Stocks Slip After Data Released on Consumer Spending, Manufacturing By Joe Bel Bruno, AP Business Writer

NEW YORK (AP) -- Stocks dipped Friday, the last trading day of the third quarter, as Wall Street mined mixed economic reports and remained cautious ahead of the upcoming earnings onslaught.

The stock market appeared wary of strong economic news, which could lower the chance of another rate cut. Last week, the Fed helped restore some confidence in the financial markets by reducing the target federal funds rate by a half point.

The Commerce Department said consumer spending increased 0.6 percent in August, the fastest growth in more than two years. Meanwhile, Chicago's National Association of Purchasing Management said business activity in the heavily industrialized Chicago area increased in September by more than analysts expected, and the University of Michigan said consumer sentiment during the month has held steady.

Also weighing on investors Friday was lingering concern that corporate earnings power was lessened in the third quarter. This is the last trading day of one of the most volatile periods in years -- one that pulled stocks sharply lower after the Dow Jones industrial average closed at a record 14,000.41 in mid-July.

Still, though energy and food prices are surging, core inflation appears to be under control, which is keeping rate cut hopes alive. The Commerce Department report showed that a closely watched gauge of core inflation showed a year-over-year rise in August of just 1.8 percent -- the smallest increase since a similar rise in February 2004. The reading is within the Fed's comfort zone of 1 to 2 percent.

"A second Fed cut will go a long way in reassuring the stock market that the worst is over. The focus going forward will be whether the Fed is going to lower rates to shore this up, or decide the risk of inflation is too high," said Janna Sampson, director of portfolio management at Oakbrook Investments.

The Dow shed 15.77, or 0.11 percent, to 13,897.17.

Broader indexes also declined. The Standard & Poor's 500 index fell 4.14, or 0.27 percent, to 1,527.24, and the Nasdaq composite index fell 6.86, or 0.25 percent, to 2,702.73.

Bonds rose, pushing the yield on the 10-year Treasury note down to 4.54 percent from 4.57 percent late Thursday.

The dollar fell against most major currencies as inflation appeared to be easing. The euro surpassed $1.42 for the first time, hitting a record against the U.S. currency for the seventh straight session.

The dollar's weakness has bolstered commodity prices throughout the quarter, and helped lift prices again on Friday. Crude oil prices rose 45 cents to $83.33 on the New York Mercantile Exchange.

"We're going to see crimped corporate profits if they eat those costs, and inflation if they pass those down. Neither of those are good," Sampson said.

In corporate news, shares of 3Com Corp. shot higher after the telecommunications equipment company said it will be sold to affiliates of private equity firm Bain Capital Partners LLC for $2.2 billion in cash. 3Com rose $1.28, or 34.8 percent, to $4.96.

As the tumultuous third quarter draws to a close, investors appear a bit less concerned about the tightening in the credit markets that sent stocks plummeting in late July and August. On Thursday, the Fed said banks slowed their borrowing from central bank this week to the smallest amount in six weeks, after a huge spike last week.

But while most market watchers agree that conditions have improved, the credit markets still don't appear they are back to operating normally. Levels of outstanding asset-backed commercial paper fell about 17 percent in the week ending Wednesday -- not as steep a decline as seen a few weeks ago, but still suggesting that demand isn't meeting supply.

Meanwhile, the bulk of third-quarter earnings start pouring in in mid-October, which should give investors a better idea of how companies weathered the summer's tumult and what they expect in the coming months.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 285.9 million shares.

The Russell 2000 index of smaller companies fell 4.68, or 0.57 percent, to 809.33.

In European trading, Britain's FTSE 100 fell 0.30 percent, Germany's DAX index fell 0.10 percent, and France's CAC-40 fell 0.31 percent.

In Asia earlier, Japan's Nikkei index fell 0.28 percent and Hong Kong's Hang Seng Index rose 0.29 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

USD Struggles on Soft Reports by Korman Tam

The beleaguered dollar found no reprieve in today’s US economic reports, with GDP and new home sales falling short of consensus estimates, sending the currency to another record low against the euro at 1.4188. Concerns of deteriorating conditions in the US economy continue to plague the greenback, raising expectations that the Fed will cut interest rates again by at least 25-basis points this year.

The final reading for Q2 GDP growth was weaker than initially anticipated, falling to 3.8% versus calls for a decline to 3.9% from 4.0% in the preliminary reading. However, PCE prices, the Fed’s preferred gauge on inflation, crept up higher than expected, with the headline at 4.3% from 4.2% while the core PCE reading rose to 1.4% versus 1.3%. The housing market continues to deteriorate, with more evidence revealing slowing activity as new home sales plunged by 8.3% to 795,000 units in August. Meanwhile, weekly jobless claims improved to 298,000, down from the previous week at 311,000.

The week concludes with a series of key US releases on Friday morning, consisting of August PCE, personal consumption, personal income, September Chicago PMI, and the University of Michigan consumer sentiment survey. Manufacturing is seen struggling, with the Chicago PMI expected to decline to 53.3 from 53.8. The University of Michigan consumer sentiment survey is forecasted to improve slightly to 99.0, up from the preliminary reading at 98.4. However, given this week’s surprise drop in the Conference Board’s consumer confidence survey to 2-year lows, it will be interesting to see if the University of Michigan survey is resilient to the recent financial market turmoil and can shrug off burgeoning fears of recession.
Euro Buoyed

The euro continued to forge ahead against the dollar and yen amid a combination of robust Eurozone economic data and renewed signs of a faltering US economy. The single currency jumped to a fresh all-time high versus the greenback just shy of the psychologically key 1.42-level at 1.4188.

Germany’s labor report improved better than anticipated with the unemployment rate for September unexpectedly falling to its lowest level in 14-years at 8.8%. Meanwhile, unemployment change in September declined by 50k to 3.694 million. The robust data adds further support for at least another 25-basis point rate hike by the ECB before year-end.

JPY Slumps Ahead of Data

A barrage of Japanese economic data is due out this evening and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.

Dollar Shrugs off Soft Data by Korman Tam

The dollar was little changed against the euro and sterling despite a sharply weaker than expected August US durable goods orders. The typically more volatile figure reversed its previous month’s gains, with the headline number falling by 4.9% versus a 6.0% increase from July. Meanwhile, the excluding transportations reading posted a 1.8% drop compared with a 3.8% gain in the previous month. The disappointing data however, were overshadowed by a strong opening in the US equity bourses after an agreement was reached between GM and UAW to end the strike of auto workers. Moreover, the yen weakened across the board amid gains in global equities.

Traders will turn to several key reports due out in the Thursday session, consisting of Q2 GDP, Q2 PCE, August new home sales, weekly jobless claims and Q2 corporate profits. The final GDP growth figure is seen softer at 3.9%, down from 4.0% in the preliminary reading. The Fed’s preferred gauge of inflation, the PCE is unchanged from the previous quarter – with the headline figure holding steady at 4.2% and the core PCE reading at 1.3%. Weekly jobless claims are seen creeping up slightly to 316k, from 311k last week.
Sterling Mixed

The sterling traded sideways against the dollar, hovering above the 2.01-level while edging higher versus the yen toward the 233-mark. Data released overnight revealed slightly stronger than expected economic growth from the UK for the second quarter, with the annualized figure edging out estimates for an unchanged reading at 3.0%, instead growing at 3.1% and the quarterly reading steady at 0.8%. The current account deficit was also smaller than anticipated at 9.1 billion sterling, shrinking from 12.2 billion sterling in the first quarter.

In the session ahead, UK data will include September nationwide house prices and CBI distributive trades. The pound continues to be weighed by fears of a UK credit crunch and its subsequent impact on the overall economy, thereby raising expectations that the next rate move by the Bank of England will be a cut.

Cable has retreated since testing the descending trendline resistance at 2.03 earlier in the week and holds steady above the 2.01-mark. We expect the pair to continue to trade sideways and lag in performance relative to the euro or Aussie against the dollar, as a result of tempered rate hike expectations. Support begins at 2.0120, followed by 2.01 and 2.0070. Additional floors will emerge at 2.0040, backed by 2 and 1.9970 and 1.9940. Gains will target initial resistance at 2.0180, followed by 2.02 and 2.0230. Subsequent ceilings are seen at 2.0275 and 2.03.

Euro Climbs to Record High by Korman Tam

The single currency jumped to another fresh all-time high against the greenback despite a softer than expected reading from Germany’s Ifo sentiment survey. The euro continues to benefit from fears of further deterioration in US economic fundamentals, and now sets its sights on the next key psychological resistance at the 1.42-level. Moreover, the outlook for interest rates between the Fed and the ECB also remains favorable for the euro, with the FOMC likely to further ease policy while the ECB is seen tightening by at least 25-basis points before the end of the year.

ECB Board member Liebscher reinforced the economic strength of the Eurozone. Despite the prevailing downside risks, Liebscher said the Eurozone economy is in a good state and that the economic expansion remains dynamic. Meanwhile, the ECB’s Garganas sounded a hawkish tone, suggesting that “upside risks to price inflation dominate any effects stemming from the appreciation of the euro”. He deems the main drivers of Eurozone inflation are domestic, but added that it was appropriate to await more information prior to taking additional action. Garganas also added that the primary impact of recent market turbulence would be higher risk perception and would otherwise not affect the main scenario.

Germany’s Ifo sentiment survey was lower than forecast, with the business climate index falling to 104.2, compared with calls for 105 and down from 105.8 a month earlier. The current conditions component slipped to 109.9, versus estimates for a smaller decline to 111.0 from 111.5, while the expectations index dropped to 98.7 and down from 100.4. The Ifo said that the initial signs of “brake to growth” emerging and that the retail sector climate has deteriorated considerably. However, it added there was no strong impact on export expectations from a stronger euro. The Ifo’s chief economist Nerb believes that the German business climate has been impacted by the market turbulence and foresees a softening in the Germany economic rebound rather than an end.

Eurozone economic data over the coming sessions will reveal further clues into the state of the region’s economy. The reports will include Eurozone money supply, Germany’s September labor report, Eurozone sentiment surveys, and the September Eurozone HICP.

USD Slumps on Data by Korman Tam

The dollar was dragged lower in the Tuesday session on the heels of lackluster US economic reports, plunging to a new record low versus the euro at 1.4154 and again falling to parity against the Loonie. We expect the greenback to remain under pressure over the coming months amid persistent worries that the US economy may slump into recession and the increased prospects for additional rate cuts from the FOMC.

The data released earlier in the session reinforced the pessimism surrounding the US economy, with consumer confidence and housing reports pointing toward further weakness. The Conference Board’s consumer confidence index tumbled to its lowest level in nearly 2-years, at 99.8 for September down sharply from August at 105.6. The dismal confidence figure reflects heightened market volatility, growing uncertainties stemming from the housing market and worries over the prospects of a US recession. There was also renewed evidence of the slumping housing market with existing home sales down 4.3% at 5.49 million units, versus 5.75 million units in July.

Dollar Mired Near Lows by Korman Tam

The dollar continues to reel from last week’s 50-basis point Fed rate cut, falling overnight to a fresh record low against the euro at 1.4129 and stumbling versus the sterling to 2.0316. Renewed fears of a faltering US economy will continue to drive the foreign exchange market this week as concerns of a possible recession weigh on the greenback. However, given the abrupt nature of the Fed’s aggressive ease, traders must keep a close eye on US inflation data for fear that the 50-basis point rate cut may strengthen inflationary pressure over the coming quarters.

Economic data slated for release this week will provide further clues on the US outlook, with reports to shed light on growth, the housing market, inflation, manufacturing, and consumer sentiment. On the whole, consensus estimates look for weaker data compared with the previous releases. The housing market slump will continue to lead the deterioration in US fundamentals, with August existing home sales seen falling to 5.49 million units, versus 5.75 million units previously and new home sales forecasted to drop to 830k units compared with 870k units in July. The final reading of Q2 GDP is estimated to be revised lower to 3.9%, from 4.0%, while the Fed’s preferred gauge on inflation is seen unchanged in Q2 with core PCE standing pat at 1.3%. Additionally, durable goods orders and Chicago PMI will provide more clues on the extent of the slowdown in manufacturing. Although durable goods orders are typically a volatile figure, estimates are calling for the number to fall by 3.1% in August, reversing the previous month’s 6.0% increase. The excluding transports reading is also seen declining, down by 1% versus a 3.8% gain a month earlier.

With additional monetary policy easing expected from the Fed this year, particular emphasis will be placed on the outlooks for central bank decisions from the ECB, BoE and BoJ. Among the banks, only the ECB is expected to maintain its current tightening cycle with another 25-basis point rate hike before year-end. However, economic data from the Eurozone will be closely scrutinized to assess the impact thus far on the region’s economy from previous rate hikes. Traders will turn to Germany’s September Ifo sentiment survey, due out early Tuesday morning at 4:00 AM, and is seen softening from August. The September Ifo expectations component is seen declining to 99.5, down from 100.4, while the current conditions figure is forecasted to fall to 111 versus 111.5.

Meanwhile, both the Bank of Japan and the Bank of England are expected to leave policy unchanged for the remainder of the year given the current global and domestic economic outlook. The BoE is even anticipated to cut rates given tightening credit conditions and the impact of global financial volatility on the UK economy. Later in the week, traders will digest Q2 UK GDP, seen unchanged at 0.7% q/q and 3.0% y/y.

A barrage of Japanese economic data is due out this week and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.

CAD Hit 31-yr High 0.9940 vs Dollar by Yan Xu

The Canadian dollar touched a 31-year-high at 0.9940 versus the dollar and it gave back some of its gains after a government report showed retail sales fell unexpectedly for a second month. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.41, followed by 1.4120 and 1.4150. Additional ceilings will emerge at 1.4180, backed by 1.42. Support starts at 1.4050, backed by 1.40, 1.3980 and 1.3950. Subsequent floors are eyed at 1.39.

USDJPY encounters interim resistance at 115.80, backed by 116 and 116.30. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.30 and 115, followed by 114.70. Additional floors are eyed at 114.30, backed by 114 and 113.70.

GBPUSD encounters interim resistance at 2.02, backed by 2.0220 and 2.0250. Subsequent ceilings will emerge at 2.0270, followed by 2.03 and 2.0320. On the downside, support begins at 2.0170, followed by 2.0150 and 2.0120. Additional floors are eyed at 2.01, backed by 2.0080 and 2.0050.

Euro Edged Lower after Weak PMI by Yan Xu

After hitting a new record high at 1.4120 versus the dollar, the euro edged lower versus the dollar on weaker-than-expected manufacturing and services PMI reports from the euro zone.

The Euro zone services PMI fell from 58 to 54 in September, below the estimate of 57.5. The manufacturing PMI dropped from 54.3 to 53.2, weaker than the expectation of 53.9. Euro zone current account balance shrank from 11.4 billion euros to 3.3 billion euros in July. The main reason behind the weak figures is the recent global financial market turbulence beginning from August.

The dollar remains under pressure after the Fed cut half a percentage-point this Tuesday. Fed Chairman Ben Bernanke yesterday said credit market turmoil may make the housing recession more severe, adding to the worries over the nation’s economy. Interest-rate futures indicated traders bet a 70 percent chance of a quarter-percentage point cut to 4.50% at the Fed’s policy meeting on October 31.

The Fed’s aggressive move lifted investors risk appetite and carry trades increased modestly. That is why the dollar weakened against most of its rivals except the yen after the rate cut.

Besides, the sterling has been recovering from subprime crisis concern sparked by the Bank of England bailing out the nation’s fourth biggest home mortgage lender Northern Rock. The currency on Friday strengthened to around 2.02 versus the dollar.

Dollar Weakened to 1.41 vs Euro by Yan Xu

The dollar extended its loss against its major rivals today on speculations that the Fed may continue to lower fed fund rates in the rest of the year. The euro touched 1.41 versus the dollar, while the yen strengthened to as low as 114 against the dollar.

The dollar index fell to an all-time low at 75.73 yesterday. Interest-rate futures pricing indicated traders see an 80 percent chance that the Fed may cut a quarter-percentage point to 4.50% on its policy meeting at the end of October.

In the early session, US weekly jobless claims fell 9k to 311k, beating the estimate of 321k. Philadelphia Fed business conditions index dropped from 0.4% to minus 0.6% in August, below the estimate of minus 0.2%.

Fed Chairman Ben Bernanke today said in a congressional hearing that subprime mortgage delinquencies are likely to rise further, and the Fed is committed to prevent lending problems. He added the market tends to self-correct over time and subprime mortgage market has adjusting sharply. US Treasury Secretary Henry Paulson said the Fed’s move help stabilize market credit crunch.

The dollar extended its loss after London’s Daily Telegraph newspaper cited that Saudi Arabia did not lower its interest rates in line with the Fed, though King Abdullah’s advisor said the country will not unpeg its currency from the dollar in the near future.
CAD Reached Parity with USD

The Canadian dollar rallied sharply on rising commodity prices. Crude oil surged to 83.46 dollars per barrel today. The currency equaled the dollar for the first time since November 1976. The market will pay attention to Canada retail sales report due tomorrow. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 114.70, backed by 115 and 115.30. Subsequent ceilings will emerge at 115.50, followed by 115.80 and 116. On the downside, support begins at 114.30 and 114, followed by 113.80. Additional floors are eyed at 113.50, backed by 113 and 112.70.

GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0170. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0050, followed by 2 and 1.9970. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

FX Rangebound by Korman Tam

At 4:30 AM UK August Retail Sales m/m (exp 0.1%, prev 0.7%)
UK August Retail Sales y/y (exp 4.0%, prev 4.4%)
At 8:30 AM US Weekly Jobless Claims (exp 321k, prev 319k)j
At 10:00 AM US August Leading Indicators (exp -0.2%, prev 0.4%)
At 12:00 PMUS September Philadelphia Fed Survey (exp 2.3, prev 0.0)

The greenback holds steady against the majors heading into the Thursday session, continuing to recover following the post-FOMC selloff. The dollar is trading just beneath the 1.40-barrier against the euro and near 2.0020 versus the sterling. We expect the 50-basis point Fed rate cut to weigh on the greenback over the coming weeks and foresee the currency to tumble to fresh lows against the euro and fall closer toward parity versus the Canadian dollar.

Economic data from the US in the coming session will include weekly jobless claims, August leading indicators and the September Philadelphia Fed survey. Weekly jobless claims are estimated to edge up slightly to 321k, from 319k from the previous week. August leading indicators are seen falling by 0.2%, compared with a 0.4% increase from July. Meanwhile, the Philadelphia Fed survey is forecasted to improve to 2.3 for September, up from a flat reading in August.

Currency traders will focus closely on global equity bourses amid the increase in risk taking following the Fed rate cut. Any fresh revelations of deteriorating banks’ balance sheets or tightening credit conditions would likely prompt a renewed sell-off in equities, and subsequently a sharp pull back in the yen carry trades. Despite the Fed’s aggressive policy easing, the US economy remains in a precarious state – amid heightened fears of a recession due to the slumping housing market.
Sterling Hovers Above 2

Cable holds steady near 2.0020 ahead of UK retail sales later in the session. The retail sales report is seen falling to 0.1%, from 0.7% in the previous month, while the annualized figure is forecasted to fall to 4.0%, versus 4.7% a year earlier.

GBPUSD encounters interim resistance at 2.0030, backed by 2.0070 and 2.01. Subsequent ceilings will emerge at 2.0140, followed by 2.0170 and 2.02. On the downside, support begins at 2, followed by 1.9980 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

Dollar Recovered From Fed Rate Cut by Yan Xu

The dollar today pared its loss from the Fed’s aggressive rate cut as investors believe the rate cut will help the US economy. The currency fell sharply yesterday after the Fed slashed interest rates by 50 basis points yesterday.

US equities gained further today with the Dow Jones Industrial Average rose 76.17 to 13,815.56 and the Standard & Poor’s 500 index rose 9.25 to 1529.03 at 4:15 pm. The rally in stock market stimulates carry trades modestly. The yen weakened to above the 116 level against the dollar.

The euro failed to extend beyond the record high at 1.3687 set on as traders sold the euros to protect option bets at 1.40 against the dollar. The pair consolidates in range between 1.3940 and 1.3987.

Earlier in the US session, a bunch of inflation and housing reports came out weaker than expected, supporting the rate cut yesterday. US CPI declined 0.1% in August, below the estimate of an unchanged reading. Excluding food and energy, core CPI rose 0.1%, less than the estimate of 0.2%. US housing starts dropped 2.6% to an annual rate of 1.33 million units in August, while building permits fell 5.9% to 1.307 million units.

Tomorrow will see US weekly jobless claims, August leading indicators, and September Philadelphia Fed index.

The sterling was still under pressure from the liquidity problem in UK banking system due to subprime issue. After Northern Rock was bailed out last week, the Bank of England announced today to allow commercial banks to use mortgages as collateral to borrow via three-month repos. The sterling fell off the high at 2.0172 set Tuesday to the key level at 2 versus the dollar.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 116.30, backed by 116.50 and 116.80. Subsequent ceilings will emerge at 117, followed by 117.30 and 117.50. On the downside, support begins at 116 and 115.70, followed by 115.50. Additional floors are eyed at 115.30, backed by 115 and 114.70.

GBPUSD encounters interim resistance at 2.0030, backed by 2.0070 and 2.01. Subsequent ceilings will emerge at 2.0140, followed by 2.0170 and 2.02. On the downside, support begins at 2, followed by 1.9980 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

Free Signal Today 19 Sept2007

SELL LIMIT GBP/USD AT 2.0117
TAKE PROFIT 2.0067 & STOP LOSS 2.0167
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

SELL LIMIT GBP/JPY AT 233.20
TAKE PROFIT I 232.40 & STOP LOSS 234.20
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

Free Signal Today!

GJ 18 september 2007

SELL GJ : 228.84
STOP LOSS : 230.77
TP : 227.78

FX Awaits Data, FOMC by Korman Tam

At 4:30 AM UK August CPI m/m (exp 0.4%, prev -0.6%)
UK August CPI y/y (exp 1.9%, prev 1.9%)
UK August RPI m/m (exp 0.4%, prev -0.6%)
UK August RPI y/y (exp 4.0%, prev 3.8%)
UK August RPI-x m/m (exp 0.3%, prev -0.6%)
At 5:00 AM Germany September ZEW Current Conditions (exp 75.0, prev 80.2)
Germany September ZEW index (exp -15.5, prev -6.9)
At 8:30 AM US August core PPI m/m (exp 0.1%, prev 0.1%)
At 9:00 AM US July TICS (exp $85.0 bln, prev $120.9 bln)
At 1:00 PM US September NAHB (exp 20.0, prev 22.0)
At 2:15 PM FOMC Policy Decision (exp 5.00%, prev 5.25%)

The major currency pairs will likely remain locked in range ahead of Tuesday’s highly anticipated FOMC monetary policy announcement, slated for 2:15 PM. Although the Fed meeting will garner the lion’s share of market attention, there will also be several key data releases that should impact central bank monetary policy decisions, namely the Bank of England and the European Central Bank.

The data include inflationary reports from the UK, consisting of the consumer price index and retail price index and from the Eurozone, the Germany ZEW sentiment survey. The ECB is expected to lift rates by 25-basis points over the remainder of the year, while the rate outlook for the BoE is less certain. There is now increased speculation that the next move from the Bank of England would be a rate cut given fears about the impact from the subprime mortgage fallout on UK banks.

The sterling remains pressured against the greenback and yen following yesterday’s news of the UK’s Northern Rock bank. The news fuelled fears of large subprime exposure among other UK banks, raising expectations that the BoE may soon ease its bench-mark lending rate. In the session ahead, UK CPI data is seen up 0.4% in August, versus a 0.6% decline in the previous month, while the annualized figure is expected to remain unchanged at 1.9% -- beneath the BoE’s 2% inflation target. The retail price index is estimated to edge up to 4.0% versus 3.8% from the previous year and seen reversing the prior month’s 0.6% decline to edge higher by 0.4%.

The key highlight will be the FOMC’s monetary policy announcement, in which a 25-basis point rate cut to 5.0% is largely anticipated. It is worth noting that Fed Board members have delivered conflicting messages, with some maintaining their mantra of keeping inflationary pressure in check. It will be interesting to see whether the Fed responds to market calls for a cut while concurrently tempering inexorable expectations for further easing over the coming months. If a 25-basis point reduction does materialize, Bernanke will likely perform a balancing act between quelling burgeoning recessionary fears and containing runaway expectations for a series of rate cuts – given lingering concerns from Board members about inflation.

Market Focus Shifts to FOMC by Korman Tam

Japan’s Market Closed for Holiday
At 5:00 AM Eurozone July Trade Balance (exp 6.8 bln euros, prev 7.8 bln euros)
At 8:30 AM US September NY Fed Manufacturing (exp 18.0, prev 25.06)

The greenback remains mixed against the majors, mired near all-time lows versus the euro around 1.3865 but firmer against the yen and the sterling. The week will kick off to a slow start with the Japanese market closed in observance of the Respect for the Elderly Day holiday. The primary focus among traders will be the FOMC monetary policy meeting on Tuesday, in which market participants are anticipating a 25-basis point rate cut to 5.00%.

While an FOMC rate cut this week is not a foregone conclusion, recent deterioration in US economic fundamentals have raised speculation that the Fed will need to preempt a potential recession by easing policy to stimulate the economy. However, board members have delivered conflicting messages, with some maintaining their mantra of keeping inflationary pressure in check. It will be interesting to see whether the Fed responds to market calls for a cut while concurrently tempering inexorable expectations for further easing over the coming months. If a 25-basis point reduction does materialize on Tuesday, Bernanke will likely perform a balancing act between quelling burgeoning recessionary fears and containing runaway expectations for a series of rate cuts – given lingering concerns from Board members about inflation.

Recent price action in the currency market suggests traders have priced in a 25-basis point rate reduction this Tuesday, which increases the significance of the Fed’s subsequent statement and any post-meeting comments from FOMC Board members. We expect the greenback to remain under pressure over the coming months given the state of the US housing market and the subprime mortgage meltdown. In the week ahead, US economic reports will include the September NY Fed manufacturing survey, August CPI, PPI, July TICS, September NAHB, building permits and the Philadelphia Fed survey. It will also be important to focus on earnings reports from major financial firms that will be releasing this week to assess the full impact of the subprime debacle on their balance sheets.

Former Fed Chairman Greenspan was quoted in the FT as saying the US housing price declines will be more significant than most expect. He said he would not be surprised if US house price declines extended into double digits. However, he cautioned against cutting rates too aggressively for fear of an “inflationary resurgence”, which are greater now than when he was Chairman. Greenspan also added that the negative wealth effect from the housing slump results in a crisis that is “trickier” to control.

Dollar Slumped after Fed Cut 50 bps by Yan Xu

The dollar slumped across the board after the Fed cut federal funds rate half a percentage point to 4.75%. The unanimous decision surprised the majority of the market who had expected a rate cut of only 25 basis points.

Against the dollar, the euro broke the 1.39 handle easily and rose up to an all-time high at 1.3980. The dollar dropped 50 pips instantly to 115.25 versus the yen after the FOMC announcement. The rate cut fueled the stock rally and also gold surged to a 28-year high on that.

The FOMC statement showed the rate cut is designed to forestall adverse economic effects. The Fed will continue to monitor effects and act as needed. It also stated that readings on core inflation have modest improvement and tightening of credit conditions may intensify housing correction.

Earlier in the session, US PPI, an inflation gauge, unexpectedly declined 1.4% in August, the largest drop since October 2006. This added to the expectation of a Fed rate cut. Excluding food and energy, core index rose 0.2%. US TICS data showed net long-term flows excluding swaps, fell from 120.9 billion to 19.2 billion in July, indicating a decline in international demand for US assets. Besides, US September NAHB came out at 20 as expected.

The euro was little changed after a weaker-than-expected Germany ZEW report as the market focus was on the FOMC. The headline declined to minus 18.1 in September, below the estimate of minus 15.5 and a previous reading of minus 6.9. The current conditions dropped from 80.2 to 74.4 as expected.

The European Central Bank Miguel Angel Fernandez Ordonez, a member of ECB governing council, said today there is still a chance that inflation may accelerate.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.

GBPUSD encounters interim resistance at 2.0150, backed by 2.0170 and 2.02. Subsequent ceilings will emerge at 2.0230, followed by 2.0250 and 2.0280. On the downside, support begins at 2.01, followed by 2.0070 and 2.0030. Additional floors are eyed at 2, backed by 1.9980 and 1.9950.

Free Signal Today!

BUY STOP GBP/JPY AT 231.75
TAKE PROFIT 232.35
STOP LOSS 230.75

SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

Free Signal Today!

BUY LIMIT GBP/USD AT 2.0060
TAKE PROFIT 2.0110
STOP LOSS 2.0010

SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

Happy Trading!

Dollar Remains Weak, Eyes on FOMC by Yan Xu

The dollar remains weak against most of its rivals on Monday on expectations that the Fed will cut interest rates by at least a quarter percentage point tomorrow.

The euro hovers above 1.3850 versus the dollar and is very likely to break 1.39 after the FOMC on Tuesday afternoon. The yen is trading in a narrow range between 114.68 and 115.36 against the dollar in today’s trading session.

After recent financial turbulence caused mostly by credit crunch, the Federal Reserve is widely expected to lower its benchmark rates to avoid recession. Some in the market even look for a 50 basis point rate cut. The market will keep range bound until the Fed makes interest rate announcement at 14:15 eastern time tomorrow.

Besides, tomorrow will see Germany ZEW index, UK RPI and CPI, US PPI, TICS and NAHB. Germany ZEW headline is seen down 15.5 in September, compared to a –6.9 reading in the previous month. Germany ZEW current conditions index is expected to fall from 80.2 to 75 in September.

EURUSD will face interim resistance at 1.39, followed by 1.3930 and 1.3950. Additional ceilings will emerge at 1.3980, backed by 1.40. Support starts at 1.3850, backed by 1.3830, 1.38 and 1.3770. Subsequent floors are eyed at 1.3750.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.
Sterling Fell Below 2

The sterling extended its loss as this is already the third day that thousands of customers withdrew money from Northern Rock Plc branches across the UK. The Bank of England last Friday provided financial support to this Britain’s fifth largest home mortgage lender to ease its liquidity needs. Subprime is still a problem for the US and European economy. The currency today fell below the major psychological level at 2 versus the dollar.

GBPUSD encounters interim resistance at 1.9980, backed by 2 and 2.0030. Subsequent ceilings will emerge at 2.0060, followed by 2.01 and 2.0150. On the downside, support begins at 1.9920, followed by 1.99 and 1.9870. Additional floors are eyed at 1.9850, backed by 1.9830 and 1.98.

U.S. Stocks Rise, Erasing 2 Weeks of Losses, on Credit Outlook

By Michael Patterson and Lynn Thomasson

U.S. stocks rose, erasing losses from the last two weeks, on speculation lower borrowing costs and resilient consumer spending will sustain profit growth.

Countrywide Financial Corp., the largest U.S. mortgage lender, snapped a four-week slide after lining up $12 billion of financing. McDonald's Corp., the biggest restaurant company, jumped to a record after posting August sales that beat analysts' estimates and boosting its dividend. General Motors Corp. had its best gain in more than a year as investors speculated automakers will win union concessions on health-care costs.

The Federal Reserve said the decline in the U.S. commercial paper market narrowed last week and Kohlberg Kravis Roberts & Co.'s bankers found buyers for loans to finance its takeover of U.K. pharmacist Alliance Boots, bolstering expectations that debt markets will recover from a summer swoon. Stock prices also rallied as traders bet the Fed will cut interest rates at its Sept. 18 policy meeting.

``Consumer demand looks reasonably strong and there's hope that the problems in the commercial paper and debt markets won't be as bad as first expected,'' said Jerome Dodson, president of Parnassus Investments in San Francisco. ``The economy is going to be pretty well off, so right now I'm reasonably bullish.''

The Standard & Poor's 500 Index climbed 2.1 percent to 1,484.25, bouncing back from two straight weekly declines. The Dow Jones Industrial Average rose 2.5 percent to 13,442.52, the biggest weekly gain since April. The Nasdaq Composite Index added 1.4 percent to 2,602.18.

FOMC Meeting

The Fed's Open Market Committee next week will lower the overnight lending rate between banks to 5 percent from 5.25 percent, according to the median forecast of economists surveyed by Bloomberg News. The reduction would be Fed Chairman Ben S. Bernanke's first and may be followed by at least two more before year-end, federal funds futures suggest.

``This Fed meeting is crucial,'' said Walter ``Bucky'' Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama. ``The stock market has been responding nicely the past few days in anticipation that the Fed will do what it's supposed to do.''

Countrywide climbed 6.6 percent to $19.42. The lender's ability to find new sources of capital ``should substantially address funding concerns,'' a team of Credit Suisse Group analysts wrote. Countrywide last month borrowed $11.5 billion from bank credit lines to help weather a decline in investor demand for mortgages and reduced access to the commercial paper market, where the company usually borrows money.

Investment Banks Rally

Lehman Brothers Holdings Inc., the biggest underwriter of U.S. mortgage bonds, climbed 12 percent to $59.50 for the largest weekly advance since October 2002. Bear Stearns Cos., the No. 2 underwriter, gained 11 percent to $117.19, the biggest rise since September 2001.

Investors snapped up shares of Lehman, Bear Stearns, Morgan Stanley and Goldman Sachs Group Inc. before the investment banks report quarterly earnings next week.

Bank and brokerage stocks have tumbled this year on concern credit market turmoil will hurt earnings from trading and debt underwriting. The S&P 500 Financials Index has dropped 8.7 percent since December for the worst performance among 10 industry groups.

McDonald's added 13 percent to $55.45. August sales advanced 8.1 percent as customers bought chicken snack wraps and iced coffee in the U.S. and McFlurry desserts in Europe. The company also this week boosted its annual dividend by 50 percent as part of a plan to return as much as $17 billion to investors.

GM Advances

GM, the biggest U.S. automaker, increased 16 percent to $34.22 for the top gain in the S&P 500. Citi Investment Research urged investors to buy the shares on the possibility of an agreement with the United Auto Workers on retiree health care.

The stock may climb to $57 a share if GM gets an accord to set up a union-run fund for the medical coverage, Citi analyst Itay Michaeli said.

The Fed reported short-term debt dropped by $8.2 billion last week, compared with a decline of $31.3 billion a week earlier. Debt maturing in 270 days or less fell to a seasonally adjusted $1.92 trillion, including a $21.6 billion decline in asset-backed commercial paper. Commercial paper outstanding has fallen $306.4 billion in five weeks.

Deutsche Bank AG, JPMorgan Chase & Co. and UniCredit SpA, which last month abandoned selling 6 billion pounds ($12 billion) of mostly senior loans to fund the Boots takeover, probably will finish syndicating 750 million pounds of mezzanine debt that ranks last for repayment, two bankers involved said.

KKR's eight underwriters have been saddled with all of the 9 billion pounds of debt backing Europe's biggest leveraged buyout after investors rejected high-risk, high-yield loans.

Buyout Debt Backlog

Banks have committed about $350 billion for leveraged buyouts in the U.S. and 60 billion euros ($83 billion) in Europe that have yet to syndicate, according to UBS estimates. Underwriters agree to provide the financing to private-equity firms when the acquisitions are announced. If market conditions sour, banks are forced to hold debt they can't sell.

Boots spokesman Richard Constant, Deutsche Bank spokesman Richard Thomson and JPMorgan spokeswoman Colette Campbell, all in London, declined to comment.

Energy companies in the S&P 500 advanced 3 percent as a group for the top gain among 10 industries. Oil reached a record this week and closed above $80 a barrel for the first time on Sept. 13 after Hurricane Humberto briefly shut three refineries in Texas. Crude for October delivery closed at $79.10 a barrel in New York yesterday.

Exxon Mobil Corp., the world's biggest energy company, advanced 3.4 percent to $88.67. Chevron Corp., the second-largest U.S. oil producer, increased 3.4 percent to $90.65.

Treasuries fell as traders reduced holdings of the safest debt and bought riskier assets. The yield on the two-year note rose about 0.14 percentage point to 4.05 percent. Bond yields move inversely to prices.

Sterling Hit By Northern Rock Crisis by Yan Xu

The sterling fell sharply after the Bank of England provide an unspecified amount of financial support to UK¡¯s fourth largest home mortgage lender, Northern Rock, which suffered losses from recent rising lending rates sparked by US subprime crunch. This unusual move reignited worries that credit market problems may hit global economy. The sterling dropped to a 10-day low at 2.0062 versus the dollar.

The dollar was almost flat against the euro and yen on Friday though a soft US retail sales report reinforced speculations on a 50 basis point Fed rate cut next week. US retail sales rose 0.3% in August, below the estimate of 0.4%. Excluding autos, core retail sales dropped 0.4%, worse than the expectation of a 0.2% growth. US import prices declined 0.3% due to lower oil prices in August, while export prices rose 0.2% as expected. Current account deficit came out at 190.79 billion as expected in the second quarter. Industrial production rose 0.2% in August, below the estimate of 0.3%. University of Michigan consumer sentiment index was almost unchanged from previous month at 83.8. Business inventories were up 0.5% in July, beating the estimate of 0.3% and 0.4% a month earlier.

Earlier in US session today, US Treasury Secretary Henry Paulson said in CNBC interview today that credit markets have had some modest improvement. He reiterated that a stronger dollar is in US interest, giving the dollar a knee-jerk boost.

Also worth noting is that ECB Chairman Trichet today made some comments on global economy. He stated that inflation risk in the region remains to the upside, setting stage for a rate rise later in the year. He also said Japanese economy is on recovery path and foreign exchange rate should reflect this, calling for a stronger yen.

EURUSD will face interim resistance at 1.39, followed by 1.3930 and 1.3950. Additional ceilings will emerge at 1.3980, backed by 1.40. Support starts at 1.3850, backed by 1.3830, 1.38 and 1.3770. Subsequent floors are eyed at 1.3750.

GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0160. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0060, followed by 2.0030 and 2. Additional floors are eyed at 1.9980, backed by 1.9950 and 1.99.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.

SIGNAL FOREX TRADING FOR 14 SEPTEMBER 2007

BUY STOP GBP/USD AT 2.0180
TAKE PROFIT 2.0240 & STOP LOSS 2.0120
SIGNAL VALID FROM 10.00 AM - 7.00 PM TRADING TIME

BUY STOP GBP/JPY AT 231.50
TAKE PROFIT I 232.50 & STOP LOSS 230.00
TAKE PROFIT II 233.35 & STOP LOSS 230.00
TAKE PROFIT III 234.20 & STOP LOSS 230.00
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

Happy Trading!
Status Signal for 13 September :Profit

Dollar Extended Loss, Eyes on Retail Sales by Yan Xu

The dollar continues to weaken across the board on expectation that the Fed will cut interest rates by half a percentage point next week. The euro today hovers above 1.3860 and set a record high at 1.3927 versus the dollar. The sterling climbed above 2.03 to test a resistance at 2.0350 against the dollar.

The main focus of the market is still on the US economy. Last Friday‘s weak US non-farm payrolls surprised the market and indicated the impact of credit crunch may spread into every aspect of the nation¡¯s economy. It is widely expected that the Fed may need to lower its benchmark rates on September 18 policy meeting to avoid recession.

The dollar was little changed after US weekly jobless claims came out at 319k, slightly better than the estimate of 325k. Tomorrow will see a bunch of economic data, including Germany August CPI, euro-zone August HICP, Canada July manufacturing shipments, Canada Q2 labor production rate, US retail sales, US import and export prices, US Q2 current account balance, US industrial production, US August Capacity utilization, and University of Michigan consumer sentiment index. US retail sales are seen growing 0.4% in August, versus a 0.3% rise earlier. Excluding autos, core retail sales are expected to rise 0.2%, down from a 0.4% reading in the previous month.

The resignation of Japanese Prime Minister Shinzo Abe and the speculation that the government may downgrade its economic assessment put pressure on the yen. The yen pared its gains versus the euro and sterling. The dollar bounced up to test 115.50 versus the yen.

The swiss franc was little changed after the Swiss National Bank unexpectedly raised interest rates by 25 basis points to 2.75% on Thursday.

As a commodity currency, the Canadian dollar rallied on rising oil prices. It rose to a 30-year peak at 1.0314 against the dollar.

EURUSD will face interim resistance at 1.3920, followed by 1.3950 and 1.3980. Additional ceilings will emerge at 1.40, backed by 1.4020. Support starts at 1.3880, backed by 1.3850, 1.3830 and 1.38. Subsequent floors are eyed at 1.3770.

GBPUSD encounters interim resistance at 2.03, backed by 2.0320 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0450. On the downside, support begins at 2.0280, followed by 2.0250 and 2.0220. Additional floors are eyed at 2.02, backed by 2.0180 and 2.0150.

FREE SIGNAL FOR 13 SEP 2007

BUY GJ : 231.77
STOP LOSS : 229.54
TP 1 : 232.43
TP 2 : 232.90
TP 3 : 233.67
BUY STOP GBP/USD AT 2.0292
TAKE PROFIT 2.0342 & STOP LOSS 2.0192
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

USD Mired Near Record Lows by Korman Tam

At 8:30 AM Canada Q2 Current Account Balance (exp 83.2%, prev 83.0%)
US Weekly Jobless Claims (exp 325k, prev 318k)
At 10:00 AM US August Federal Budget

The dollar is mired near its lows against the euro amid heightened fears of accelerated deterioration in US economic fundamentals, to the extent of a recession. Markets are largely expecting the FOMC to jumpstart the economy with at least a 25-basis point rate cut when it deliberates policy next week. However, a shift in policy is not a foregone conclusion in light of recent conflicting comments from Fed officials, in which some reiterated lingering inflationary concerns.

In the session ahead, the US economic calendar is light with the release of weekly jobless claims and the August federal budget. The key reports will be released on Friday, consisting of August retail sales, Q2 current account balance, industrial production, capacity utilization, business inventories and the University of Michigan sentiment survey. The retail sales report will bear additional significance since it will be the last piece of consumer spending data the Fed will see before its policy setting meeting next week.
Euro Buoyed Near All-Time Highs

The euro remains favored as it hovers near its all-time highs just under the 1.39-figure. Although it remains unclear whether the ECB will continue its tightening cycle in the face of recent financial market turmoil, the Bank is largely expected to raise rates by 25-basis points by year-end to lift its benchmark lending rate to 4.25%. We expect the single currency to remain supported over the coming weeks, with an interim target of 1.40.

EURUSD holds steady near 1.39, with ceilings seen at 1.3920, followed by 1.3950 and 1.40. Support begins at 1.3860, backed by 1.3830 and 1.38.

Yen Mixed

The yen fell against the dollar while edging up higher versus the euro and sterling. Japan’s Prime Minister Abe resigned from his post amid a series of scandals and a poll defeat. However, the abrupt announcement had little impact on the currency market.

USDJPY trades near 114.30, with interim resistance starting at 114.60, followed by 115 and 115.50. Additional ceilings are seen at 115.75 and 116. Support starts at 114, followed by 113.70 and 113.40. Subsequent floors are eyed at 113, followed by 112.50 and 112.

Dollar Broke 1.39 vs Euro by Yan Xu

The dollar broke the 1.39 handle against the euro on Wednesday on raising concerns about US economy and the Fed outlook. The sterling rose to as high as 2.03 versus the dollar.

The market focus has shifted from general risks aversion to US-economy related risk aversion. Last Friday¡¯s unexpectedly weak non-farm payrolls added to the worries about the US economy. It is still hard to measure how much impact the subprime and credit market crunch may have on the broad economy. The Fed needs to cut interest rates to avoid economic recession. The market has fully priced in an interest rate cut by the Fed on September 18 meeting. Most in the market has a bearish sentiment over the greenback.
The Fed is the only central bank that is going to lower the rates, while the ECB and BOE are expected to raise interest rates by at least once this year.

ECB Governing Council member Victor Constancio said on Wednesday that the central bank are keeping all options open, reinforcing expectations for a rate hike by the year-end.

Besides, oil set a record intraday high at 78.84 per barrel today, pushing the dollar down futher.

Tomorrow will see US weekly jobless claims, which is expected to increase from 318k to 325k.

EURUSD will face interim resistance at 1.3920, followed by 1.3950 and 1.3980. Additional ceilings will emerge at 1.40, backed by 1.4020. Support starts at 1.3880, backed by 1.3850, 1.3830 and 1.38. Subsequent floors are eyed at 1.3770.

GBPUSD encounters interim resistance at 2.03, backed by 2.0320 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0450. On the downside, support begins at 2.0280, followed by 2.0250 and 2.0220. Additional floors are eyed at 2.02, backed by 2.0180 and 2.0150.

USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 115.80. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.30, backed by 113 and 112.70.

FREE SIGNAL FOR 12 SEP 2007

BUY STOP GBP/JPY AT 231.55
TAKE PROFIT 232.55
STOP LOSS 230.55


BUY STOP GBP/USD AT 2.0303
TAKE PROFIT 2.0363
STOP LOSS 2.0223

SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

Happy Nice Trading!

Dollar Weakens on Rate Cut Expectation by Yan Xu

The dollar fell to a record low at 1.3847 versus the euro on expectation that the Fed may cut interest rates on its September 18 policy meeting.

Several Federal Reserve officials yesterday expressed their concerns on the credit crunch and its impact on the broader economy, reinforcing expectations for a half percentage point cut instead of a quarter percentage point cut as anticipated earlier. Fed Chairman Ben Bernanke said in Berlin that the ¡°global saving glut¡± is still helping to keep interest rates low. Fed Governor Frederic Mishkin said there is an important downside risk to the US economy. San Francisco Fed President Janet Yellen said that losses related to credit market may slow growth.

Interest-rate futures pricing showed traders see a 68 percent chance that the Fed will cut interest rates by half a percentage point to 4.75 percent on its policy meeting on September 18.

US international trade deficit increased from 58.14 billion to 59.25 billion in July as expected. Tomorrow has no major economic data due from US. The market will focus on the retail sales report, current account deficit, industrial production capacity utilization, and University of Michigan consumer sentiment report on Friday.

ECB President Trichet said that credit losses in the euro-zone were not big enough to weaken financial institutions. He reiterated that inflation risks remain on the upside, raising expectations that the central bank may lift interest rates at least once this year.

The loonie strengthened against the dollar after a run of better-than-expected housing data. Canada housing starts increased from 215.6k to 226.5k in August, beating the estimate of 220k. New housing price index rose 0.9% in July, above the expectation of 0.6%.

EURUSD will face interim resistance at 1.3850, followed by 1.3870 and 1.39. Additional ceilings will emerge at 1.3930, backed by 1.3950. Support starts at 1.38, backed by 1.3780, 1.3750 and 1.3730. Subsequent floors are eyed at 1.37.

GBPUSD encounters interim resistance at 2.0350, backed by 2.0380 and 2.04. Subsequent ceilings will emerge at 2.0420, followed by 2.0450 and 2.0480. On the downside, support begins at 2.03, followed by 2.0280 and 2.0250. Additional floors are eyed at 2.0220, backed by 2.02 and 2.0180.

USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 115.80. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.30, backed by 113 and 112.70.

Yen Edges Higher on Data

The yen crept higher against the dollar in early Tokyo trading, edging up to 113.40 upon the release of a sharply higher than expected Japan machinery orders report. The core July machinery orders shot up by 17% m/m, far outpacing estimates for a 5.0% rise. The annualized core machinery orders also defied calls for a 2.0% decline, instead climbing by 8.0%.

Meanwhile, Japan’s economics minister Ota said he does not see a large change in Japanese economic conditions. He also expressed caution on whether the US economy can make a soft landing. Finance Minister Nukaga said he expects the BoJ to set appropriate policy with an eye on the global economy and market moves.

FX Awaits Data, Bernanke by Korman Tam

At 4:00 AM Germany August WPI m/m (exp n/f, prev 0.4%)
Germany August WPI y/y (exp n/f, prev 2.6%)
At 4:30 AM UK July Trade Balance (exp –6.4 bln stg, prev –6.3 bln stg)
At 8:15 AM` Canada August Housing Starts (exp 220k units, prev 215.6k units)
At 8:30 AM Canada July New Housing Price Index (exp 0.6%, prev 0.7%)
US July Trade Deficit (exp $59 bln, prev 58.14 bln)
Canada July Trade Surplus (exp C$5.0 bln, prev C$ 5.3 bln)

The currency market remains biased for a softer dollar amid a dearth of US economic data at the start of the week – with commentary from Federal Reserve members garnering the lion’s share of traders’ attention. Ahead of the blackout period before next week’s FOMC meeting, a barrage of comments from Fed speakers revealed mixed sentiment among its members providing little insight into the coming deliberations. However, market participants are largely anticipating a 25-basis point cut in the Fed funds rate with some even calling for a preemptive 50-basis point reduction to jumpstart the economy and stave off potential recession.

Earlier in the session, Fed governor Mishkin sounded a dovish tone in his commentary, saying that risks to the inflation outlook is now more balanced given the greater downside risks to growth. He added that the Fed must remain vigilant on inflation, but it also needs to be attentive to keeping demand from falling beneath supply as well. His comments echo a similar tone to Lockhart’s and Yellen’s, who both suggested that policy should incorporate the recent downturn in US economic fundamentals. Lockhart said the recent payrolls number is very important and must be taken very seriously. Moreover, he said another key piece of economic data that will play a particularly key role in policy deliberations is consumer-spending data. This week’s retail sales report on Friday will bear additional significance since it will be the last piece of key data before the Fed’s meeting. Furthermore, Fed Chairman Bernanke’s comments on Tuesday will be closely scrutinized, who is scheduled to speak at the Bundesbank at 11:00 am.

Economic data from the US will see the July trade deficit, which is expected to creep higher to $59 billion, up from June at $58.14 billion.

Free Signal Today 11 September 2007

BUY STOP GBP/USD AT 2.0268
TAKE PROFIT 2.0348
STOP LOSS 2.0218

SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

BUY STOP GBP/JPY AT 230.20
TAKE PROFIT 231.20
STOP LOSS 229.20

SIGNAL VALID FROM 10.30 AM - 6.30 PM TRADING TIME

Lets trade now!

Yen Strengthens Despite Soft Data by Korman Tam

The yen pushed higher against the greenback, firming to 112.62 and advancing versus the euro toward 155.19. Heightened risk aversion continues to benefit the Japanese currency amid growing worries of a US recession following last week’s dismal labor report. The yen is seen maintaining its stance as a safe haven currency and inversely track equity performances.
Economic data released earlier revealed softer-than-forecast GDP growth for Q2 in Japan, which shrunk by 0.3% q/q and by 1.2% y/y. The weak growth reports raise fears that the US economic slowdown may be taking its toll on Japan’s export driven economy. The Q2 revised capital expenditures reading was better than estimates, albeit down by 1.2% versus calls for a 1.8% decline.

USDJPY holds steady beneath the 113-level, with support beginning at 112.60, followed by 112.30 and 112. Subsequent floors will emerge at 111.60, followed by 111.20 and 111. Resistance begins at 113, backed by 113.30 and 113.75. Additional ceilings will emerge at 114, followed by 114.50 and 115.

USD Mired in Weakness by Korman Tam

t 4:30 AM UK August core PPI m/m (exp 0.2%, prev 0.2%)
UK August core PPI y/y (exp 2.4%, prev 2.2%)
At 2:00 PM US July Consumer Credit (exp $8.0 bln, prev $13.1 bln)

The greenback kicks off the week on softer footing, still reeling from the unexpectedly disappointing August jobs data -- which saw non-farm payrolls drop by 4k. With the FOMC policy meeting a little over one week away, the dollar will remain pressured amid expectations for a Fed rate cut in the face of deteriorating US economic fundamentals.

Data slated for release from the US include July consumer credit, trade balance, August retail sales, industrial production, capacity utilization, University of Michigan sentiment survey and July business inventories. Particular focus will be on the retail sales figures as a gauge on how resilient the US consumer is in the face of the recent financial market volatility and mortgage market turmoil.

The calendar for the session ahead is light, with the release of UK August PPI and core PPI. The core PPI figures are seen largely unchanged at 0.2% m/m and the annualized figure up slightly to 2.4%

FREE SIGNAL FOR 10 September 2007

SIGNAL FOREX TRADING FOR 10 SEPTEMBER 2007

BUY STOP GBP/USD AT 2.0324
TAKE PROFIT 2.0384 & STOP LOSS 2.0264
SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

BUY STOP GBP/JPY AT 230.15
TAKE PROFIT 231.75 & STOP LOSS 228.65
SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

NB : All of risk not my own but i hope we can profit together!

Five Fibonacci Tricks

by Alan Farley

Fibonacci jumped into the technical mainstream late in the bull market. Futures traders had it all to themselves until real-time software ported it over to the equity markets. Its popularity exploded as retail traders experimented with its arcane math and discovered its many virtues.

Fibonacci ratios describe the interaction between trend and countertrend markets -- 38%, 50% and 62% retracements form the primary pullback levels. Apply these percentages after a trend in either direction to predict the extent of the countertrend swing. Stretch a grid over the most obvious up or down wave, and see how percentages cross key price levels.

Convergence between pattern and retracement can point to excellent trading opportunities. Keep in mind that retracements work poorly in a vacuum. Always examine highs, lows and moving averages to confirm the importance of a specific level.

Discord between retracement and the underlying pattern generates noise instead of profit. Move on to a new chart when nothing lines up correctly. This divergence generates most of the whipsaw in a price chart. Alternatively, strong phasing between Fibonacci and pattern exposes highly predictive reversals at narrow price levels.

Let's look at five tricks to improve your Fibonacci skills. Add these twists and turns to your toolbox and apply them to your next trade. I promise they'll serve you very well in the years ahead.

First Rise/First Failure

First Rise/First Failure marks the first 100% retracement of a trend within your time frame of interest. It provides an early reversal warning after a new high or low. The 100% retracement violates the major price direction and terminates the trend it corrects. From this level, the old trend can reestablish itself if it breaks through the old 38% level. More often, traders will use that level to enter low-risk positions against the old trend.

Parabola Hunt

Parabolic movement tends to occur between the 0%-to-38% and 62%-to-100% Fibonacci levels in all trends. This tendency offers a great tool for finding the big moves when looking for trades. Watch for congestion to form at the 38% or 62% level. Then use a simple breakout or breakdown strategy when price moves past it. The next thrust can be dramatic, with price moving like a magnet back to an old high or low. Of course, the strategy only works when you can find these levels in advance.

Continuation Gap Extensions

You can often target the exact price a rally or selloff will end at by using the continuation gap as a Fibonacci extension tool. Identify the gap by its location at the dead center of a vertical price wave. Then start a Fib grid at the beginning of the trend and extend it so the gap sits under the 50% retracement level. The grid extension points to the terminating price for the rally or selloff.

Overnight Grids

Find an active stock and start a grid from the high (or low) of a session's last hour. Stretch the grid to the opposite end of the next morning's first hour low (or high). This defines a specific price wave traders can use to uncover intraday reversals, breakouts and breakdowns. The overnight grid also offers a way to trade morning gaps. The gap will often stretch across a key retracement level and target low-risk entry on a pullback.

Second High/Low

Many traders can't figure out where to start a Fib grid. Here's a trick to help you place it where it'll do the most good. The absolute high or low in a price wave isn't the best starting point for a grid most of the time. Instead, look for a small double bottom or double top within the congestion where the trend began. Swing one end of the grid over this second high (or low), instead of the first. This will capture a specific Elliott Wave that conforms to the trend you're trying to trade.

Fibonacci Trading

Leonardo Pisano, better known by his nickname, Fibonacci, was an Italian mathematician born in Pisa in the 12th century. He is known to have discovered the Fibonacci numbers, said to be based upon observations of the Great Pyramid of Gizeh in Egypt. Fibonacci Numbers are a sequence of numbers where each successive number is the sum of the two previous numbers.

e.g. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

It is the ratio of the Fibonacci sequence that is significant, rather than the actual numbers in the sequence. The quotient of the adjacent terms in the series possesses an amazing proportion, roughly 1.618, or its inverse 0.618. This proportion is known by many names: the golden ratio, the golden mean, PHI, and the divine proportion. The dimensional properties that adhere to the ratio of 1.618 occur repeatedly in nature. Examples are as various as mollusk shells and the shapes of gallaxies containing billions of stars.

When used in technical analysis, the golden ratio is most often translated into three percentages: – 38.2%, 50%, and 61.8%. However, other multiples can be used, such as 23.6%, 161.8%, 423%, and so on. The Fibonacci sequence is applied to finance in several ways: retracements, extensions, arcs, fans, and time zones.

See also: Fibonacci Biography, Elliott Wave, R.N. Elliott, W.D. Gann

Countrywide May Fire as Many as 12,000 as Mortgage Demand Wanes

By Elizabeth Hester and Jody Shenn

Sept. 8 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S. mortgage company, plans to cut its workforce by 10,000 to 12,000 in the largest round of firings since the industry's contraction began last year.

New U.S. home loans probably will drop 25 percent in 2008 from this year's levels, forcing the company to eliminate as much as 20 percent of its staff, Calabasas, California-based Countrywide said in a statement yesterday.

More than 15,000 jobs have been lost this week amid the worst U.S. housing slump in 16 years. IndyMac Bancorp, the second-biggest mortgage company, National City Corp. and Lehman Brothers Holdings Inc. cut staff. At least 100 mortgage companies have sought buyers or halted lending since the start of 2006, and foreclosures in the second quarter rose to a record, according to the Mortgage Bankers Association in Washington.

Countrywide's managers ``are taking the steps they need to take in light of the much lower origination volume,'' said Blake Howells, who helps manage $2.6 billion at Portland-based Becker Capital Management Inc. including Countrywide shares. ``The company had been actually criticized in the analyst community for growing their headcount.''

Angelo Mozilo, 68, the company's co-founder and chief executive officer, said in an interview he has ``no regrets'' about adding staff in recent years. ``We adjust to the environment we're in,'' he said. ``There was great opportunity for Countrywide to invest in a growing market.''

Shares Fall

The company's stock fell 27 cents, or 1.5 percent, to $18.21 in Friday's New York Stock Exchange composite trading. Countrywide shares have lost 57 percent this year.

Mortgage lenders have run short on cash as home sales slowed, more borrowers paid late and investors avoided mortgage bonds that don't have implied government guarantees. That prompted banks, securities firms and commercial-paper markets that finance mortgage companies to shut off credit.

Countrywide, which handled all types of mortgages, tapped $11.5 billion of emergency financing last month. A $2 billion investment from Bank of America Corp. on Aug. 22 helped ease concern that the lender might file for bankruptcy protection.

``It was impossible to anticipate the credit crisis we've seen on a worldwide basis,'' Mozilo said.

Concern about credit quality spread from the mortgage market to securities such as collateralized debt obligations tied to home loans, and later to short-term commercial paper. Central banks in Europe and the U.S. Federal Reserve have added more than $400 billion to money markets since Aug. 9 to encourage bank lending.

Guidelines Revised

Countrywide revised guidelines to ensure all loans are good enough to sell to investors or hold in its investment portfolio. Almost the entire residential lending business will be moved into the company's federally chartered thrift by the end of this month to reduce costs and improve liquidity.

Bill Ruberry, a spokesman for the U.S. Office of Thrift Supervision, which regulates Countrywide, declined to comment on the announcement. The company took out full-page ads in newspapers last month to stem withdrawals from Countrywide Bank FSB and reassure depositors that the thrift was sound.

``We have plenty of liquidity,'' Mozilo said. ``We're in very good shape.''

National City, Ohio's biggest bank, disclosed 1,300 job cuts, while Lehman Brothers, the biggest underwriter of U.S. mortgage bonds, said it's firing 850 people. Two weeks earlier, Lehman said it will close a subprime unit and dismiss 1,200.

Falling Payrolls

The mortgage industry's decline may have contributed to a drop of 4,000 U.S. jobs in August, reported yesterday by the U.S. Department of Labor. It was the first payroll decline in four years. Mozilo has predicted a recession unless home sales and prices rebound.

Countrywide is firing people because it's struggling to sell mortgages to investors, said Sean Egan, managing director of Egan-Jones Ratings Co. That's likely to continue next year, he said.

``It's probably not going to be the last cut,'' Egan said.

Brent Cunningham, a Countrywide security guard at the Calabasas headquarters, said yesterday no reporters were allowed on the property. Two Los Angeles County sheriff's cars were parked in front of the doorway.

Countrywide's statement said fewer jobs may be lost if markets improve. Mozilo said he's still adding salespeople.

``Events could change, though it's remote, to make things better than we anticipate,'' Mozilo said. ``Hopefully at the end of the day we won't have to cut as many as we've proposed. There's a potential for a refinance boom if rates come down.''

Dollar Slumped on Negative Payrolls by Yan Xu

The dollar slumped across the after US labor department released an unexpectedly weak employment report. Non-farm payrolls fell 4k in August, the first time decline in 4 years and far off the estimate of a 110k increase.

The negative job number solidified the expectation that the Fed will cut interest rates on its September 18 policy meeting. After the release of the report, the 2-year Treasury note yield fell below 4% for the first time in 2 years and the 10-year note dropped to a 9-month low. Interest-rate futures pricing showed traders added odds on a 50 basis point rate cut on September FOMC to 74% from 42% before the non-farm payrolls.
The euro broke the 1.37 handle and gained sharply to test the 1.38 level against the dollar. The sterling also rallied more than 100 pips to as high as 2.0323 versus the dollar, while the yen strengthened to 113.15 from above 115 versus the dollar.

US economy outlook is uncertain with subprime and credit market problem. Overall sentiment on the greenback is bearish and this also raises risk aversion. The yen becomes the biggest beneficiary as investors unwind carry trades.

EURUSD will face interim resistance at 1.38, followed by 1.3830 and 1.3850. Additional ceilings will emerge at 1.3880, backed by 1.39. Support starts at 1.3750, backed by 1.3730, 1.37 and 1.3670. Subsequent floors are eyed at 1.3650.

GBPUSD encounters interim resistance at 2.03, backed by 2.0330 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0430. On the downside, support begins at 2.0250, followed by 2.02 and 2.0170. Additional floors are eyed at 2.0140, backed by 2.01 and 2.0080.

USDJPY encounters interim resistance at 113.50, backed by 113.80 and 114. Subsequent ceilings will emerge at 114.30, followed by 114.50 and 115. On the downside, support begins at 113.20 and 113, followed by 112.80. Additional floors are eyed at 112.50, backed by 112.20 and 112.

How to investigate your Forex Broker

online forex trading is easy.The forex market is the largest market in the world, 1.9 trillion traded daily and unregulated - this last adjective is an often repeated warning, but what does it mean for you, the forex trader? When a forex broker offers guarantees on execution and account safety, can they really back this up?

The Commodity Futures Modernization Act, introduced in 2000 did not extend regulation of the CFTC to cover the spot forex market. However, The NFA offers a free database called BASIC which provides registration and membership information and shows regulatory actions brought against CFTC registrants by the CFTC, NFA or exchanges.

Here are two measures you can use to check into the background of your forex broker:

1. Check that your broker is a registered futures commission merchant. Get the brokers NFA ID and look them up at www.nfa.futures.org/basicnet/ Beware of affiliates.

2. Go to the CFTC website at www.cftc.gov/tm/tmfcm.htm and make sure that the registered FCM has substantial assets. The NFA required minimum is 250,000. However, many experts see this as a modest requirement and would like to see assets of at least 10 million.

To confirm the validity of your forex brokers price feed, cross check the trading platform feeds against eSignal and Reuters.

Slippage, (when you get a worse fill than the price you requested), and requotes (when you enter or exit the market and a different price comes up, leaving you seconds to leave the worse bid or offer) should be rare and only in fast markets. Slippage is already built into the spread

'FDIC insured' and 'segregated accounts' does not necessarily guarantee the safety of your account. Your funds would probably not receive priority in a bankruptcy as demonstrated by the Refco scandal.

Markets Await US Jobs Report by Korman Tam

At 1:00 AM Japan July Leading Indicator (exp n/f, prev 72.7)
Japan July Coincident Indicator (exp n/f, prev 80.0)
At 2:00 AM Germany July Trade Balance (exp 15.5 bln euros, prev 14.9 bln euros)
At 7:00 AM Canada August Unemployment Rate (exp 6.0%, prev 6.0%)
Canada August Jobs-Change (exp 18k, prev 11.3k)
At 8:30 AM US August average earnings (exp 0.3%, prev 0.3%)
US August non-farm payrolls (exp 110k, prev 92.0k)
US August unemployment rate (exp 4.6%, prev 4.6%)
At 10:00 AM US July Wholesale Inventories (exp 0.4%, prev 0.5%)
The major currency pairs traded narrowly in the early Tokyo session, as traders direct their focus to the closely watched US labor report. A key driver in FX movement continues to be sentiment over global central bank decisions, with the ECB and BoE both keeping rates unchanged yesterday.

US economic reports will be closely scrutinized for its potential impact on the upcoming FOMC policy setting meeting on September 18th. Although many are expecting the Fed to cut rates by 25-bp -- lowering the Federal funds rate to 5.0%, the decision is not a foregone conclusion. Comments from Fed board members recently have suggested the FOMC is not ready to move given the outlook for inflation. The recent liquidity injections and reduction in the discount rate have eased credit conditions somewhat and may buy the Fed another month before cutting its benchmark-lending rate.

The key highlight for the session ahead will be the US August jobs report. Consensus forecasts are calling for non-farm payrolls to improve to 110k, up from July at 92k. Average earnings are seen remaining unchanged at 0.3% and the unemployment rate is also expected to stand pat at 4.6%. Firm jobs data could prop the dollar higher against the majors on prospects that improving labor conditions may sway the Fed into remaining unchanged in a few weeks.

Canada will also release jobs data for August, with the unemployment rate unchanged at 6.0% and jobs-change edging up to 18k from 11.3k previously.

The euro maintains its buoyant tone against the dollar, hovering just below 1.37. We anticipate the single currency to continue to creep higher versus the greenback, with resistance starting at 1.37, followed by 1.3750 and 1.38. Additional ceilings are eyed at 1.3850 and 1.39. On the downside, support begins at 1.3620, backed by 1.36 and 1.3550. Subsequent floors will emerge at 1.3520, followed by 1.35 and 1.3460.ok friend enjoy your forex online trading.

Free Signal Today!

GJ 7 september 2007

SELL GJ : 232.75
STOP LOSS : 234.32
TP 1 : 231.97
TP 2 : 230.95
TP 3 : 229.71

Market Unrest Appears Good for Gold ETFs By MATT WHITTAKER

Money continues to flow into exchange-traded funds that focus on gold, despite the pressure that gold markets have at times faced recently as risk-averse investors fret over the impact of the credit crunch on economic growth.

This shows that gold, despite recent volatility as stocks have alternately swooned and rebounded, at its heart remains a safe-haven asset, some analysts said.

Gold ETFs allow investment in the metal without physical delivery, since the ETFs themselves physically buy gold to back outstanding shares. They then sell gold when investors sell shares.

Tradition Holds

"Some traditional attitudes are standing up to financial-market turbulence as investors pump money into gold exchange-traded funds despite volatile [gold] spot prices," said John Reade, head of metals strategy with UBS Investment Bank in a report last week.

Gold held in the world's largest such ETF, StreetTRACKS Gold Shares, have hit a record high of 515.44 metric tons, or 16,571,995 ounces. Those holdings are valued at more than $11 billion. Gold holdings for London-based ETF Securities Ltd. tripled last week to 331,835 ounces as nearly 200,000 ounces of gold were bought in a day.

StreetTRACKS Gold Shares is followed in size by LyxOR Gold Bullion Securities, which has a primary listing in London. The Comex iShares fund comes in third.

On Guard

Investors have been investing in gold ETFs to guard against political, economic and financial concerns, said Carlos Sanchez, precious-metals analyst with CPM Group. The current credit crunch is just the latest iteration of these types of financial concerns.

Holdings in the world's gold ETFs have been increasing across the board, with a combined total 23.6 million ounces as of Aug. 24, up from 20.2 million ounces at the end of last year, Mr. Sanchez said.

But Leonard Kaplan, president of Prospector Asset Management, cautions against looking at gold ETF inventories in a vacuum.

"You don't know how much of their success is due to cannibalizing" of other gold-trading business such as bullion, coin sales, physical demand and shares of gold mining companies, he said. "Just to look at that number alone is totally foolish. The fact that the ETF is rising is not by itself a bullish phenomenon.

"I would take it positively, certainly [but not] wildly so," Mr. Kaplan said.

Not surprisingly, Matthew Graydon, a spokesman for the World Gold Council, which was instrumental in creating the concept for physically backed gold ETFs, was more optimistic.

"Growth in exchange-traded funds is bullish for gold," he said. "We know from research that most of this has been demand from new investors who had not previously invested in gold -- there has been only a small amount of cannibalization from other forms of gold investment," he said.

FX Awaits Data Barrage, CB Meetings by Korman Tam

At 4:30 AM UK July Manufacturing Production m/m (exp 0.2%, prev 0.2%)
UK July Manufacturing Production y/y (exp 1.2%, prev 0.9%)
UK July Industrial Production m/m (exp 0.2%, prev 0.1%)
UK July Industrial Production y/y (exp 1.0%, prev 0.8%)
At 6:00 AM Germany July Industrial Orders m/m (exp –2.5%, prev 4.6%)
At 7:00 AM Bank of England Monetary Policy Decision (exp 5.75%, prev 5.75%)
At 7:45 AM ECB Monetary Policy Decision (exp 4.0%, prev 4.0%)
At 8:30 AM ECB Pres Trichet Press Conference
US Q2 Productivity (exp 2.4%, prev 1.8%)
US Q2 Labor Cost (exp 1.6%, prev 2.1%)
US Weekly Jobless Claims (exp 330k, prev 334k)
US July Building Permits (exp –5.3%, prev –0.4%)
At 10:00 AM US August non-manufacturing ISM (exp 54.8, prev 55.8)
Canada August Ivey PMI

The yen maintains its strength against the majors in early Tokyo trading as persistent worries over the global economic outlook and credit conditions remain. The currency market will derive its direction from a barrage of economic data and central bank decisions on Thursday. Reports from the US continue to reveal further deterioration in the housing market, with traders pondering to what extent the FOMC will allow conditions to worsen before moving to ease the Federal funds rate.

Data slated for release today include US Q2 productivity, labor cost, weekly jobless claims, July building permits and August non-manufacturing ISM. Productivity is expected to improve to 2.4% in Q2, compared with 1.8% from the first quarter. Labor costs in Q2 are seen slipping to 1.6%, down from 2.1% in Q1. Weekly jobless claims are largely unchanged from the previous week, down slightly to 330k versus 334k. Meanwhile, the August non-manufacturing ISM survey is forecast to decline to 54.8 from 55.8 – but remain above the key 50-level, which distinguishes expansion from contraction.

Tata MF, Invesco in offshore fund tie-up

Tata Mutual Fund has tied up with Invesco, a UK-based global investment management house with nearly $500 billion under management, for the former’s new scheme, ‘Indo-Global Infrastructure Fund’ launched today.

The Indo-Global Infrastructure Fund would invest 35 per cent of its money into global infrastructure companies, mainly in other Asian markets.

The remaining amount would be invested in top-notch infrastructure companies listed on the Indian stock markets.

Ved Prakash Chaturvedi, managing director of Tata Mutual Fund explained that the new product will be a feeder fund in which Tata MF will collect money in India and invest in Invesco’s Asia Infrastructure Fund. Invesco, in turn, will invest the funds in various equities across Asia.

The global portfolio for the fund (ex-Asia) will be invested in an ETF (Exchange Traded Fund) called Powershare. Invesco, which has been investing in Asia since 1962, has a strong focus and presence in China.

Some of the Asian stocks which it has invested into are Keppel Corp (Singapore), China Mobile (China), Macquarie Bank (Australia), China Resources and Power (China).

Tata Mutual Fund already has an Infrastructure Fund in India, which has been one of the best performing funds, giving returns of 66.66 per cent.

The new launch is the latest from an Indian fund house after the Reserve Bank of India hiked the total amount that the domestic fund houses can invest in overseas markets to $4 billion with a cap of $200 million per fund house.

The launch follows the relaxation in norms, allowing the fund houses to invest across sectors globally. Earlier, domestic fund houses could invest only in those foreign companies that had at least 10 per cent holdings in their Indian subsidiaries.

Principal PNB, Franklin Templeton, Fidelity, Kotak Mahindra and Sundaram-BNP have launched offshore funds in India, giving the domestic investors an option to diversify their portfolio into other overseas markets.

ICICI-Prudential has also launched an Indo-Asian Equity Fund recently, which is managed by Prudential Asset Management, the foreign partner of the domestic venture.

Tata MF’s alliance with Invesco follows a trend whereby fully-owned Indian mutual funds are tying up with a foreign partner for launching offshore funds in the country.

UTI Mutual Fund, the country’s oldest asset management company, has tied up with US-based Select Street Global Advisory (SSgA) for a ‘Global Navigator Fund’, an offshore fund for the Indian investors.

Similarly, Kotak Mutual Fund joined hands with US-based T Rowe Price for its ‘Kotak Global Emerging Market’.

Yen Gains as Watanabe Spurs Risk Aversion, U.S. Home Sales Fall

By Bo Nielsen
he yen rose versus the 16 most- actively traded currencies after Japan's chief financial regulator said he will monitor credit market losses at the nation's banks and U.S. pending home resales plummeted.

The Japanese currency also gained on speculation investors will pare purchases of higher-yielding assets made with loans in Japan and Switzerland. Global stocks fell as higher lending rates indicated banks are reluctant to lend.

``Markets are still very jittery and they are almost waiting for the next shoe to drop,'' said Camilla Sutton, co-head of currency strategy at Scotia Capital Inc. in Toronto. ``That's benefiting the yen.''

The yen rose to 115.33 against the dollar at 10:58 a.m. in New York, from 116.33 yesterday. It also climbed to 157.42 per euro from 158.26. The euro gained 0.3 percent to $1.3650.

Yoshimi Watanabe, who was appointed earlier this week, today said he'll watch banks' half-year earnings results for any losses related to U.S. subprime mortgage defaults, prompting investors to dump stocks.

European stocks fell for the first time in six days while Asian shares extended losses. The Standard & Poor's 500 Index declined 1 percent to 1,473.89. Japan's Nikkei 225 Stock Average fell 1.6 percent.

The Organization for Economic Cooperation and Development lowered its forecast for growth in the U.S. this year to 1.9 percent from an estimate of 2.1 percent in May. The Group of Seven industrialized nations, including Germany and Japan, will grow 2.2 percent, slower than an earlier estimate of 2.3 percent.

`More Ominous'

``Downside risks have become more ominous,'' Jean-Philippe Cotis, the OECD's chief economist, said today in Paris.

Japan's currency climbed 1.1 percent against the Australian dollar and 2.1 percent versus New Zealand's dollar, favorites of carry trades.

In a carry trade, the investor makes money by borrowing in a country with low interest rates, such as Japan, converting the money to a currency where interest rates are higher, such as the U.S. or euro countries, and lending the money at that higher rate. The profit comes from the spread between the borrowing and lending rates; the risk is that exchange rates may change.

Interest Rates

Japan's 0.5 percent target lending rate is the lowest among industrialized nations, helping push down the yen against 12 of the 16 major currencies over the past 12 months. The rate compares with 5.25 percent in the U.S., 4 percent in the euro region and 8.25 percent in New Zealand.

The dollar extended its loss versus the yen after a private report showed the number of Americans signing contracts to buy previously owned homes fell in July by the most since records began in 2001, extending a U.S. housing slump that is weighing on credit markets and the economy.

The index of signed purchase agreements, or pending home resales, fell 12.2 percent to 89.9, the lowest since September 2001, after increasing 5 percent in June, the National Association of Realtors said today in Washington. The median estimate of economists polled by Bloomberg News projected a 2.2 percent drop.

``The numbers show that it's not just a financial crisis anymore, but that it's spilling into the real economy in a very material manner,'' said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``We're in for a big slide in the housing market in the months to come. It should be very negative on risk appetite and benefit the yen.''

Canada's Dollar

The Canadian dollar fell 0.2 percent to 95.06 U.S. cents after the Bank of Canada kept its benchmark lending rate unchanged at 4.5 percent and suggested credit market problems may slow domestic demand and exports.

The Reserve Bank of Australia kept its key rate at 6.5 percent today after boosting borrowing costs last month to curb inflation.

``Both central banks were looking to hike rates at this round, but opted to wait and see what will happen with the credit markets,'' said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago.

The Bank of England and European Central Bank will leave rates unchanged tomorrow, according to Bloomberg surveys. The U.K.'s benchmark rate is 5.75 percent.

The U.K. central bank acted today to free up England's money markets by allowing an increase in commercial banks' reserves and boosting the amount of money offered at its regular fine-tuning operations.

The Federal Reserve will release a survey at 2 p.m. in Washington, known as the beige book, that may show mortgage defaults and rising financing costs are curbing demand in the world's biggest economy.

`Dollar Remains Weak'

``The dollar still remains weak,'' said Koji Fukaya, senior currency strategist in Tokyo at Deutsche Securities. ``The beige book may show a downside risk with the U.S. economy. The Fed may indicate the correction of housing markets will adversely affect consumer spending.''

Fed Bank of Richmond President Jeffrey Lacker said in an interview with Reuters yesterday he would support a rate cut if financial turmoil led to slower economic growth, while cautioning that the outcome is ``unclear.''

The Fed cut its rate on loans to banks on Aug. 17, saying risks to growth had increased.

Interest-rate futures show a 70 percent chance the Fed will lower its 5.25 percent target rate for overnight loans between banks to 4.75 percent at its Sept. 18 meeting, up from 44 percent a week ago. The odds of a reduction to 5 percent are 30 percent.