The Yen Returns to Favor

The yen returned to favor against a basket of currencies in the Asian session. There were rumors that funds from maturing US Treasuries owned by the Japanese was going to be repatriated, resulting in yen buying. This, combined with Friday's sell off in US equities, has caused the yen to strengthen to 94.80. It looks like the uptrend line in place since early July has been broken. Is the yen telling us that the rally in stocks since the middle of March is about to end? The Shanghai stock index had its worst week since February, down 6%, suggesting that influence of the Chinese stimulus package may be waning.

If we have a reversal in the USD/JPY, it looks like there may be more on the downside, perhaps to the 93/93.50 level. Should the market gives us a rally back to 95 today, let's sell the pair and put a stop above the down trend line at about 95.70.

U.S. Dollar Unusual Behaviour Despite Continuing Risk Taking Environment

From the middle of 2008 until February 2009, the dollar had been the safe haven vehicle. But in March, when risk appetite came back into the market, the safe haven trade began to slowly unwind. That means, since March, good news for the economy has meant bad news for the dollar.

You can see it in the chart below of the British pound vs. the U.S. dollar. The pound dropped sharply (U.S. dollar rose) on risk aversion as investors fled to the dollar. Now the pound is riding higher on a wave of surging risk appetite.

Within this risk environment, the relationship between financial markets and risk has been abundantly clear: When risk appetite is high … stocks, commodities, interest rates and all currencies (except for the U.S. dollar) rally. When fear creeps back in, the dollar benefits, the U.S. Treasury market benefits and almost everything else goes south.

So, when last week’s employment report showed a lower unemployment rate and fewer jobs lost, the dollar should have taken a hit. But it didn’t. Instead, it rallied!

Well, one day doesn’t make a trend.

And after the markets digested a cautiously positive statement by the Fed this week on the economy, the resulting activity in the currencies spoke clearly: For the moment, it’s still all about risk appetite.

I do, however, expect a shift in market focus to take place in the near term, to accommodate this growing sentiment of recovery. I think that global capital will begin shifting toward those economies that are relative outperformers. And for 2009 and 2010, consensus estimates have the U.S. outperforming other major developed market economies.

Last month, the IMF downgraded its forecast on the Eurozone, expecting the region’s economy to fall 4.8 percent in 2009. And for 2010, while all other economies are expected to grow, the Eurozone is expected to fall more.

Then Germany and France, the two largest economies in the Eurozone, shocked the market this week by posting actual growth for the second quarter!

On top of that, central banks are now upgrading economic forecasts for 2009, a year that was first thought to be a complete disaster. And the 2010 numbers are being boosted even more.

In fact, the European Central Bank has now revised its expectations for 2009 and 2010: Expecting just a slight contraction in 2009 and growth in 2010.

But in a period where less bad is the new good, and economies have stopped free-falling and are now showing signs of improvement, the recovery story is about sustainability, not just data points.

Algeria's forex reserves steady at $144.3 bln-cenbank

Algeria held $144.3 billion in foreign exchange reserves at the end of June this year, largely unchanged from six months earlier, the official APS news agency cited the central bank governor as saying on Sunday.

The last time Algeria's central bank revealed the size of its foreign exchange reserves was in December 2008, when it said they stood at $143.1 billion.

Algerian officials have repeatedly said the oil and gas producer is shielded from the turmoil on global financial markets because it has sharply reduced national debt and relies increasingly on its own revenues to fund development.

However, the fall in world energy prices has cut receipts from oil and gas sales, which account for 97 percent of Algeria's total exports.

The government last month banned domestic banks from issuing consumer loans in a drive to cut imports and boost the country's shrinking trade surplus.

Growth Surprise Boosts Euro

Growth Surprise Boosts Euro

Patterns in the forex markets seem to be changing: over a long period of time, whenever the crisis intensified, the dollar and the yen benefited. The more confident market participants became, the more the euro strengthened. Most other industrialised and emerging market currencies benefited from increasing risk appetite as well. As confidence grows that the economy could have bottomed out, markets are now focusing more on comparing developments in individual countries, particularly the pace of recovery in these regions, and when they could decide to end expansive monetary policies and quantitative easing measures.

After the release of the US labour market report last Friday, both the euro and the yen had suffered badly. USD-JPY rose by 2 ½ yen to 97.50, EUR-USD fell from 1.4350 to 1.4150. Then, however, in the run-up to the FOMC meeting, the US currency began to weaken again - presumably mainly because market participants were expecting the Fed to remain cautious and focus on a continuation of its present monetary policy. The Bank of England could have had an impact on market expectations too: the Inflation Report emphasized that the interest rate hikes markets had been expecting would lead to inflation undershooting the target.

The Fed, however, did not take such a decisive stand as the Bank of England. The Fed's assessment of the economic situation was slightly more positive than before: the phrase “the pace of contraction is slowing” was replaced by “economic activity is levelling out”. But the Fed still underlined the weak points, particularly private consumption and corporate investment. The announcement that the $300bn Treasury securities purchasing programme was expected to be completed according to plan by the end of October caused some confusion. Some people saw it - to some extent in contrast to the Bank of England - as the beginning of an exit from quantitative easing. The market's reaction was only short-lived, however. This decision was in fact in line with expectations.

In the second half of the week, the dollar came under fresh pressure after surprisingly good second quarter growth figures for the euro area on the one hand, and somewhat disappointing US retail sales figures on the other. According to preliminary estimates, the decline in real GDP in the eurozone slowed down from -2.5% to -0.1% quarter-on-quarter. Compared with the previous year, the decline slowed from -4.9% to -4.6%. The biggest economies in the euro area, Germany and France, have returned to positive growth rates (0.3% respectively, quarter-on-quarter). In both countries, private consumption, public spending and net exports had a positive impact, whereas corporate investment continued to fall.

Then, however, the US retail sales figures dampened the upbeat mood: instead of picking up as expected because of the US cash-for-clunkers scheme, they posted an 0.1% decline in July compared with the previous month. The 2.4% increase in car sales was not enough to push the total figure into positive territory. Sales fell in most product groups, suggesting that new cars are perhaps being purchased instead of other goods.

The sales figures from the US were not good, but not abysmal either. The market's sharp reaction could indicate that market participants are well aware of the risks to the upswing scenario - the labour market and private consumption: an upswing without private households is practically inconceivable in the US. Markets will have to keep a close eye on consumption data such as consumer confidence.

On the US side, we think it likely that the slightly favourable trend in the macroeconomic data could continue for the time being. Next week will see the release of the first August figures for the manufacturing sector, which is benefiting at present from inventory re-stocking and the car scrappage scheme. The housing market is also likely to continue to stabilise. From this point of view, EUR-USD, presently at just under 1.43, could lose some ground again. In the light of surprisingly strong GDP in Q2 and on the general assumption that the ECB is likely to be more hawkish than the Fed, the euro should remain quite well supported, however. It will presumably remain within the trading range for the time being.

Daily Exchange Rates

Currency	Bid	Offer	Time
EUR/USD	1.41308	1.41326	Mon Aug 10 19:13:04 2009
USD/JPY	96.936	96.953	Mon Aug 10 19:14:58 2009
GBP/USD	1.64735	1.64780	Mon Aug 10 19:12:26 2009
USD/CAD	1.08837	1.08897	Mon Aug 10 19:14:37 2009
USD/CHF	1.08574	1.08614	Mon Aug 10 19:14:32 2009
EUR/JPY	136.987	137.027	Mon Aug 10 19:14:58 2009
EUR/GBP	0.85761	0.85791	Mon Aug 10 19:13:05 2009
EUR/CHF	1.53433	1.53468	Mon Aug 10 19:14:32 2009
GBP/CHF	1.78900	1.78980	Mon Aug 10 19:14:32 2009
GBP/JPY	159.684	159.754	Mon Aug 10 19:14:58 2009

OIL FUTURES: Crude Futures Slip Lower On Rebounding Dollar

NEW YORK (Dow Jones)--Crude futures ended lower Monday as the dollar rose against the euro and equities fell.

Light, sweet crude for September delivery settled down 33 cents, or 0.5%, at $70.60 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled nine cents, or 0.1% lower, at $73.50 a barrel.

The dollar advanced Monday to a one-week high against the euro. A stronger dollar makes crude more expensive for holders of other currencies. The euro was recently at $1.4116, down from $1.4219.

Crude futures have risen almost 20% since July 13 on expectations an economic recovery will galvanize oil demand. Upbeat data showing U.S. unemployment fell to a surprising 9.4% in July sent prices rising close to $73 a barrel Friday, but a rebounding dollar capped gains.

"The ongoing strength in the dollar quelled the upward momentum in the oil market," said Stephen Schork, editor of the energy newsletter The Schork Report.

Crude has been caught in a tug-of-war between bulging oil inventories and hopes of an economic rebound. Sliding equities, a barometer for the health of the economy, exerted further pressure on crude prices. The Dow Jones Industrial Average was recently down 46.53 at 9323.44.

"We'll stay in this range until will get a weather event or we get a change in supply from OPEC," said Morgan Downey, a commodities trader with Standard Chartered PLC in New York.

The National Hurricane Center is tracking a pair of storm systems, including one southwest of the southern Cape Verde Islands that could become a tropical depression in the next day or two. Another storm, with a low potential for tropical cyclone formation, was near the Windward Islands. Neither is considered to pose a serious threat to energy infrastructure, but serve as a reminder that the normal peak of hurricane season has arrived.

Meanwhile, quota compliance by Organization of Petroleum Exporting Countries is deteriorating, according to the latest Dow Jones OPEC-11 survey, falling to 73% compared with the 76% achieved in June, as producers seek to take advantage of higher oil prices.

Front-month September reformulated gasoline blendstock, or RBOB, settled up 1.93 cents, or 1%, at $2.0274 a gallon. September heating oil settled up 1.54 cents, or 0.8%, at $1.9276 a gallon.

More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

Nymex Light Crude Oil Close

Nymex Harbor RBOB Gasoline Close

Nymex Heating Oil Close

ICE Brent Crude Oil Close

ICE Gas Oil Close

US Dollar, Japanese Yen Gain Ahead of Bank of Japan's Rate Decision

The US dollar and Japanese yen were two of the strongest major currencies on Monday, just behind the New Zealand dollar, as uneasy risk appetite weighed on the S&P 500 and DJIA. The moves suggest that Friday wasn’t necessarily a turning point for the greenback after the release of better-than-expected US non-farm payroll results provided a boost to both the currency and US equities, but with event risk due to pick up later in the week, we won’t jump to conclusions.

Though not incredibly market-moving for the Japanese yen, it’s worth noting that the Bank of Japan will announce their latest rate decision overnight. The BOJ is anticipated to leave rates unchanged at 0.1 percent, and while some economic indicators - including machine orders, industrial production, and manufacturing PMI - have shown signs of improvement, the central bank is likely to continue focusing on risks stemming from persistently weak domestic demand and deflation.On August 12, traders will be watching the release of the Federal Reserve’s rate decision. The Federal Open Market Committee (FOMC) is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, but the statement could spark heavy volatility if the FOMC announces an expansion of their QE efforts or an elimination of them. Generally, signs that the central bank may increase Treasury purchases have been negative for the US dollar, but indications that they will complete the program within the next month or so could send the greenback spiraling higher. Though highly unlikely, any change to previous wording that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period” are sure to spark heavy volatility throughout the financial markets

Euro Down Despite Improvements in French Industrial Output, Investor Confidence

The euro traded on a mixed note at the start of the week, losing against the US dollar, Australian dollar, Japanese yen, and New Zealand dollar but gaining versus the British pound, Canadian dollar, and Swiss franc. There were no major economic releases, though data did show that French industrial production rose for the second straight month in June while the Sentix measure of investor confidence rose to a 12-month high in August. However, there are clear risks to investor sentiment in the future, as highlighted by Andreas Schmitz, president of the Federal Association of German Banks. Schmitz said that there is a “concern” and a “real danger” of another credit crunch, saying that he does not think “it is entirely unrealistic to think there will be one.” Schmitz went on to say that “it is obvious that every bank will have more to deal with in the next 18 months, in terms of defaults by clients and non-performing loans, than they have had up to now.” These issues are not contained to Germany either, as other European and US banks must contend with growing defaults and charge-offs as unemployment rates continue to rise.

Oil falls as stronger dollar offsets encouraging jobs data

Oil prices fell on Friday as the U.S. dollar rose against the euro, weakening the purchasing power of buyers using other currencies.

Light, sweet crude for September delivery dropped 1.01 dollars, or 1.4 percent, to settle at 70.93 dollars a barrel on the New York Mercantile Exchange.

The contract initially rose after the release of the encouraging jobs data which showed the U.S. jobless rate unexpectedly dropped to 9.4 percent from 9.5 percent in July, adding to optimism that the economy was turning around.

However, oil prices began to drop as the dollar got stronger against the euro. The Dollar Index rose more than 1.2 percent, undermining demand for dollar-priced assets such as oil used to hedge against inflation.

In London, Brent crude for September delivery dropped 1.41 dollars to 73.42 dollars a barrel on the ICE Futures exchange.

Gold falls as dollar soars after U.S. jobless rate drops

Gold futures on the COMEX Division of the New York Mercantile Exchange declined slightly for the third session on Friday as unexpected jobless data boosted dollar to rise sharply, much reducing gold's appeal of safe-haven. Silver and platinum both ended a little higher.

Gold price for December delivery fell 3.40 U.S. dollars, or 0.4percent, to finish at 959.50 dollars an ounce.

The Labor Department said that non-farm payroll employment fell by 247,000 in July following a revised decline of 443,000 in June. The unemployment rate for July unexpectedly declined to 9.4 percent from 9.5 percent in June. Analysts had expected joblessness to grow to 9.6 percent and this is the first decline in 15 months.

Analysts indicated the bullish jobless data provided a strong signal of the beginning of a faster-than-expected economic recovery.

Buoyed by the jobs report, dollar jumped sharply with the rate against euro climbing more than 2 cents to 1.4193 dollars from the intraday low of 1.4413 by the end of gold floor trading time. The dollar index, a gauge measuring the greenback's value against other six main currencies, rose 0.931 point, or 1.2 percent, to 78.876.

Encouraging prospects of the U.S. economy and a stronger dollar both put some pressure on gold as the precious metal's appeal of hedge and safe-haven were reduced.

September silver finished at 14.668 dollars per ounce, up 2.3 cents. October platinum fell 5.10 dollars to 1268.50 dollars an ounce. 　

Rupee up on IMF loan hopes

The rupee firmed against the dollar and stocks ended higher on Friday on expectations the International Monetary Fund will approve the country's third loan trance and reports a top militant was killed, dealers said. The rupee closed at 82.27/37 to the dollar, strengthening from Thursday's close of 82.50/60. Pakistan obtained a $7.6 billion emergency loan package from the IMF last November to avert a balance of payments crisis. The third tranche of about $850 million is expected to be approved when its board meets on Friday. "The IMF is expected to approve the third trance and the additional loan which is why we've seen the rupee strengthen this week," said a local currency dealer. Pakistan has also said it would request an extra $4 billion as "insurance" to help it cope with its economic crisis. The rupee has lost 3.85 percent this year after losing 22.12 percent in 2008. Pakistani stocks rose 0.64 percent, or 49.91 points, to end at 7,872.23 on turnover of 112.5 million shares.

US dollar hits weekly high against euro

The US dollar rose to a seven-day high against the euro and also gained against the Japanese currency in a surprise rally on better-than-expected US jobs data.

At 1000 (AEST) on Friday, the euro fetched $US1.4173 from $US1.4347 the late trading time in New York on Thursday.

The dollar also rose to 97.51 yen from 95.44 on Thursday.

The surge in the dollar came after government data showed the US unemployment rate fell to 9.4 per cent in July and job losses in the month narrowed to 247,000. The surge surprised some analysts.

The US currency has mostly been regarded as a safe haven unit sought by investors seeking cover against risk. But Friday's market action showed a shift in tone.

'The US dollar rallied in response to surprisingly strong nonfarm payroll results, which was surprising in that the currency has generally only traded as a 'safe haven' asset,' said Terri Belkas, currency strategist with Forex Capital Markets.

She said the US Federal Reserve's interest rate decision and US retail sales numbers the coming week 'will be important as a gauge of what will drive the US dollar going forward: economic data or risk appetite'.

Kathy Lien, director of currency research at Global Forex Trading, said the dollar rally on Friday 'looks like fundamentals may be finally impacting the dollar in a positive way meaning that good data is good for the dollar'.

With the greenback surging on Friday in line with US stocks that shot up to their best levels of the year after the much-awaited July jobs report, 'the negative correlation between them appears to have been drawn into question -- at least temporarily,' said Michael Woolfolk of the Bank of New York Mellon.

'Keep in mind that the standard model and historical precedent argues in favour of a positive, not negative, correlation between equities and the local currency,' he said.

'At some point in the recovery process this will happen.'

Woolfolk predicted that if the US economy began to lead the global economy out of recession, the dollar could benefit as it did in the wake of 1997-98 Asian crisis triggered by a regional currency meltdown.

'Consequently, the US dollar could benefit during the second half of 2009 from two scenarios: a faster than expected US recovery and a return to crisis conditions.

'Anything in between is likely to prove neutral to negative for the US dollar as sovereigns continue to diversify reserves.'

In late New York trade the dollar also jumped to 1.0816 Swiss francs from 1.0652 on Thursday.

Sales 11,617mn Yen YY6.7% / Ordinary Income 734mn Yen QTR Results of TAKE AND GIVE. NEEDS

Established in 1998, T&G pioneered a glamorous and highly customized wedding service that operated in stark contrast to the rigidly formal hotel wedding packages that were typical at the time. From 2001, T&G began expanding its operations nationwide, coining the now ubiquitous term 'house wedding'. By 2006, T&G had the largest net sales and earnings of any peer in the wedding ceremony and reception business and was the number one provider of wedding services in Japan.

The T&G Group, consolidated in fiscal 2006, has expanded to include 7 consolidated subsidiaries involved in the wedding industry, including an overseas wedding service provider, a honeymoon travel provider, a wedding financing operation and an internet-based wedding preparation site.

T&G was listed on NASDAQ Japan Market in 2001 (stock code: 4331) and listed on the first section of the Tokyo Stock Exchange in March 2006. As of March 31, 2008, T&G had 62 directly managed wedding venues, 17 affiliated restaurants, and 1,303 employees on a consolidated basis.

Daily Exchange Rate

Currency	Bid	Offer	Time
EUR/USD	1.41788	1.41888	Fri Aug 7 16:59:56 2009
USD/JPY	97.515	97.615	Fri Aug 7 16:59:57 2009
GBP/USD	1.66796	1.66896	Fri Aug 7 16:59:57 2009
USD/CAD	1.08083	1.08183	Fri Aug 7 16:59:57 2009
USD/CHF	1.08060	1.08160	Fri Aug 7 16:59:58 2009
EUR/JPY	138.383	138.410	Fri Aug 7 16:59:57 2009
EUR/GBP	0.85008	0.85026	Fri Aug 7 16:59:57 2009
EUR/CHF	1.53313	1.53332	Fri Aug 7 16:59:56 2009
GBP/CHF	1.80274	1.80474	Fri Aug 7 16:59:58 2009
GBP/JPY	162.686	162.886	Fri Aug 7 16:59:57 2009

Bombay Stock Exchange - United Stock Exchange Form Alliance to Develop Currency & Interest Rate Derivatives Markets

MUMBAI, India, Aug 07, 2009 (PR Newswire Europe via COMTEX) --

Bombay Stock Exchange Limited (BSE), today decided to take a 15% stake in United Stock Exchange (USE). USE, which will operate as a BSE Group Company, now brings together a consortium of key stakeholders - the exchange, banks, financial institutions - to drive the development and growth of the currency and interest rate derivatives markets.

Currency futures have been trading actively for the past year, however the market is still at a very nascent stage. USE's efforts will be focused on increasing the participants in this market, as well as the liquidity and the range of tradable products.

With prior regulatory approval, USE will also launch interest rate futures. Interest rates touch every economic agent, from the largest financial institution to a family with a home loan. New products are expected to be launched in the coming years to help market participants manage their interest rate risks. USE will provide an advanced trading platform for these products and will be an important driver of innovation in terms of product and market development.

Commenting on the development, Mr. Jagdish Capoor, Chairman, BSE, said, "Events in recent years have demonstrated the desirability of exchange traded products. We at BSE are committed to working with regulators and market participants to forge the development of trading platforms that facilitate price discovery in a transparent manner. We are happy to be joining hands with the largest banks, end-users and trading entities to drive development of this market."

Mr. T S Narayanasami, Managing Director & CEO, USE added "By partnering with India's premier exchange, we will significantly strengthen our offering and broaden our reach. BSE has an established regulatory structure, and strong distribution and exchange technology that will help us accelerate our plans to be a dominant player in the currency and interest rate derivatives market in India."

"BSE's commitment to thought-leadership, innovation and our belief in the consortium model as a powerful approach for long-term market development were the key factors to enter into this relationship. The BSE Group will work with all the different constituents to drive product and market development in currency and interest rate derivatives markets," said Mr. Madhu Kannan, Managing Director & CEO, BSE Ltd.

About Bombay Stock Exchange:

Bombay Stock Exchange is one of India's leading exchange groups and has played a pre-eminent role in the development of the Indian capital market. BSE is a corporatised and demutualised entity, with a broad shareholder-base which includes two leading global exchanges, Deutsche Borse and Singapore Exchange as strategic partners.

BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. It also provides a host of other services to capital market participants including risk management, clearing, settlement, market data services and training. It has a global reach with customers around the world and a nation-wide presence. BSE systems and processes are designed to safeguard market integrity, support the growth of the market in India, and stimulate innovation and competition across all market segments. The BSE Training Institute is at the forefront of educating market participants on currency and interest rate derivatives.

About United Stock Exchange of India:

The United Stock Exchange of India Limited (USE) is India's newest stock exchange for trading in financial derivatives.

The exchange is a unique Public-Private partnership with equity investments by both PSUs and the private sector. USE has 16 of the most respected names in Indian business and finance as consortium members - Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Canara Bank, Federal Bank, HDFC Bank, Indian Overseas Bank, Indian Potash, Jaypee Capital, MMTC, Oriental Bank of Commerce, Punjab National Bank, Tata Consultancy Services Union Bank and United Bank. These 16 institutions not only form the financial backbone of the exchange but also epitomize the integrity, impeccable standards, and values upon which USE stands.

Canadian dollar closes at 92.40 cents US, down 0.48 of a cent

TORONTO - The Canadian dollar closed at 92.40 cents US, down 0.48 of a cent on Friday.

The U.S. dollar stood at C$1.0823, up 0.56 of a cent.

Pound sterling closed C$1.8056, down 0.22 of a cent and US$1.6683, down 1.07 cents.

The euro was worth C$1.5342, down 1.17 cents.

Dollar Tree reports jump in second-quarter sales over last year

Dollar Tree Inc. announced today that sales for the second quarter jumped nearly 12 percent from the prior year to $1.2 billion.

Sales in comparable stores -- those open at least 12 months -- rose 6.8 percent in the quarter, which ended Aug. 1. Data for comparable stores provide the best measure of year-to-year performance.

That growth comes on top of a 6.5 percent increase in comparable sales in the second quarter of 2008. It also continues Dollar Tree's momentum during the recession, as shoppers spend more at its all-for-$1 stores on food and other household basics.

Bob Sasser, the retailer's chief executive, said customers in the second quarter also scooped up health and beauty items, party supplies and "hot summer deals." Dollar Tree, with headquarters in Chesapeake, plans to release its full quarterly earnings results Aug. 26.

UPDATE 10-Oil slips as U.S. jobs data boosts dollar

U.S. July unemployment data better than expected

* Offshore crude storage up sharply in last 2 weeks (Updates with settlement prices, replaces last graph on offshore storage)

By Matthew Robinson

NEW YORK, Aug 7 (Reuters) - Oil fell from six-week highs on Friday, pressured by gains in the dollar following the release of better-than-expected U.S. job-loss numbers.

U.S. employers cut 247,000 jobs in July, far less than expected and the least in any month since last August, according to a government report, adding to optimism that the world's largest economy was turning around. [ID:nN07385157]

"The jobs report was a mixed bag for crude traders. On the one hand, it was good for fundamentals for people to be working and able to buy things," said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire.

"But it could mean that Europe will be seen as the lagging market and get people to short the euro, and a stronger dollar longer term, and put some pressure on commodities."

U.S. crude settled $1.01 lower at $70.93 a barrel, after touching a six-week high of $72.84 earlier. London Brent crude fell $1.24 to settle at $73.59 a barrel.

The drop came as the dollar gained against the euro and the yen, putting pressure on commodities denominated in the greenback. [.N] Wall Street gained following the release of the U.S. jobs data.

The economic crisis has damped fuel demand, pushing crude from record highs near $150 a barrel in July 2008 to below $33 a barrel in December.

Oil prices have found support from optimism that a potential turnaround in the economy could boost flagging fuel consumption, although global inventories of crude remain high, especially in top consumer the United States. [EIA/S]

Several industry sources estimated that there were 70 million barrels of crude oil being stored at sea. While the estimates vary from around 60 million to 100 million barrels, most sources agree offshore storage levels rose by around 10 million barrels in the last two weeks alone.

Daily Exchange Rate

Currency	Bid	Offer	Time
EUR/USD	1.44089	1.44106	Thu Aug 6 03:39:59 2009
USD/JPY	95.139	95.155	Thu Aug 6 03:39:58 2009
GBP/USD	1.70030	1.70070	Thu Aug 6 03:39:58 2009
USD/CAD	1.06764	1.06824	Thu Aug 6 03:39:52 2009
USD/CHF	1.06117	1.06157	Thu Aug 6 03:39:57 2009
EUR/JPY	137.082	137.115	Thu Aug 6 03:39:58 2009
EUR/GBP	0.84730	0.84750	Thu Aug 6 03:39:58 2009
EUR/CHF	1.52924	1.52954	Thu Aug 6 03:40:00 2009
GBP/CHF	1.80446	1.80521	Thu Aug 6 03:39:58 2009
GBP/JPY	161.759	161.824	Thu Aug 6 03:39:58 2009

Home Money Business News Markets India Europe US Asia All Indices Deals Economy Industries Quotes Funds Currencies Personal Finance Portfolio News Do

 TOKYO, Aug 6 (Reuters) - Gold inched up on Thursday, drawing
support from the dollar's weakness against the euro and investor
risk appetite that has helped boost assets across markets, but
prices were capped as investors grew wary of high price levels.

 Gold hit a two-month high earlier in the week on the dollar's
drop and a broad rally in commodities and equities, as hopes for
an economic recovery encouraged funds to pour money into a wide
range of assets.

 Traders said investors may become cautious about pushing
prices higher given the elevated market levels, as well as
physical demand remaining weak and gold losing its appeal as a
safe haven as sentiment about the economy improves.

 "We'll see further weakness in the dollar which is very
supportive to the gold market, but in 2009 we have seen gold
struggle to maintain its momentum when it got to the high
$900s-$1,000," said Toby Hassall, an analyst with CWA Global
Markets in Australia.

 "I wouldn't be surprised if the market fails to break above
$1,000," he said.

 Spot gold XAU= was up 0.2 percent at $963.60 per ounce as
of 0250 GMT, compared with New York's notional close of $961.95.

 U.S. gold futures for December delivery GCZ9 eased 0.1
percent to $965.40 an ounce, compared with $966.30 an ounce on
the COMEX division of the New York Mercantile Exchange.

 As optimism about the economy grows, other products such as
silver, copper and oil have become a focus due to their
exposure to industrial use, Hassall said.

 "As things are getting better and money flows into riskier
assets, funds are looking to get exposed to industrial demand.
Gold has been out of focus, with fear moving out of the market as
the volatility index .VIX fell," he said.

 The dollar stayed near its 2009 lows against the euro on
Thursday on hopes a slower pace of U.S. private job losses in
July hinted at a gradual improvement in the economy. [USD/]

 The impact on gold from the U.S. nonfarm payrolls data due on
Friday will depend on how currencies react, traders said. With
the recent markets' rally based on expectations the U.S. economy
is improving, a negative surprise could erode some of the
optimism.

 Gold futures dipped on Wednesday as weaker equities prompted
funds to consolidate recent profits.

 U.S. stocks slipped on Wednesday as the market took the
weaker services sector and private payrolls data as cooling
recent optimism the recession was retreating, but the market
finished off its lows as investors ventured into riskier
financial shares. [.N]

 Asian stocks fell on Thursday, led by a more than 3 percent
drop in Chinese stocks on worries about adjustments to monetary
policy that might impact market liquidity. [ID:nPEK368445]

 Base metals also fell sharply on Thursday after rising to
multimonth peaks in previous sessions.

 Physical demand is generally weak and the fairly high price
of gold in a historic context might limit the market impact from
an expected pick-up in Indian demand this month, traders said.

 Indians have started buying gold jewellery and wholesalers
are stocking up against anticipated price rises as the busy
season gets under way in the world's largest bullion consumer.
India, accounting for over 20 percent of global demand for gold
jewellery in 2008, celebrates several Hindu festivals this month,
when demand for bullion usually picks up. [ID:nSP91056]

 The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust GLD, said holdings stood at 1,072.87 tonnes as
of Aug. 5, unchanged from the previous business day. [GOL/SPDR]

 PRICES
 Precious metals prices at 0250 GMT
Metal             Last    Change  Pct chg  YTD pct chg Turnover
Spot Gold         962.55    0.60   +0.06      9.36
Spot Silver        14.60   -0.04   -0.27     28.98
Spot Platinum    1277.50   -5.00   -0.39     37.07
Spot Palladium    273.00    0.00   +0.00     47.97
TOCOM Gold       2950.00   -4.00   -0.14     14.65        24202
TOCOM Platinum   3906.00   33.00   +0.85     47.29        15256
TOCOM Silver      446.90    0.70   +0.16     39.96           84
TOCOM Palladium   842.00  -16.00   -1.86     53.09          182
Euro/Dollar       1.4390
Dollar/Yen         94.97
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.

Forex Exchange Morning Report 5-8-2009

Forex Exchange Morning Report
Risk currencies maintained their firm tone last night thanks to supportive, but mixed, US data. The ADP payroll report produced a small negative surprise, denting equity investor sentiment and the S&P500 at the open, but the later factory orders report easily beat consensus, helping revive risk into the NY close. The S&P500 closed down 0.3%, but noteworthy is the +4.4% performance of the banks' index. Oil was little changed, but copper ground 1.1% higher. US treasuries bounced around with the data, the 10yr note 8bp higher on the day.
EUR ranged wildly between 1.4355 and 1.4445, a disappointing retails sales report hurting, but has rebounded to the upper bound. A raft of strong UK data pushed GBP higher to 1.7043. JPY remained around its recent 95 consolidation zone. We note retail margin traders aggressively cutting JPY shorts. Moody's reaffirmation of Mexico's Baa1 rating boosted the peso 1.3%.
AUD bounced around with the data, seeing overnight extremes of 0.8450 and 0.8360, but is about where it closed in Sydney yesterday at 0.8405.
NZD was relatively stable, perhaps supported by residual sentiment from the earlier milk powder price rise, and remains around 0.6730. That milk result kept the pressure on AUD/NZD overnight, reaching a low of 1.2443.
US ISM non-manufacturing slipped from 47.0 to 46.4 in July. This reflected a near 4 pt drop in the business activity index, a 2 pt drop in jobs and a smaller drop in orders, with offset from inventories and supplier deliveries. Not a surprising outcome to us, as the June jump had looked excessive; the uptrend in this survey is still intact.
US ADP private payrolls down 371k in July. This compared to a 463k fall in June, which suggests that Friday's payrolls report will also show a smaller pace of job loss. However, ADP is not a reliable guide to payrolls, even if, as in June, it seems to get it about right; we expect total payrolls to show an even starker improvement (WBC forecast -270k), given statistical distortions related to auto sector hiring.
US factory orders rise 0.4% in June. A 2.7% jump in non-durables (mostly due to energy prices) offset the known 2.2% drop in the durables component. Factory inventories fell 0.8%.
Euroland retail sales fell 0.2% in June, their sixth decline in seven months, and pointing to a likely further contraction in Q2 household spending.
UK industrial production jumped 0.5% in June, the strongest monthly gain since October 2007, and one of only four monthly gains since then. This result adds weight to the view that the UK economy may have bottomed out sometime in the second quarter.
UK surveys point to improving economy. The Nationwide's July consumer confidence index rose from 59 to 60; the Halifax reported a 1.1% jump house prices last month; and the British Retail Consortium saw only modest further discounting in July, with shop price growth easing from 0.7% yr to 0.5% yr. Most impressive was the rise from 51.6 to 53.2 in the services PMI, pointing to accelerating growth in that sector.
Outlook Today's highlight should be the double billing employment reports from New Zealand and Australia. In New Zealand, a number higher than 5.7% may be dismissed as old data (it would also need to be worse than the RBNZ's 5.9% forecast to have monetary policy implications), but something lower would likely elicit a bullish response in the NZD. We favour the kiwi higher in sessions ahead, to around 0.6900 initially, with temporary corrections limited to 0.6650.
Events Today
Country Release Last Forecast NZ Q2 HLFS Employment –1.1% –0.4% Q2 HLFS Unemployment 5.00% 5.70% Aus Jul Employment chg –21.4k –20k Jul Unemployment Rate 5.80% 6.00% US Initial Jobless Claims w/e 1/8 584k 590k Jul Chain Store Sales %yr –5.1% – Jpn Jun Leading Index 76.9 79.7 Eur ECB Rate Decision 1.00% 1.00% Ger Jun Factory Orders 4.40% –2.2% UK BoE Rate Decision 0.50% 0.50% Can Jun Building Permits 14.80% –3.2% Westpac Institutional Bank
http://www.wib.westpac.co.nz/
All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.

Metal prices rise slightly on dollar weakness

Most precious and industrial metals rose Wednesday, building on recent gains as the dollar extended its losses. Gold prices, however, finished slightly lower as investors collected some profits.

Prices were supported by the dollar's ongoing weakness; the greenback fell slightly against the euro and the British pound Wednesday.

Commodities are priced in U.S. dollars, so they become more attractive to foreign investors when the dollar is down.

Commodities traders seemed little fazed by the day's mix of economic data.

A reading indicating weakness in the services sector offset a report showing an unexpected increase in factory orders.

Metals and other commodities have been rallying over the past month, mirroring big gains in the stock market as improving economic data and earnings reports gave investors hope that demand for basic materials will pick up by the end of the year.

But analysts are anticipating that the market will cool off in the near future, and they say it may have gotten ahead of itself considering the economy's slow rate of recovery.

On the New York Mercantile Exchange, September silver rose 6.5 cents to $14.76 an ounce, while October platinum added $16.30 to $1,293.10 an ounce.

Over the past week, silver has risen 11.3 percent, while platinum is up 10.3 percent. September copper futures rose 1.65 cents to $2.8120 a pound.

Copper is up 13.5 percent since July 29. Gold for December delivery dipped $3.40 to $966.30 an ounce.

David Beahm, vice president of economic research at Blanchard & Co., a precious metals investment firm, said investors were likely taking some profits off the table in light of gold's recent advance.

Prices have risen nearly 4 percent in just five trading sessions.

Oil prices hovered near $72 a barrel, after dipping below $70 earlier Wednesday.

Prices have climbed from below $63 a barrel last week on the hopes that energy demand would soon rebound amid signs the economy was improving.

Some of the market's recent optimism was tempered Wednesday after the Energy Department said crude inventories rose by nearly 2 million barrels last week.

Light, sweet crude for September delivery rose 55 cents to settle at $71.97 a barrel on the Nymex.

Gasoline futures fell half a cent to settle at $2.0512 a gallon, while heating oil futures rose just more than half a cent to settle at $1.9569 a gallon.

Grain prices were mixed on the Chicago Board of Trade.

September wheat futures fell 13.5 cents to $5.5675 a bushel, and corn for September delivery fell 7.5 cents to $3.47 a bushel.

November soybeans rose 1.35 cents to $1.045 a bushel.

CBI’s dollar sales drop on Wed.

BAGHDAD / Aswat al-Iraq: Demand for the dollar was lower in the Central Bank of Iraq (CBI) auction on Wednesday, reaching $132.780 million compared to $150.250 million during the previous session.

“The demand hit $15 million in cash, covered by the bank at an exchange rate of 1,183 Iraqi dinars, and $117.780 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.
None of the 14 banks that participated in today’s session offered to sell dollars.
The Central Bank of Iraq runs a daily auction from Sunday to Thursday.

Daily Exchange Rate

Currency	bid	offer	Time
EUR/USD	1.44003	1.44015	Wed Aug 5 03:59:59 2009
USD/JPY	95.001	95.012	Wed Aug 5 03:59:57 2009
GBP/USD	1.69235	1.69256	Wed Aug 5 03:59:59 2009
USD/CAD	1.07547	1.07589	Wed Aug 5 03:59:58 2009
USD/CHF	1.06131	1.06149	Wed Aug 5 04:00:00 2009
EUR/JPY	136.802	136.826	Wed Aug 5 03:59:58 2009
EUR/GBP	0.85080	0.85097	Wed Aug 5 03:59:59 2009
EUR/CHF	1.52838	1.52857	Wed Aug 5 03:59:59 2009
GBP/CHF	1.79609	1.79651	Wed Aug 5 04:00:00 2009
GBP/JPY	160.769	160.808	Wed Aug 5 04:00:00 2009

Employees' pension program 10 trillion yen in red

Depressed stock prices, deficits in public pension programs nearly doubled to 10.1795 trillion yen in fiscal 2008 from the previous fiscal year, the welfare ministry reported Tuesday.

In addition, the national pension program for self-employed, unemployed, part-time workers and other people chalked up a red ink figure of 1.1216 trillion yen, the ministry said.

The deficits, based on market values, were the largest since fiscal 2001. Comparable data for the period before that was not available.

Both pension programs were in the red in fiscal 2007 as well. The deficit for the employees' pension program at that time came to 5.5909 trillion yen and the national pension program ran a loss of 777.9 billion yen.

The Ministry of Health, Labor and Welfare attributed the biggest losses mostly to investments in reserve funds. The global financial crisis that flared last September caused share prices to tumble.

The employees' pension program lost 8.7252 trillion yen through various market investments in fiscal 2008, and the national pension program was down 592.4 billion yen, the ministry said.

The reserve funds in both programs fell sharply to 116.6496 trillion yen for the employees' pension program, down 13.5314 trillion yen from fiscal 2007, and to 7.1885 trillion yen for the national pension program, down 1.2789 trillion yen.

As for revenues, the employees' pension program received premiums worth 22.6905 trillion yen in fiscal 2008, up 721.4 billion yen from fiscal 2007.

The higher revenue owed largely to the fact that 496,000 more people were in the program than in the previous year due to a relatively stable labor market at the beginning of fiscal 2008.

As for the national pension program, 752,000 fewer people paid premiums than in the previous year, mostly because many baby boomers reached an age and no longer had to pay them.

This was a main reason for the drop in the program's revenue for fiscal 2008 to 1.747 trillion yen, down 111.2 billion yen from fiscal 2007.

Because pension benefits are funded by both premiums and tax money, deficits in a single year will not immediately affect payouts.

"We have devised long-term prospects for pension financing, taking into consideration stock prices and other factors up until the end of last year," said a welfare ministry official.

"A balance between the burden and the payments will be maintained in the future," the official added.

However, if the economic slump continues for a prolonged period, pension benefits could drop in the future.

Dollar Stuck Near 2009 Lows Versus Most Majors

he dollar saw very little movement versus most majors on Tuesday, taking a breather after falling to its lowest levels of the year during the previous session.

Its been a brutal stretch for the dollar, which has given back a major portion of its post-economic meltdown gains. During the throes of the near-collapse of the financial system, the dollar rose to multi-year highs, but has since fallen under the weight of increased risk appetite.

With stocks rocketing higher, traders have been in hot pursuit of riskier, higher-yielding assets. Consequently, the dollar has fallen to levels not seen since 2008 versus all majors but the yen.

Traders on Tuesday weighed a pair of economic reports, but participants will be marking time until Friday's pivotal monthly jobs report. Pending home sales increased for the fifth consecutive month in June, according to industry data.

The dollar barely budged on either report, staying near yesterday's 8-month low of 1.4444 versus the euro. Meanwhile, the buck improved very slightly from a 10-month low of 1.7004 against the sterling.

With the price of oil stabilizing near $70, the dollar held its ground versus the loonie. After hitting a 10-month low of C$1.0630, the dollar hovered near C$1.0700.

The buck extended its run of choppy trading versus the yen, bouncing back and forth around 95.

In global economic news, the Eurostat said in a report that Eurozone industrial producer price index or PPI dropped 6.6% year-over-year in June, compared with a 5.9% fall in the previous month. The May month figure is revised from 5.8% decline reported initially. The PPI came in line with economists' expectations.

U.K.'s CIPS/Markit Construction Purchasing Managers' Index rose to 47 in July, a survey from the Chartered Institute of Purchasing & Supply and Markit Economics showed Tuesday. Economists were expecting the index to rise to 45 from 44.5 logged in June. However, the index stood below the neutral level.

Forex trading challenge to start in August

Varengold Bank is offering traders a second chance to put their FX trading skills to use by virtual trading to win $250,000 AUM. “This is a great opportunity for both beginners and sophisticated forex traders, to join in and put their trading skills to the test,” said Ilja Perschbacher, Managing Director of Varengold Bank Dubai.

Participants are being invited to sign up for a virtual play money account and begin trading over a period of three months, from the 1 August 2009 to 31 October 2009. The challengers will be assessed on the highest risk-adjusted interest yield during the three month duration.

The winner of the challenge will be awarded with their own managed account ready for trade, Seed capital amounting to $250,000 AUM and bank-based sales support to acquire additional funding.

GBP/USD: Pound, consolidating below 1.7000

FXstreet.com (Barcelona) - GBP/USD has remained moving in a range from 1.6900 to 1.7000 after being rejected on its attempts to reach a 2009 high above 1.7000.

At the moment, the Pound is testing the lower band of the trading range at 1.6900, in case of dipping below here, next support levels could be at 1.6880 and 1.6815.

GBP/JPY has depreciated during Asian session after being rejected at levels close to 161.80 resistance area, and the Pound lost about 120 pips to levels around 160.50 at the time of writing. Support levels lie at 160.00 and 158.05. On the upside, resistance levels are 161.80 and 162.20.

South Korean Won Falls To 2-day Low Against US Dollar

During early deals on Wednesday, the South Korean won declined to a 2-day low against the US dollar as a fall in Asian stock prices reduced the appeal of the nation's assets. The won also showed weakness against the Japanese yen.

Asian markets retreated today as Japanese automakers fell on Toyota's big loss and investors waited for a U.S. employment report to shed light on how quickly the world's biggest economy can recover.

The Korean benchmark KOSPI closed at 1,559.47, down 6.90 points or 0.44% from its previous close.

The South Korean won declined to a 2-day low of 1226.60 against the US dollar at 2:55 am ET Wednesday. The next downside target level for the South Korean currency is seen around 1236.0. The dollar-won pair closed Tuesday's North American session at 1218.30.

U.K. Halifax Prices Provide Positive Stimulus Ahead of European Open

U.K. July Halifax house price index rose 1.1% m/m, largely in line with the Nationwide reading for the same month (which was 1.3%) and with the 3m y/y rate now down 12.1%. This is the third monthly increase for the index this year and follows -0.5% m/m and -15.0% 3m y/y in June. Halifax data hence serve to highlight that the housing market might now be stabilizing, though low supply is distorting price comparison.

The USD and JPY are likely to retain their inverse correlation to stock market performance and the associated ebb and flow of risk appetite. Currently we have more ebb than flow as equity markets pause after recent impressive gains, fueled by an overall better-than-expected Q2 corporate earnings season and encouraging global economic data. Concerns about a correction in China's market resurfaced today, with banking stocks pressured amid a view that Beijing may tighten capital holding requirements, while potential for further upside corporate earnings announcements and guidance is reducing simply due to the fact that the majority of companies have now reported. So, the tone for European morning trade will likely be supportive for the USD and JPY and negative for higher beta type currencies. There is some potential for a sharper recovery in the U.S. and Japanese currencies given the extent of net short positions held by the market, though we may need some sort of catalyst (i.e. negative news of data event) to spark a short-covering squeeze. A busy data calendar looms today.

Malaysian Ringgit Tumbles Against Dollar

The Malaysian ringgit plummeted to 3.5030 against the U.S. dollar at 2:20 am ET Wednesday. On the downside, 3.510 is seen as the next target level for the Malaysian currency. The dollar-ringgit pair closed yesterday's North American session at 3.4895.

Rupee strengthens as Dollar drops overseas

Mumabi: The Indian rupee rose on Wednesday, buoyed by weakness in the US unit versus majors overseas but pared some of its rise in mid-morning trade as local shares turned negative after having risen nearly 1% early.

At 10:55pm, the partially convertible rupee was at Rs47.69/70 per dollar, off an early high of Rs47.595, but still a little stronger than its previous close of Rs47.73/74.

On Tuesday, the rupee had risen to as much as Rs47.43, its strongest since 12 June. “The rupee has gained as expected. It should be rangebound today with a slight downward bias. Rs47.50-47.80 is the expected range for the day,” said Ashtosh Raina, head of foreign exchange trading, at HDFC Bank.

Dealers said weakness in the dollar versus majors and a positive start to the domestic share market had helped the rupee rise, but added that they would be watching out for cues on direction of capital flows.

The dollar was steady near 2009 lows against the euro and sterling on Wednesday, after a surprisingly strong US housing report the previous day boosted hopes that the worst of the recession was over.

The dollar index, a gauge of the US units performance versus six majors, was down 0.1%. Most Asian units were also stronger against the dollar.

Shares rose 0.9% early with positive economic data from the United States lending support, but were trading down 0.3% as caution prevailed across Asia after the recent rally.

Foreigners have so far in 2009 bought $7.6 billion worth of local stocks, after net sales of more than $13 billion last year.

One-month offshore non-deliverable forward contracts were quoting Rs47.71/81, largely unchanged from the onshore spot rate, indicating a bullish outlook in the near term.

Daily Exchange Rate

Currency	bid	offer	Time
EUR/USD	1.43889	1.43898	Tue Aug 4 07:19:59 2009
USD/JPY	94.663	94.675	Tue Aug 4 07:19:59 2009
GBP/USD	1.69423	1.69441	Tue Aug 4 07:19:59 2009
USD/CAD	1.06780	1.06825	Tue Aug 4 07:20:00 2009
USD/CHF	1.06284	1.06302	Tue Aug 4 07:19:47 2009
EUR/JPY	136.209	136.236	Tue Aug 4 07:19:59 2009
EUR/GBP	0.84926	0.84943	Tue Aug 4 07:19:59 2009
EUR/CHF	1.52934	1.52953	Tue Aug 4 07:20:00 2009
GBP/CHF	1.80083	1.80125	Tue Aug 4 07:19:59 2009
GBP/JPY	160.378	160.417	Tue Aug 4 07:19:59 2009