừa qua, dự trữ ngoại tệ của Trung Quốc đã tăng thêm 11,9 tỷ USD.

Theo ngân hàng này, tốc độ tăng dự trữ ngoại tệ của nước này đã có chiều hướng giảm, một phần do thặng dư thương mại giảm.

Chính phủ Trung Quốc cũng đã áp dụng các biện pháp kiềm chế tình trạng đầu cơ ngoại tệ. Hồi tháng 6, Bắc Kinh thông báo sẽ triển khai một hệ thống kiểm soát ngoại tệ, nhằm kiểm tra tính xác thực của hoạt động giao dịch xuất khẩu./.

Hai điều hiểu nhầm về FED
Người ta lo ngại FED đưa ra quá nhiều cam kết hỗ trợ tài chính cho các công ty và tổ chức tài chính Mỹ nên có thể sẽ hết tiền. Thực tế không phải vậy.
Hai điều người ta thường nhầm lẫn về Cục Dự Trữ Liên Bang Mỹ (FED): Điều thứ nhất là FED kiểm soát mức lãi suất chuẩn tại Mỹ; thứ hai, FED thực hiện nhiều cam kết về tài chính đến nỗi FED có khả năng sẽ hết tiền.

Như vậy FED sẽ không thực hiện được chức năng của mình là bơm thêm tiền vào hệ thống tài chính. Cả hai điều trên đều không đúng sự thật.

FED kiểm soát loại lãi suất nào?

Một số người tin rằng FED chính là cơ quan kiểm soát mức lãi suất chuẩn tại Mỹ, vì thế họ thường hay viết rằng:”FED mới đây đã cắt giảm lãi suất.”

Trên thực tế, chúng ta thường thêm vào từ ngắn hạn (short term) trước thuật ngữ lãi suất (interest rates) khi nói đến sự kiểm soát của FED đối với vấn đề lãi suất. Đó là bởi vì FED chỉ kiểm soát lãi suất ngắn hạn, mức lãi suất các tổ chức tài chính áp dụng đối với những khoản vay qua đêm. Chính thị trường tài chính đã lập nên tỷ lệ lãi suất dài hạn, và lãi suất này không biến đổi cùng chiều với lãi suất ngắn hạn.

Từ tháng 9 năm ngoái, FED đã giảm mức lãi suất ngắn hạn từ 5,25 điểm phần trăm xuống 2 điểm phần trăm.

Giá nhà đất hạ là điều đã xảy ra khá lâu nay trên thị trường nhà đất Mỹ. Tỷ lệ thu hồi nhà ở tăng cao, cả bên cho vay và bên vay tiền đều gặp nhiều khó khăn.

FED cắt giảm lãi suất ngắn hạn để giảm đi sự hoảng loạn trên thị trường diễn ra hơn một năm nay. Và hơn thế nữa, mức lãi suất giảm này có tác động tích cực đối với tăng trưởng kinh tế Mỹ.

Nhiều người cho rằng việc hạ lãi suất ngắn hạn của FED khiến lạm phát tăng cao và USD mất giá mạnh trên thị trường quốc tế. Trên thực tế, FED chỉ điều chỉnh mức lãi suất ngắn hạn. Sự điều chỉnh lãi suất dài hạn nằm ngoài tầm kiểm soát của FED.

FED có đủ tiền để cứu hệ thống tài chính không?

Nhiều người cho rằng FED có thể sẽ hết tiền bởi đã chi tiêu quá nhiều vào các chương trình hỗ trợ các công ty tài chính và cuối cùng sẽ mất khả năng tài chính.

Chủ tịch của FED và cộng sự của mình đã tiến hành cam kết thực hiện hai chương trình khiến thị trường lo lắng về việc FED mất khả năng tài chính. Thứ nhất, ngoài các ngân hàng thương mại, FED còn tiến hành cho các tổ chức tài chính và các ngân hàng đầu tư vay. Thứ hai, FED sẽ cho một số công ty nhất định vay ngân phiếu.

Người ta có cơ sở để lo ngại bởi hiện nay FED chỉ sở hữu 800 tỷ USD ngân phiếu trong khi tổng số tiền dành cho những chương trình trên và số tiền dự kiến phải chi ra để cứu hai trụ cột tài chính Mỹ sẽ là khoảng 800 tỷ USD.

Và đây là cơ chế cụ thể: Nếu một tổ chức vay 50 tỷ USD từ FED, FED sẽ ghi khoản 50 tỷ USD này vào cột có trong tài khoản của tổ chức đó tại FED và tổ chức vay tiền sẽ tiêu khoản tiền trên theo ý họ. Trên thực tế, với cách làm như vậy, FED đã tạo ra tiền.

Và nếu FED cần nhiều hơn khoản 800 tỷ USD ngân phiếu, FED có thể mua thêm trên thị trường. FED sẽ luôn có đủ khả năng tài chính để cứu hệ thống tài chính Mỹ.

Cafef

Fundamental Outlook at 1400 GMT (EST + 0400)



€



The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5750 level and was supported around the $1.5660 level. Data released in the U.S. today saw June new home sales fall 0.6% to an annualized 530,000 units, the lowest level since March and further evidence of the beleaguered condition of the housing sector. Other data released today saw the July University of Michigan consumer sentiment indicator improve to 61.2 from 56.4 at the end of June, exceeding expectations. Also, June building permits were revised to +16.4% from +11.6% and June durable goods orders were up 0.8% with the ex-transportation component up 2.0%. Notably, the core capital goods index rose 1.4%, the largest monthly increase since April. The November federal funds futures contract is pricing in about an 88% chance the Fed will lift the federal funds target rate by 25bps to 2.25% at the 5 August Federal Open Market Committee meeting. Dealers also cited some U.S. dollar selling pressure related to comments from PIMCO managing director Gross who said securities owners should expect about US$ 1 trillion in losses related to risky mortgage loans. In eurozone news, EMU-15 M3 money supply growth moderated to 9.5% from 10.0% in May. European Central Bank member Liebscher reported there is still room to tighten monetary policy. It was also reported that German June import prices were up 1.5% m/m and 8.9% y/y. Euro bids are cited around the $1.5230 level.



¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥107.90 level and was supported around the ¥106.60 level. Data released in Japan overnight saw June core consumer price inflation climb 1.9% y/y on soaring oil and commodity prices. This is just below Bank of Japan’s 2.0% “understanding of price stability.” Most traders believe the central bank will keep the overnight call rate unchanged at 0.50% for a few months but policymakers are concerned inflation could reach as much as 2.5%. BoJ Governor Shirakawa and finance minister Nukaga discussed the economy today and economy minister Ota said she is worried prices could impact spending. Other data released overnight saw the June corporate services price index up 1.2%. The Nikkei 225 stock index lost 1.97% to close at ¥13,334.76. Dollar bids are cited around the ¥103.65 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥169.30 level and was supported around the ¥167.50 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥214.80 and ¥104.00 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8189 in the over-the-counter market, down from CNY 6.8289.

₤

The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9975 level and was supported around the $1.9830 level. Data released in the U.K. today saw Q2 gross domestic product increase 0.2%, less-than-expected and its slowest rate in three years. Many economists believe the U.K. economy may be in a recession by the end of the year. Cable bids are cited around the $1.9360 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7920 level and was supported around the ₤0.7870 level.



CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0405 level and was supported around the CHF 1.0315 level. Technically, today’s intraday high was right around the 23.6% retracement of the move from CHF 0.9645 to CHF 1.0625. Most traders expect Swiss National Bank will keep official interest rates unchanged for the foreseeable future. U.S. dollar offers are cited around the CHF 1.0515 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6310 and CHF 2.0715 levels, respectively.





Technical Outlook at 1230 GMT (EDT + 0400)



(Bid Price) (Today’s Intraday Range)



EUR/ USD 1.5678 1.5752, 1.5661
USD/ JPY 107.80 107.91, 106.58
GBP/ USD 1.9906 1.9977, 1.9829
USD/ CHF 1.0390 1.0406, 1.0315
AUD/ USD 0.9550 0.9606, 0.9544
USD/CAD 1.0160 1.0166, 1.0126
NZD/USD 0.7420 0.7467, 0.7404
EUR/ JPY 169.05 169.27, 167.49
EUR/ GBP 0.7875 0.7919, 0.7870
EUR/ CHF 1.6291 1.6308, 1.6222
GBP/ JPY 214.64 214.80, 211.58
CHF/ JPY 103.74 103.98, 103.13




Support Resistance Support Resistance



EUR/ USD USD/ JPY



L1. 1.5225 1.5645 101.95 106.60

L2. 1.5035 1.5840 100.60 109.95

L3. 1.4805 1.6020 98.75 113.30



GBP/ USD USD/ CHF



L1. 1.9520 1.9760 1.0135 1.0565

L2. 1.9395 1.9880 0.9990 1.0730

L3. 1.9100 2.0000 0.9875 1.1040



AUD/ USD USD/ CAD



L1. 0.9380 0.9655 0.9870 1.0175

L2. 0.9215 0.9735 0.9715 1.0370

L3. 0.9005 1.0115 0.9465 1.0520



NZD/ USD EUR/ JPY



L1. 0.7700 0.8105 160.60 166.65

L2. 0.7595 0.8420 158.35 167.75

L3. 0.7275 0.8665 154.80 168.95



EUR/ GBP EUR/ CHF



L1. 0.7740 0.8120 1.5975 1.6250

L2. 0.7555 0.8310 1.5855 1.6470

L3. 0.7440 0.8570 1.5730 1.6760



GBP/ JPY CHF/ JPY



L1. 200.60 208.50 98.70 103.30

L2. 197.55 211.35 97.00 105.40

L3. 192.70 217.15 95.85 107.70





SCHEDULE



Friday, 25 July 2008
all times GMT
(last release in parentheses)



0800 Eurozone July M3 money supply (10.4%)

0800 Eurozone July M3 money supply (10.5% y/y)

0830 UK Q2 GDP (0.3% q/q)

0830 UK Q2 GDP (2.3% y/y)

0830 UK May index of services (0.3%)

1230 US June durable goods orders (0.0%)

1230 US June durable goods orders, ex-transportation (-0.9%)

1400 US July University of Michigan consumer sentiment (56.6)

1400 US June new home sales (512,000)

1400 US June new home sales (-2.5% m/m)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5395 level and was capped around the $1.5515 level. The common currency extended recent losses and reached its lowest level since 16 June. As expected, the Federal Open Market Committee kept the federal funds rate unchanged at 2.00% yesterday and contrary to much speculation, the only dissenter seeking higher rates was Dallas Fed President Fisher. The FOMC reported “Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters.” On the inflation front, the Fed added it “expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.” On balance, most traders interpreted the Fed’s statement as being more dovish than expected, especially since the Fed omitted previous language that read downside risks to growth “appear to have diminished somewhat.” Data released in the U.S. yesterday saw the July non-manufacturing ISM index climb to 49.5 from the previous reading of 49.0. In eurozone news, the European Central Bank is expected to keep interest rates unchanged. Traders will pay close attention to comments from ECB President Trichet, particularly because the ECB voted for a rate hike last month and economic data have been deteriorating quickly. Data released in Germany today saw June manufacturing orders off 2.9% m/m and 6.1% y/y. Euro bids are cited around the $1.5380/ 1.5175 levels.



¥/ CNY

The yen depreciated marginally vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥108.55 level and was supported around the ¥108.20 level. The pair came within a couple of pips of establishing a new multi-month high dating to January 2008. Data released in Japan overnight saw the June composite index of leading economic indicators fall 1.7 points to 91.2 in June. Traders await the release of April – June gross domestic product data next week with most economists expecting a contraction in growth. Most traders expect Bank of Japan’s Policy Board will keep the overnight call rate unchanged at 0.50% for the foreseeable future. Dealers await further details about the Fukuda government’s likely supplementary budget. The Nikkei 225 stock index gained 2.63% to close at ¥13,254.89. Dollar bids are cited around the ¥106.40 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥168.45 level and was supported around the ¥167.30 level. The British pound and Swiss franc moved higher vis-à-vis the yen as the crosses tested offers around the ¥212.50 and ¥103.15 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8482 in the over-the-counter market, down from CNY 6.8556. A government official reported China’s consumer price inflation growth will likely be 5.5% in Q3, up from 4.5% in Q4.



₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9465 level and was capped around the $1.9595 level. Sterling reached its lowest level since 16 June. Data released in the U.K. today today saw Nationwide July consumer confidence recede to its lowest level since at least May 2004, printing at +51. Also, the BRC’s July shop price index was up 3.2% y/y. Most traders expect Bank of England’s Monetary Policy Committee will keep its overnight call rate unchanged at 5.00% tomorrow. Most recent economic data have been quite weak yet inflation remains elevated so the minutes from tomorrow’s meeting will be scrutinized in a couple of weeks. Other data released today saw REC permanent staff placements decline to 44.1 in July from 48.2 in June. NIESR reported its sees U.K. GDP growth slowing to 0.1% in the three months to July. The U.K. media is reporting Chancellor of the Exchequer Darling may freeze a stamp duty to support the U.K. housing market. Cable bids are cited around the $1.9140 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7925 level and was supported around the ₤0.7900 figure.



CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0610 level and was supported around the CHF 1.0500 figure. The pair reached its highest level since 8 May. U.S. dollar offers are cited around the CHF 1.0760 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.6345 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 2.0545 level.







Technical Outlook at 1230 GMT (EDT + 0400)



(Bid Price) (Today’s Intraday Range)



EUR/ USD 1.5416 1.5514, 1.5407
USD/ JPY 108.39 108.53, 108.20
GBP/ USD 1.9503 1.9595, 1.9489
USD/ CHF 1.0582 1.0595, 1.0502
AUD/ USD 0.9102 0.9204, 0.9083
USD/CAD 1.0458 1.0476, 1.0400
NZD/USD 0.7229 0.7269, 0.7225
EUR/ JPY 168.41 168.45, 167.27
EUR/ GBP 0.7904 0.7927, 0.7903
EUR/ CHF 1.6320 1.6328, 1.6278
GBP/ JPY 211.68 212.48, 211.43
CHF/ JPY 102.99 103.16, 102.63





Support Resistance Support Resistance



EUR/ USD USD/ JPY



L1. 1.5225 1.5645 101.95 106.60

L2. 1.5035 1.5840 100.60 109.95

L3. 1.4805 1.6020 98.75 113.30



GBP/ USD USD/ CHF



L1. 1.9520 1.9760 1.0135 1.0565

L2. 1.9395 1.9880 0.9990 1.0730

L3. 1.9100 2.0000 0.9875 1.1040



AUD/ USD USD/ CAD



L1. 0.9380 0.9655 0.9870 1.0175

L2. 0.9215 0.9735 0.9715 1.0370

L3. 0.9005 1.0115 0.9465 1.0520



NZD/ USD EUR/ JPY



L1. 0.7700 0.8105 160.60 166.65

L2. 0.7595 0.8420 158.35 167.75

L3. 0.7275 0.8665 154.80 168.95



EUR/ GBP EUR/ CHF



L1. 0.7740 0.8120 1.5975 1.6250

L2. 0.7555 0.8310 1.5855 1.6470

L3. 0.7440 0.8570 1.5730 1.6760



GBP/ JPY CHF/ JPY



L1. 200.60 208.50 98.70 103.30

L2. 197.55 211.35 97.00 105.40

L3. 192.70 217.15 95.85 107.70

U.S. Stocks Rise, Led by Technology, Energy Shares; Cisco Gains

By Elizabeth Stanton

Aug. 6 (Bloomberg) -- U.S. stocks rose, sending benchmark indexes to a six-week high, as better-than-estimated earnings at Cisco Systems Inc. spurred a rally in technology shares and falling gasoline inventories boosted fuel refiners.

Cisco, the biggest maker of networking equipment, climbed as its sales forecast allayed concern business is deteriorating. Microsoft Corp. advanced on UBS AG's prediction that the largest software company may buy back up to $20 billion in stock. Tesoro Corp., the biggest refiner in the U.S. West, posted its best gain since October. Freeport-McMoRan Copper & Gold Inc. jumped the most since 2002 on takeover speculation.

The Standard & Poor's 500 Index added 4.31 points, or 0.3 percent, to 1,289.19 after posting its best advance in four months yesterday. The Dow Jones Industrial Average rose 40.3, or 0.4 percent, to 11,656.07. The Nasdaq Composite Index gained 28.54, or 1.2 percent, to 2,378.37. Almost three stocks climbed for every two that fell on the New York Stock Exchange.

``A highly visible technology company reporting decent numbers and, more importantly, saying any slowdown previously predicted should be short, is a huge reassurance,'' said Bruce McCain, the Cleveland-based chief investment strategist at Key Private Bank, which oversees about $30 billion.

Stocks opened lower on disappointing earnings reports from Freddie Mac, Whole Foods Market Inc. and Sprint Nextel Corp. Three-quarters of the companies in the S&P 500 that reported results so far have exceeded or matched analysts' earnings estimates, according to data compiled by Bloomberg. Still, profits have declined 19 percent on average from a year earlier.

Two-Day Rally

U.S. stocks jumped yesterday as crude oil fell to a three- month low and the Federal Reserve indicated it won't lift interest rates until next year. JPMorgan Chase & Co. and Citigroup Inc. led financial shares to their best gain in a week after the central bank left borrowing costs unchanged at 2 percent and predicted inflation will ease.

The S&P 500 has rebounded 6.1 percent from an almost three- year low on July 15 as oil tumbled and investors speculated the credit crisis has crested. Even following the advance, indexes for all 10 industries in the S&P 500 have retreated in 2008, led by telephone companies, and the broader index is down 12 percent on the year.

Cisco, Microsoft

Cisco climbed 5.7 percent to $23.93, the highest since June 25. Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections, the company said.

Microsoft gained 3.1 percent to $27.02, the highest since July 17. UBS analyst Heather Bellini, ranked the best software analyst by Institutional Investor magazine in 2007, predicted the company will buy back as much as $20 billion of stock over the next three months.

``Corporate balance sheets are in very good shape for this stage and environment in the economy,'' James Dunigan, chief investment officer at PNC Advisors in Philadelphia, told Bloomberg Television. PNC manages $70 billion. ``These are certainly difficult times but in uncertain times is where opportunities show up.''

Energy companies rallied even as crude oil fell for a third day and extended its retreat from a record to a bear market plunge of more than 20 percent.

The S&P 500 Energy Index's advance was led by refining companies, for which crude is a cost. Refiners also benefited from U.S. government data showing gasoline inventories fell more than twice as much as expected last week. The Department of Energy's weekly Petroleum Status report said gasoline inventories decreased by 4.34 million barrels, or 2 percent, to a six-week low of 209.2 million barrels.

Refiners Rally

Tesoro Corp., the largest oil refiner in the U.S. West, rose 12 percent to $17.39. Valero Energy Corp., the biggest U.S. refiner, climbed 7.3 percent to $34.47. Sunoco Inc., the top refiner in the U.S. East, advanced 3.3 percent to $43.28, a two- month high.

Freeport-McMoRan climbed 11 percent to $87.67. Xstrata Plc today bid $9.8 billion for Lonmin Plc in what would be the biggest-ever acquisition of a platinum miner. Mining companies have announced deals worth about $246 billion this year to boost output and cut costs amid record metal prices and a dearth of new mineral discoveries.

Ambac's Record

Ambac Financial Group Inc. rallied 24 percent to $5.85 after reporting its biggest profit since going public in 1991. The second-largest bond insurer posted net income of $823.1 million, or $2.80 a share, on an accounting change that allowed it to log a $5.2 billion gain as its main business of insuring municipal and corporate securities fell. Without the change, Ambac posted a loss of $1.53 a share.

MBIA Inc., the biggest bond insurer, rallied 4.4 percent to $8.79.

Fidelity National Information Services Inc. rose 19 percent to $22.50 for the biggest gain in the S&P 500. The payment processor reported second-quarter sales and profit that exceeded the average analyst projection. Adjusted earnings of 51 cents a share beat the 33-cent average of seven estimates.

Freddie Mac tumbled 19 percent to $6.49 after posting its fourth-straight quarterly deficit. Its second-quarter net loss of $821 million, or $1.63 a share, compares with the 54-cent-a-share average loss estimate of analysts in a Bloomberg survey. Freddie Mac said it will cut its dividend to 5 cents or less from 25 cents. Freddie Mac has plunged about 80 percent this year on concern it may not have enough capital to overcome loan losses on the $2.2 trillion of mortgages it owns and guarantees.

Fannie Mae, Freddie's larger competitor, fell 15 percent to $11.60.

Whole Foods

Whole Foods Market retreated 13 percent to $20.04. Net income dropped 31 percent to $33.9 million, or 24 cents a share, on costs from last year's purchase of Wild Oats Markets Inc. The grocer said it's reducing the number of planned store openings for the year ending in September 2009 to 15, from the 25 to 30 announced in May.

United Natural Foods Inc., a natural-foods distributor, slumped 4.9 percent to $17.

Sprint Nextel fell 14 percent to $7.34. The third-biggest U.S. wireless carrier posted a second-quarter loss as customers switch to Verizon Wireless and AT&T Inc.

Priceline.com Inc. slumped 17 percent to $97.17, its biggest drop in four years. Gross travel bookings will rise no more than 54 percent in the third quarter, less than the 71 percent increase in the second quarter, the company said.

Strategist Calls

UBS's strategist David Bianco cut his year-end forecast for the S&P 500 by about 3.1 percent to 1,550 today, while JPMorgan's Thomas Lee reiterated his prediction that stocks will rally.

Bianco cut his S&P 500 estimate on concern the slowing U.S. economy will prolong the slump in earnings at financial companies. Bianco also reduced his 2008 per-share profit estimate for S&P 500 companies to $85 from $92 and lowered his 2009 projection to $95 from $102.

JPMorgan's Lee said today that stocks will climb ``much higher'' by the end of 2008 as falling commodity prices ease inflation concerns and investors buy shares that dropped the most during the market's sell-off. The S&P 500 will climb 13 percent from yesterday's close to 1,450 by the end of the year, he said.

``I'm still very confident that we're going to see much higher levels,'' Lee said in a Bloomberg Television interview. ``We're starting to see these contrarian, out-of-favor sectors come back.''

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Asian Stocks Decline After Profits at AIG, Chuo Mitsui Slump
Aug. 7 (Bloomberg) -- Asian stocks fell for the third time this week, led by financial companies after writedowns wiped out American International Group Inc.'s profit for a third quarter.

Chuo Mitsui Trust Holdings Inc., a Japanese bank, snapped two days of gains after saying first-quarter profit fell by half because of bad loans. Woori Finance Holdings Co., which controls South Korea's second-largest bank, tumbled from a one-month high. AIG, the world's biggest insurer by assets, announced a $5.36 billion loss for the latest quarter, stemming from writedowns on mortgage and derivative assets.

The MSCI Asia Pacific Index lost 0.5 percent to 128.55 as of 9:39 a.m. in Tokyo. Japan's Nikkei 225 Stock Average slipped 0.8 percent to 13,153.76. Shares climbed in Australia and New Zealand.

U.S. stocks advanced 0.3 percent to a six-week high yesterday. Fourth-quarter profit at Cisco Systems Inc., the world's largest maker of networking equipment, beat analysts' estimates, sparking a rally in technology shares.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
Last Updated: August 6, 2008 20:42 EDT

Fundamental Outlook at 1400 GMT (EDT + 0400)
€
The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5315 level and was capped around the $1.5500 figure. The common currency came within a few pips of establishing a new multi-month low dating to 8 May. There were two major reasons for the extension of the euro’s recent losses. First, traders were displeased with comments from European Central Bank President Trichet following the central bank’s decision to keep interest rates unchanged at 4.25%. Trichet remained hawkish in his comments saying “It has confirmed that annual inflation rates are likely to remain well above levels consistent with price stability for a protracted period of time and that risks to price stability over the medium term remain on the upside.” Trichet said recent inflation data have justified last month’s rate hike. Dealers sold the euro on these comments because recent economic data have deteriorated and traders believe the ECB should be lowering rates to counter weaker economic growth. Trichet said the eurozone’s economic fundamentals remain “sound” but acknowledged GDP growth in Q3 will not be much above the pace seen in Q2. Second, U.S. housing data surprised traders and may have signaled a possible bottom in the housing market there. Data released in the eurozone today saw German industrial production rise 0.2% m/m and 4.1% y/y. In U.S. news, weekly initial jobless claims rose 7,000 to 455,000, the highest level since March 2002, while continuing jobless claims rose 31,000 to 3.311 million, the highest level since December 2003. Also, U.S. pending homes sales rose 5.3% in June, defying expectations of a decline. Euro bids are cited around the US$ 1.5175 levels.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥109.10 level and was capped around the ¥109.75 level. Technically, today’s intraday high was right around the 50% retracement of the move from ¥124.15 to ¥95.70. As expected, the Japanese government downgraded its economic assessment in its August monthly report on account of weakening exports, industrial production, and employment. The government also removed the word “recovery” from its assessment for the first time in 56 months and government policymakers have suggested the economy is already in a recession. Data released in Japan overnight saw June machinery orders off 2.6% m/m, less-than-forecast and the first decline in three months. The Nikkei 225 stock index lost 0.98% to close at ¥13,124.99. Dollar bids are cited around the ¥106.40 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥167.75 level and was capped around the ¥169.45 level. The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥212.55 and ¥103.00 levels, respectively. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8614 in the over-the-counter market, up from CNY 6.8482. China announced the most significant change to its foreign exchange regulations since 1997 overnight. The government loosened capital controls by permitting domestic companies to hold foreign exchange income overseas and by allowing foreign companies to issue securities in China.
£

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9420 level and was capped around the $1.9535 level. The pair reached its lowest level since 13 June. As expected, Bank of England’s Monetary Policy Committee kept its headline repo rate unchanged at 5.00%. BoE’s quarterly inflation report will be released next week and policymakers will likely have a difficult time reconciling elevated rates of inflation with slumping economic growth. Data released in the U.K. today saw Halifax house prices off 1.7% m/m and 8.8% y/y. Cable bids are cited around the $1.9140 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the £0.7880 level and was capped around the £0.7935 level.
CHF

The Swiss franc came off vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0635 level and was supported around the CHF 1.0525 level. The pair reached its highest level since 26 February. Swiss National Bank’s three-month Swiss franc LIBOR target has remained unchanged at 2.75% since June. U.S. dollar offers are cited around the CHF 1.0760 level. The euro and British pound slumped vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6275 and CHF 2.0560 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.5412 1.5502, 1.5397
USD/ JPY 109.29 109.77, 109.12
GBP/ USD 1.9464 1.9536, 1.9455
USD/ CHF 1.0578 1.0602, 1.0523
AUD/ USD 0.9093 0.9128, 0.9073
USD/CAD 1.0486 1.0491, 1.0448
NZD/USD 0.7171 0.7215, 0.7158
EUR/ JPY 168.35 169.46, 168.31
EUR/ GBP 0.7913 0.7937, 0.7907
EUR/ CHF 1.6300 1.6339, 1.6295
GBP/ JPY 212.72 213.81, 212.61
CHF/ JPY 103.27 103.77, 103.21

Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.5225 1.5645 101.95 106.60
L2. 1.5035 1.5840 100.60 109.95
L3. 1.4805 1.6020 98.75 113.30

GBP/ USD USD/ CHF
L1. 1.9520 1.9760 1.0135 1.0565
L2. 1.9395 1.9880 0.9990 1.0730
L3. 1.9100 2.0000 0.9875 1.1040

AUD/ USD USD/ CAD
L1. 0.9380 0.9655 0.9870 1.0175
L2. 0.9215 0.9735 0.9715 1.0370
L3. 0.9005 1.0115 0.9465 1.0520

NZD/ USD EUR/ JPY
L1. 0.7700 0.8105 160.60 166.65
L2. 0.7595 0.8420 158.35 167.75
L3. 0.7275 0.8665 154.80 168.95

EUR/ GBP EUR/ CHF
L1. 0.7740 0.8120 1.5975 1.6250
L2. 0.7555 0.8310 1.5855 1.6470
L3. 0.7440 0.8570 1.5730 1.6760

GBP/ JPY CHF/ JPY
L1. 200.60 208.50 98.70 103.30
L2. 197.55 211.35 97.00 105.40
L3. 192.70 217.15 95.85 107.70

SCHEDULE
Thursday, 7 August 2008
all times GMT (last release in parentheses)
N/A Germany July wholesale price index
0130 Australia July unemployment rate
0130 Australia July employment change
0600 Germany June trade balance
0600 Germany June current account
0645 France June trade balance
0800 Italy June industrial production
1000 Germany June industrial production (-2.4% m/m)
1000 Germany June industrial production (0.8% y/y)
1100 UK Bank of England Monetary Policy Committee interest rate decision
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1230 Canada June building permits (1.1% m/m)
1400 US June pending home sales (-4.7% m/m)
1730 US July ICSC chain store sales
1900 US June consumer credit
2350 Japan July M2+CD money supply (2.3% y/y)
2350 Japan July bank lending (1.8% y/y)

Friday, 8 August 2008
all times GMT
(last release in parentheses)

N/A Japan July economy watchers’ survey, current (29.5)
N/A Japan July economy watchers’ survey, outlook (32.1)
0545 CH July unemployment rate (2.3%)
0800 Italy Q2 GDP (0.5% q/q)
0800 Italy Q2 GDP (0.3% y/y)
0900 Eurozone August industrial confidence
1100 Canada July unemployment rate
1230 US Q2 non-farm productivity (2.6%)
1230 US Q2 unit labour costs (2.2%)
1400 US June wholesale inventories (0.8%)

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE
10 August 2008
Sunday

€. The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.5005 level and was capped around the $1.5630 level. The pair lost about 530 pips last week. The FOMC kept rates unchanged with Dallas Fed’s Fisher dissenting in favour of higher rates. Most traders viewed the Fed’s statement as dovish.

Traders were disappointed with Trichet’s hawkishness following the ECB’s decision to keep rates steady. ECB’s Wellink sees monetary policy useless if inflation is above 5%. The ECB’s bank lending survey evidenced tighter lending standards.

Data released in the U.S. last week saw June core PCE up 0.3% m/m and 2.3% y/y; June factory orders were up 1.7% with ex-transportation up 2.3%; June personal spending was up 0.6%; June personal income was up 0.1%; weekly initial jobless claims rose 7,000 to 455,000 with continuing claims up 31,000 to 3.311 million; U.S. pending home sales rose 5.3% in June; the July non-manufacturing ISM index climbed to 49.5; Q2 non-farm productivity grew an annualized 2.2% in Q2 with unit labour costs up 1.3%; and June wholesale inventories were up 1.1% with wholesale sales up 2.8%.

Data released in the eurozone last week saw June retail sales off 0.6% m/m and 3.1% y/y; EMU-15 services PMI fell to 48.3; German GDP fell 1% in Q2; EMU-15 PPI was up 0.9% m/m and 8.0% y/y; German industrial production rose 0.2% m/m; and German June manufacturing orders were off 2.9% m/m and 6.1% y/y.

Technical Outlook

Last week’s high (1) was right around 23.6% retracement of the 1.4309-1.6038 range and last week’s low (2) was just above the 61.8% retracement of the same range. The 1.5174/ 1.5325/ 1.5378/ 1.5630 levels represent upside resistance targets while the 1.4970/ 1.4861/ 1.4717/ 1.4287 levels represent downside support targets.

¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the ¥110.35 level and was supported around the ¥107.45 level. The pair gained about 250 pips last week. The Nikkei 225 stock index gained 0.33% on Friday to close at ¥13,168.41. New finance chief Ibuki said “it’s hard to move now” on interest rates. LDP’s Aso said the Japanese economy is in recession. Economic minister Yosano foresees a supplementary budget to stimulate the economy. Ibuki sees cost-push stagflation. The government downgraded its assessment of the economy and removed the word “recovery” for the first time in 56 months. April – June GDP will be released next week. Swaps are signaling a slight chance that rates could be higher this fiscal year.

Data released in Japan this week saw June machinery orders were off 2.6% m/m; the June composite index of leading economic indicators fell 1.7 points to 91.2 in June; the July economy watchers’ survey fell to 30.8; and July bank lending was up 2.0%.
In Chinese news, the Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8588 in the over-the-counter market, up from CNY 6.8425. Goldman Sachs sees July CPI growth moderating to 6.6% y/y. China loosened capital controls significantly. The government sees Q3 GDP growth around 10.2% y/y with CPI up 6.6% y/y.
Data released in China last week saw Q3 CPI was up 5.5%.

Technical Outlook

Last week’s high (1) was just above the 76.4% retracement of the 113.27-95.71 range and last week’s low (2) was right around the 61.8% retracement of the same range. Upside resistance targets remain the 113.27/ 114.65/ 117.42 levels while downside support targets remain the 107.41/ 106.57/ 105.18/ 102.94 levels.

£. The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.9145 level and was capped around the $1.9760 level. The pair lost about 540 pips last week. Chancellor Darling defended the BoE’s inflation remit. BoE’s MPC kept the repo rate unchanged at 5.0%.

Data released in the U.K. last week saw July PMI services improved to 47.4; Q1 mortgage repossessions were up 40% y/y; June manufacturing output fell 0.5% m/m and 1.3% y/y; July construction PMI fell to 36.7; Halifax house prices were off 1.7% m/m and 8.8% y/y; Nationwide July consumer confidence fell to +51; the BRC July shop price index was up 3.2% y/y; July REC permanent staff placements fell to 44.1; NIESR sees Q1 GDP slowing to 0.1% in the three months to July; and CML mortgage repossessions jumped 18,900.

Technical Outlook

Last week’s high (1) was right around the 23.6% retracement of the 2.1159-1.9336 range and last week’s low (2) was right around the 50.0% retracement of the 1.7060-2.1159 range. Upside resistance targets include the 1.9336/ 1.9602/ 1.9767 levels while downside support targets include the 1.8631/ 1.8031 levels.

CHF. The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.0835 level and was supported around the CHF 1.0435 level. The pair gained about 310 pips last week.

Data released in Switzerland last week saw July PMI fall to 54.1 and the July unemployment rate stood at 2.3%.
Technical Outlook


Last week’s high (1) was right around the 61.8% retracement of the 1.1594-0.9647 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.0850/ 1.1061/ 1.1134 levels while downside support targets include the 1.0727/ 1.0620/ 1.0555/ 1.0391/ 1.0250 levels.

CAD. The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0695 level and was supported around the C$ 1.0260 level. The pair gained about 410 pips last week.

Data released in Canada last week saw June building permits were off 5.5%; July Ivey PMI declined to 65.5; and the June unemployment rate fell to 6.1%.

Technical Outlook


Last week’s high (1) was above the 50.0% retracement of the 1.1869-0.9055 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.0794/ 1.0878/ 1.1204 levels while downside support targets include the 1.0462/ 1.0186/ 1.0130/ 1.0069 levels.


AUD. The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.8865 figure and was capped around the US$ 0.9345 level. The pair lost about 390 pips last week. RBA kept rates steady at 7.25% but conceded rates could fall in the coming months. The markets are fully pricing in about a 50bps RBA cut in rates by September. RBA’s monetary policy statement is due on Monday.

Data released in Australia last week saw July services PMI fell; July job advertisements fell; the Q2 house price index was of 0.3% q/q; July employment was up 10,900; July construction declined; August leading indicators fell for the seventh consecutive month; June home loans fell for the fifth consecutive month; and June housing finance was off 3.7% m/m.

Technical Outlook

Last week’s high (1) was right around the 23.6% retracement of the 0.7673-0.9849 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 0.9017/ 0.9180/ 0.9335/ 0.9533 levels while downside support targets include the 0.8827/ 0.8761/ 0.8504/ 0.8186 levels.

SCHEDULE
Sunday, 10 August 2008
all times GMT
(last release in parentheses)

N/A NZ July QV house prices (0.1% y/y)

Monday, 11 August 2008
all times GMT
(last release in parentheses)

0130 Australia Reserve Bank of Australia quarterly monetary policy statement
0645 France June industrial production (-2.6% m/m)
0645 France June industrial production (-1.2% y/y)
0830 UK July producer price index, input (2.1% m/m)
0830 UK July producer price index, input (30.3% y/y)
0830 UK July producer price index, output (0.9% m/m)
0830 UK July producer price index, output (10.0% y/y)
0830 UK July PPI, core output (0.3% m/m)
0830 UK July PPI, core output (6.4% y/y)
0830 UK June visible trade balance (-£7.494 billion)
1215 Canada July housing starts (217,800)
1230 Canada June new housing price index (0.0% m/m)
2301 UK July BRC retail sales monitor
2301 UK July RICS house price balance (-88.0%)
2350 Japan July domestic corporate goods price index (0.8% m/m)
2350 Japan July domestic corporate goods price index (5.6% y/y)

Tuesday, 12 August 2008
all times GMT
(last release in parentheses)

0130 Australia July NAB business confidence (-9)
0130 Australia July NAB business confidents (0)
0130 Australia Q2 HIA house affordability (103.1)
0430 Japan June industrial production
0430 Japan June capacity utilization (2.2% m/m)
0430 Japan June industrial production
0500 Japan July consumer confidence (32.9)
0645 France June current account
0645 France July consumer price index (0.4% m/m)
0645 France July consumer price index (3.6% y/y)
0645 France July CPI, harmonized (0.4% m/m)
0645 France July CPI, harmonized (4.0% y/y)
0830 UK July consumer price index (0.7% m/m)
0830 UK July consumer price index (3.8% y/y)
0830 UK July consumer price index, core (1.6% y/y)
0830 UK July retail price index (0.8% m/m)
0830 UK July retail price index (4.6% y/y)
0830 UK June DCLG house prices (3.7% y/y)
1230 US June trade balance (-US$ 59.8 billion)
1230 Canada June international merchandise trade (C$ 5.5 billion)
2245 NZ Q2 producer prices, inputs (2.3% q/q)
2245 NZ Q2 producer prices, outputs (1.8% q/q)
2350 Japan June trade balance (¥529.4 billion)
2350 Japan June current account (¥2.00 trillion)

Wednesday, 13 August 2008
all times GMT
(last release in parentheses)

0030 Australia August Westpac consumer confidence (-6.7%)
0130 Australia Q2 wage cost index (0.9% q/q)
0130 Australia Q2 wage cost index (4.1% y/y)
0830 UK July claimant count rate (2.6%)
0830 UK July jobless claims change (15,500)
0830 UK June ILO unemployment rate (5.2%)
0830 UK June average earnings, bonus (3.8%)
0830 UK June average earnings, ex-bonus (3.8%)
0830 UK June manufacturing unit wage cost (1.8%)
0900 Eurozone June industrial production (-1.9% m/m)
0900 Eurozone June industrial production (-0.6% y/y)
0930 UK Bank of England quarterly inflation report
1100 US MBA mortgage applications
1230 US July advance retail sales (0.1%)
1230 US July retail sales, ex-autos (0.8%)
1230 US July import price index
1230 US July import price index (20.5% y/y)
1400 US June business inventories (0.3%)
2350 Japan June tertiary industry index (-0.2% m/m)
2350 Japan Foreign purchases of Japanese equities and bonds
2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 14 August 2008
all times GMT
(last release in parentheses)

0000 NZ July purchasing manager index (45.7)
0100 Australia August consumer inflation expectations (5.9%)
0130 Australia May average weekly wages (1.1% q/q)
0130 Australia May average weekly wages (4.8% y/y)
0400 Japan July Tokyo condominium sales (-30.0% y/y)
0545 CH July SECO consumer climate (2)
0600 Germany Q2 GDP
0630 France July Bank of France business sentiment (95)
0645 France Q2 GDP
0645 France Q2 wages (1.1% q/q)
0800 Eurozone European Central Bank monthly report
0900 Eurozone Q2 GDP (0.7% q/q)
0900 Eurozone Q2 GDP (2.1% y/y)
0900 Eurozone July consumer price index (0.4% m/m)
0900 Eurozone July consumer price index (4.0% y/y)
0900 Eurozone June consumer price index, core (1.8% y/y)
1230 US July consumer price index (1.1% m/m)
1230 US July consumer price index (5.0% y/y)
1230 US July CPI, ex-food and energy (0.3% m/m)
1230 US July CPI, ex-food and energy (2.4% y/y)
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1400 Germany July consumer price index
2245 NZ June retail sales (-1.2% m/m)
2245 NZ June retail sales, ex-autos (0.7% m/m)
2245 NZ Q2 retail sales, ex-inflation (-1.2% q/q)

Friday, 15 August 2008
all times GMT
(last release in parentheses)

1230 US August Empire State manufacturing index (-4.9)
1230 Canada June manufacturing shipments (2.7% m/m)
1300 US June net long-term Tic flows (US$ 67.0 billion)
1300 US June total net TIC flows (-US$ 2.5 billion)
1315 US July industrial production (0.5%0
1315 US July capacity utilization (79.9%)
1400 US August University of Michigan consumer sentiment

Daily Market Commentary
Fundamental Outlook at 1400 GMT (EST + 0400)
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4845 level and was capped around the $1.4980 level. Technically, today’s intraday high was right around the 61.8% retracement of the move from $1.4310 to $1.6040. Data released in the U.S. today saw July retail sales off 0.1%, the first decline in five months. Also, July import prices were up 1.7% m/m, down from a revised 2.9% in June, and were up 21.6%, the fastest pace in nearly three decades. These data evidence the continuing dilemma faced by Federal Reserve policymakers who must reconcile a slowing economy with heightened inflation pressures. Other data released today saw June business inventories up 0.7%, the largest gain since January, and were up 5.6% y/y. Dallas Fed President Fisher said the U.S. economy could face a prolonged period of “anemia” with GDP growth approaching 0% in the second half of 2008. Richmond Fed President Lacker warned that slowing economic growth will not reduce inflation appreciably. In eurozone news, the EMU-15 Ifo quarterly climate index fell to 61.9 in Q3 from 76.3 in Q2 with pullbacks in the current economic situation and expectations sub-indices. Germany’s IG Metall Union will seek pay increases that are 6.5% higher than their previous demands. The German media reported German Q2 GDP contracted 0.5% to 0.7% q/q. Euro bids are cited around the US$ 1.5175 levels.

¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥108.35 level and was capped around the ¥109.35 level. Traders dumped higher-yielding currencies for yen overnight. Data released in Japan overnight saw the June current account surplus fall 67.4% y/y, the fourth consecutive monthly decrease. Exports data revealed gross exports decline for the first time in thirteen quarters in the past quarter and this resulted in the first contraction in economic growth in the April – June period. Finance minister Ibuki reported Japanese exports are in a severe condition and reiterated the economy is facing cost-push stagflation. The Nikkei 225 stock index lost 2.11% to close at ¥13,023.05. Dollar bids are cited around the ¥106.40 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥161.35 level and was capped around the ¥163.05 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥202.55 and ¥99.70 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8570 in the over-the-counter market, down from CNY 6.8632. Data released in China today saw July retail sales climb 23.3% y/y to CNY 862.9 billion. Also, the end-July M2 money supply was up 16.35%.

₤
The British pound fell appreciably vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.8640 level and was capped around the $1.9035 level. Technically, today’s intraday low was right around the 61.8% retracement of the move from $1.7045 to $2.1160. The impetus for the move lower was a dovish Bank of England quarterly Inflation Report and accompanying press conference from BoE policymakers. BoE predicted inflation will fall back to target and added the U.S. economy faces a recession. BoE Governor King reported there will likely be one or two quarters of negative economic growth in the U.K, citing it “painful” and “difficult.” Deputy Governor Bean indicated GDP growth will improve in 2009. King added the MPC will take the “action necessary” to bring inflation back to target. In fact, the BoE sees U.K. CPI growth peaking at 4.8% by Q4. Other data saw the July claimant count of jobless persons rise by 20,100, the sixth consecutive monthly rise. Cable bids are cited around the $1.8615 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7975 level and was supported around the ₤0.7850 level.

CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0820 level and was capped around the CHF 1.0920 level. The pair came within a few pips of establishing a new lifetime high dating to 25 February. U.S. dollar offers are cited around the CHF 1.1135 level. The euro and British pound moved lower vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6155 and CHF 2.0265 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.4905 1.4980, 1.4854
USD/ JPY 108.72 109.37, 108.35
GBP/ USD 1.8757 1.9034, 1.8735
USD/ CHF 1.0872 1.0921, 1.0822
AUD/ USD 0.8706 0.8741, 0.8590
USD/CAD 1.0666 1.0715, 1.0612
NZD/USD 0.6969 0.6998, 0.6823
EUR/ JPY 162.10 163.07, 161.59
EUR/ GBP 0.7945 0.7948, 0.7850
EUR/ CHF 1.6202 1.6233, 1.6183
GBP/ JPY 203.95 207.31, 203.84
CHF/ JPY 100.01 100.65, 99.76

Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.5225 1.5645 101.95 106.60

L2. 1.5035 1.5840 100.60 109.95

L3. 1.4805 1.6020 98.75 113.30

GBP/ USD USD/ CHF

L1. 1.9520 1.9760 1.0135 1.0565

L2. 1.9395 1.9880 0.9990 1.0730

L3. 1.9100 2.0000 0.9875 1.1040

AUD/ USD USD/ CAD
L1. 0.9380 0.9655 0.9870 1.0175

L2. 0.9215 0.9735 0.9715 1.0370

L3. 0.9005 1.0115 0.9465 1.0520
NZD/ USD EUR/ JPY
L1. 0.7700 0.8105 160.60 166.65

L2. 0.7595 0.8420 158.35 167.75

L3. 0.7275 0.8665 154.80 168.95

EUR/ GBP EUR/ CHF
L1. 0.7740 0.8120 1.5975 1.6250

L2. 0.7555 0.8310 1.5855 1.6470

L3. 0.7440 0.8570 1.5730 1.6760

GBP/ JPY CHF/ JPY

L1. 200.60 208.50 98.70 103.30

L2. 197.55 211.35 97.00 105.40

L3. 192.70 217.15 95.85 107.70

SCHEDULE
Wednesday, 13 August 2008 all times GMT (last release in parentheses)

0030 Australia August Westpac consumer confidence (-6.7%)

0130 Australia Q2 wage cost index (0.9% q/q)

0130 Australia Q2 wage cost index (4.1% y/y)

0830 UK July claimant count rate (2.6%)

0830 UK July jobless claims change (15,500)

0830 UK June ILO unemployment rate (5.2%)

0830 UK June average earnings, bonus (3.8%)

0830 UK June average earnings, ex-bonus (3.8%)

0830 UK June manufacturing unit wage cost (1.8%)

0900 Eurozone June industrial production (-1.9% m/m)

0900 Eurozone June industrial production (-0.6% y/y)

0930 UK Bank of England quarterly inflation report

1100 US MBA mortgage applications

1230 US July advance retail sales (0.1%)

1230 US July retail sales, ex-autos (0.8%)

1230 US July import price index

1230 US July import price index (20.5% y/y)

1400 US June business inventories (0.3%)

2350 Japan June tertiary industry index (-0.2% m/m)

2350 Japan Foreign purchases of Japanese equities and bonds

2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 14 August 2008 all times GMT (last release in parentheses)
0000 NZ July purchasing manager index (45.7)

0100 Australia August consumer inflation expectations (5.9%)

0130 Australia May average weekly wages (1.1% q/q)

0130 Australia May average weekly wages (4.8% y/y)

0400 Japan July Tokyo condominium sales (-30.0% y/y)

0545 CH July SECO consumer climate (2)

0600 Germany Q2 GDP

0630 France July Bank of France business sentiment (95)

0645 France Q2 GDP

0645 France Q2 wages (1.1% q/q)

0800 Eurozone European Central Bank monthly report

0900 Eurozone Q2 GDP (0.7% q/q)

0900 Eurozone Q2 GDP (2.1% y/y)

0900 Eurozone July consumer price index (0.4% m/m)

0900 Eurozone July consumer price index (4.0% y/y)

0900 Eurozone June consumer price index, core (1.8% y/y)

1230 US July consumer price index (1.1% m/m)

1230 US July consumer price index (5.0% y/y)

1230 US July CPI, ex-food and energy (0.3% m/m)

1230 US July CPI, ex-food and energy (2.4% y/y)

1230 US Weekly initial jobless claims

1230 US Continuing jobless claims

1400 Germany July consumer price index

2245 NZ June retail sales (-1.2% m/m)

2245 NZ June retail sales, ex-autos (0.7% m/m)

2245 NZ Q2 retail sales, ex-inflation (-1.2% q/q)
Friday, 15 August 2008. all times GMT (last release in parentheses)

1230 US August Empire State manufacturing index (-4.9)

1230 Canada June manufacturing shipments (2.7% m/m)

1300 US June net long-term Tic flows (US$ 67.0 billion)

1300 US June total net TIC flows (-US$ 2.5 billion)

1315 US July industrial production (0.5%0

1315 US July capacity utilization (79.9%)

1400 US August University of Michigan consumer sentiment

August 14 market commentary and technical levels
EURUSD Outlook
Yesterday The EURUSD made indecisive movement by open and closed at almost the same price (1.4914 and 1.4921). The pair failed stay above key level 1.4975. My strategy remains the same, that as long as the pair stay below that key level, the bias is still on the bearish side. Immediate resistance is seen at 1.4930 followed by 1.4975. Further upside break would open the door to 1.5083. Initial support at 1.4850 followed by 1.4815. CCI in neutral area on both hourly and 4h chart.

EURUSD Daily Supports and Resistances:

S1= 1.4848
S2= 1.4775
S3= 1.4709
R1= 1.4987
R2= 1.5053
R3= 1.5126


GBPUSD Outlook
Yesterday the GBPUSD continued it's bearish momentum. The pair bottomed at 1.8644 and closed at 1.8693. I am expecting this bearish momentum to be continue today. My model goes short, targeting 1.8590 and then 1.8520. Immediate resistance is seen at 1.8750. CCI in oversold area on 4h chart, so we might see a minor upside pullback today.

GBPUSD Daily Supports and Resistances:

S1= 1.8546
S2= 1.8400
S3= 1.8156
R1= 1.8936
R2= 1.9180
R3= 1.9326

USDJPY Outlook
Yesterday the USDJPY failed to make further downside correction move. The pair bottomed at 108.36 before whipsawed to the upside and made a new high of the day at 109.73 and closed at 109.49. My model is mixed with upside bias. A consistent movement above 109.50 area could trigger further bullish scenario back towards 110.34. Immediate support is seen at 108.90 followed by 108.50. Initial resistance at 109.73 (yesterday's high). CCI in neutral area on both hourly and 4h chart.

USDJPY Daily Supports and Resistances:

S1= 108.65
S2= 107.82
S3= 107.28
R1= 110.02
R2= 110.56
R3= 111.39



USDCHF Outlook
The USDCHF made no significant movement yesterday. On the hourly chart, we can see that the pair move in a ranging market between 1.0924 and 1.0825. A break out to the upside would trigger further upside scenario towards 1.0990 while a break out to the downside open the door for further correction towards 1.0740. CCI in neutral area both on hourly and 4h chart.

USDCHF Daily Supports and Resistances:

S1= 1.0809
S2= 1.0768
S3= 1.0712
R1= 1.0906
R2= 1.0962
R3= 1.1003

Have a great day!

BANGKOK (Dow Jones)--The Bank of Thailand said Friday that its foreign reserves as of Aug. 8 were $103.1 billion, compared with $104.1 billion a week earlier.

The central bank said in a statement that its net forward position in the foreign exchange markets was $16.3 billion, compared with $17.1 billion on Aug. 1.

The central bank doesn't provide an explanation for the changes in these weekly data.

The following are the key components from Friday's issue of the Bank of Thailand's assets and liabilities.


Aug. 8 Aug. 1
Foreign reserves $103.1 bln $104.1 bln
Net forward position $16.3 bln $17.1 bln
Net claims on government THB109.2 bln THB114.5 bln
Net central bank claims
on financial institutions -THB1.980 tln -THB1.938 tln
Reserve Money THB878.5 bln THB909.7 bln


Note:

Reserve money equals notes and coins in circulation plus deposits of financial institutions with the Bank of Thailand.

Net claims on the government comprise central bank lending to the government less government deposits with the central bank and currency held by the government.


-By Bangkok Bureau; Dow Jones Newswires; 662-266-0744; djnews.bangkok@dowjones.com


(END) Dow Jones Newswires

August 15, 2008 03:34 ET (07:34 GMT)

MARKET SNAPSHOT: U.S. Stocks Likely To Be Under The Influence Of Oil
U.S. stock-market action next week is likely to take cues from the currency and commodities markets.

"The biggest driver we'll see in the market next week is the price of a barrel of oil," said Art Hogan, chief market strategist at Jefferies & Co.

"Unless we get some crazy M&A activity on Monday, the only monkey wrench I see is some skeleton falling out of some financial closet, or something heats up in Georgia," Hogan said, referring to Russia's recent military conflict with its former Soviet Republic neighbor.

On Friday, stocks ended mostly higher, with the major indexes scoring mixed results for the week, with the Dow Jones Industrial Average (DJI) ended up 43.97 points at 11,659.90, giving it a weekly loss of 0.6%.

The broader indexes had a like finish, with the S&P 500 (SPX) climbing 5.27 points to close at 1,298.19, leaving it virtually flat from the prior Friday's close. The Nasdaq Composite (RIXF) fell 1.15 points to end at 2,452.52, giving the index a weekly gain of 1.6%.

Last week saw crude futures dip more than 1%, with strength in the U.S. dollar and ongoing concerns over global oil demand pressuring prices. September crude finished at $113.77 a barrel, down $1.24, or 1.1%, for the session and off 1.2% for the week.

The dollar's rally extended to multiple-month highs , while metals futures were pounded, with gold for December delivery falling $22.40 to close at $792.10 an ounce, a weekly loss of 8.4%. .

Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank, said the recent focus of equity investors on energy costs has heightened the importance of weekly inventory data on U.S. crude oil and gasoline supplies. "It's been on everyone's calendar for years, and nobody paid much attention. Now the level of weight it carries is high, and Wednesday's data "will be important in setting the market's tone," Fitzpatrick said.

Summer lull?

Other economic data on tap includes housing starts on Monday, followed by weekly jobless claims figures on Tuesday. A gauge of manufacturing in the Philadelphia region is slated for release on Thursday, along with leading economic indicators for July.

"It's all July numbers," said Hogan of the scheduled data.

And with the latest earnings season nearly complete, the market will have only a handful of results to digest, including figures from Hewlett-Packard Co. (HPQ) , which on Tuesday is slated to report its third-quarter results. Analysts looking for the technology giant to meet or possibly exceed earnings and sales estimates. .

"There will be some stragglers on the retail side, but in general most companies are through," said Fitzpatrick.

"I don't think it matters what they say on the earnings front, the broader issues for retailers are energy prices. In general, every time we've seen energy prices sell off, the group rallies, even when one retailer reports a negative number."

Both Hogan and Fitzpatrick point to the possibility of credit-related issues, which in recent days included bullish developments, such as bond insurers MBIA Inc. (MBI) and Ambac Financial Group Inc. (ABK) having their credit ratings affirmed.

"Every week we get some news that is not on the calendar. But the tone seems to be improving within the financial sector," said Fitzpatrick.

The recent trend of the financial and consumer discretionary sectors doing well when oil prices slide is expected to continue. At the same time, energy and materials tend to get hurt, along with some industrial names with leverage to commodity prices.

On the bullish side, the two big issues weighing on the market -- higher commodity prices and credit issues -- are undergoing underlying positive trends, analysts say.

€
The euro depreciated vis-à-vis the U.S. dollar last week[/b] as the single currency tested bids around the $1.4695 level and was capped around the $1.5085 level. The pair lost about 275 pips last week. Extreme moves stemmed from Russia’s military incursion in Georgia and falling crude oil prices. Dallas Fed’s Fisher sees economic “anemia” in H1 2008 while Richmond Fed’s Lacker said lower GDP won’t result in a sharp decline in inflation. The eurozone economy shrank for the first time since H1 2005. Minneapolis Fed’s Stern sees “a continuation of only modest expansion in the economy, the likelihood of further increases in unemployment for a time, and a diminution of inflation, absent a resurgence in energy and other commodity prices.”
ECB’s Liebscher said there is “no room for complacency” on inflation. ECB’s Weber sees a “dry spell” in German GDP growth but no recession. ECB’s Bini-Smaghi sees EMU-15 GDP growth slowing fast. IG Metall may seek wage hikes 6.5% higher than previous wage rounds. Germany’s Ifo will reduce its 2009 GDP forecast. Weber sees the EMU-15 economy as being “robust” and ECB’s Stark warned against “overplaying” the recent EMU-15 economic contraction.
Data released in the U.S. last week saw the June trade deficit fall 4.1% to US$ 56.8 billion; July retail sales were off 0.1%; July retail sales were off 0.1%; July import prices were up 1.7% m/m and 21.6% y/y; June business inventories were up 0.7% m/m and 5.6% y/y; the New York Fed’s August manufacturing survey climbed to 2.77; July capacity utilization rose to 79.9% with industrial production up +0.2%; June net TIC purchases of U.S. securities grew to US$ 51.1 billion, up from US$ 12.3 billion in May; and mid-August University of Michigan consumer sentiment improved to 61.7.

Data released in the eurozone last week saw German July wholesale prices up 1.4% m/m and 9.9% y/y; French industrial production was off 0.4% m/m; the Ifo EMU-15 quarterly climate index fell to 61.9; EMU-15 GDP growth was off 0.2% q/q and up 1.5% y/y in Q2; revised EMU-15 July CPI printed at 4.0%; Germany’s economy fell 0.5% in Q2; France’s economy fell 0.3% in Q2; and German final July CPI was up 0.6% m/m and 3.3% y/y.

Technical Outlook
Last week’s high (1) was below the 50.0% retracement of the 1.4309-1.6038 range and last week’s low (2) was just below the 76.4% retracement of the same range. The 1.4861/ 1.5174/ 1.5325/ 1.5378/ 1.5630 levels represent upside resistance targets while the 1.4717/ 1.4357/ 1.4287/ 1.3838 levels represent downside support targets.
[b]¥/ CNY The yen depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the ¥110.65 level and was supported around the ¥108.35 level. The pair gained about 25 pips last week. The Nikkei 225 stock index gained 0.48% on Friday to close at ¥13,019.41. The Fukuda government’s economic stimulus plan will be unveiled this month. Finance boss Ibuki warned exports are in a severe condition after falling for the first time in 13 quarters. Nikkei reported BoJ will lower its economic assessment again this month. Japanese banks’ bad loans losses spiked two-thirds in the April – June quarter.

Data released in Japan last week saw the July corporate goods price index climb to 7.1%; July consumer confidence fell to a 26-year low; June industrial output was off 2.2%; the June current account surplus fell 67.4% y/y; and the June tertiary index was off 0.8% m/m.

In Chinese news, the Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8700 in the over-the-counter market, up from CNY 6.8588. PBoC formed an exchange rate committee to manage the yuan better. A report sees Chinese CPI moderating in H2 2008 and 2009. PBoC will keep monetary policy “stable.”
Data released in China last week saw the January – July trade surplus print at US$ 123.72 billion; July PPI was up 10.0% y/y; July CPI was up 6.3% y/y; FDI was up 44.54% y/y between January and July; July retail sales climbed 23.3% y/y; industrial valued-added output was up 16.1% in the January to July period; and January – July urban fixed-asset investment was up 27.3%.

Technical Outlook
Last week’s high (1) was just above the 76.4% retracement of the 113.27-95.71 range and last week’s low (2) was above the 61.8% retracement of the same range. Upside resistance targets remain the 113.27/ 114.65/ 117.42 levels while downside support targets remain the 107.41/ 106.57/ 105.18/ 102.94 levels.

The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.8510 level and was capped around the $1.9255 level. The pair lost about 550 pips last week. BoE’s quarterly inflation report was dovish with King pledging to do “the necessary action” to get inflation reduced. BoE sees CPI growth peaking around 4.8% by Q4.

Data released in the U.K. last week saw June output prices up 0.4% m/m and 10.2% y/y; June input pries were up 0.6% m/m and 30.1% y/y; the June trade in goods deficit widened to £7.7 billion; July CPI spiked to 4.4%; CML June gross mortgage lending was off 4%; June house price growth was off 0.6% y/y; July BRC high street sales fell 0.9% y/y; the July claimant count of jobless persons rose by 20,100; and Q2 English and Welsh corporate failures and personal bankruptcies moved higher.

Technical Outlook

Last week’s high (1) was just below the 61.8% retracement of the 1.7060-2.1159 range and last week’s low (2) was below the 38.2% retracement of the same range. Upside resistance targets include the 1.9117/ 1.9336/ 1.9602/ 1.9767 levels while downside support targets include the 1.8631/ 1.8303/ 1.8031 levels.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.1010 level and was supported around the CHF 1.0740 level. The pair gained about 130 pips last week.

Data released in Switzerland last week saw the SECO Q3 consumer sentiment index fall to -17 from +2 in Q2.
Technical Outlook

Last week’s high (1) was above the 61.8% retracement of the 1.1594-0.9647 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 1.1061/ 1.1134/ 1.1395 levels while downside support targets include the 1.0727/ 1.0687/ 1.0555/ 1.0391/ 1.0250 levels.


CAD. The Canadian dollar appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the C$ 1.0560 level and was capped around the C$ 1.0725 level. The pair lost about 60 pips last week.
Data released in Canada last week saw July housing starts were off 14%; the June new monthly house price index was up 0.1% m/m and 3.5% y/y; and the July trade surplus rose C$ 5.76 billion.
Technical Outlook

Last week’s high (1) was below the 61.8% retracement of the 1.1869-0.9055 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 1.0794/ 1.0878/ 1.1204 levels while downside support targets include the 1.0462/ 1.0186/ 1.0130/ 1.0069 levels.
AUD

The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.8590 level and was capped around the US$ 0.8950 level. The pair lost about 210 pips last week. RBA upped the chances of a rate cut saying slower growth should “significantly” reduce inflation. RBA’s Battelino said policymakers “cannot wait to see a fall in inflation before we start cutting rates.”
Data released in Australia last week saw June personal finance was up 5.8% m/m; the NAB overall business conditions index fell to -5 in July; Q2 wages were up 1.2% q/q and 4.2% y/y; August consumer sentiment was up 9.1% m/m; May weekly earnings grew 0.7% in the three months ending in May; and August inflation expectations moderated to 4.9%.

Technical Outlook

Last week’s high (1) was below the 38.2% retracement of the 0.7673-0.9849 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 0.8761/ 0.9017/ 0.9180/ 0.9335/ 0.9533 levels while downside support targets include the 0.8504/ 0.8186 levels.


SCHEDULE

Sunday, 17 August 2008 all times GMT (last release in parentheses)

N/A Japan Bank of Japan Policy Board meeting

2230 NZ July performance of services index

2301 UK August Rightmove house prices (-1.8% m/m)

2301 UK August Rightmove house prices (-2.0% y/y)

Monday, 18 August 2008, all times GMT (last release in parentheses)

N/A Japan Bank of Japan Policy Board interest rate decision

0500 Japan June leading economic index (91.2)

0500 Japan June coincident index (101.7)

0530 Japan July Tokyo-area department store sales (-7.4% y/y)

0530 Japan July nationwide department store sales (-7.6%)

0715 CH June retail sales (7.4% y/y)

0900 Eurozone June trade balance (-€4.6 billion)

0900 Eurozone June trade balance (-€1.5 billion)

0900 Italy June current account

1230 Canada June international securities transactions (C$ 10.71 billion)

1700 US August NAHB housing market index (16)

2245 NZ Q2 producer prices, inputs (2.3% q/q)

2245 NZ Q2 producer prices, outputs (1.8% q/q)

Tuesday, 19 August 2008. all times GMT (last release in parentheses)

N/A Germany July import price index (1.5% m/m)

N/A Germany July import price index (8.9% y/y)

0130 Australia August Reserve Bank of Australia Board minutes

0130 Australia July preliminary balance of payments imports (-2.0% m/m)

0600 Germany July producer prices (0.9% m/m)

0600 Germany July producer prices (6.7% y/y)

0900 Germany August ZEW survey, economic sentiment (-63.9)

0900 Germany August ZEW survey, current situation (17.0)

0900 Eurozone August ZEW survey, economic sentiment (-63.7)

0900 Eurozone June construction output (0.2% m/m)

0900 Eurozone June construction output (-1.1% y/y)

1230 US July producer price index (1.8% m/m)

1230 US July producer price index (9.2% y/y)

1230 US July PPI, ex-food and energy (0.2% m/m)

1230 US July PPI, ex-food and energy (3.0% y/y)

1230 US July housing starts (1.066 million)

1230 US July building permits (1.091 million)

1230 Canada June wholesale sales (1.6% m/m)

1400 US Dallas Fed President Fisher speaks

2350 Japan June all-industry activity index (0.4% m/m)



Wednesday, 20 August 2008 all times GMT (last release in parentheses)

0030 Australia June Westpac leading index (0.0% m/m)

0100 Australia August DEWR skilled vacancies

0500 Japan Bank of Japan monthly report

0700 Japan July convenience store sales (4.2% y/y)

0700 CH July M3 money supply (1.5% y/y)

0830 UK Bank of England Monetary Policy Committee meeting minutes

0830 UK July public sector net cash requirement (£15.5 billion)

0830 UK July M4 money supply

0830 UK July M4 sterling lending (£46.1 billion)

1000 UK August CBI industrial trends

1100 US MBA mortgage applications

1230 Canada June retail sales (0.4% m/m)
1230 Canada June retail sales, ex-autos (0.4% m/m)

1230 Canada July leading indicators (0.0%)

2350 Japan July merchandise trade balance (¥138.6 billion)

2350 Japan Foreign purchases of Japanese equities and bonds

2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 21 August 2008, all times GMT, (last release in parentheses)
0600 Japan July machine tool orders (-8.9% y/y)

0615 CH July trade balance (CHF 2.41 billion)

0715 CH July producer and import prices (0.6% m/m)

0715 CH July producer and import prices (4.5% y/y)

0730 Germany August PMI, manufacturing (50.9)

0730 Germany August PMI, services (53.1)

0750 France August PMI, manufacturing (47.1)

0750 France August PMI, services (47.5)

0800 Eurozone August PMI, manufacturing (47.4)

0800 Eurozone August PMI, services (48.3)

0830 UK July retail sales (-3.9% m/m)

0830 UK July retail sales (2.2% y/y)

0830 UK Q2 total business investment (-1.8% q/q)

0830 UK Q2 total business investment (4.5% y/y)

0900 CH August ZEW survey, expectations (-76.9)

1100 Canada July consumer price index (0.7% m/m)

1100 Canada July consumer price index (3.1% y/y)

1100 Canada July Bank of Canada CPI, core (0.1% m/m)

1100 Canada July Bank of Canada CPI, core (1.5% y/y)

1230 US Weekly initial jobless claims

1230 US Continuing jobless claims

1400 US August Philadelphia Fed index (-16.3)

1400 US July leading indicators (-0.1%)

2350 Japan July Bank of Japan Policy Board meeting minutes



Friday, 22 August 2008, all times GMT, (last release in parentheses)

0500 Japan July supermarket sales (-0.9% y/y)

0800 Eurozone June current account (-€7.3 billion)

0830 UK Q2 GDP (0.3% q/q)

0830 UK Q2 GDP (1.6% y/y)

0900 Eurozone June industrial new orders (-3.5% m/m)

0900 Eurozone June industrial new orders (-4.4% y/y)

TOKYO -(Dow Jones)- Some Bank of Japan board members warned that slowing overseas growth was starting to hurt the nation's exports, minutes of the board's July 14-15 meeting showed Friday.

"Due attention should be paid to the degree of the deceleration" in overseas growth, those members warned, according to a summary of meeting discussions released Friday.

The BOJ board voted unanimously at that meeting to leave the policy interest rate unchanged at 0.50%.

Also at that meeting, the board reviewed the economic and price forecasts in its semiannual outlook report from April. With growth in the United States and around the world slowing and prices of fuel and raw materials rising, the board cut its forecast for Japan's real gross domestic product growth to 1.2% from 1.5% this fiscal year, and upped its inflation expectations to a 1.8% rise in the core consumer price index, from 1.1%.

The thinking behind those changes was evident in the minutes of the meeting. Members agreed that downside risks to growth remained elevated, reflecting the continued turmoil in financial markets and sluggish overseas economies.

Some members warned that private consumption in the U.S. could weaken after residents spent their summer tax rebates, while the board also noted that European growth was slowing.

Some members said the "deceleration of overseas economic growth seemed to be starting to affect Japan's exports," a key driver of Japan's economy, the minutes show.

On prices, many board members said there was as yet no indication of "second-round" inflationary effects - in particular, a rise in wages that can create an inflationary spiral - from the recent surge in prices of petroleum and food.

In the past, the board has stressed that it places great emphasis not just on the latest CPI reading but on consumers' expectations of future inflation, which can affect their purchasing decisions. One board member said it seemed Japanese consumers were getting used to price hikes and that businesses were becoming more inclined to pass on their higher costs by raising prices, so the bank must watch vigilantly for second-round inflationary effects.

Some members also warned that the high global inflation of the 1970s was attributable in part to a failure to correctly estimate the output gap - that is, the difference between a country's potential GDP and its actual economic output - and to an expansionary monetary policy, "and the lessons learned from this experience should always be borne in mind."

Indeed, some members warned that if downside risks to the economy waned, "this would increase the risk of possible swings in economic activity and prices due to a prolonged period of accommodative financial conditions, and this risk should therefore always be borne in mind."

Still, the board was unanimous in its decision to keep rates on hold for now, arguing that after an interim of slowing growth Japan's economy should return to a moderate growth path, and that the faster pace of inflation expected in coming months would gradually moderate.


-By Michael S. Arnold and Megumi Fujikawa, Dow Jones Newswires; 813-5255-2929; michael.arnold@dowjones.com; megumi.fujikawa@dowjones.com.


Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=msysc34sJ...XUKmt4ODQ%3D%3D. You can use this link on the day this article is published and the following day.



(END) Dow Jones Newswires

August 21, 2008 21:47 ET (01:47 GMT)

GMO announce its interim results for the six months ended June 30.

* Revenue amounting to $1.8 million (2007: $5.4 million)


* Loss for the period $1.6 million (2007: Profit of $0.6 million)


Edited Press Release


LONDON (Dow Jones)--GMO said Friday for the six months ended June 30 it made a pretax loss of $1.7 million compared to $1.1 million profit in the same period last year.

Omar A. Rahman, chairman said: "GMO, in its quest to become a leading WVAS and Media Company in China, is constantly evaluating its business and other potential opportunities," Rahman said.

"The Group continues to explore various acquisition opportunities in order to strengthen their businesses. The Group's investment strategy will be to acquire profitable trading businesses which are cash generative and capable of organic growth or growth by acquisition. In the meantime, GMO will continue to expand its range of products and services to increase its revenue base and to improve its profitability."


Corrected August 22, 2008 04:08 ET (08:08 GMT)

(MORE TO FOLLOW) Dow Jones Newswires

August 22, 2008 03:49 ET (07:49 GMT)

DAILY MARKET COMMENTARY
22 August 2008
Friday
____________________________________________________________________

Fundamental Outlook at 1400 GMT (EDT + 0400)

€
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4790 level and was capped around the $1.4910 level. Technically, today’s intraday low was right around the 38.2% retracement of the move from $1.4630 to $1.4910. The U.S. dollar gained some ground after state-run Korea Development Bank indicated it may target Lehman Brothers in an acquisition. Traders await a speech from Federal Reserve Chairman Bernanke later in the day at the Kansas City Fed’s annual Jackson Hole Symposium. Bernanke is expected to talk about financial stability. In eurozone news, EMU-15 factory orders fell 0.3% m/m and 7.4% y/y in June, worse-than-expected and the fastest annualized rate of decline since December 2001. These data confirm that slowing domestic demand is the source of the pullback in eurozone economic growth because net exports from the eurozone expanded in June. European Central Bank member Liebscher said EMU-15 economic growth will be around the bottom end of forecasts in 2008 – around +1.5% - but said the economy is not nearing recession. Euro bids are cited around the US$ 1.4315 level.

¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥109.95 level and was supported around the ¥108.30 level. Technically, today’s intraday high was right around the 50% retracement of the move from ¥124.15 to ¥95.70. Finance minister Ibuki reported the government does not plan to issue additional Japanese government bonds to finance the forthcoming economic stimulus and Economics minister Yosano will provide details about the stimulus package next week. Minutes from Bank of Japan’s Policy Board meeting on 14-15 July expressed policymakers’ concerns with the “degree of deceleration” in overseas economic growth. Some policymakers also said the central bank needs to “keep close watch for any sign of second-round effects” on inflation expectations. Data released in Japan overnight saw July supermarket sales rise 0.9% to ¥1.13 trillion. The Nikkei 225 stock index lost 0.68% to close at ¥12,666.04. Dollar bids are cited around the ¥106.40 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥162.95 level and was supported around the ¥161.45 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥204.55 and ¥100.40 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8333 in the over-the-counter market, down from CNY 6.8442.

£
The British pound depreciated sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.8545 level and was capped around the $1.8795 level. Cable came within a few pips of testing a new multi-year low dating to October 2006. U.K. GDP data revealed the economy recorded zero per cent economic growth in Q2, its weakest showing since the early 1990s. It now appears the economy may expand by just 1.2% in 2008 and economists ascribe a high probability to the chances of a technical U.K. economic recession in H2 with 2009 faring worse. Coupled with last week’s dovish quarterly inflation report, today’s GDP data suggest there could be greater pressure on Bank of England’s Monetary Policy Committee to reduce interest rates. Cable bids are cited around the $1.8015 level. The euro gained ground vis-à-vis the British pound as the single currency tested offers around the £0.7985 level and was supported around the £0.7925 level.

CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0970 level and was supported around the CHF 1.0855 level. Most traders expect Swiss National Bank will reduce interest rates later this year. U.S. dollar offers are cited around the CHF 1.1135 level. The euro gained ground vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.6240 level while the British pound came off vis-à-vis the Swiss franc as sterling tested bids around the CHF 2.0285 level.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.4812 1.4908, 1.4790
USD/ JPY 109.79 109.92, 108.32
GBP/ USD 1.8571 1.8793, 1.8546
USD/ CHF 1.0948 1.0968, 1.0853
AUD/ USD 0.8699 0.8812, 0.8688
USD/CAD 1.0464 1.0486, 1.0418
NZD/USD 0.7124 0.7215, 0.7112
EUR/ JPY 162.63 162.79, 161.43
EUR/ GBP 0.7976 0.7987, 0.7924
EUR/ CHF 1.6229 1.6237, 1.6176
GBP/ JPY 203.87 204.57, 202.76
CHF/ JPY 100.20 100.29, 99.71

Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.4260 1.4975 106.60 113.30
L2. 1.3840 1.5175 102.45 115.90
L3. 1.3320 1.5380 101.95 117.45

GBP/ USD USD/ CHF

L1. 1.8305 1.9135 1.0705 1.1475
L2. 1.7420 1.9525 1.0505 1.1610
L3. 1.6540 1.9835 1.0340 1.1910

AUD/ USD USD/ CAD

L1. 0.8430 0.8885 1.0440 1.0795
L2. 0.8095 0.9220 1.0130 1.1205
L3. 0.7685 0.9370 0.9720 1.1870

NZD/ USD EUR/ JPY

L1. 0.6760 0.7275 159.10 164.35
L2. 0.6440 0.7520 156.80 165.40
L3. 0.5930 0.8105 153.90 167.80

EUR/ GBP EUR/ CHF

L1. 0.7730 0.8120 1.5975 1.6250
L2. 0.7555 0.8310 1.5855 1.6470
L3. 0.7440 0.8570 1.5730 1.6760

GBP/ JPY CHF/ JPY

L1. 200.60 208.50 98.70 103.30
L2. 197.55 211.35 97.00 105.40
L3. 192.70 217.15 95.85 107.70

SCHEDULE

Friday, 22 August 2008
all times GMT
(last release in parentheses)
0500 Japan July supermarket sales (-0.9% y/y)
0800 Eurozone June current account (-€7.3 billion)
0830 UK Q2 GDP (0.3% q/q)
0830 UK Q2 GDP (1.6% y/y)
0900 Eurozone June industrial new orders (-3.5% m/m)
0900 Eurozone June industrial new orders (-4.4% y/y)

Chúc tuần chiến chiến thắng thị trường !

€. The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4765 level and was supported around the $1.4685 level. Data released in the U.S. today saw July personal spending rise 0.2% but when adjusted for inflation, it was off 0.4%, the largest decline since June 2004. Also, personal income fell 0.7%, much lower-than-expected and the largest decline since August 2005. The core personal consumption expenditures price index that excludes food and energy rose 0.3% in July while the headline PCE price index was up 0.6%. On an annualized basis, the core PCE price index has risen 2.4% - well above the Fed’s perceived comfort zone of 1.5% to 2.0% - while the headline PCE price index is up 4.5% y/y. Other data released in the U.S. today saw the final August University of Michigan consumer sentiment indicator improve to 63.0 from 61.2 in July while the August Chicago PMI index improved to 57.9 from 50.8 in July with the prices paid component lower at 80.6. In eurozone news, EMU-15 consumer price inflation slowed more than expected in August, falling to 3.8% y/y from 4.0% y/y but still significantly above the European Central Bank’s 2.0% inflation target. Also, EMU-15 economic sentiment fell to 88.8 in August from 89.5 in July and consumer confidence ticked up to -19. European Central Bank member Liebscher echoed comments from other policymakers this week saying inflation is too high. Notably, six-month Euribor interbank lending rates reached an all-time high today with six-month rates at 5.197%. Also, German July wholesale sales were up 0.3% m/m and 3.5% y/y and the EMU-15 unemployment rate was stable at 7.3%. Euro bids are cited around the US$ 1.4315 level.

¥/ CNY. The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥108.40 level and was capped around the ¥109.55 level. The pair moved to its lowest intraweek level following the release of many Japanese economic data. The Japanese government announced that its economic stimulus package will aggregate ¥11.7 trillion with ¥2.0 trillion of its financed by a supplemental budget. Economics minister Yosano said he is concerned about escalating inflation in Japan and said prices could accelerate more. Data released in Japan overnight saw the nationwide core consumer price index rise 2.4% y/y, exceeding forecasts. Second, July housing starts rose 19.0%, the first rise in thirteen months. Third, July retail sales were up 1.9%, mostly on account of fuel spending. Fourth, July industrial output was up 0.9%. Fifth, July orders received by the 50 largest contractors were up 42.3%. The rise in core CPI represented the fastest climb since October 1997. Bank of Japan’s Policy Board is expected to keep the overnight call rate unchanged at 0.50% for several months. The Nikkei 225 stock index gained 2.39% to close at ¥13,072.87. Dollar bids are cited around the ¥106.40 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥159.75 level and was capped around the ¥161.10 level. The British pound and Swiss franc moved lower vis-à-vis the yen as the crosses tested bids around the ¥198.35 and ¥98.85 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8350 in the over-the-counter market, up from CNY 6.8275.

£. The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.8235 level and was capped around the $1.8340 level. Cable reached its lowest level since July 2006. Data released in the U.K. today saw July Land Registry house prices fall 2% y/y while GfK August consumer confidence rose to -36 from -39 in July. Additionally, IRS pay deals picked up 3.5% in the three months to July. Cable bids are cited around the $1.8015 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the £0.8065 level and was supported around the £0.8030 level.

CHF. The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1000 figure and was supported around the CHF 1.0925 level. Data released in Switzerland today saw the KOF leading growth indicator fall to 0.68 from a revised 0.85 in July, the lowest print since August 2003. U.S. dollar offers are cited around the CHF 1.1135 level. The euro gained ground vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.6180 level while the British pound weakened vis-à-vis the Swiss franc and tested bids around the CHF 1.9990 level.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.4739 1.4766, 1.4687
USD/ JPY 108.62 109.56, 108.42
GBP/ USD 1.8299 1.8341, 1.8257
USD/ CHF 1.0961 1.0999, 1.0923
AUD/ USD 0.8626 0.8657, 0.8601
USD/CAD 1.0541 1.0547, 1.0469
NZD/USD 0.7050 0.7066, 0.7013
EUR/ JPY 160.17 161.08, 159.73
EUR/ GBP 0.8057 0.8067, 0.8031
EUR/ CHF 1.6165 1.6169, 1.6127
GBP/ JPY 198.79 200.32, 198.35
CHF/ JPY 99.07 99.71, 98.84

Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.4260 1.4975 106.60 113.30
L2. 1.3840 1.5175 102.45 115.90
L3. 1.3320 1.5380 101.95 117.45

GBP/ USD USD/ CHF

L1. 1.8305 1.9135 1.0705 1.1475
L2. 1.7420 1.9525 1.0505 1.1610
L3. 1.6540 1.9835 1.0340 1.1910

AUD/ USD USD/ CAD

L1. 0.8430 0.8885 1.0440 1.0795
L2. 0.8095 0.9220 1.0130 1.1205
L3. 0.7685 0.9370 0.9720 1.1870

NZD/ USD EUR/ JPY

L1. 0.6760 0.7275 159.10 164.35
L2. 0.6440 0.7520 156.80 165.40
L3. 0.5930 0.8105 153.90 167.80

EUR/ GBP EUR/ CHF

L1. 0.7730 0.8120 1.5975 1.6250
L2. 0.7555 0.8310 1.5855 1.6470
L3. 0.7440 0.8570 1.5730 1.6760

GBP/ JPY CHF/ JPY

L1. 200.60 208.50 98.70 103.30
L2. 197.55 211.35 97.00 105.40
L3. 192.70 217.15 95.85 107.70

SCHEDULE
Friday, 29 August 2008
all times GMT
(last release in parentheses)

0130 Australia July private sector credit (0.4% m/m)
0130 Australia July private sector credit (11.7% y/y)
0130 Japan Bank of Japan Policy Board member Suda speaks
0500 Japan July housing starts (-16.7% y/y)
0500 Japan July housing starts, annualized (1.130 million)
0500 Japan July construction orders (-11.7% y/y)
0800 Italy June retail sales
0900 Eurozone July unemployment rate (7.3%)
0900 Eurozone August consumer price index, estimate (4.1% y/y)
0900 Italy August consumer price index
0930 CH August KOF leading indicator (0.9)
1230 US July personal consumption expenditures, core (0.3% m/m)
1230 US July personal consumption expenditures, core (2.3% y/y)
1230 US July personal consumption expenditures deflator (4.1% y/y)
1230 US July personal spending (0.6%)
1230 US July personal income (0.1%)
1230 Canada June gross domestic product (-0.1% m/m)
1230 Canada Q2 GDP, annualized (-0.3%)
1230 Canada July industrial product prices (1.3% m/m)
1230 Canada July raw materials price index (4.4% m/m)
1345 US August Chicago PMI (50.8)
1400 US August University of Michigan consumer sentiment

€. The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.4570 level and was capped around the $1.4805 level. The pair lost about 90 pips last week. The FDIC warned some banks may fail and public funds may need to be borrowed. FOMC officials believed “core inflation would edge back down during 2009” at their 5 August meeting.

The IMF downgraded its EMU-15 GDP forecast for 2008 to 1.4% - 1.7%. Denmark’s central bank rescued the tenth largest bank in a failure. ECB’s Papademos warned a “stronger degree” of tightening may be required. ECB’s Weber said inflation could pick up and force rates higher and ECB’s Bini-Smaghi dismissed rate cut chatter. ECB’s Stark said second-round inflation effects persist. ECB GDP growth and inflation forecasts will be released on 4 September.

Data released in the U.S. last week saw July existing home sales were up 3.9% to an annualized 5.0 million units; July new home sales climbed 2.4% to an annualized 515,000 rate; the August Richmond Fed manufacturing index was steady at -16; the August consumer confidence index climbed to 56.9; the S&P/ Case Shiller U.S. national home price index fell 15.4% y/y; Q2 GDP growth was up an annualized 3.3%; the core PCE price index was unchanged at 2.1%; weekly jobless claims fell 10,000 to 425,000; continuing jobless claims expanded 64,000 to 3.423 million; July durable goods orders rose 1.3% with the ex-transportation component up 0.7%; July personal spending rose 0.2% with personal income off 0.7%; core PCE prices rose 0.3% m/m and 2.4% y/y; the final University of Michigan consumer sentiment indicator improved to 63.0; and August Chicago PMI improved to 57.9 with prices paid lower at 80.6.

Data released in the eurozone last week saw the German Ifo business climate index fell to 94.8; the September GfK consumer climate index fell to a five-year low; Q2 GDP was off 0.5% q/q; the EMU-15 July M3 money supply expanded 9.3%; German August unemployment fell 40,000; French unemployment was up +0.1% in July; German July import prices were up 0.6% m/m and 9.3% y/y; August German provisional CPI was off 0.3% m/m and up 3.1% y/y; EMU-15 August CPI receded to 3.8% y/y; EMU-15 economic sentiment fell to 88.8; German July wholesale sales were up 0.3% m/m and 3.5% y/y; and the EMU-15 July unemployment rate was stable at 3.5%.

Technical Outlook
Last week’s high (1) was below the 61.8% retracement of the 1.4309-1.6038 range and last week’s low (2) was below the 76.4% retracement of the same range. The 1.4717/ 1.4861/ 1.5174/ 1.5325/ 1.5378/ 1.5630 levels represent upside resistance targets while the 1.4357/ 1.4287/ 1.3838 levels represent downside support targets.

¥/ CNY. The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥108.40 level and was capped around the ¥110.30 level. The pair lost about 140 pips last week. The Nikkei 225 stock index gained 2.39% on Friday to close at ¥13,072.87. Bank of Japan Governor Shirakawa said economic growth will remain “sluggish” and added the economy “is unlikely to experience a deep adjustment phase.” Japan’s fiscal economic stimulus is likely to be worth ¥2-3 trillion. BoJ’s Suda said “inflation should be directly confronted” when the economy permits. Nikkei reported Japan, the U.S., and Europe planned a concerted U.S. dollar-supportive intervention in March when Bear Stearns fell. Japan’s economic stimulus will aggregate ¥11.7 trillion including a ¥2.0 trillion supplemental budget. Economics minister Yosano sees inflation moving higher.

Data released in Japan last week saw nationwide core CPI up 2.4% y/y; July housing starts were up 19.0%; July retail sales were up 1.9%; July industrial output was up 0.9%; and orders received by the 50 largest contractors were up 42.3% in July.
In Chinese news, the Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8350 in the over-the-counter market, up from CNY 6.8333. The Chinese government is considering a CNY 370 billion economic stimulus package. PBoC said tackling inflation remains a top priority.
Data released in China last week saw the July consumer confidence index improve to 94.5.

Technical Outlook

Last week’s high (1) was below the 61.8% retracement of the 124.13-95.71 range and last week’s low (2) was below the 50.0% retracement of the same range. Upside resistance targets remain the 109.92/ 110.64/ 113.27/ 114.65/ 117.42 levels while downside support targets remain the 107.12/ 106.57/ 105.18/ 102.94 levels.

£. The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.8225 level and was capped around the $1.8590 level. The pair lost about 290 pips last week. BoE’s MPC Bean warned the economic stimulus will “drag on for some considerable time.” BoE’s Blanchflower said large rate cuts are needed now to stimulate the economy.

Data released in the U.K. last week saw BBA mortgage approvals were off 65% y/y in July with net mortgage lending off 22.7% y/y; Nationwide U.K. house prices were off 10.5% y/y; the CBI’s monthly distributive trades survey’s retail sales balance worsened to -46; July Land Registry house prices fell 2% y/y; GfK August consumer confidence rose to -36; and IRS pay deals climbed 3.5% in the three months to July.

Technical Outlook
Last week’s high (1) was below the 23.6% retracement of the 1.3682-2.1159 range and last week’s low (2) was below the 38.2% retracement of the same range. Upside resistance targets include the 1.8303/ 1.8631/ 1.9117/ 1.9336/ 1.9602/ 1.9767 levels while downside support targets include the 1.8031/ 1.7420 levels.

CHF. The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.1085 level and was supported around the CHF 1.0885 level. The pair gained about 5 pips last week. SNB’s Hildebrand called for stronger capital requirements by Swiss banks. SNB boss Roth sees inflation easing.

Data released in Switzerland last week Q2 non-farm payrolls were up 2.4% y/y and the KOF leading growth indicator fell to 0.68 in August.

Technical Outlook
Last week’s high (1) was above the 50.0% retracement of the 1.2476-0.9647 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.1061/ 1.1134/ 1.1395 levels while downside support targets include the 1.0850/ 1.0727/ 1.0687/ 1.0555/ 1.0391/ 1.0250 levels.

CAD. The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0600 level and was supported around the C$ 1.0410 level. The pair gained about 125 pips last week. Bank of Canada will release its interest rate announcement on 3 September. BoC’s Longworth noted Q2 GDP growth is likely to be weaker-than-expected with inflation pressures less-than-expected.

Data released in Canada last week saw the Q2 current account surplus reach C$ 6.8 billion; July producer prices were up 0.4%; the July industrial product price index decreased to 0.4% m/m; and the economy grew 0.3% in Q2.


Technical Outlook
Last week’s high (1) was above the 50.0% retracement of the 1.1875-0.9055 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.0797/ 1.0878/ 1.1204 levels while downside support targets include the 1.0465/ 1.0331/ 1.0186/ 1.0130/ 1.0069 levels.

AUD. The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.8490 level and was capped around the US$ 0.8690 level. The pair lost about 50 pips last week. Futures traders are pricing in a 25bps rate cut by RBA this week followed by another 50bps in cuts in 2008.

Data released in Australia last week saw Q2 Australian business spending surge 5.7% q/q; Q2 construction activity was off 2.6% q/q; July private sector credit growth expanded 0.5%; and July new home sales were lower.


Technical Outlook
Last week’s high (1) was below the 50.0% retracement of the 0.7673-0.9849 range and last week’s low (2) was above the 61.8% retracement of the same range. Upside resistance targets include the 0.8761/ 0.9017/ 0.9180/ 0.9335/ 0.9533 levels while downside support targets include the 0.8504/ 0.8186 levels.

SCHEDULE

Sunday, 31 August 2008. all times GMT (last release in parentheses)

2330 Australia August performance of manufacturing index (46.9)

Monday, 1 September 2008 all times GMT (last release in parentheses)

N/A UK August HBOS house prices (-1.7% m/m)
0030 Australia August TD Securities inflation (0.4% m/m)
0030 Australia August TD Securities inflation (4.6% y/y)
0130 Australia Q2 current account balance
0130 Australia Q2 inventories (0.9%)
0130 Japan July cash earnings (-0.6% y/y)
0630 Australia August Reserve Bank of Australia commodity index SDR
0730 CH August purchasing managers index (54.1)
0745 Italy August PMI, manufacturing (45.3)
0750 France August PMI, manufacturing (47.1)
0755 Germany August PMI, manufacturing
0830 UK July mortgage approvals (36,000)
0830 UK July M4 money supply
0830 UK July M4 sterling lending
0830 UK July net consumer credit (£900 million)
0830 UK July net lending secured on dwellings (£3.1 billion)
0830 UK August PMI, manufacturing (44.3)
0900 Italy July hourly wages
1845 Argentina Kansas City Fed President Hoenig speaks
2350 Japan August monetary base (-0.7% y/y)

Tuesday, 2 September 2008
all times GMT
(last release in parentheses)

0100 Japan Bank of Japan Governor Shirakawa speaks
0130 Australia July building approvals (-7.8% y/y)
0430 Australia Reserve Bank of Australia interest rate decision
0545 CH August consumer price index (-0.4% m/m)
0545 CH August consumer price index (3.1% y/y)
0545 CH Q2 GDP (0.3% q/q)
0545 CH Q2 GDP (3.0% y/y)
0830 UK August PMI, construction (36.7)
0900 Eurozone July purchasing managers index
1400 US August ISM manufacturing (50)
1400 US July construction spending (-0.4% m/m)
2301 UK August Nationwide consumer confidence (51)
2330 Australia August performance of service index (42.8)
2330 Australia Q2 gross domestic product (0.6% q/q)

Wednesday, 3 September 2008
all times GMT
(last release in parentheses)

0130 Australia Q2 GDP (3.6% y/y)
0300 NZ August ANZ commodity prices (1.8%)
0730 Italy August business confidence
0740 Italy August PMI, services
0745 France August PMI, services
0755 Germany August PMI, services
0800 Eurozone August PMI, services
0830 UK August PMI, services (47.4)
0900 Eurozone Q2 GDP (-0.2% q/q)
0900 Eurozone Q2 GDP (1.5% y/y)
0900 Eurozone July retail sales (-0.6% m/m)
0900 Eurozone July retails ales (-3.1% y/y)
0930 UK August BRC shop price index
1100 US MBA mortgage applications
1130 US August Challenger job cuts (140.8% y/y)
1300 Canada Bank of Canada interest rate decision
1400 US July factory orders (1.7%)
1800 US Federal Reserve Beige Book
2350 Japan Foreign investors’ purchases of Japanese equities and bonds
2350 Japan Japanese investors’ purchases of foreign equities and bonds

Thursday, 4 September 2008 all times GMT (last release in parentheses)

0130 Australia July trade balance (A$ 411 million)
1000 Germany July factory orders (-2.9% m/m)
1000 Germany July factory orders (-6.1% y/y)
1100 UK Bank of England interest rate decision
1145 Eurozone European Central Bank interest rate decision
1215 US August ADP employment change (9,000)
1230 US Q2 non-farm productivity (2.2%)
1230 US Q2 unit labour costs (1.3%)
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1400 US August ISM non-manufacturing index (49.5)
1800 US San Francisco Fed President Yellen speaks
2330 Australia August performance of construction index (41.6)
2350 Japan Q2 capital spending (-4.9%)

Friday, 5 September 2008 all times GMT (last release in parentheses)

1000 Germany July industrial production (0.2% m/m)
1000 Germany July industrial production (1.7% y/y)
1100 Canada August unemployment rate (6.1%)
1100 Canada August employment, net change (-55,200)
1230 US Weekly initial jobless claims (-51,000)
1230 US August unemployment rate (5.7%)
1230 US August average hourly earnings (0.3% m/m)
1230 US August average hourly earnings (3.4% y/y)
1400 Canada August Ivey PMI (65.5)
1955 US San Francisco Fed President Yellen speaks

€. The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4195 level and was capped around the $1.4345 level. The common currency reached its lowest level since October 2007 as traders continued to speculate the European Central Bank’s next rate move will be lower despite nagging inflation pressures in the eurozone. The common currency got a bump higher to intraday highs after the release of weak U.S. August non-farm payrolls data that saw the economy shed 84,000 jobs, worse-than-expected. Payroll losses in June and July were downwardly revised and the cumulative two-month total of jobs lost is 160,000. The August unemployment rate printed at 6.1%, the highest level seen since September 2003. Also, August hourly wages were up 0.4%, above expectations. The Federal Open Market Committee convenes on 16 September and is expected to keep the federal funds target rate unchanged at 2.0% when it convenes. The U.S. dollar’s recent strength is resulting in significant intervention around the world. Bank of Korea reportedly sold up to US$ 3 billion today to prop up the won and Central Bank of the Russian Federation is said to have sold an estimated US$ 4 billion yesterday to prop up the ruble after it fell to its lowest level since February 2007. In eurozone news, traders await next week’s updated economic growth forecasts from the European Commission. European Central Bank member Stark hawkishly reported “inflation remains at worrying levels and financial tensions persist.” Similarly, ECB member Nowotny reported “Eurozone inflation is much too high. The rate of price increases appears to have peaked now, but there is still every reason for heightened alertness towards inflationary risks.” Euro bids are cited around the US$ 1.3840 level.

¥/ CNY. The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥105.50 level and was capped around the ¥107.35 level. Technically, today’s intraday high was just above the 76.4% retracement of the move from ¥103.75 to ¥110.65. The yen is strengthening across the board as traders are bracing for more losses in commodity hedge funds. The world’s largest commodities hedge fund, Ospraie Management LLC, closed its flagship fund this week and PIMCO executive Bill Gross said the U.S. Treasury needs the authority to purchase debt and other assets to stop a “financial tsunami.” The yen gained strength on these news because many hedge funds sold yen to invest in higher-yielding plays such as commodities and now that they are being unwound, the yen is being bought back and is appreciating. Data released in Japan overnight saw non-financial companies’ capital investments fall 6.5% y/y in Q2, worse than the 4.9% y/y decline in Q1. Also, Japan’s foreign reserves fell to US$ 996.74 billion at the end of August from US$ 1.00 trillion at the end of July. In political news, LDP mandarin Aso formally announced his bid for the party’s presidential election on 22 September. The Nikkei 225 stock index lost 2.75% to close at ¥12,212.23. Dollar bids are cited around the ¥103.20 level. The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥150.55 level and was capped around the ¥153.40 level. The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥186.15 and ¥95.00 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8422 in the over-the-counter market, up from CNY 6.8365.

£. The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.7535 level and was capped around the $1.7740 level. The pair reached its lowest level since April 2006. Bank of England’s Monetary Policy Committee kept interest rates unchanged yesterday and traders are speculating the MPC will move rates lower within a few months. Cable bids are cited around the $1.7420 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the £0.8055 level and was capped around the £0.8140 level.
CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1180 level and was supported around the CHF 1.1065 level. U.S. dollar offers are cited around the CHF 1.1390 level. The euro and British pound depreciated vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.5810 and CHF 1.9495 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.4294 1.4337, 1.4196
USD/ JPY 106.01 107.33, 105.52
GBP/ USD 1.7680 1.7720, 1.7536
USD/ CHF 1.1090 1.1179, 1.1072
AUD/ USD 0.8112 0.8229, 0.8027
USD/CAD 1.0617 1.0725, 1.0601
NZD/USD 0.6673 0.6728, 0.6588
EUR/ JPY 151.82 153.40, 150.53
EUR/ GBP 0.8091 0.8139, 0.8062
EUR/ CHF 1.5862 1.5918, 1.5809
GBP/ JPY 187.68 189.45, 186.15
CHF/ JPY 95.71 96.55, 95.00

Support Resistance Support Resistance

EUR/ USD USD/ JPY
L1. 1.3840 1.4975 106.60 113.30
L2. 1.3320 1.5175 102.45 115.90
L3. 1.2675 1.5380 101.95 117.45

GBP/ USD USD/ CHF
L1. 1.7420 1.9135 1.0705 1.1475
L2. 1.6450 1.9525 1.0505 1.1610
L3. 1.5445 1.9835 1.0340 1.1910

AUD/ USD USD/ CAD
L1. 0.8095 0.8885 1.0440 1.0940
L2. 0.7910 0.9220 1.0130 1.1205
L3. 0.7685 0.9370 0.9720 1.1870

NZD/ USD EUR/ JPY
L1. 0.6590 0.7275 153.00 164.35
L2. 0.6440 0.7520 153.30 165.40
L3. 0.5930 0.8105 145.65 167.80

EUR/ GBP EUR/ CHF
L1. 0.7730 0.8310 1.5895 1.6250
L2. 0.7555 0.8570 1.5730 1.6470
L3. 0.7440 0.8790 1.5610 1.6760

GBP/ JPY CHF/ JPY
L1. 188.55 200.50 94.15 100.15
L2. 181.15 206.00 91.30 103.30
L3. 173.75 214.65 87.40 105.30

SCHEDULE

Friday, 5 September 2008. all times GMT (last release in parentheses)
1000 Germany July industrial production (0.2% m/m)
1000 Germany July industrial production (1.7% y/y)
1100 Canada August unemployment rate (6.1%)
1100 Canada August employment, net change (-55,200)
1230 US August unemployment rate (5.7%)
1230 US August average hourly earnings (0.3% m/m)
1230 US August average hourly earnings (3.4% y/y)
1400 Canada August Ivey PMI (65.5)
1955 US San Francisco Fed President Yellen speaks

Treasury Deal Close For Fannie And Freddie

The Treasury is putting the final touches on a plan that would essentially mean the government is taking over troubled mortgage giants Fannie Mae and Freddie Mac, market sources were reporting on Friday. An announcement of the deal could come as early as this weekend, according to the WSJ. On Friday afternoon, Treasury Secretary Henry Paulson met with Daniel H. Mudd, chief executive of Fannie Mae, and Richard Syron, his counterpart at Freddie Mac. Also attending the meeting were Federal Reserve Board chairman Ben Bernanke and James Lockhart, chief of the Federal Housing Finance Agency.

While details have not been announced, the plan is expected to involve putting the two companies into the conservatorship of their regulator, the Federal Housing Finance Agency, along with a government injection of capital.

"Once the Treasury won congressional approval to take over the GSE's, the move became inevitable," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "Fannie and Freddie were unable to sell new issues of common or preferred stock because investors feared the shares could lose value when the government acted." The companies were recently able to sell new debt issues at premiums well above Treasuries because the government basically back-stopped the debt.

It also appears that big firms such as Pacific Investment Management Company (PIMCO) will be making sizeable investments once the Treasury's plan is implimented. Bill Gross, chief investment officer of PIMCO, said in an interview Friday he believes private investors would buy new shares in Fannie and Freddie only if the Treasury acts first to bolster their capital. "Investors are saying, 'We want to see the Treasury in there with us,'" Mr. Gross said. The Treasury will have to "swim in the pool, not just be a lifeguard," he added.

Forward U.S. Growth

The increase in the U.S. unemployment rate to a five year high of 6.1% may signal to FOMC members that their recent hawkish comments on increasing interest rates to tackle inflation may have to be addressed. "The Usd gained in value recently due in part to Fed member outlooks that the U.S. economy would show growth going into 2009, and as such a move higher in interest rates to tackle inflationary pressures looked justified" said Anthony Tillman, Trade Desk Director at TheLFB-Forex.com. "That may be challenged now that the U.S. has shown that the cuts in overnight lending from 5.25% to 2.00% still have not impacted the consumer or the economy. The dollar will now not be getting bought on the thought process that the Fed will be the first major central bank to be increasing rates, and right now the challenge that the Government departments face in turning around confidence in the banking, lending and investment arena may start to weigh on Usd valuation".

The Usd really is the be-all and end-all of where currency market valuations start and end each week, each month and each year, it is on 90% of all currency trades, and as such the dollar will dominate again on Sunday/Monday as the market looks for the sentiment reaction to the U.S. weekend news. "The next plays on the dollar may be dominated by the fear of loss in not being in the next market currency re-valuation, be it higher or lower on the dollar, and right now the direction of those moves are very hard to call until a full session of global commodity trade has been seen", added Tillman. It seems that those looking for U.S. growth going into 2009 may have to re-assess their thought process after the impact of the large increase in the Non-farm payroll jobless count has been absorbed.

Dollar Supported By Lack Of Regional Economic Seperation

Risk aversion creates an environment in which stocks get sold, commodities lose their speculative interest, and bonds become favorable. In that climate, those currencies offering a higher overnight swap interest against the Usd (euro, pound, aussie, cad) will be less appealing unless the region backing the currency is showing growth. At this time, none of the major regional economies are offering an outlook that is unaffected by America’s contraction and as such none may easily regain the recently lost ground against the Usd. There may be a move to take back some of the losses, but reversal moves that match the initial dollar break may have to wait until each region can show growth. Just standing still economically may not be enough to stem the tide of dollar buying as global trade desks settle into the newly found ‘long-dollar’ positions that satisfy their ‘risk averse’ mind-set. The U.S. Treasury note is still deemed to be a safe haven for investors, and that may allow the dollar to remain well supported.

The markets are still not seeing a regional separation between the U.S. economy and each of the other major region’s economic outlooks. It would seem that although America is showing that the full impact of the 2007/08 contraction has not been fully absorbed, (read Fannie Mae and Freddie Mac having to be shored-up by the Treasury, unemployment numbers that are consistently moving higher, and a housing market that keeps adding to inventory levels), the other regions are unable to offer anything more than that in the way of sustainable growth. Until one region reports expansionary economic numbers the dollar valuations may stay range-bound in the current 4 hour chart areas as consolidation of the recent moves continue.

Treasury Yields and Mortgage Rates

The U.S. Treasury stepping in to support the failing Government Sponsored Entities (GSE’s) may be harder to judge the currency impact of, than assessing the risk aversion impact. On one hand, it seems that the bleeding of loss-making loans now stops in the short-term as the U.S. taxpayer steps in to inject cash into the companies so that they can continue to properly function. On the other hand, the question will be whether a band-aid is being placed over something that may need major economic surgery to put it right. The Treasury is not committing to a one-off injection of cash, just in case the firms take that money and still fail, but have decided instead to inject liquidity in controlled measures. The Usd impact may be seen in the moves seen in Treasury yields and mortgage rates, both of which have been dropping recently, and both of which dropping have historically been a Usd negative in the near-term.

The 10 year yield is floating around 3.7% at the moment with mortgage rates dropping substantially over the course of the last three weeks from 6.9% to just above 6.0%, the first time this year that they have moved lower and held. "House appraisals and lending criteria are impeding the ability of those looking to purchase a home in the U.S., and it may take another cut in Fed rates to get repayment rates low enough that the eleven month housing inventory can start to be reduced" said Terry Crawley, retired City Bond Trader, "Lower rates however do not automatically lead to mortgages being issued, and with an employment market that is losing jobs, the question may be asked as to whether lower rates alone can get things moving. It may be that the Fed has to cut rates once again to stimulate the economy, and that may in turn force dollar valuations lower". Without a positive housing sector, it will be difficult for the dollar to appreciate off an 'economic expansion' outlook, and may force the FOMC members to look hard at their ability to increase overnight lending rates.

€. The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.4195 level and was capped around the $1.4720 level. The pair lost about 410 pips last week. Gustav’s weakening pushed crude oil and the euro lower. EONIA rates confirm traders see no ECB cut this year. The Fed’s Beige Book reported economic activity is slowing in most of the U.S. U.S. payrolls eroded sharply. The Fed is expected to keep rates unchanged on 16 September. Bank of Korea and Russian Bank of Central Federation have been selling U.S. dollars to prop up their currencies. PIMCO’s Bill Gross warned of a “financial tsunami.”

Luxembourg’s Juncker said “the euro is still overvalued.” The ECB kept rates unchanged at 4.25% and Trichet said there is no rate bias. The ECB sees 2008 inflation between 3.4% to 3.6% and sees EMU-15 GDP at 1.1% to 1.7%. ECB’s Stark sees inflation at “worrying levels” and ECB’s Nowotny called for “heightened alertness.”

Data released in the U.S. last week saw July construction spending was off 0.6%; August ISM manufacturing fell to 49.9; the August ISM services index printed at 50.6; weekly initial jobless claims were up 15,000 to 444,000 with continuing claims up 6,000 to 3.44 million; Q2 non-farm productivity rose 4.3% with unit labour costs off 0.5% q/q; ADP August private sector job losses totaled 33,000; August non-farm payrolls were off 84,000 with a revised cumulative 160,000 loss in June and July; August unemployment printed at 6.1%; and August hourly wages were up 0.4%.

Data released in the eurozone last week saw German July retail sales fell 1.5% m/m; EMU-15 manufacturing improved to 47.6; EMU-15 July producer prices were up 1.1% m/m and 9.0% y/y with core producer prices were up 0.5% m/m and 4.3% y/y; EMU-15 Q2 GDP growth registered 1.4% y/y; EMU-15 July retail sales were off 0.4% m/m and 2.8% y/y; and German manufacturing orders fell 1.7% m/m.
Technical Outlook
Last week’s high (1) was right around the 76.4% retracement of the 1.3359-1.6038 range and last week’s low (2) was below the 38.2% retracement of the 1.1638-1.6038 range. The 1.4717/ 1.4861/ 1.5174/ 1.5325/ 1.5378/ 1.5630 levels represent upside resistance targets while the 1.3838/ 1.3319 levels represent downside support targets.

¥/ CNY. The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥105.50 level and was capped around the ¥108.65 level. The pair lost about 160 pips last week. The Nikkei 225 stock index lost 2.75% on Friday to close at ¥12,212.23. PM Fukuda resigned and Taro Aso is expected to be named his successor. BoJ Governor Shirakawa said the central bank is focused on long-term rates.

Data released in Japan last week saw the August monetary base was off 0.2% y/y; non-financial capital investments were off 6.5% y/y in Q2; and foreign reserves fell to US$ 996.74 billion.
In Chinese news, the Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8422 in the over-the-counter market, up from CNY 6.8350. The government sees CPI easing over the coming months.
Data released in China last week saw CFLP August manufacturing remain unchanged at 48.4 and CLSA August manufacturing fell to 49.2.

Technical Outlook

Last week’s high (1) was below the 50.0% retracement of the 124.13-95.71 range and last week’s low (2) was below the 38.2% retracement of the same range. Upside resistance targets remain the 109.92/ 110.64/ 113.27/ 114.65/ 117.42 levels while downside support targets remain the 107.12/ 106.57/ 105.18/ 102.94 levels.

£. The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.7535 level and was capped around the $1.8150 level. The pair lost about 565 pips last week. The U.K. government will waive the house tax purchases for one year on certain properties. BoE’s MPC kept repo unchanged at 5.0%.

Data released in the U.K. last week saw BoE July mortgage approvals sank to 33,000; August CIPS manufacturing climbed to 45.9; Hometrack August house prices were off 5.3% y/y; July net consumer credit increased to £1.1 billion; CIPS PMI services improved to 49.2; BRC August shop prices were up 3.8% y/y; Nationwide consumer confidence was unchanged at 52; and August Halifax house prices fell 12.7% y/y.

Technical Outlook
Last week’s high (1) was below the 61.8% retracement of the 1.7060-2.1159 range and last week’s low (2) was below the 76.4% retracement of the same range. Upside resistance targets include the 1.8031/ 1.8303/ 1.8631/ 1.9117 levels while downside support targets include the 1.7420/ 1.7060/ 1.6538 levels.

CHF. The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.1180 level and was supported around the CHF 1.0945 level. The pair gained about 140 pips last week.

Data released in Switzerland last week saw August manufacturing slow to 52.5; Q2 GDP was up 0.4% q/q and 2.3% y/y; and August consumer price inflation fell 0.3% m/m and was up 2.9% y/y.

Technical Outlook
Last week’s high (1) was above the 50.0% retracement of the 1.2476-0.9647 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.1395/ 1.1594/ 1.1808 levels while downside support targets include the 1.1061/ 1.0850/ 1.0727/ 1.0687 levels.

CAD. The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0725 level and was supported around the C$ 1.0600 level. The pair gained about 15 pips last week. Bank of Canada kept its overnight rate target unchanged at 3.0% and the Bank Rate remains unchanged at 3.25%.

Data released in Canada last week saw the August unemployment rate remain unchanged at 6.1% and 15,200 new jobs were added.

Technical Outlook
Last week’s high (1) was below the 61.8% retracement of the 1.1875-0.9055 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 1.0797/ 1.0878/ 1.1204 levels while downside support targets include the 1.0465/ 1.0331/ 1.0186/ 1.0130/ 1.0069 levels.

AUD. The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.8025 level and was capped around the US$ 0.8580 level. The pair lost about 465 pips last week. RBA cut its benchmark cash rate by 25bps to 7.0%.

Data released in Australia last week saw Q2 gross company profits were up 14.3% q/q; Q2 business inventories were up 0.3%; the Q2 current account balance printed at –A$ 12.77 billion; July building approvals were off 2.3%; Q2 GDP was up 0.3% q/q and 2.7% y/y; and the July trade balance printed at –A$ 717 million.

Technical Outlook
Last week’s high (1) was above the 61.8% retracement of the 0.7673-0.9849 range and last week’s low (2) was above the 76.4% retracement of the same range. Upside resistance targets include the 0.8186/ 0.8504/ 0.8761/ 0.9017 levels while downside support targets include the 0.7638/ 0.7015 levels.

SCHEDULE

Sunday, 7 September 2008. all times GMT (last release in parentheses)

N/A NZ August QV house prices (-2.2% y/y)
2300 Australia Reserve Bank of Australia Governor Stevens testifies
2350 Japan August bank lending (2.5% y/y)
2350 Japan August M2+CD money supply (2.1% y/y)

Monday, 8 September 2008. all times GMT. (last release in parentheses)

N/A Japan August economy watchers survey, current (29.3)
N/A Japan August economy watchers survey, outlook (30.8)
N/A Japan August machine tool orders (-8.9% y/y)
0130 Australia August ANZ job advertisements (-0.3% m/m)
0545 CH August unemployment rate (2.3%)
0830 UK August producer price index, input (-0.6% m/m)
0830 UK August producer price index, input (30.1% y/y)
0830 UK August PPI, output (0.4% m/m)
0830 UK August PPI, output (10.2% y/y)
0830 UK August PPI, core output (0.3% m/m)
0830 UK August PPI, core output (6.7% y/y)
0830 UK July industrial production (-0.2% m/m)
0830 UK July industrial production (-1.6% y/y)
0830 UK July manufacturing production (-0.5% m/m)
0830 UK July manufacturing production (-1.3% y/y)
0830 Eurozone September investor confidence (-15.3)
1230 Canada July building permits (-5.3% m/m)
1900 US July consumer credit (US$ 14.3 billion)
2301 UK August NIESR GDP estimate (0.1%)
2301 UK August BRC retail sales monitor
2301 UK August RICS house price balance (-83.9%)

Tuesday, 9 September 2008. all times GMT. (last release in parentheses)

N/A NZ August REINZ house sales (-32.6% y/y)
0130 Australia July retail sales (-1.0%)
0130 Australia August NAB business confidence (-9)
0130 Australia August NAB business conditions (-5)
0130 Australia July home loans (-3.7%)
0130 Australia July value of loans (-1.1% m/m)
0130 Australia July investment lending (-0.3%)
0600 Germany July trade balance (€19.7 billion)
0600 Germany July current account (€18.5 billion)
1215 Canada August housing starts (186,500)
1400 US July pending home sales (5.3% m/m)
1400 US July wholesale inventories (1.1%)
2245 NZ Q2 terms of trade index (4.1% q/q)
2350 Japan August domestic corporate goods price index (2.0% m/m)
2350 Japan August domestic corporate goods price index (7.1% y/y)
2350 Japan July trade balance (¥252.1 billion)
2350 Japan July current account (¥493.9 billion)

Wednesday, 10 September 2008. all times GMT. (last release in parentheses)

0030 Australia September Westpac consumer confidence (9.1%)
0500 Japan July leading index (91.3)
0500 Japan July coincident index (101.6)
0645 France July trade balance (-€5.6 billion)
0645 France July industrial production (-0.4% m/m)
0645 France July industrial production (-1.6% y/y)
0645 France July manufacturing production (-0.8% m/m)
0645 France July manufacturing production (-2.1% y/y)
0830 UK July visible trade balance (-£7.684 billion)
0900 Italy Q2 GDP
1100 UK MBA mortgage applications
1230 Canada Q2 labour productivity (-0.3% q/q)
2100 NZ Reserve Bank of New Zealand interest rate decision
2245 NZ August food prices (0.6% m/m)
2350 Japan July machine orders (-2.6% m/m)
2350 Japan July machine orders (9.7% y/y)
2350 Japan Foreign purchases of Japanese equities and bonds
2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 11 September 2008. all times GMT. (last release in parentheses)

0000 NZ August PMI (48.8)
0100 Australia September consumer inflation expectations (4.9%)
0130 Australia August unemployment rate (4.3%)
0130 Australia August employment, change (10,900)
0645 France Q2 non-farm payrolls
0800 Eurozone European Central Bank monthly report
0945 Eurozone European Commission economic growth forecasts
1230 US July trade balance (-US$ 56.8 billion)
1230 US August import price index (1.7% m/m)
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1230 Canada July international merchandise trade (C$ 5.8 billion)
1230 Canada July new housing price index (0.1% m/m)
2245 NZ July retail sales (0.9% m/m)
2245 NZ July retail sales, ex-autos (0.0% m/m)
2350 Japan Q2 GDP (-0.6% q/q)
2350 Japan Q2 GDP, annualized (-2.4%)
2350 Japan Q2 GDP, deflator

Friday, 12 September 2008. all times GMT. (last release in parentheses)

0430 Japan July industrial production
0430 Japan July capacity utilization (-1.7% m/m)
0630 France August Bank of France business sentiment (92)
0645 France August consumer price index (-0.2% m/m)
0645 France August consumer price index (3.6% y/y)
0645 France August CPI, harmonized (-0.3% m/m)
0645 France August CPI, harmonized (4.0% y/y)
0800 Italy July industrial production (0.1% m/m)
0800 Italy July industrial production (-1.8% y/y)
0900 Eurozone Q2 employment (1.6% y/y)
0900 Eurozone July industrial production (0.0% m/m)
0900 Eurozone July industrial production (-0.5% y/y)
1230 US August retail sales (-0.1%)
1230 US August retail sales, ex-autos (0.4%)
1230 US August PPI (1.2% m/m)
1230 US August PPI (9.8% y/y)
1230 US August PPI, ex-food and energy (0.7% m/m)
1230 US August PPI, ex-food and energy (3.5% y/y)
1230 Canada Q2 capacity utilization (79.8%)
1400 US September University of Michigan consumer sentiment
1400 US July business inventories (0.7%)

On Friday, a disappointing U.S. nonfarm payrolls report proved no match for dollar strength against the euro and the U.K. pound.
The greenback climbed higher versus the euro on Friday but data from U.S. government showed jobs were lost for the eighth straight month and the unemployment rate jumped unexpectedly, causing doubts about the resilience of the U.S.
The Euro traded lower as EURJPY was sold hard in the Asian session then continued to track lower before US data allowed a recovery. German Industrial Production was considerable weaker than expected at -1.8% vs. forecasts of -0.5%.EURUSD traded with a low of 1.4197 and a high of 1.4347 and closed the day at 1.4241.
The British pound has fallen nearly 2 percent last week as Credit Suisse overnight index swaps have gone from pricing in 75bps worth of cuts last Friday to almost 100bps (96.8 to be exact) at this week's close. Indeed, news out of the UK has done little to change the gloomy outlook for the UK. The Bank of England's rate decision was essentially a non-event, as the left rates at 5.00 percent and did not issue a monetary policy statement.
The Japanese yen strengthened against the dollar as investors became risk-averse and unwound their carry trades spooked by a 3 % slump in major US stock indices. The yen rallied against most major currencies as fears over global recession heightened, due to credit-market losses.
The Canadian dollar strengthened against the US dollar as stronger than expected Canadian employment data was released.
A bailout by U.S. regulators of troubled mortgage giants Freddie Mac and Fannie Mae injected life into the battered Australian dollar and pushed government bond prices lower Monday as a surge in risk appetite boosted high yielding currencies.

EURUSD fall as European fund players enter market selling, to take profits after morning gains following Freddie, Fannie bailout plan news. The news caused yen-crosses to rise in the morning and helped the EURUSD up as well. But it is difficult to give forecast what kind of effect this news will have in the longer run. Now players are just taking short-term profits. Expected volatile trading will continue today.
The euro is higher against the dollar and yen, but the gains may be temporary because of worry over the slumping euro-zone economy.
Looking ahead to next week, economic releases will be the light side, though UK producer prices are anticipated to reflect weakening cost growth thanks to the August drop in commodities. Meanwhile, UK industrial production is forecasted to fall or stagnate for the fifth consecutive month.

Date Time:GMT Currency Indicator Forecast Prior
2008-09-08 05:00 JPY Economy Watchers Current Index 29.7 29.3
2008-09-08 05:45 CHF Unemployment Rate 2.5% 2.5%
2008-09-08 08:30 EUR Sentix Investor Confidence -18.4 -15.3
2008-09-08 08:30 GBP PPI Input m/m -1.2% -0.6%
2008-09-08 08:30 GBP PPI Output m/m 0.1% 0.4%
2008-09-08 12:30 CAD Building Permits m/m -1.0% -5.3%
2008-09-08 17:00 USD FOMC Member Fisher Speaks
2008-09-08 19:00 USD Consumer Credit m/m 8.6B 14.3B
2008-09-08 23:01 GBP BRC Retail Sales Monitor y/y -0.9%
2008-09-08 23:01 GBP RICS House Price Balance -85.0% -83.9%
2008-09-08 23:01 GBP NIESR GDP Estimate 0.1%

On Monday, the dollar's inroads versus the euro remained safe after the U.S. Treasury's decision to put Freddie Mac (FRE) and Fannie Mae (FNM) under conservatorship, although hazard lights could be flashing up ahead.
EURUSD sank to an 11-month low of 1.4051 as the rescue news bolstered dollar sentiment. The dollar regained the initial losses and EURUSD already set a new reaction low in the 1.4165 area before the start of US trading. The move was extended later in US trading (supported by declining oil prices at that time) with a new correction low in the 1.4051 area. EURUSD closed the session at 1.4128 compared to 1.4267 on Friday.

Sterling had more to do with US dollar price action, but the moves were notable nonetheless. GBPUSD managed to trade in a nearly 500 point range of approximately 1.75 - 1.80, but ultimately ended the day by consolidating in a smaller range of 1.7550 - 1.7625.
On Monday, USDJPY rebounded on the GSE measures announced over the weekend. Unwinding of safe haven flows weighed on the yen. USDJPY closed the session at 108.28, only a limited gain compared to the 107.73 close on Friday last week.
The Australian dollar dropped to its lowest level in almost 13 months in Asia Tuesday as a run up in market confidence following U.S. Treasury's bailout of Fannie Mae and Freddie Mac reversed sharply.

Market expectation

USDJPY - traders reporting stops building on a break of JPY107.20 this morning.
Australian dollar looks poised to test the psychologically crucial US$0.80 level in coming weeks as investors continue to reweigh their preferences to the U.S. dollar away from commodities.
EURUSD, EURJPY on slight rise now but likely to resume downtrend later today as currency players have unclear how to interpret the U.S. government's GSE rescue plan. Looks they will follow cues from the stocks and commodities markets. EURUSD may target 1.40 later as growing pessimism toward the euro zone economy adds pressure on the euro.
UK July Industrial Orders are expected to fall -0.1% and the August Manufacturing production is expected to fall -1.1% vs. -1.3% in July.
The European calendar is almost empty and in the US only some second tier release (weekly retail sales, wholesale inventories and pending home sales) are scheduled for release.
Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-09 01:30 AUD Home Loans m/m 0.0% -3.7%
2008-09-09 01:30 AUD Retail Sales m/m 0.5% -1.0%
2008-09-09 01:30 AUD NAB Business Confidence -9
2008-09-09 06:00 EUR German Trade Balance 17.5B 18.1B
2008-09-09 06:00 JPY Machine Tool Orders y/y -8.9%
2008-09-09 08:30 GBP Manufacturing Production m/m -0.1% -0.5%
2008-09-09 08:30 GBP Industrial Production m/m -0.1% -0.2%
2008-09-09 12:15 CAD Housing Starts 194K 187K
2008-09-09 13:00 USD Fed Chairman Bernanke Speaks
2008-09-09 14:00 USD Pending Home Sales m/m -1.2% 5.3%
2008-09-09 14:00 USD IBD/TIPP Economic Optimism 43.9 42.8
2008-09-09 14:00 USD Wholesale Inventories m/m 0.7% 1.1%
2008-09-09 22:45 NZD Overseas Trade Index q/q -1.7% 4.1%
2008-09-09 23:01 GBP NIESR GDP Estimate 0.1%
2008-09-09 23:30 ALL OPEC Press Conference
2008-09-09 23:50 JPY CGPI y/y 7.2% 7.1%
2008-09-09 23:50 JPY Current Account 1.34T 1.29T

€. The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4225 level and was supported around the $1.4045 level. The common currency reached its lowest level since 9 October 2007 before moving higher. The U.S. dollar is lower on rumours that Lehman Brothers is facing significant funding problems, and on ongoing ease regarding the U.S. financial sector. The Federal Reserve convenes in one week to deliberate monetary policy and is expected to keep the overnight federal funds rate unchanged at 2.25%. The fed funds futures market is currently only pricing in about a 2% chance the Fed will lift the fed funds target rate before the end of year, down from 22% yesterday. Data released in the U.S. today saw July wholesale inventories rise 1.4% while sales were off 0.3%. Additionally, the U.S. July pending home sales index was off 3.2% to 86.5, the latest evidence that the beleaguered U.S. housing market remains in the doldrums. In eurozone news, European Central Bank member Gonzalez-Paramo reported “serious efforts are need to improve the financial markets. The euro shook off data that saw Germany’s trade surplus narrow to €13.9 billion from €19.9 billion in June. The European Central Bank is expected to keep interest rates unchanged for at least the next couple of months. Euro bids are cited around the US$ 1.3840 level.

¥/ CNY. The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥107.05 level and was capped around the ¥108.40 level. Technically, today’s intraday low was right around the 23.6% retracement of the move from ¥95.70 to ¥110.65. The yen gained ground on growing concerns that U.S. investment banking giant Lehman Brothers is unable to secure necessary funding in the capital markets. Lehman traded as high as $66.58 this year and traded as low as $8.00 today, its lowest price since October 1998. Many traders believe the U.S. government and/ or Federal Reserve may need to facilitate a bail out Lehman Brothers, much as Bear Stearns was taken over in March. The yen gained ground on this speculation as traders were less inclined to sell yen and invest the proceeds in higher-yielding overseas asset markets. Data released in Japan overnight saw August machine tool orders off 14.2% y/y. The Nikkei 225 stock index climbed 1.77% to close at ¥12,400.65. Dollar bids are cited around the ¥103.20 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥150.85 level and was capped around the ¥153.50 level. The British pound and Swiss franc moved lower vis-à-vis the yen as the crosses tested bids around the ¥187.90 and ¥94.65 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8381 in the over-the-counter market, down from CNY 6.8433.

£. The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.7705 level and was supported around the $1.7505 level. Cable retraced some of yesterday’s intraday losses despite the release of soft U.K. economic data. First, July U.K. manufacturing output was off 0.4% m/m and 1.4% y/y, the fifth consecutive monthly decline in output. Second, BRC August retail sales were off 1.0% y/y, evidencing the worst summer period for U.K. retailers since 2005. Dealers await U.K. trade balance data next. Cable bids are cited around the $1.7420 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the £0.8005 level and was capped around the £0.8175 level.
CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1220 level and was capped around the CHF 1.1365 level. Staffing firm Manpower reported Swiss companies plan to increase their staffs in Q4. U.S. dollar offers are cited around the CHF 1.1390 level. The euro and British pound came off vis-à-vis the yen as the crosses tested bids around the CHF 1.5925 and CHF 1.9815 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)
EUR/ USD 1.4089 1.4200, 1.4045
USD/ JPY 107.91 108.40, 107.22
GBP/ USD 1.7584 1.7667, 1.7503
USD/ CHF 1.1352 1.1353, 1.1267
AUD/ USD 0.8081 0.8176, 0.8021
USD/CAD 1.0671 1.0688, 1.0601
NZD/USD 0.6713 0.6788, 0.6605
EUR/ JPY 151.91 153.52, 150.83
EUR/ GBP 0.8009 0.8050, 0.8007
EUR/ CHF 1.5987 1.6022, 1.5923
GBP/ JPY 189.56 190.95, 187.88
CHF/ JPY 94.99 95.86, 94.63

Support Resistance Support Resistance

EUR/ USD USD/ JPY
L1. 1.3840 1.4975 106.60 113.30
L2. 1.3320 1.5175 102.45 115.90
L3. 1.2675 1.5380 101.95 117.45

GBP/ USD USD/ CHF
L1. 1.7420 1.9135 1.0705 1.1475
L2. 1.6450 1.9525 1.0505 1.1610
L3. 1.5445 1.9835 1.0340 1.1910

AUD/ USD USD/ CAD
L1. 0.8095 0.8885 1.0440 1.0940
L2. 0.7910 0.9220 1.0130 1.1205
L3. 0.7685 0.9370 0.9720 1.1870

NZD/ USD EUR/ JPY
L1. 0.6590 0.7275 153.00 164.35
L2. 0.6440 0.7520 153.30 165.40
L3. 0.5930 0.8105 145.65 167.80

EUR/ GBP EUR/ CHF
L1. 0.7730 0.8310 1.5895 1.6250
L2. 0.7555 0.8570 1.5730 1.6470
L3. 0.7440 0.8790 1.5610 1.6760

GBP/ JPY CHF/ JPY
L1. 188.55 200.50 94.15 100.15
L2. 181.15 206.00 91.30 103.30
L3. 173.75 214.65 87.40 105.30

SCHEDULE Tuesday, 9 September 2008 all times GMT (last release in parentheses)
N/A NZ August REINZ house sales (-32.6% y/y)
0130 Australia July retail sales (-1.0%)
0130 Australia August NAB business confidence (-9)
0130 Australia August NAB business conditions (-5)
0130 Australia July home loans (-3.7%)
0130 Australia July value of loans (-1.1% m/m)
0130 Australia July investment lending (-0.3%)
0600 Germany July trade balance (€19.7 billion)
0600 Germany July current account (€18.5 billion)
1215 Canada August housing starts (186,500)
1400 US July pending home sales (5.3% m/m)
1400 US July wholesale inventories (1.1%)
2245 NZ Q2 terms of trade index (4.1% q/q)
2350 Japan August domestic corporate goods price index (2.0% m/m)
2350 Japan August domestic corporate goods price index (7.1% y/y)
2350 Japan July trade balance (¥252.1 billion)
2350 Japan July current account (¥493.9 billion)

Wednesday, 10 September 2008 all times GMT (last release in parentheses)

0030 Australia September Westpac consumer confidence (9.1%)
0500 Japan July leading index (91.3)
0500 Japan July coincident index (101.6)
0645 France July trade balance (-€5.6 billion)
0645 France July industrial production (-0.4% m/m)
0645 France July industrial production (-1.6% y/y)
0645 France July manufacturing production (-0.8% m/m)
0645 France July manufacturing production (-2.1% y/y)
0830 UK July visible trade balance (-£7.684 billion)
0900 Italy Q2 GDP
1100 UK MBA mortgage applications
1230 Canada Q2 labour productivity (-0.3% q/q)
2100 NZ Reserve Bank of New Zealand interest rate decision
2245 NZ August food prices (0.6% m/m)
2350 Japan July machine orders (-2.6% m/m)
2350 Japan July machine orders (9.7% y/y)
2350 Japan Foreign purchases of Japanese equities and bonds
2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 11 September 2008
all times GMT
(last release in parentheses)

0000 NZ August PMI (48.8)
0100 Australia September consumer inflation expectations (4.9%)
0130 Australia August unemployment rate (4.3%)
0130 Australia August employment, change (10,900)
0645 France Q2 non-farm payrolls
0800 Eurozone European Central Bank monthly report
0945 Eurozone European Commission economic growth forecasts
1230 US July trade balance (-US$ 56.8 billion)
1230 US August import price index (1.7% m/m)
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1230 Canada July international merchandise trade (C$ 5.8 billion)
1230 Canada July new housing price index (0.1% m/m)
2245 NZ July retail sales (0.9% m/m)
2245 NZ July retail sales, ex-autos (0.0% m/m)
2350 Japan Q2 GDP (-0.6% q/q)
2350 Japan Q2 GDP, annualized (-2.4%)
2350 Japan Q2 GDP, deflator

Friday, 12 September 2008
all times GMT
(last release in parentheses)

0430 Japan July industrial production
0430 Japan July capacity utilization (-1.7% m/m)
0630 France August Bank of France business sentiment (92)
0645 France August consumer price index (-0.2% m/m)
0645 France August consumer price index (3.6% y/y)
0645 France August CPI, harmonized (-0.3% m/m)
0645 France August CPI, harmonized (4.0% y/y)
0800 Italy July industrial production (0.1% m/m)
0800 Italy July industrial production (-1.8% y/y)
0900 Eurozone Q2 employment (1.6% y/y)
0900 Eurozone July industrial production (0.0% m/m)
0900 Eurozone July industrial production (-0.5% y/y)
1230 US August retail sales (-0.1%)
1230 US August retail sales, ex-autos (0.4%)
1230 US August PPI (1.2% m/m)
1230 US August PPI (9.8% y/y)
1230 US August PPI, ex-food and energy (0.7% m/m)
1230 US August PPI, ex-food and energy (3.5% y/y)
1230 Canada Q2 capacity utilization (79.8%)
1400 US September University of Michigan consumer sentiment
1400 US July business inventories (0.7%)

EURUSD has returned above 1.4100 after recently dipping to an intraday low at 1.4074, now slightly stronger than late Tuesday in NY. USDJPY has regained the 107 level, putting it up on the day compared with late Tuesday. Some up and-down activity in early NY trading, but movements have so far been confined to narrow ranges in the wake of the announcement from Lehman Brothers that it is essentially dismantling its operations. EURUSD was at 1.4121 from 1.4104 late Tue. USDJPY was at 107.34 from 107.15.
The euro declined to an intraday low against the yen and dollar as currency traders educed that the significance of a worse-than-expected third quarter earnings report from troubled U.S. bank Lehman Brothers (LEH) isn't isolated to U.S. markets.
The euro's fall Wednesday also follows speeches by European Central Bank President Jean Claude Trichet and Luxembourg Finance Minister and Prime Minister Jean-Claude Juncker.
World indexes:
DJIA 0.67%
S&P500 0.83%
NASDAQ 0.91%
CAC40 -0.23%
DAX -0.44%
NIKKEI -0.44%

Movers & Shakers:
NZD/USD +0.72%
AUD/USD +0.42%
EUR/CHF +0.33%
GBP/CHF +0.28%
USD/CAD +0.26%
USD/CHF +0.24%
EUR/GBP +0.18%
AUD/JPY +0.16%
EUR/USD +0.11%
GBP/USD -0.07%
EUR/JPY -0.12%
USD/JPY -0.23%
GBP/JPY -0.27%
EUR/AUD -0.31%
CAD/JPY -0.45%
CHF/JPY -0.50%

Important levels:
Support Resistance
EUR/USD
1.4019 1.4199
1.3943 1.4303
1.3839 1.4379
GBP/USD
1.7494 1.7695
1.7400 1.7802
1.7293 1.7896
USD/CHF
1.1215 1.1366
1.1140 1.1441
1.1065 1.1516
USD/JPY
106.38 107.87
105.78 108.77
104.88 109.37




Dukascopy analytic desk report
Published: 10 September 2008 at 13.55 GMT
Previous session overview
EURUSD has returned above 1.4100 after recently dipping to an intraday low at 1.4074, now slightly stronger than late Tuesday in NY. USDJPY has regained the 107 level, putting it up on the day compared with late Tuesday. Some up and-down activity in early NY trading, but movements have so far been confined to narrow ranges in the wake of the announcement from Lehman Brothers that it is essentially dismantling its operations. EURUSD was at 1.4121 from 1.4104 late Tue. USDJPY was at 107.34 from 107.15.
The euro declined to an intraday low against the yen and dollar as currency traders educed that the significance of a worse-than-expected third quarter earnings report from troubled U.S. bank Lehman Brothers (LEH) isn't isolated to U.S. markets.
The euro's fall Wednesday also follows speeches by European Central Bank President Jean Claude Trichet and Luxembourg Finance Minister and Prime Minister Jean-Claude Juncker.
Market expectation
Low rates after a year of aggressive easing to confront the U.S. credit crunch is the dollar's biggest impediment to more permanent gains against the euro. Analysts also say that the Lehman results have a global significance, and the euro remains sensitive to fears that the euro zone is facing recession. The dollar has been gaining over the last month against the euro on that belief.
Technically Euro continues to trade with a heavy tone and given 10-day momentum and 14-day RSI studies are making new lows for the move -- the risk is on a break below USD1.4046 recent low. Below here, support is located at October 2007 low at USD1.4016 and nothing significant until USD1.3890 -- support line from February 2002.
Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-10 00:30 AUD MI Consumer Sentiment m/m 9.1%
2008-09-10 05:00 JPY Leading Indicators 91.8% 91.0%
2008-09-10 06:45 EUR French Industrial Production m/m 0.1% -0.6%
2008-09-10 06:45 EUR French Trade Balance -5.1B -5.4B
2008-09-10 07:00 EUR ECB President Trichet Speaks
2008-09-10 08:30 GBP Trade Balance -7.5B -8.0B
2008-09-10 10:15 CHF Gov Board Member Hildebrand Speaks
2008-09-10 12:30 CAD Labor Productivity q/q 0.1% -0.3%
2008-09-10 13:00 CHF Gov Board Member Jordan Speaks
2008-09-10 14:30 GBP CB Leading Index m/m -1.0%
2008-09-10 14:35 USD Crude Oil Inventories -4.8M -1.9M
2008-09-10 21:00 NZD Monetary Policy Statement
2008-09-10 21:00 NZD Official Cash Rate 7.75% 8.00%
2008-09-10 22:45 NZD FPI m/m 0.6%
2008-09-10 23:50 JPY Core Machinery Orders m/m -4.1% -2.6%

Japan Stocks Fall on Lehman's Loss, Decline in Machine Orders
Sept. 11 (Bloomberg) -- Japan stocks dropped on concern falling asset values will batter global financial companies and the slowing economy will cut investment in manufacturing.

Nomura Holdings Inc., Japan's biggest brokerage, dived 6 percent after Lehman Brothers Holdings Inc. reported a record loss, while Mitsubishi UFJ Financial Group Inc., the nation's largest listed bank, slumped 4 percent. Sumitomo Heavy Industries Ltd. sent equipment makers to the lowest in three years after Japan's machine orders dropped last month.

``Global securities firms and investment banks can no longer count on the securitization deals that have kept them profitable in recent years,'' said Yuuki Sakurai, a Tokyo-based general manager at Fukoku Mutual Life Insurance Co., which manages about $54 billion. ``There're no investors willing to buy securitized products.''

The Nikkei 225 Stock Average retreated 168.11, or 1.4 percent, to 12,178.52 as of 10:24 a.m. in Tokyo. The broader Topix index slumped 20.91, or 1.8 percent, to 1,171.47. More than three stocks fell for each that rose on the Topix.

Lehman, the fourth-biggest U.S. brokerage, yesterday reported a $3.9 billion third-quarter loss, the biggest in its 158-year history, and 77 percent wider than analysts had estimated. That helped push global writedowns and credit losses caused by the collapse in the U.S. mortgage market to $511 billion, according to figures compiled by Bloomberg News.

Nomura slid 6 percent to 1,439 yen, while Shinko Securities Co. sank 5 percent to 304 yen. Mitsubishi UFJ dropped 4 percent to 832 yen and Sumitomo Mitsui Financial Group Inc., Japan's third-biggest listed bank, retreated 4.1 percent to 653,000 yen. Brokerages and banks were the biggest losers among 33 industry groups on the Topix.

Machinery Orders

``Investors expected positive news from Lehman, which, as it turns out, didn't deliver anything good,'' Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co. in Tokyo, said in an interview with Bloomberg Television.

Sumitomo Heavy industries Ltd. declined 3.6 percent to 477 yen. Mitsubishi Heavy Industries Ltd. fell 2 percent to 481 yen. Machinery makers as a group headed for the lowest close since August 2005.

Equipment orders fell in July for a second-straight month, declining 3.9 percent drop from June, the Cabinet Office today said before markets opened. Economists had estimated orders, an indicator of capital spending in the next three to six months, fell 3.6 percent.

Softbank Corp., Japan's third-biggest mobile-phone carrier, extended its gain to a second day, jumping 3 percent to 1,694 yen after Morgan Stanley raised its rating on the stock to ``overweight/in-line'' from ``equal-weight/in-line.'' Softbank traded at 16 times its earnings on Sept. 9, the lowest in at least a year.

Nikkei futures expiring in September retreated 1.3 percent to 12,170 in Osaka and slumped 1.2 percent to 12,180 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Asian Stocks Decline to Lowest Since June 2006; Banks Retreat
Sept. 11 (Bloomberg) -- Asian stocks fell, driving the benchmark index to its lowest level since June 2006, as financial companies slumped on concern that credit-market losses will widen and carmakers fell on signs of slowing growth in Europe.

Mitsubishi UFJ Financial Group Inc. and Australia & New Zealand Banking Group Ltd. declined more than 3 percent after Lehman Brothers Holdings Inc. posted a wider loss than analysts estimated. Mazda Motor Corp., which gets more than half of its operating profit in Europe, tumbled 7.2 percent after the European Commission cut the euro area's growth outlook. Fanuc Ltd. slid 1.3 percent after Japan's machinery orders fell.

``Investors expected positive news from Lehman, which, as it turns out, didn't deliver anything good,'' Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co. in Tokyo, said in an interview with Bloomberg Television.

The MSCI Asia Pacific Index lost 1 percent to 116.59 as of 10:33 a.m. in Tokyo, extending a two-day, 3 percent drop. Financial stocks were the biggest contributor to the measure's decline.

Japan's Nikkei 225 Stock Average lost 1.5 percent to 12,162.54. All other benchmark indexes in the region declined apart from New Zealand's NZX 50 Index, which rallied 0.8 percent after the central bank cut its benchmark interest rate by a half point to 7.5 percent, more than economists expected.

U.S. stocks rose yesterday, with the Standard & Poor's 500 Index advancing 0.6 percent to 1,232.04, as investors bought energy shares trading at their cheapest level in 18 months.

Mitsubishi UFJ, Japan's biggest bank, lost 4.3 percent to 830 yen. ANZ, Australia's fourth-largest by market value, slid 3.5 percent to A$17.

Record Loss

Lehman said yesterday it posted a $3.9 billion third-quarter loss on $5.6 billion of writedowns, worse than the $2.2 billion loss analysts had predicted. Chief Executive Officer Richard Fuld is striving to convince investors that the fourth-largest U.S. securities firm will stem losses as housing prices fall.

Mizuho Financial Group Inc., Japan's second-biggest bank by assets, retreated 3.8 percent to 452,000 yen. Kookmin Bank, South Korea's biggest, lost 3.2 percent to 58,500 won.

Lehman's loss pushed global writedowns and credit losses caused by the collapse in the U.S. mortgage market to $511 billion, according to figures compiled by Bloomberg News.

Mazda slumped 7.2 percent to 480 yen, set for its lowest close since May 28.

The 15-nation euro region's economy will probably stagnate this quarter after shrinking in the previous three months for the first time since the euro was introduced in 1999, the Brussels-based commission said yesterday. The commission lowered its full-year growth forecast to 1.3 percent, from 1.7 percent earlier, and signaled the 2009 outlook may also be cut.

Fanuc lost 1.3 percent to 7,590 yen, the lowest since July 2005. Sumitomo Heavy Industries Ltd., Japan's largest maker of plastic injection-molding gear, dropped 4 percent to 475 yen.

Japan's machinery orders declined 3.9 percent in July from the previous month, the Cabinet Office today. Economists had estimated orders, an indicator of capital spending in the next three to six months, would fall 3.6 percent.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Motoko Kakizaki in Tokyo at mkakizaki@bloomberg.net.

€. The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4010 level and was capped around the US$ 1.4180 level. The common currency reached its lowest level since 20 September 2007 as traders reacted to a variety of factors. First, troubled U.S. investment banking giant Lehman Brothers accelerated its earnings release and was trading higher than yesterday’s close of US$ 7.79. Second, Eurogroup chairman Juncker said there is a risk of a “technical recession” in the eurozone. Third, EMU-15 finance ministers and central bank governors will meet in Nice on Friday and Saturday and their agenda has changed so policymakers can address the abrupt slowdown in European economies. Fourth, the European Commission slashed its 2008 eurozone growth forecast to 1.3%, half of 2007’s growth rate of 2.6%. Fifth, European Central Bank President Trichet acknowledged the eurozone is facing a slowdown in economic growth. Data released in the eurozone today saw French July industrial production climb 1.2% m/m. Traders await July trade balance data tomorrow in the U.S. along with weekly jobless claims data. Euro bids are cited around the US$ 1.3840 level.

¥/ CNY. The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥107.95 level and was supported around the ¥106.60 level. Technically, today’s intraday low was right around the 38.2% retracement of the move from ¥124.13 to ¥95.70. Data released in Japan overnight saw August wholesale inflation remain near a 27-year high as the corporate goods price index rose 7.2% m/m and the core consumer price index rose 2.4% y/y. Other data saw the July current account surplus fall 17.3% y/y. Traders await the release of April-June GDP data on Friday and many economists expect a larger economic contraction than previously thought. Other data saw the July coincident indicator index climb +0.9 points. The Nikkei 225 stock index lost 0.44% to close at ¥12,346.63. Dollar bids are cited around the ¥103.20 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥152.50 level and was supported around the ¥150.15 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥190.10 and ¥95.45 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8385 in the over-the-counter market, up from CNY 6.8381. Data released in China today saw August consumer price inflation up 4.9% y/y while August producer price inflation was up 10.1% y/y. Also, actual foreign direct investment was up 41.6% y/y at US$ 67.73 billion between January and August and the August trade surplus stood at a record US$ 28.69 billion in August.

£. The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.7540 level and was capped around the $1.7675 level. Cable traded at its lowest level since April 2006. NIESR reported the U.K. economy contracted 0.2% in the three months to August after contracting 0.1% in the three months to July. Also, the U.K.’s global goods deficit shrank to -£7.7 billion in July from a revised -£8.0 billion in June. Bank of England Monetary Policy Committee member Gieve reported “At 4.4 percent it certainly hasn't peaked yet. We're expecting it to rise further in the next month or two and probably to stay there for several months. Our latest forecast in August did show a period of flat output for most of the coming year, and certainly this is a sharp slowdown. But it's what we're expecting and what is required given the current level of inflation at 4.4 per cent. We've got to make sure this is a spike, a temporary move, and that inflation does come down next year towards target. But on the other hand we're very aware of the risk of perhaps overdoing it and causing an unnecessary slowdown in activity." Cable bids are cited around the $1.7420 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the £0.7985 level and was capped around the £0.8040 level.

CHF. The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1365 level and was supported around the CHF 1.1240 level. Swiss National Bank directorate member Jordan reported Switzerland’s mortgage market has avoided a credit crunch. SNB is expected to keep its target rate for three-month Swiss franc LIBOR unchanged at 2.75% on 18 September. U.S. dollar offers are cited around the CHF 1.1390 level. The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.5985 and CHF 1.9945 levels, respectively.

On Wednesday, the euro fell below USD1.400 in a final late day push by traders after testing the key psychological level throughout the New York session.
The euro declined as low as USD1.3989, its lowest mark since Sept. 20, 2007, despite another sign of distress in U.S. financial markets. On Wednesday, the picture of EURUSD trading wasn't much different from the previous sessions. The pair is grabbed in a forceful downtrend and there is hardly any news able to turn around sentiment. The pair closed the session at 1.3998, again a decent loss compared to the 1.4133 close on Tuesday.
The Pound Sterling weakened against the dollar and the yen as troubled results were released from Lehman Brothers. The pound remains under pressure as confidence in the UK government and the Bank of England to prop up the sharply slowing economy, via interest rate cuts or fiscal measures, is thin.
The Japanese yen slipped against most of the majors, especially versus the Canadian dollar, Australian dollar, and US dollar. Indeed, in the aftermath of the US government's seizure of Fannie Mae and Freddie Mac, risky assets have been quite volatile. USDJPY gradually moved higher throughout the trading session. The pair started trading in the 107 area early in Asian trading and closed the session at around 107.70.
The Canadian dollar strengthened against the US dollar with the rebound in oil prices.
The Australian dollar was below the psychologically crucial US$0.80 mark in Asia late Thursday, as currency traders sold the currency in tandem with the New Zealand dollar after a larger than expected interest rate cut by the New Zealand central bank. The Australian dollar was sold off heavily with the New Zealand dollar as investors began to price in expectations Australia's central bank would also need to cut its interest rates harder and faster than

previously expected. Market expectation
EURJPY has slipped back to overnight lows in as EURUSD also trades with a heavy tone. Bids are said to stretch into JPY149.50 barrier interest with stops below, with the August 2007 spike low at JPY149.25 then looking vulnerable on a deeper move.
Analysts say fact that AUD failed to hold above US$0.80 suggests it's still a sell on rallies. The big picture beyond those two events today is that you're seeing the U.S. dollar at one-year highs, you're seeing oil prices fall, you're seeing gold down at US$750 an ounce - that's not a good environment for the Aussie to rebound.
The euro is falling Thursday against the dollar and the yen, and faces more losses as investors continue to liquidate positions.
Traders are also buying back the less risky, lower-yielding yen. That kept the dollar within a narrow trading range against the yen Wednesday, although the euro sank to a fresh one-year low of JPY150.15.
Today, the calendar becomes more interesting as the trade balance for July, the August import price index and weekly claims will be released.
Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-11 01:00 AUD MI Inflation Expectations 4.9%
2008-09-11 01:30 AUD Employment Change 5.5K 18.7K
2008-09-11 01:30 AUD Unemployment Rate 4.4% 4.3%
2008-09-11 06:00 EUR German WPI m/m -0.3% 1.4%
2008-09-11 06:45 EUR French Final Non-Farm Payrolls q/q -0.1% -0.1%
2008-09-11 08:00 EUR ECB Bulletin
2008-09-11 08:30 GBP BOE Inflation Attitudes 4.3%
2008-09-11 08:45 GBP MPC Treasury Committee Hearings
2008-09-11 12:30 USD Unemployment Claims 440K 444K
2008-09-11 12:30 USD Import Prices m/m -1.6% 1.7%
2008-09-11 12:30 USD Trade Balance -58.0B -56.8B
2008-09-11 12:30 CAD NHPI m/m 0.1% 0.1%
2008-09-11 12:30 CAD Trade Balance 5.6B 5.8B
2008-09-11 14:35 USD Natural Gas Storage 88B 90B
2008-09-11 18:00 EUR ECB President Trichet Speaks
2008-09-11 18:45 USD FOMC Member Kohn Speaks
2008-09-11 22:45 NZD Core Retail Sales m/m 0.2% 0.0%
2008-09-11 22:45 NZD Retail Sales m/m -0.3% 0.9%
2008-09-11 23:50 JPY Final GDP q/q -0.9% -0.6%
2008-09-11 23:50 JPY Final GDP Price Index y/y -1.6% -1.6%

The dollar and the yen are extending their sharp gains versus the euro early Thursday in New York as investors pull risky assets amid fears over the future of major U.S. investment bank Lehman Brothers.

U.S. data out Thursday provided an additional boost for the yen, as the trade deficit surged in July to its highest level in 16 months.
That pushed the dollar to an intra-day and four session low against the yen of JPY106.37. But the dollar, which has been rallying broadly against European currencies for two months amid signs of sharp economic weakness in Europe, remains stronger against the euro and the U.K. pound Thursday.
Early Thursday in New York, the euro was at USD1.3932 from USD1.4015 late Wednesday. The dollar was at JPY106.78 from JPY107.60. The euro was at JPY148.74 from JPY150.76. The U.K. pound was at USD1.7534 from USD1.7539, and the dollar was at CHF1.1382 from CHF1.1364.
Canada's trade surplus slipped in July, dropping down to C$4.9B from June's revised C$5.6B.
USDCAD is slightly higher after both Canada and the US released trade data for July, with news that the US trade deficit increased to USD62.2B from USD58.8B in June.

Market expectation
EURUSD has backtracked to USD1.3915 area after notching a high around USD1.3975 in post-data trading with EURUSD back again to within striking distance of overnight lows at USD1.3893. Risk positions being unwound all over. Euro downside options are being priced at a feverish pace. Bids are USD1.3890, stops below.
Analysts doubt that negative U.S. data will anything more than a transitory dent, and any USD selling will be quickly counter-traded as the dollar reversed its earlier reaction to a wide trade deficit.

Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-11 01:00 AUD MI Inflation Expectations 4.9%
2008-09-11 01:30 AUD Employment Change 5.5K 18.7K
2008-09-11 01:30 AUD Unemployment Rate 4.4% 4.3%
2008-09-11 06:00 EUR German WPI m/m -0.3% 1.4%
2008-09-11 06:45 EUR French Final Non-Farm Payrolls q/q -0.1% -0.1%
2008-09-11 08:00 EUR ECB Bulletin
2008-09-11 08:30 GBP BOE Inflation Attitudes 4.3%
2008-09-11 08:45 GBP MPC Treasury Committee Hearings
2008-09-11 12:30 USD Unemployment Claims 440K 444K
2008-09-11 12:30 USD Import Prices m/m -1.6% 1.7%
2008-09-11 12:30 USD Trade Balance -58.0B -56.8B
2008-09-11 12:30 CAD NHPI m/m 0.1% 0.1%
2008-09-11 12:30 CAD Trade Balance 5.6B 5.8B
2008-09-11 14:35 USD Natural Gas Storage 56B 90B
2008-09-11 18:00 EUR ECB President Trichet Speaks
2008-09-11 18:00 USD Federal Budget Balance -106.2B -102.8B
2008-09-11 18:45 USD FOMC Member Kohn Speaks
2008-09-11 22:45 NZD Core Retail Sales m/m 0.2% 0.0%
2008-09-11 22:45 NZD Retail Sales m/m -0.3% 0.9%
2008-09-11 23:50 JPY Final GDP q/q -0.9% -0.6%
2008-09-11 23:50 JPY Final GDP Price Index y/y -1.6% -1.6%

On Friday, the dollar rose against major currencies amid some optimism that the U.S. economy may bottom out soon.
The U.S. dollar was relatively strong during a very volatile session where most traders decided to take profits ahead of the Labor Day holiday.
The euro held gains, boosted by a weaker dollar and reduced expectations of a rate cut in the euro zone. EURUSD peaked early to 1.4722, but the momentum failed and the pair eventually slid to a level of 1.4614 before leveling out near the 1.4640 region. EURUSD traded with a low of 1.4640 and a high of 1.4768 before closing the day at 1.4675 in the New York session.
For Friday's close, GBPUSD ended with a fresh 13-month low. On the week, the pair dropped below a major 38.2 percent retracement of a 7-year trend.
Though the Japanese currency couldn't win a major breakout against the dollar before the week ended, it was able to push the pair to boundaries of its range.

EURJPY fell back to JPY159.23 in the NY session Friday before a slight bounce to close around JPY159.70. Strong selling out of Tokyo was reported into early Asian dealing, together with a dip in sterling-yen as the pound tumbled on the back of weekend comments from UK's Darling. EURJPY triggered stops under the May lows at JPY158.65 en-route to session lows at JPY158.42 before a quick move back to trade just shy of JPY159.00.
Renewed strength in the U.S. dollar and a bout of selling by Japanese investors sent the Australian dollar sharply lower in Asian trading Monday. In thin trading conditions, creeping risk aversion was the dominant theme as strong buying of the yen pushed the Australian dollar to a five month low of JPY92.473.
Market expectation
The euro is slumping against the dollar and yen Monday, while traders wait for more euro-zone developments. Analysts see a chance for EURUSD to strengthen in the short term with the possibility of waning ECB rate cut expectations. Markets expect the ECB to keep rates the same Thursday. But, the quarterly economic forecast from the ECB staff could show an upward revision in inflation and a downward revision in economic growth.
Pound opened into the Asian session Monday around highs of USD1.8200, having been sold to a low of USD1.8173 in NY Friday. Market was waiting to react to the UK Chancellor Darling's comments, in an interview published Saturday in The Guardian, suggesting that the UK economy was facing its worst economic downturn in 60 years. Rate in initially dropped to USD1.8080 before a second wave of selling took it to lows of USD1.8005. Bids remain in place ahead of USD1.8000, with further interest noted to USD1.7990. Main stops noted on a break of USD1.7990, which if triggered seen opening a deeper move toward USD1.7955/45. Further demand noted at USD1.7930/20 ahead of USD1.7900. Offers are at USD1.8050, more between USD1.8070/80.

German Retail Sales are seen down -0.1% in July from -1.4% in June. Final Euro zone August PMI is expected to remain 47.5.

Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-12 04:30 JPY Revised Industrial Production m/m 0.9% 0.9%
2008-09-12 06:45 EUR French CPI m/m 0.1% -0.2%
2008-09-12 08:00 EUR Italian Industrial Production m/m -0.5% 0.1%
2008-09-12 09:00 EUR Industrial Production m/m -0.2% -0.2%
2008-09-12 09:00 EUR Employment Change q/q 0.3%
2008-09-12 10:30 GBP MPC Member Tucker Speaks
2008-09-12 12:30 USD Core PPI m/m 0.2% 0.7%
2008-09-12 12:30 USD Retail Sales m/m 0.2% -0.1%
2008-09-12 12:30 USD PPI m/m -0.5% 1.2%
2008-09-12 12:30 USD Core Retail Sales m/m -0.2% 0.4%
2008-09-12 12:30 CAD Capacity Utilization Rate 79.3% 79.8%
2008-09-12 13:55 USD Prelim UoM Consumer Sentiment 64.0 63.0
2008-09-12 13:55 USD Prelim UoM Inflation Expectations 4.8%

The dollar is down against the euro and yen Friday after a disappointing U.S. retail sales report extended an overnight run to book profits on fresh banking sector news.
U.S. retail sales fell a second straight month in August, down 0.3% on falling gasoline prices and the sluggish spending of timid consumers.
This is the first session after eight winning sessions that the dollar has failed to hit a new long-term high against the euro. On Thursday, the euro fell to a fresh one-year low of USD1.3882.
USD gained a bit, but EURUSD remains higher on the day after a Univ of Michigan mid-Sept report that beat expectations and rose from the previous month. Recently EURUSD was at 1.4128 from 1.3942 late Wed.
USDJPY chopped down to JPY106.73 area in a stop hunt a short while ago but then spikes higher as euro-yen gets a lift back over JPY151.00 area despite US stocks weakness.
Friday morning in New York, the euro was at USD1.4128 from USD1.3942 late Thursday. The dollar was at JPY106.84 from JPY106.88. The euro was at JPY151.10 from JPY149.15. The U.K. pound was at USD1.7785 from USD1.7517, and the dollar was at CHF1.1314 from CHF1.1408.

Market expectation

EURGBP - again seen meeting decent support from bids placed on the approach to stg0.7940. A break below here to open a deeper move back toward Thursday's lows at stg0.79215, with bids noted toward stg0.7920.
Sterling gets through USD1.7780 and progresses on to USD1.7794. Offers now seen placed toward USD1.7800, a break above to open a move on toward USD1.7820/25, ahead of USD1.7850 (76.4% USD1.7975/1.7445).
EURUSD lifted to USD1.4120 area before easing to current USD1.4110 with chatter mentioning Asian sovereign name as a recent buyer but pair now looking to test resolve of earlier noted supply to the highs. Traders say yesterday's talk of a Lehman rescue that included rate cut chatter may be hurting dollar, especially in the light of the PPI data that presumably encourages such speculation.

Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-12 04:30 JPY Revised Industrial Production m/m 0.9% 0.9%
2008-09-12 06:45 EUR French CPI m/m 0.1% -0.2%
2008-09-12 08:00 EUR Italian Industrial Production m/m -0.5% -0.2%
2008-09-12 09:00 EUR Industrial Production m/m -0.2% -0.2%
2008-09-12 09:00 EUR Employment Change q/q 0.3%
2008-09-12 10:30 GBP MPC Member Tucker Speaks
2008-09-12 12:30 USD Core PPI m/m 0.2% 0.7%
2008-09-12 12:30 USD Retail Sales m/m 0.2% -0.1%
2008-09-12 12:30 USD PPI m/m -0.5% 1.2%
2008-09-12 12:30 USD Core Retail Sales m/m -0.2% 0.4%
2008-09-12 12:30 CAD Capacity Utilization Rate 79.3% 79.8%
2008-09-12 13:55 USD Prelim UoM Consumer Sentiment 64.0 63.0
2008-09-12 13:55 USD Prelim UoM Inflation Expectations 4.8%

The woes of Lehman, Merrill Lynch and AIG weighed heavily on the greenback in a holiday-thinned session in Asia with risk aversion spiking and low yielders strongly outperforming. EURUSD peaked at 1.4482, GBPUSD at 1.8124 and USDJPY based at a near 2-month low of 104.53. However, the greenback makes a sharp comeback in Europe: oil below USD95bbl helps as does the flight to quality as European stocks markets are mostly down approaching 5% on the day. China surprised with a 27bp rate cut to 7.2%, effective Tuesday, which helps USDJPY recover. At midday EURUSD had based at 1.4085, GBPUSD 1.7771 while USDJPY trades at 105.60.
USD remains stronger against EUR on the day, and with all eyes on financial market woes the greenback showed little reaction to the release of the Empire State Manufacturing Survey, which indicated more weakness in the NY area's factory sector in Sept. Early Monday in NY, EURUSD was at 1.4135 from 1.4219 late Friday.
USDJPY has chopped back to JPY105.65 area after bouncing to JPY105.90 a short while ago on stop-driven demand and as euro-yen revisited the JPY150.00 area.
Canada's monthly new motor vehicle sales fell in July, reflecting lower sales of passenger cars built overseas. Sales were down 0.8% to a seasonally adjusted 141,818 units. Preliminary data from the auto industry indicate sales were lower again in August.
Market expectation
Pound continues to claw its way higher, as rate recovers off late European morning lows of USD1.7768, break above USD1.7850 allows rate to push on to USD1.7880. Offers seen placed toward USD1.7900, a break above to open a move on toward USD1.7950.
Traders say that volumes are light in the major FX pairs but flows are driven mainly by position liquidation across many sectors, the greenback getting a lift as risk positions are taken off across the board by those not already on the sidelines. As a result, dollar sees lift against any high-yielding emerging market currency while also showing gains against euro and other majors except yen. Flows are limited in spot, even more so in forwards as credit considerations take the driver's seat.
Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-15 01:30 AUD Housing Starts q/q -2.7% -1.0%
2008-09-15 07:15 CHF PPI m/m -0.2% 0.5%
2008-09-15 07:15 CHF Retail Sales y/y 2.3% 0.7%
2008-09-15 09:00 EUR ECB President Trichet Speaks
2008-09-15 12:30 CAD New Motor Vehicle Sales m/m 0.0% -1.0%
2008-09-15 12:30 USD Empire State Manufacturing Index 1.5 2.8
2008-09-15 13:15 USD Capacity Utilization Rate 79.6% 79.9%
2008-09-15 13:15 USD Industrial Production m/m -0.3% 0.2%

World indexes:
DJIA -4.42%
S&P500 -4.71%
NASDAQ -3.60%
CAC40 -3.78%
DAX -2.74%
NIKKEI -4.95%

Movers & Shakers:
NZD/USD +0.72%
AUD/USD +0.42%
EUR/CHF +0.33%
GBP/CHF +0.28%
USD/CAD +0.26%
USD/CHF +0.24%
EUR/GBP +0.18%
AUD/JPY +0.16%
EUR/USD +0.11%
GBP/USD -0.07%
EUR/JPY -0.12%
USD/JPY -0.23%
GBP/JPY -0.27%
EUR/AUD -0.31%
CAD/JPY -0.45%
CHF/JPY -0.50%

Important levels:
Support Resistance
EUR/USD
1.4060 1.4457
1.3874 1.4668
1.3663 1.4854
GBP/USD
1.7766 1.8130
1.7584 1.8311
1.7403 1.8493
USD/CHF
1.1021 1.1284
1.0906 1.1433
1.0757 1.1548
USD/JPY
102.92 106.79
101.60 109.33
99.060 110.65

Dukascopy analytic desk report Published: 16 September 2008 at 07.18 GMT Previous session overview
On Monday, the dollar hit a two-month low against the yen as turmoil on Wall Street sent stocks plunging and led currency investors to unwind risky carry trades funded by the low-yielding yen.
But worries over financial markets also drove many investors to buy the dollar due to its status as a safe-haven currency in times of trouble.
The dollar had managed to hold gains against the euro for most of the New York session as Treasury Secretary Henry Paulson said on Monday the U.S. financial system remained sound despite current stresses and he was prepared to take further actions if necessary to maintain stability. EURUSD was choppy, in a range from 1.4308 and 1.4192, but down slightly on the Asian session as traders squared up before what looks to be poor CPI and ZEW Survey data ahead in the London session.
Dollar hit a two month low versus the Yen; the USDJPY continued its slide from earlier in NY. With the Yen in high demand, USDJPY erased its session high of 104.79 early and it a low of 104.00, but could not break through the figure.
Contagion from the storm engulfing America's financial system targeted high-yielding currencies in Asia Tuesday, with the Australian dollar losing over two U.S. cents as risk aversion dominated sentiment. Interest rate futures soared while regional equity markets slumped, prompting nervous traders to rush into safer assets such as government bonds in anticipation of further bad news from the U.S. banking sector.
Market expectation
AUDUSD may show spurt of life, recover to 0.8700 by year end, but pair would then resume downward spiral, hitting 0.7500 in long term. Says weak world prices and slowing demand will offset inflationary impact from weaker AUD.
The U.S. remains squarely in focus, with markets awaiting news on insurance giant American International Group's (AIG) scramble to raise some US$70 billion in cash. Because of the cloud hanging over markets, high yielding carry trades will remain out of favor, with further losses to be expected.
USDCHF falling due to CHF-buying by Asian hedge funds, which typical in time of risk-aversion. Players awaiting German ZEW data, FOMC later in day; if events fuel more risk aversion, pair may decline to 1.0050.
USDJPY may fall below 100 in one to two weeks. Players worry that other financial firms may face trouble and if USDJPY falls close to the psychologically 95.00 level, the U.S government could mount verbal intervention.
Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-16 01:30 AUD Monetary Policy Meeting Minutes
2008-09-16 05:00 JPY Household Confidence 31.5 31.4
2008-09-16 06:00 EUR German Final CPI m/m -0.3% -0.3%
2008-09-16 07:15 CHF Industrial Production q/q 5.0% -9.3%
2008-09-16 08:30 GBP RPI y/y 4.9% 5.0%
2008-09-16 08:30 GBP DCLG HPI y/y -2.0% 0.6%
2008-09-16 08:30 GBP Core CPI y/y 1.9% 1.9%
2008-09-16 08:30 GBP CPI y/y 4.6% 4.4%
2008-09-16 09:00 EUR ZEW Economic Sentiment -55.0 -55.7
2008-09-16 09:00 EUR Core CPI y/y 1.7% 1.7%
2008-09-16 09:00 EUR German ZEW Economic Sentiment -53.0 -55.5
2008-09-16 09:00 EUR CPI y/y 3.8% 3.8%
2008-09-16 12:30 CAD Manufacturing Shipments m/m 1.0% 2.1%
2008-09-16 12:30 USD Core CPI m/m 0.2% 0.3%
2008-09-16 12:30 USD CPI m/m 0.0% 0.8%
2008-09-16 13:00 USD TIC Net Long-Term Transactions 55.0B 53.4B
2008-09-16 14:00 USD Treasury Sec Paulson Speaks
2008-09-16 15:00 CHF Gov Board Member Hildebrand Speaks
2008-09-16 17:00 USD NAHB Housing Market Index 17 16
2008-09-16 17:30 USD Treasury Sec Paulson Speaks
2008-09-16 18:15 USD FOMC Statement
2008-09-16 18:15 USD Federal Funds Rate 2.00% 2.00%

Currencies are volatile early in New York trading, but are bouncing inside narrow ranges ahead of the Federal Reserve's announcement on interest rates expected later Tuesday.
The dollar is slightly up against the euro and weaker versus the yen, after a more significant fall overnight as traders debate the possible outcome of the monetary policy meeting and the mess that has splayed across financial markets since Lehman Brother Holdings Inc.
Currency markets largely ignored the release Tuesday morning of the August U.S. consumer price index, which met expectations.
USD rises some more, adding to its modest gains after US data from the Tsy Dept showed foreigners were net buyers of long-term US securities in July, when excluding non-market flows. Recently, EURUSD was at 1.4229 from 1.4299 late Mon.
The dollar fell to a four-month low of Y103.61 overnight and the euro declined to a one-year low of USD147.19.
Market expectation
EURUSD remains slightly lower Tue, but is somewhat jumpy as currency markets watch steep falls in global stock markets and try to decide what this means for the dollar. EURUSD spikes to USD1.4275 area in the wake of the GS earnings report and around the ECB fixing where RHS interest had been expected. Offers seen placed near USD1.4280. Markets remain thin and whippy.
Pound found resistance around USD1.7823 (61.8% USD1.8011/1.7781) and slips back in tandem with EURUSD. Rate currently trades around USD1.7865. Bids seen placed toward USD1.7850 (USD1.7852 50% USD1.7781/1.7923) with stops below.
The Bank of England indicated Tuesday that the pound's fate on foreign exchange markets is now a key element in its future interest rate decisions.

Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-16 01:30 AUD Monetary Policy Meeting Minutes
2008-09-16 05:00 JPY Household Confidence 31.5 31.4
2008-09-16 06:00 EUR German Final CPI m/m -0.3% -0.3%
2008-09-16 07:15 CHF Industrial Production q/q 5.0% -9.4%
2008-09-16 08:30 GBP RPI y/y 4.9% 5.0%
2008-09-16 08:30 GBP Core CPI y/y 1.9% 1.9%
2008-09-16 08:30 GBP CPI y/y 4.6% 4.4%
2008-09-16 08:37 GBP DCLG HPI y/y -2.0% 0.6%
2008-09-16 09:00 EUR ZEW Economic Sentiment -55.0 -55.7
2008-09-16 09:00 EUR Core CPI y/y 1.7% 1.7%
2008-09-16 09:00 EUR German ZEW Economic Sentiment -53.0 -55.5
2008-09-16 09:00 EUR CPI y/y 3.8% 3.8%
2008-09-16 09:30 GBP BOE Inflation Letter
2008-09-16 12:30 CAD Manufacturing Shipments m/m 1.0% 2.1%
2008-09-16 12:30 USD Core CPI m/m 0.2% 0.3%
2008-09-16 12:30 USD CPI m/m 0.0% 0.8%
2008-09-16 13:00 USD TIC Net Long-Term Transactions 55.0B 53.4B
2008-09-16 14:00 USD Treasury Sec Paulson Speaks
2008-09-16 15:00 CHF Gov Board Member Hildebrand Speaks
2008-09-16 17:00 USD NAHB Housing Market Index 17 16
2008-09-16 17:30 USD Treasury Sec Paulson Speaks
2008-09-16 18:15 USD FOMC Statement
2008-09-16 18:15 USD Federal Funds Rate 2.00% 2.00%

On Tuesday, the dollar rose broadly Tuesday. The market was thrown a couple of curveballs by the Fed Tuesday. Firstly holding rates at 2% with the first unanimous rate decision in a year, and then lending AIG USD85B for a 79.9% stake. This resulted in risk appetite spiking, to the detriment of JPY and CHF, and giving the high yielders some relief.
The euro remained heavy on Tuesday as Euro zone CPI slowed for the first time in four months in August, falling 0.1 percent during the month as the annual rate slipped to 3.8 percent from 4.0 percent. Euro fell to intra-day low of 1.4073 in late New York trading on Tuesday, ending well off Monday's peak of 1.4482 at 1.4131.
The Pound Sterling weakened against the dollar after inflation in the UK reached a 16 year high in August, making it harder for the Bank of England to cut interest rates.
Several media reports on Tuesday suggested the Fed may step in to provide some type of loan package to AIG, and that provided much needed help to the dollar against the yen. Greenback rebounded strongly from near four-month lows of 103.55 against the Japanese yen to as high as 106.39 in late New York sessions before retreating.
The Canadian dollar weakened against the US dollar as investors sold commodities, which include crude oil and aluminum, in an attempt to move towards less risky assets.
The Australian dollar was firmer in Asian trade late Wednesday after risk appetite perked up slightly on a U.S. government plan to rescue insurance giant American International Group Inc. (AIG) from imminent collapse. However, the commodity currency, which has lost almost 20 U.S. cents since mid-July on a dramatic pullback in domestic and global economic expectations, fell back to around the key US$0.80 mark toward the end of the Australian trading session.
Market expectation
The euro is gaining against the dollar and yen Wednesday, after the AIG rescue reduced need for safety. Technical charts are predicting more euro gains.
Tech traders suggest outlook currently seen supportive, though adds that area between USD1.4225/35, and USD1.4265 could provide hurdles to further upside gains. Bids are placed back at USD1.4160/50 ahead of stronger area between USD1.4130/20.
Technical's still point to a neutral to positive trend for USDCHF in near term. The pair would have to break above 1.1270 to open the path towards 1.1419.

Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-17 00:30 AUD MI Leading Index m/m 0.1%
2008-09-17 03:20 AUD RBA Governor Stevens Speaks
2008-09-17 08:30 GBP Claimant Count Change 22.2K 20.1K
2008-09-17 08:30 GBP MPC Meeting Minutes 1-1-7 1-1-7
2008-09-17 08:30 GBP Average Earnings Index y/y 3.4% 3.4%
2008-09-17 08:30 GBP Unemployment Rate 5.4% 5.4%
2008-09-17 09:00 EUR Trade Balance -3.5B -3.0B
2008-09-17 09:00 CHF ZEW Economic Expectations -79.6
2008-09-17 10:00 GBP CBI Industrial Trends Orders -14 -13
2008-09-17 12:30 CAD Foreign Securities Purchases 5.4B 7.3B
2008-09-17 12:30 USD Building Permits 0.93M 0.94M
2008-09-17 12:30 USD Current Account -180B -176B
2008-09-17 12:30 USD Housing Starts 0.95M 0.97M
2008-09-17 14:35 USD Crude Oil Inventories -4.3M -5.9M
2008-09-17 23:50 JPY Tertiary Industry Activity Index m/m 0.4% -0.8%

The dollar's relief rally against major rivals waned early Wednesday in New York as uncertainty overtook the market again, leaving the impact of an unchanged fed funds target rate and a rescued American International Group Inc meaningless in the morning light.
USDJPY has moved back into the 104-range early Wed in NY as the dollar retreats despite a brief rally Tuesday from the AIG bailout news.
U.K.'s claimant count jobless figure posted its biggest monthly increase for 15 1/2 years in August. That news squashed gains the U.K. pound made off of reports that HBOS said it is in advanced talks for a possible sale to Lloyds TSB Group.
Early Wednesday in New York, the euro was at USD1.4177 from USD1.4140 late Tuesday. The dollar was at JPY105.44 from JPY106.17. The euro was at JPY149.46 from JPY150.13. The U.K. pound was at USD1.7876 from USD1.7835, and the dollar was at CHF1.1212 from CHF1.1226 Tuesday.

Market expectation
The fears whirling around the U.S. financial sector are keeping dollar trading volatile and illiquid. As a result, though the dollar is down for now, it remains within the range it has been bouncing around all week. Risk aversion is keeping traders from taking most speculative positions, especially as the number of counterparties available has diminished. The upshot is a choppy market, which means a weak morning could later turn into a weak lead versus rivals.
Analysts said the Australian dollar has been the worst performer this session. Some Australian banks could have difficulty raising debt. The higher-yielding currency has been suffering from the repositioning in currency markets from riskier assets, which has supported the yen and dollar.
For Sterling traders report that bids are placed USD1.7855/50 and break below can open a deeper move toward USD1.7840 with stops below. Further demand then noted at USD1.7825/20. Offers USD1.7915/20.

U.S. Stocks Plunge as Lending Freezes Up Following AIG Takeover
By Elizabeth Stanton and Lynn Thomasson

Sept. 17 (Bloomberg) -- U.S. stocks tumbled as bank lending seized up in the wake of the government's takeover of American International Group Inc., raising concern that more of the nation's biggest financial companies will fail.

The Standard & Poor's 500 Index lost 4.7 percent, extending its decline from an October record to 26 percent and erasing half its gain from the five-year bull market that began in 2002.

Goldman Sachs Group Inc. and Morgan Stanley, the only remaining independent brokerages on Wall Street, plunged the most ever. General Electric Co., the world's third-biggest company, fell 6.7 percent and U.S. Steel Corp. slid 11 percent. Yields on three-month Treasury bills sank to the lowest since World War II as investors sought the relative safety of government debt, and a measure of corporate borrowing costs surged above the level seen during the crash of 1987.

``It's ugly,'' said Michael Mullaney, a Boston-based money manager for Fiduciary Trust Co., which oversees $10 billion in stocks and bonds. ``It's about the worst I've seen it in 25 years. You have to have free-flowing credit to lubricate the system. That's not happening right now.''

The S&P 500 lost 57.20 points to 1,156.39, the lowest since May 2005 and nearly matching the biggest percentage drop since the September 2001 terrorist attacks. The Dow Jones Industrial Average decreased 449.36, or 4.1 percent, to 10,609.66. The Nasdaq Composite Index sank 109.05, or 4.9 percent, to 2,098.85, a two-year low. Almost 14 stocks fell for each that rose on the New York Stock Exchange.

$3.6 Trillion Erased

About $3.6 trillion of market value has been erased from global stocks this week, triggered by the largest-ever bankruptcy filing by Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm. Russia halted stock trading for a second day and poured $44 billion into its three biggest banks in a bid to halt the worst financial crisis in a decade.

Gold and silver surged as investors turned to precious metals as a store of value. Newmont Mining Corp., the largest U.S. gold producer, rose 9.4 percent to $43.25 for the second- biggest gain in the S&P 500.

Investors paid up for protection from further losses. The Chicago Board Options Exchange Volatility Index jumped 20 percent to 36.22, the highest closing level since October 2002. The VIX measures the cost of using options as insurance against declines in the S&P 500.

`Protracted' Battle

Morgan Stanley slid $6.95, or a record 24 percent, to a 10- year low of $21.75 after Oppenheimer & Co. analyst Meredith Whitney and Merrill Lynch & Co.'s Guy Moszkowski reduced their fourth-quarter profit estimates, citing higher funding costs. The lowered forecasts come a day after Morgan Stanley's profit beat estimates.

``We believe Morgan Stanley, along with its peers, will battle a protracted period of negative operating leverage,'' Whitney wrote in a note to clients.

Goldman tumbled $18.51, or 14 percent, to $114.50, its steepest drop ever and lowest price in almost three years. Oppenheimer cut its fourth-quarter earnings estimate to $2.60 a share from $3.45.

The three-month London interbank offered rate, or Libor, rose 19 basis points to 3.06 percent, its steepest gain since 1999.

U.S. Treasury three-month bill rates dropped to as low as 0.02 percent and the so-called TED spread, the difference between what the Treasury pays to borrow for three months and the amount banks charge each other for loans, widened by 0.84 percentage point to 3.02 percent.

AIG Takeover

AIG, the largest U.S. insurer by assets, lost $1.70, or 45 percent, to $2.05 and extended its decline over the past year to 97 percent, after the government said it will receive a 79.9 percent stake in return for an $85 billion loan that analysts said will be repaid by liquidating the company.

``A disorderly failure of AIG could add to already significant levels of financial market fragility,'' according to a central bank statement yesterday.

The S&P 500 Financials Index slumped 8.9 percent as all 86 of its companies retreated.

Banks and brokerages also fell after the Reserve Primary Fund, the oldest U.S. money-market fund, became the first in 14 years to expose investors to losses after writing off $785 million of debt issued by Lehman. Investor redemptions will be delayed as long as seven days, the fund said.

``There's just a massive retrenchment in risk appetite,'' said Robert Stimpson, a money manager at Oak Associates Ltd. in Akron, Ohio, which oversees $1.1 billion. ``We've seen three cornerstones of Wall Street fall by the wayside in the last six months. Is anyone safe? It's a legitimate question.''

Naked Shorts

The Securities and Exchange Commission stiffened regulations against manipulative short-selling after the routs in AIG and Lehman. The new rules force traders to borrow shares before selling them short and make it a fraud for investors to lie to their broker about locating stock to close positions.

Homebuilders across S&P indexes slumped 7.4 percent after the government reported that housing starts dropped 6.2 percent to a 17-year low in August.

Only 21 companies in the S&P 500 gained. SanDisk Corp. surged 39 percent, the most since January 2000, to $20.92. Samsung Electronics Co. made a $5.85 billion hostile bid for the world's largest maker of memory cards used in digital cameras. SanDisk rejected the $26-a-share offer.

Evergreen Solar Inc., not in the S&P 500, rallied the most since June, jumping 19 percent to $5.21. Citigroup Inc. upgraded the maker of wafers used in solar-power panels to ``hold'' from ``sell,'' saying it is a bargain following declines due to disclosure of pacts with Lehman Brothers.

Fall From Record

The S&P 500 started the week with a 4.7 percent tumble, its steepest since the September 2001 terrorist attack, after credit losses forced Lehman to file for bankruptcy protection and Merrill to agree to be taken over by Bank of America Corp. The plunge today was only 0.01 point away from eclipsing that drop.

The S&P 500 has fallen 21 percent this year and is poised to post its first yearly retreat since 2002 after global banks racked up $516 billion in credit losses and asset writedowns stemming from the first nationwide decline in home prices since the 1930s.

The S&P 500 has lost 408.76 points since its Oct. 9 record of 1,565.15. The decline erases more than half of the 788.39- point advance between 2002 and 2007.

Financial shares in the S&P 500 have lost 38 percent as a group this year, led by the tumble in AIG, an 85 percent drop for Washington Mutual Inc. and a 78 percent retreat in National City Corp.

Earnings by companies in the index have declined from the year-earlier period for the past four quarters, and analysts forecast a 3.3 percent decline in the third quarter. As recently as a month ago, the forecast was for an increase, according to estimates compiled by Bloomberg.

The Federal Reserve kept its benchmark interest rate at 2 percent yesterday, citing risks to growth and inflation. Hours after yesterday's meeting, the central bank agreed to the AIG loan.

Morgan Stanley Said to Mull Deal; Wachovia Calls Mack (Update1)
By Christine Harper and Jonathan Keehner

Sept. 17 (Bloomberg) -- Morgan Stanley is weighing a merger with Wachovia Corp. and several other banks as the securities firm seeks to regain investor confidence after its shares sank 42 percent this week, people familiar with the matter said.

John Mack, Morgan Stanley's chief executive officer, received a call from Wachovia today indicating interest, said one person, who declined to be identified because the talks aren't public and may end without an agreement. Such a deal is one option being considered and the New York-based firm also is seeking ways to limit short sales of its stock, said the person.

``It makes more sense to try to determine your own fate than to let the market decide it,'' said Douglas Ciocca, managing director of Renaissance Financial Corp. in Leawood, Kansas, who manages $1.8 billion and who used to work for Morgan Stanley. ``But Wachovia still has a lot of issues and I would think that would need further examination.''

Morgan Stanley and Goldman, the biggest U.S. securities firms, tumbled the most ever after a government rescue of American International Group Inc. failed to ease the credit crisis. The cost to protect against a default by the Wall Street firms rose to a record. Wachovia, the fourth-largest U.S. bank, plunged 21 percent after saying it would support $494 million of Lehman Brothers Holdings Inc. credits held by its Evergreen Investments money market funds.

'Focused on Solutions'

``The smartest people at this firm are focused on solutions,'' said Mark Lake, a spokesman at Morgan Stanley. Wachovia spokeswoman Christy Phillips-Brown said it was bank policy not to comment on ``market rumors or merger speculation.'' The New York Times reported earlier today that Wachovia contacted Mack.

Wachovia, based in Charlotte, North Carolina, has a market value of $19.7 billion, 18 percent less than Morgan Stanley's $24.1 billion.

Wachovia Chief Executive Officer Robert Steel, hired in July to replace Kennedy Thompson, is cutting $1.5 billion in expenses and reducing risk to cope with mounting losses from Wachovia's $122 billion of option adjustable-rate mortgages.

HSBC Not Interested

A Morgan Stanley-Wachovia tie-up ``makes much more sense for Wachovia,'' than for Morgan Stanley, Ciocca said.

HSBC Holdings Plc, Wells Fargo & Co. and JPMorgan Chase & Co. are among the potential bidders for a Wall Street firm, according to Anton Schutz, president of Mendon Capital Advisors. Goldman and Morgan Stanley have both done deals with Chinese companies: China Investment Corp., the state-controlled investment fund, bought a stake in Morgan Stanley in December, and Goldman invested in Industrial & Commercial Bank of China Ltd. in 2006.

HSBC, Europe's largest bank, is not in talks with Morgan Stanley and isn't interested in pursuing a deal with the company, people with knowledge of the London-based bank's plans said today. HSBC spokesman Donal McCarthy declined to comment.

Julia Tunis Bernard, a spokeswoman for Wells Fargo, the largest U.S. bank on the West Coast, declined to comment. Joseph Evangelisti, a spokesman for JPMorgan, the second-biggest U.S. bank, also declined to comment.

Executives at Goldman Sachs and Morgan Stanley told analysts and investors yesterday that they see no need to combine with banks even after Merrill Lynch & Co.'s emergency sale to Bank of America Corp. over the weekend and Lehman Brothers bankruptcy filing. Goldman and Morgan Stanley said they have adequate capital and cash and don't have any pressing need to borrow new money.

Pushed to Sale

Analysts including David Trone at Fox-Pitt Kelton Cochran Caronia Waller have said the demise of Lehman and Merrill may force Goldman and Morgan Stanley to pursue a sale or some sort of transaction with a bank, to gain a stable funding base of deposits and the confidence of the markets. The firms hold more than $20 of assets for every $1 in capital, making them dependent on lenders.

``From what Goldman said on their conference call, they said they're going to go it alone,'' said William Smith, whose firm Smith Asset Management Inc. in New York manages $80 million, including Goldman stock. ``But when you're leveraged it's not up to you, it's up to your trading counterparties.''

Morgan Stanley Chief Executive Officer John Mack and Goldman's Lloyd Blankfein are trying to navigate declining investor confidence that prompted the emergency sales of Merrill Lynch and Bear Stearns Cos., and the bankruptcy of 158-year-old Lehman.

`Every Step Possible'

In a memo to employees today, Mack said the management committee is ``taking every step possible to stop this irresponsible action in the market'' and urged employees to contact clients to reassure them that the firm is performing strongly and has plenty of capital.

``There is no rational basis for the movements in our stock or credit default spreads,'' Mack wrote in the memo. ``We're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down.''

Markets are reacting to ``rumor and fear,'' Colm Kelleher, Morgan Stanley's finance chief, said yesterday after the New York-based company reported better-than-estimated earnings for the third quarter.

The turmoil spurred the U.S. government late yesterday to lend as much as $85 billion to AIG to prevent the insurer's collapse.

`Performance'

``We think rational markets will positively differentiate those financial institutions that have global, diversified businesses and out-performed for their shareholders through this crisis,'' said Lucas van Praag, a Goldman spokesman in New York. ``The issue that really matters is performance, not the business model.''

Glenn Schorr, an analyst at UBS AG, said today in a note to investors that the market reaction was ``insanity.'' Goldman and Morgan Stanley aren't at risk of running out of money because they keep plenty of cash on hand and can borrow from the Federal Reserve and a consortium of banks set up over the weekend, he said, noting that both have enough capital to absorb any losses.

``If you have the liquidity and capital to withstand the storm, why should CDS spreads be having such a big impact on stocks?'' he wrote. He said investors must be reacting to concern that counterparties or clients will abandon the firms or that the credit-rating companies will cut their ratings.

``At the heart of these issues is available funding, all in funding costs and the inherent mismatch of short-term funding and longer duration, levered balance sheets,'' Schorr said.

Locked Up

Credit markets have been locked up since New York-based Lehman, which was the fourth-largest U.S. securities firm, filed for bankruptcy protection on Sept. 15, raising concern that other financial companies may fail. Investors have been unwilling to take on new debt risk and overnight lending rates have soared.

Morgan Stanley dropped $6.95, or 24 percent, to $21.75 in composite trading on the New York Stock Exchange, after sinking as low as $16.08. Goldman slumped $18.51, or 14 percent, to $114.50, a three-year low and the biggest one-day drop in its nine years as a public company.

Credit-default swaps on Morgan Stanley, which insure against a default of the company's debt, rose to levels typical of companies in distress.

Sellers of credit-default swaps on Morgan Stanley demanded 11.5 percentage points upfront and 5 percentage points a year to protect the company's bonds for five years, broker Phoenix Partners Group. That means it would cost $1.1 million initially and $500,000 a year to protect $10 million in bonds, up from $680,000 a year with no upfront payment yesterday. The contracts traded as high as 21 percentage points upfront earlier today.

Contracts

Contracts on Goldman climbed 1.77 percentage points to 6.20 percentage points, according to CMA Datavision. Morgan Stanley and Goldman are based in New York.

Morgan Stanley's plunge may add impetus to calls from Democrats in Congress for a broader effort by policy makers to address the financial crisis, including setting up a government agency to take on devalued assets.

``The private market screwed itself up and they need the government to come and help them unscrew it,'' House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, told reporters late yesterday after top lawmakers met with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke.

Frank this week proposed considering an agency to ``deal with all the bad paper out there'' and get financial markets ``out of the box'' they are in.

On Thursday, after a day of volatile trading, the dollar ended the New York session little changed against the euro and up against the yen.
On Thursday morning, EURUSD extended its rebound after strong (mostly oil related) gains on Wednesday. At first, EURUSD showed no strong reaction but throughout the European morning session EURUSD gained momentum and the pair tested offers well above the 1.45. Later in the session, the rebound on the US stock markets on news headlines about a new plan/fund to address the credit crisis supported the dollar and EURUSD closed the session at 1.4348.
The Pound Sterling strengthened against the dollar after stronger than expected retail sales. Pound held within a range of approximately 1.8100 - 1.8250.
USDJPY was again haunted by swings in investor sentiment caused by the unraveling of the credit crisis. So the pair jumped up and down in a 105.50/104.00 trading range.
The Canadian dollar strengthened against the US dollar as oil and gold prices climbed and wholesale trade soared past expectations.
Sweeping plans by the U.S. government to intervene in financial markets allowed investors to emerge from safe havens in Asia Friday, buying the Australian dollar.
Market expectation
Investors are getting out of euro shorts ahead of the weekend, analysts say, with expectations that the move by central banks Thursday will probably lead to more measures over the weekend to calm financial markets. The euro Friday is falling against the dollar, but both are higher against the yen. The U.S. plan to deal with bad loans lessened the appetite for risk aversion.
USDJPY gets a pop to JPY105.30 area now as euro-yen provides lift, tracking the Dow higher though dollar remains shy of overnight high at JPY105.57 and tech resistance at JPY105.61.
After a disastrous week of financial failures and a flood of risk aversion, traders will be keenly awaiting the outcome of proposals by the U.S. Government to take bad assets off bank balance sheets, and create federal insurance for investors in money market funds.

The dollar found favor over rivals Friday morning on news of a comprehensive U.S. government plan that could rid financial companies of their bad assets.
The dollar's latest moves are an expression of relief, saying currency analysts, after days of severe tensions across money markets on the unraveling of Wall Street. The crisis has left many foreign exchange traders at a virtual standstill, weary of U.S. assets and currencies extremely volatile.
EURUSD spiked to USD1.4300 area in current trade as euro-yen gapped higher, the euro stalling in the face of supply at USD1.4300/05 after absorbing supply ahead.
USDJPY rips to new highs for the day near JPY107.90 area as euro-yen lurches higher in current trade, the dollar overcoming supply at JPY107.60 before pausing ahead of tech resistance and offers at JPY107.95.
Friday morning in New York, the euro was at USD1.4237 from USD1.4348 late Thursday. The dollar was at JPY107.80 from JPY105.40. The euro was at JPY153.52 from JPY151.31. The U.K. pound was at USD1.8058 from USD1.8201, and the dollar was at CHF1.1221 from CHF1.1041 Thursday.
Market expectation
Analysts said that interest rates in the U.S. will stay low and another cut is possible, but fears of recession in the euro zone and receding inflation concerns will oblige the European Central Bank to cut interest rates. That will undercut the support the euro may receive as a higher-yielding currency.
Pound recovery off earlier lows of USD1.7916 extends to USD1.8080 (61.8% USD1.8178/1.7916), as rate tracks euro-dollar rally while euro-sterling rests on support at stg0.7880. Rate currently holds back around USD1.8058. Offers remain in placed near USD1.8080, a break above to open a move on toward USD1.8120. Bids now reported in place at USD1.8000.
No major data out Friday so market focus will be squarely on U.S. stocks.
Analysts still question the prospects for both the U.S. and euro-zone economies, and rising dollar sentiment is not translating to a rise in risk aversion for all currency crosses.
Most important events of the day
Date Time:GMT Currency Indicator Forecast Prior
2008-09-19 00:15 CAD Gov Council Member Murray Speaks
2008-09-19 03:00 NZD Credit Card Spending y/y 4.2%
2008-09-19 06:00 EUR German PPI m/m -0.4% 2.0%

€. The euro appreciated vis-à-vis the U.S. dollar last week as the single currency tested offers around the $1.4540 level and was supported around the $1.4070 level. The pair gained about 250 pips last week. Lehman Brothers filed for bankruptcy; BoA purchased Merrill Lynch; and AIG was bailed out by the Fed. The Fed broadened its Primary Dealer Credit Facility and Term Securities Lending Facility. The FOMC kept rates unchanged and injected several hundred billion dollars in liquidity. The Fed expanded swaps with the ECB and SNB and added swap lines with BoJ, BoE, and BoC. The U.S. government restricted short-selling on 799 equities through 2 October and looks set to set up an RTC-type toxic asset dump. The Fed is guaranteeing some money market funds.

ECB boss Trichet cited the need for “permanent credible alertness.” ECB’s Tumpel-Gugerell saw the “first signs of second-round” inflation effects. ECB’s Stark railed against second-round effects. The overnight swaps market implies a 25bps cut by the ECB in October. The ECB tendered tens of billions of dollars in short-term repo to bring down interbank rates.

Data released in the U.S. last week saw August industrial output fall 1.1%; August capacity utilization fell to 78.7%; the New York State Empire manufacturing index fell to -7.31 in September; the August CPI fell 0.1% m/m with core CPI was up 0.2%; TICS foreign purchases of U.S. long-term securities totaled –US$ 25.6 billion in July; August housing starts fell 6.2% with building permits off 8.9%; the July current account deficit widened to –US$ 183.1 billion; the September Philadelphia business activity index improved to +3.8%; August leading economic indicators fell 0.5%; and weekly initial jobless claims rose 10,000 to 455,000 with continuing claims off 55,000 to 3.48 million.

Data released in the eurozone last week saw EMU-15 labour costs rose 2.7% y/y; German ZEW economic expectations improved to -41.1; German July retail sales were revised down to -1.5% m/m; EMU-15 August CPI fell 0.1% m/m and rose 3.8% y/y with core CPI up 0.3% m/m and 1.9% y/y; the EMU-15 July trade deficit widened to €2.3 billion; and German PPI was off 0.6% m/m and 8.1% y/y.

Technical Outlook
Last week’s high (1) was below the 38.2% retracement of the 1.6038-1.3881 range and last week’s low (2) was below the 23.6% retracement of the same range. The 1.4717/ 1.4861/ 1.5174/ 1.5325/ 1.5378/ 1.5630 levels represent upside resistance targets while the 1.4390/ 1.4287/ 1.3838/ 1.3319/ 1.2676 levels represent downside support targets.

¥/ CNY. The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥103.55 level and was capped around the ¥108.00 level. The pair lost about 50 pips last week. The Nikkei 225 stock index climbed 3.76% on Friday to close at ¥11,920.86. BoJ’s Policy Board kept the overnight call rate unchanged at 0.50%, reporting the economy is “still sluggish.” The LDP will likely name Japan’s next prime minister on Monday. BoJ will maintain its US$ 60 billion swap facility through January and Ibuki said countries are “fully prepared to cooperate in defending the dollar.” BoJ chief Shirakawa refused to take a rate cut off the table.

Data released in Japan last week saw August consumer confidence declined to 30.1; August machine tool orders were revised to -13.9%; and the July tertiary sector index was up 1.2% m/m.
In Chinese news, the Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8350 in the over-the-counter market, down from CNY 6.8465. PBoC reduced its one-year lending rate by 27bps to 7.20% and lowered some commercial banks’ reserve requirements to 16.5%. CIC may assume some more equity in Morgan Stanley. China took the U.S. to the WTO over pipes and tires. The Chinese government sees CPI moderating further in H2.
Data released in China last week saw August CPI slowed to 4.9%; August property prices in 70 major Chinese cities were up 5.3% y/y; and the August property climate index was off 2.7 points.

Technical Outlook
Last week’s high (1) was above the 23.6% retracement of the 95.71-110.64 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets remain the 109.92/ 110.64/ 113.27/ 114.65/ 117.42 levels while downside support targets remain the 106.57/ 105.18/ 102.94 levels.

£. The British pound appreciated vis-à-vis the U.S. dollar last week as cable tested offers around the US$ 1.8385 level and was supported around the $1.7735 level. The pair gained about 380 pips last week. BoE’s King reported “the fall in the value of sterling” is pushing up import price inflation. The MPC voted 8-to-1 to keep rates unchanged with Blanchflower seeking a 50bps cut. BoE’s Dale said economic risks are “finely balanced.” BoE auctioned tens of billions of dollars in repo to depress interbank lending rates.

Data released in the U.K. last week saw August CPI reached 4.7% with core CPI up 2.0%; the government reported house prices were off 0.3% y/y in July; the CBI monthly industrial trends total orders books balance fell to -26 from -13; the August U.K. claimant count spiked 32,500; August mortgage lending fell 12% m/m and 36% y/y; August PSNB rose to £10.4 billion; and August retail sales volumes were up 1.2% m/m and 3.3% y/y.

Technical Outlook
Last week’s high (1) was below the 38.2% retracement of the 2.0156-1.7442 range and last week’s low (2) was below the 23.6% retracement of the same range. Upside resistance targets include the 1.8479/ 1.8631/ 1.8799/ 1.9117 levels while downside support targets include the 1.8082/ 1.8031/ 1.7420/ 1.7060/ 1.6538 levels.

CHF. The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.0900 level and was capped around the CHF 1.1280 level. The pair lost about 255 pips last week. SNB kept monetary policy unchanged and is maintaining vigilance on inflation. SNB sees 2008 inflation around 2.7% and economic growth between 1.5% and 2.0%. SNB injected tens of billions of dollars in repo. SNB’s Roth noted the Swiss franc has not “destabilized.”

Data released in Switzerland last week saw August producer and import prices rise 4.0% y/y and decline 0.5% m/m; July retail sales were up 6.2% y/y; Q2 industrial orders rose 5.4% y/y; September ZEW investor sentiment improved to -44.4; and the August trade surplus narrowed to CHF 1.4 billion.

Technical Outlook
Last week’s high (1) was above the 23.6% retracement of the 1.0010-1.1416 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.1395/ 1.1594/ 1.1808 levels while downside support targets include the 1.0850/ 1.0727/ 1.0687 levels.

CAD. The Canadian dollar appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the C$ 1.0430 level and was capped around the C$ 1.0805 level. The pair lost about 130 pips last week. The Fed set up a swap line with Bank of Canada to meet short-term dollar funding needs in Canada. PM Harper may seek an early election and said the Canadian economy remains robust.

Data released in Canada last week saw August manufacturing sales rose 2.7%; August leading indicators were up 0.3%; and July wholesale sales were up 2.3% m/m.

Technical Outlook
Last week’s high (1) was right around the 61.8% retracement of the 1.1875-0.9055 range and last week’s low (2) was below the 50.0% retracement of the same range. Upside resistance targets include the 1.0797/ 1.0878/ 1.1204 levels while downside support targets include the 1.0465/ 1.0331/ 1.0186/ 1.0130/ 1.0069 levels.

AUD. The Australian dollar appreciated vis-à-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.8360 level and was supported around the US$ 0.7800 level. The pair gained about 105 pips last week. RBA injected tens of billions of dollars of liquidity to meet short-term funding needs.

Data released in Australia last week saw Q2 housing starts fall 3.7% q/q and August imports totaled A$ 18.455 billion.

Technical Outlook
Last week’s high (1) was above the 61.8% retracement of the 0.7015-0.9849 range and last week’s low (2) was above the 76.4% retracement of the same range. Upside resistance targets include the 0.8432/ 0.8504/ 0.8761/ 0.9017 levels while downside support targets include the 0.8186/ 0.8097/ 0.7793/ 0.7683/ 0.7015 levels.

SCHEDULE all times GMT (last release in parentheses)

2301 UK September Rightmove house prices (-2.3% m/m)
2301 UK September Rightmove house prices (-4.8% y/y)
2350 Japan August Bank of Japan Policy Board meeting minutes
2350 Japan July all-industry activity index (-0.9% m/m)

Monday, 22 September 2008 all times GMT (last release in parentheses)

N/A Japan August supermarket sales (0.9% y/y)
N/A Japan August convenience store sales (11.7% y/y)
1230 Canada July retail sales (0.5% m/m)
1230 Canada July retail sales, ex-autos (1.4% m/m)

Tuesday, 23 September 2008 all times GMT (last release in parentheses)

0200 NZ Q3 Westpac consumer confidence (81.7)
0645 France August consumer spending (-0.4% m/m)
0645 France August consumer spending (1.0% y/y)
0730 Italy September consumer confidence
0830 UK August BBA house purchase loans
0900 Eurozone July industrial new orders (-0.3% m/m)
0900 Eurozone July industrial new orders (-7.4% y/y)
1100 Canada August consumer price index (0.3% m/m)
1100 Canada August consumer price index (3.4% y/y)
1100 Canada Bank of Canada CPI, core (0.1% m/m)
1100 Canada Bank of Canada CPI, core (1.5% y/y)
1400 US September Richmond Fed manufacturing index (-16)
1400 US July house price index (0.0% m/m)
2350 Japan Q3 BSI large all industry (-15.2)
2350 Japan Q3 BSI large manufacturing (-15.1)

Wednesday, 24 September 2008. all times GMT. (last release in parentheses)

N/A Australia September DEWR skilled vacancies (-1.7% m/m)
N/A Japan September PMI, manufacturing (46.9)
N/A Germany September consumer price index
0645 France September business confidence indicator (98)
0730 Italy September business confidence
0800 Germany September Ifo, expectations (87.0)
0800 Germany September Ifo, business climate (94.8)
0800 Germany September Ifo, current assessment (103.2)
0800 Eurozone July current account (-€8.2 billion)
0800 Italy July retail sales (-0.5% m/m)
0800 Italy July retail sales (-3.4% y/y)
1100 US MBA mortgage applications
1400 US August existing home sales (5.00 million)
1400 US August existing home sales (3.1% m/m)
2350 Japan August merchandise trade balance
2350 Japan August corporate service prices (1.3% y/y)

Thursday, 25 September 2008. all times GMT . (last release in parentheses)

N/A Australia Reserve Bank of Australia Financial Stability Review
N/A Australia August HIA new home sales (-7.2% m/m)
N/A Germany October GfK consumer confidence (1.5)
N/A UK September Nationwide house prices (-1.9% m/m)
N/A UK September Nationwide house prices (-10.5% y/y)
0800 Eurozone August M3 money supply (9.6%)
0800 Italy July trade balance
1230 US August durable goods orders (1.3%)
1230 US August durable goods orders, ex-transportation (0.7%)
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1400 US August new home sales (515,000)
1400 US August new home sales (2.4% m/m)
1440 US Chicago Fed President Evans speaks
1700 US Federal Reserve Governor Warsh speaks
2245 NZ Q2 GDP (-0.3% q/q)
2245 NZ Q2 GDP (1.9% y/y)
2330 Japan September Tokyo CPI (1.3% y/y)
2330 Japan September Tokyo CPI, ex-food, energy (0.2% y/y)
2330 Japan August CPI (2.3% y/y)
2330 Japan August CPI (0.2% y/y)
2330 US Dallas Federal Reserve President Fisher speaks
2350 Japan Foreign purchases of Japanese equities and bonds
2350 Japan U.S. purchases of foreign equities and bonds

Friday, 26 September 2008. all times GMT. (last release in parentheses)

0645 France Q2 GDP (-0.3% q/q)
0645 France Q2 GDP (1.1% y/y)
0645 France September consumer confidence
0800 Italy August hourly wages
0930 CH September leading indicator (0.68)
1230 US Q2 GDP, annualized (3.3% q/q)
1230 US Q2 personal consumption expenditure (2.1% q/q)
1400 US September University of Michigan consumer sentiment
1400 US St. Louis Federal Reserve Bank President Bullard speaks