USD Softer, Awaits Data by Korman Tam

The currency market has much to digest this week as traders look ahead to monetary policy decisions from several central banks, including the BoC, RBA, BoE and ECB. The greenback relinquished some of last week’s gains in early Monday trading, slipping against the sterling and yen. The major currency pairs will likely be dictated by a combination of sentiment over global interest rate differentials as well as any new revelations from the subprime debacle and credit crisis. Fed Chairman Bernanke’s comments last week heightened market expectations for a December rate cut. It remains unclear however, whether the anticipated ease will be a 25-bp or 50-bp cut. The economic reports over the coming week will be particularly important with the FOMC deliberating policy next Tuesday. In the session ahead, traders will look ahead to the November manufacturing ISM – forecasted to slip to 50.5 from 50.9. The main highlight this week will be Friday’s labor report, with non-farm payrolls forecasted to drop sharply in November to 75.0k, versus 166.0k from October.

Sterling Propped Higher By Manufacturing Data

The sterling bounced off its lows against the dollar to recover above the 2.06-level after an upbeat manufacturing report assuaged sentiment for a rate cut when the Bank of England announces its policy decision this week. The CIPS manufacturing PMI in November unexpectedly jumped up to 54.4, beating calls for a decline to 52.5 from the 52.8 reading in October. The data also revealed further pressure in prices, with input prices climbing to its highest level since July to 64.4 from 60.8, while output prices edged up to 57.5 versus 57 a month earlier. The new orders component improved to 55.6 from 53.8 in October, it’s highest since August.

Cable rebounded sharply after touching 2.0527 earlier in the session, buoyed by the unexpectedly strong manufacturing growth. The key highlight this week will be the Bank of England’s monetary policy announcement on Thursday morning. Although we look for the BoE to leave rates unchanged at 5.75%, given the recent commentary from MPC officials, the decision is likely to be a close one. MPC officials have highlighted the difficulty in setting policy as a result of lingering inflationary pressure and the anticipated “sharp slowdown” in UK economic growth. Further, recent inflation reports were stronger than forecast – likely to keep the BoE’s hand in check this week. Yet, depending on how grim the Board members interpret the current subprime debacle and credit crunch to be, the possibility for the Bank to alleviate the impact of tight credit conditions by easing rates remains.

GBPUSD encounters interim resistance at 2.0665, followed by 2.07 and 2.0740. Additional ceilings will emerge at 2.08, backed by 2.0830 and 2.0860. On the downside, support begins at 2.06, backed by 2.0570 and 2.0530. Subsequent floors are eyed at 2.05, followed by 2.0450 and 2.04.

401(k) Investors May See Returns Suffer by Tim Paradis

Investors Ignoring the Often Free Advice of 401(k) Providers Can See Their Returns Suffer

Sales pitches bombard us every day with advice on what to eat, what to wear and what to do with our money. While savvy consumers are quick to duck many of these distractions, investors looking for advice on how to save for retirement should think twice before tossing aside the colorful brochures of their 401(k) managers.

Many 401(k) retirement plans offer investors access to online or over-the-phone chats with someone who can answer investment questions, and it appears that those who don't ask for help can end up with less money in their portfolios.

A new Charles Schwab examination of the 401(k) plans it oversees found that investors who rely on some professional advice for investment decisions enjoy greater returns than those who go it alone.

The investors who used an independent investment adviser that Schwab makes available to its 401(k) participants saw an average 14.1 percent return last year. Those who didn't solicit advice, at least from the adviser Schwab provides, saw only an 11.1 percent return. A similar gap in returns occurred in 2005.

Jim McCool, executive vice president of Schwab Corporate & Retirement Services, points out that it is well known that investors are leaving money on the table if they don't put enough into their 401(k) to merit a full matching contribution from their employer. But, he said, too few investors realize that without some professional hand-holding, they could also be giving up some money.

The services can help investors set up investments or check up on them as the years pass, he said.

"It's about helping them build a portfolio or it's about providing a retirement fund that automatically adjusts its return characteristics as the person gets older," McCool said, referring to so-called target-date funds, which gradually shift their investments into more conservative footing as a person ages and approaches retirement.

And investors who pride themselves on making sound financial decisions should note that in many cases the advice offered through their 401(k) plan doesn't carry any additional costs because the service is wrapped in a fund's overall expenses.

Jeff Tjornehoj, an analyst at fund tracker Lipper Inc., said that while many individual investors do just fine on their own, those who don't at least consider seeking advice could miss out.

"These differences -- two, three or four percentage points -- aren't going to make or break you in one year but if you compound that over decades then the differences do add up. I think it's fair to say by and large people should be asking for advice where appropriate," he said.

Even asking some simple questions can have dramatic effects on an investors' success. Investors who might think to diversify their holdings by putting 10 percent of their money into 10 funds might quickly be told this isn't necessarily the best idea.

"A lot of investors look at the 401(k) platform and they may not understand that if you are investing in a target-retirement fund that should be the only fund you put money into as far as your 401(k)," Tjornehoj said, pointing to a common mistake by investors who don't understand that such funds are designed to be one-stop-shopping investments.

Schwab's findings indicated that the differences in returns among those who seek advice and those who don't are most pronounced among younger plan participants. Often new investors don't set enough aside or invest too conservatively.

But just as important as setting the right course, analysts say, is sticking with a long-term investment strategy through short-term ups and downs.

"The two most important things are the expertise in building long-term asset allocation and also the discipline of maintaining that course," said Peng Chen, president of Ibbotson Associates, a division of Morningstar Inc. that provides financial advice for 401(k) investors.

Schwab's McCool noted that despite all the educational tools to help investors learn about investing, many don't take advantage of them and would rather be able to ask for help only when they need it.

"Ultimately, at the end of the day, investing money is an emotional decision and they need help," he said.

Copyrighted, The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

Wall St. eases at Monday open

NEW YORK (CNNMoney.com) -- U.S. stocks were lower at Monday's open as investors considered the housing slump and awaited economic reports.

The Dow Jones industrial average straddled the breakeven point. The Nasdaq composite index eased 0.2 percent. The Standard & Poor's 500 index dropped 0.2 percent.

Among stocks in the news Monday: Activision (Charts), MetLife (Charts, Fortune 500), UnitedHealth Group (Charts, Fortune 500), Amgen (Charts, Fortune 500), Lennar (Charts, Fortune 500) and TXU (Charts, Fortune 500).

There are some readings on U.S. economic strength due Monday, particularly from the manufacturing sector. But additional weakness there could actually lift stocks if it raises hope for a bigger rate cut by the Federal Reserve at its Dec. 11 meeting.

First up is the ISM index, a survey of executives in the manufacturing sector, due at 10 a.m. ET. Economists surveyed by Briefing.com expect the reading to fall for the fifth straight month to 50.5 in November from 50.9 in October. If it slips below 50, that would indicated that the growth in the manufacturing sector has stopped and it has started to contract. The closely watched reading hasn't been below 50 since January.

Then at noon, automakers are due to start reporting their November sales. Sales tracker Edmunds.com forecasts that General Motors (Charts, Fortune 500) sales will be down 1.3 percent from a year earlier, while Ford Motor (Charts, Fortune 500) sales are forecast to be essentially unchanged. Privately-held Chrysler could see an 11 percent decline.

A modest expected gain at Toyota Motor (Charts) and forecasts of more solid gains at Honda Motor (Charts) and Nissan could trim the traditional Big Three's share of the U.S. market to 51.2 percent, according to Edmunds. If it falls below 50 percent, it would mark only the second time on record, after July of this year, that domestic brands fell behind the import brands in U.S. sales.

Stocks in the news Monday include video game publisher Activision (Charts). On Sunday, Vivendi said it plans to buy a controlling stake in the company and combine it with its game unit. The deal is expected to create a rival to Electronic Arts (Charts). Shares of Vivendi gained 2.6 percent in its home market in Paris.

Home builder Lennar (Charts, Fortune 500) said it has partnered with the real estate arm of Morgan Stanley (Charts, Fortune 50selling the new joint venture a portfolio of homes and property for $525 million. Lennar, the nation's largest home builder by revenue, has taken large charges due to the reduction of the value of its holdings and costs for getting out of land options.

Personal computer maker Dell (Charts, Fortune 500) said it would partner with advertising giant WPP Group (Charts) to create a new marketing agency that would handle $4.5 billion in Dell accounts.

In global trade, major markets in Asia finished the session lower. European stocks were mixed in morning trading.

Yen Fall as Global Stocks Surge by Yan Xu

The yen fell versus high-yielding currencies as global stocks rebounded this week. Carry trades came back to the market as investors regained their risk appetite.

The greenback gained as US corporations squared positions to realize profits on financial statements by the end of the month. The euro dipped to lower 1.46 versus the dollar, and the sterling fell to below 2.06.The euro zone CPI rose at a faster-than-expected rate of 3%, increasing the case for an unchanged rate decision at ECB¡¯s next policy meeting. In the medium term, the euro is more favorable than the dollar in terms of the interest rate outlook.

US personal income rose at 0.2% in October, below the estimate and the previous reading of 0.4%. Personal spending also fell to 0.2%, lower than the expectation of 0.3%. A key inflation measure, core PCE index, remained at a monthly rate of 0.2% as expected. Chicago PMI rose from 49.7 to 52.9 in October, better than the estimate of 50.3.

The situation the Fed faces now is the inflation is contained and the economy is slowing. US futures showed traders are pricing in a 68 percent chance the Fed will cut its interest rates by a quarter-percentage point to 4.25%

Fed Chairman Ben Bernanke said yesterday on the Charlotte Chamber of Commerce meeting that resurgence in financial market in these two weeks dimmed US economic outlook. The dollar was under pressure after his comments.

The six members of the Gulf Cooperation Council may relax their fixed exchange rates to the US dollar at a meeting next Monday.

EURUSD will face interim resistance at 1.4650, followed by 1.4680 and 1.47. Additional ceilings will emerge at 1.4750, backed by 1.4780. Support starts at 1.46, backed by 1.4580, 1.4550 and 1.4520. Subsequent floors are eyed at 1.45.

GBPUSD encounters interim resistance at 2.06, backed by 2.0650 and 2.0680. Subsequent ceilings will emerge at 2.07, followed by 2.0730 and 2.0750. On the downside, support begins at 2.0550, followed by 2.0520 and 2.05. Additional floors are eyed at 2.0470, backed by 2.0450 and 2.04.

USDJPY encounters interim resistance at 111.30, backed by 111.50 and 111.80. Subsequent ceilings will emerge at 112, followed by 112.50 and 113. On the downside, support begins at 111 and 110.80, followed by 110.50. Additional floors are eyed at 110.20, backed by 110 and 109.50.

USD Buoyed Ahead of Data by Korman Tam

The dollar bounced higher in overnight trading, recovering across the board following yesterday’s sell-off. The greenback edged up to 2.0628 versus the sterling and 1.4730 against the euro. In the coming session, markets will look ahead to Q3 GDP, core PCE prices, weekly jobless claims and new home sales. The economy is seen expanding by 4.8% in the third quarter, up from 3.9% previously. New home sales are expected to slip to 750k units, down from 770k units in September.

The greenback recovered from the declines prompted by the heightened anticipation that the Fed will ease rates again in December following yesterday’s dovish comments from Fed Vice Chairman Kohn. We view the dollar’s strength as a short-term corrective move and look for the downtrend to remain in place against the major currencies.Cable Retreats

Bank of England Governor King spoke before Parliament’s Treasury Committee earlier today, saying the outlook for inflation and growth is less benign. King said the MPC remained focused on meeting the CPI target, but surveys are suggesting the economy is beginning to slow. King said financial market turmoil has tightened credit conditions, and sees the first signs of credit crunch effect likely in housing and property markets. He anticipates output growth to slow while CPI to increase in the short term. King reiterated the Bank remained ready to take further measures to ensure the overnight rate remained in line with the bank rate. Meanwhile, Bank of England board member Blanchflower said that the fear of recession in the US is greater than others think, placing a 50% likelihood for a recession in the US.

Consumer credit for October increased to 1.439 billion sterling, up from 1.322 billion sterling. Mortgage approvals dropped to its lowest level since February 2005, at 88k versus 100k from September. Final M4 money supply edged up by 0.2% m/m and 11.8% y/y in October – marking its lowest annual rate since May 2006.Cable retreated sharply from just shy of 2.0850 yesterday and pulling back to trendline support around 2.0630 in early Thursday trading. We look for the pair to stabilize around the 2.06-figure and expect bullish momentum to push the pair back toward the 2.0850-2.09 region in the coming sessions.

Retailers Buoyed by Strong Holiday Start By Anne D'Innocenzio, AP Business Writer

NEW YORK (AP) -- The nation's shoppers set aside worries about higher gas prices and a slumping housing market and proved their resilience over the Thanksgiving weekend, giving what the nation's merchants wished for -- a strong start to the holiday shopping season.Stores and malls opened the season as early as midnight, drawing bigger-than-expected crowds Friday for discounted flat-panel TVs, digital cameras and toys such as all things related to Disney Channel's "Hannah Montana." Strong sales continued through Saturday, according to one research group that tracks total sales at retail outlets across the country.

Clearly, the biggest draw was electronics, benefiting consumer electronics chains like Best Buy Co. and discounters such as Wal-Mart Stores Inc. and Target Corp. Popular-priced department stores including J.C. Penney Co. and Kohl's Corp. drew in crowds with good deals. Toy stores like Toys "R" Us Inc. fared well too. Still, apparel sales appeared to be mixed at mall-based clothing stores, though a cold weather snap helped spur sales of outerwear and other winter-related items.

"This was a really good start. ... There seemed to be a lot of pent-up demand," said Bill Martin, co-foundeer of ShopperTrak RCT Corp., which tracks total sales at more than 50,000 retail outlets. ShopperTrak reported late Sunday that sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago.

Total sales on Friday, the day after Thanksgiving, rose to $10.3 billion, up 8.3 percent from the same day a year ago. Martin had expected increases no greater than 5 percent.

Meanwhile, Internet research firm comScore Inc. reported a 22 percent gain in online sales on the day after Thanksgiving compared with the same day a year ago and estimated online sales would exceed $700 million online Monday, the official kickoff to the online shopping season.

The signs were encouraging, but stores are now wondering whether bargain hunters will keep up the pace as they face an escalating credit crunch, depreciating home values and rising daily living expenses.

Frederick Crawford, managing director at AlixPartners, a turnaround consulting company, said that amid economic challenges, people are buying fewer gifts.

"Clearly, it was mission-based shopping," Crawford said. "People had their list, and they were very specific in what they were looking for."

Consumers were out looking for bargains.

"The bargains are better this year, a lot better," said Theresa Calib, of Houston, Texas, who was at the local Greenspoint mall Saturday. "We always know what we want to get, and we get it." She noted she took advantage of Foot Locker Inc.'s two pairs for $89 sale.

I'm trying to get everything done, and I did it," said Pat Marcantonio, of Wakefield, R.I., who returned Saturday to the Warwick Mall after braving the crowds Friday morning.

Marcantonio also shopped for herself Saturday, loading up a Bath & Body Works bag full of frosted cranberry and sweet pea lotions. Bath & Body Works was offering select gift sets at 30 percent off.

Meanwhile, in downtown Philadelphia, Barbara McGlade, of Wyndmoor, Pa., had picked up deals on fleece clothing at Modell's, with prices marked down from $29.99 to about $15.

"If I see something now, I'll pick it up," McGlade said. "You don't know if you'll see it again."

The nation's stores worked hard to lure shoppers with expanded hours, including midnight openings, and a blitz of early morning specials Friday. J.C. Penney and Kohl's opened at 4 a.m., an hour earlier than a year ago.

Many stores were also more focused on discounting products that they knew shoppers wanted. Gail Lavielle, a spokeswoman at Sears Holding Corp., which operates Kmart and Sears stores, said it zeroed in on great deals on electronics, instead of offering deep discounts on a wide range of products. Still, analysts say frustrations were high across among shoppers who couldn't get their hands on limited deals at many different stores.

Lavielle noted that the turnout Friday was better than a year ago, and customer flow was steady throughout the weekend. Both Kmart and Sears sold out a significant inventory of its flat-panel TVs. Other hot items were Global Positioning System receivers, game consoles like the hard-to-find Nintendo Wii, and digital cameras.

Toys "R" Us chairman and CEO Jerry Storch said the toy seller drew a strong turnout Friday for its 101 early morning specials. He said that he was pleased with traffic on Saturday and Sunday as well.

"This was a robust start to the holiday season," Storch said. Popular items included anything related to Disney's hot franchises "Hannah Montana" and "High School Musical," video games, consoles, an interactive parrot from Hasbro Inc., and radio-controlled helicopters and planes.

In a statement Saturday, J.C. Penney reported "strong performance across all merchandise categories," including fine jewelry, outerwear, and young men's and children's assortments.

Wally Brewster, senior vice president of marketing and communications for General Growth Properties Inc., which operates more than 220 malls in 44 states, estimated that sales rose 2.5 percent for the weekend compared with a year ago, in line with projections. Electronic items were extremely popular, but he added that the cold weather helped spur sales of fleece outerwear and other winter items.

Karen MacDonald, spokeswoman at Taubman Centers, which operates 24 malls across 11 states, estimated that business was up anywhere from mid to high single digits Friday, while sales Saturday increased by as much as the mid-single digits.

Both Macerich Co. and Simon Property Group reported strong sales at malls across the country over the weekend.

Despite a decent showing, many shoppers interviewed said they planned to curb their spending.

Earl Lee, a mechanic from Live Oak, Fla., who was shopping in Tallahassee, said that he was planning on spending less this holiday season.

"Gas prices, everything's so high," he added.

John Muller, of Clifton, N.J., who was standing outside Macy's Herald Square in Manhattan on Sunday, said he plans to spend only about $500 this year, half as much as a year ago, because of higher expenses and worries about the economy.

This year, "we are mostly buying for the kids," said Muller, who has two children, ages 3 and 7.

AP Business Writer John Porretto in Houston and Associated Press writers Brent Kallestad in Tallahassee, Fla., and Kathy Matheson in Philadelphia contributed to this report.

GBP Pounded by BoE by Korman Tam

The greenback was mixed in the Wednesday session, advancing versus the British pound and the yen while struggling against the euro and Aussie. With the exception of the sterling, the higher yielding currencies rallied against the yen as speculators continued to jump back into the carry trades following the sharp unwinding of recent sessions.

Economic data from the US were largely softer than expectations. The October PPI increased by 0.1% on a monthly basis, down from a 1.1% increase previously while the annualized PPI jumped to 6.1% from 4.4% previously. Core PPI was flat on a monthly basis versus 0.1% previously, but the yearly core PPI jumped to 2.5%, from 2.0%. Meanwhile, retail sales for October were weaker with the headline report inline with estimates at 0.2%, but down from the previous month at 0.6%. The excluding-autos retail sales figure missed expectations, down to 0.2% versus 0.4% a month earlier.

Bank of Canada Deputy Governor Jenkins expressed concern over the rapid appreciation in the Canadian dollar, saying the recent rise is stronger than historical experience have suggested. He said that Canada has been bearing a disproportionate share of adjustment in global imbalances. He warned that if the Loonie remains at current levels, there will be increased risks of significantly lower inflation and output.GBP Pounded By BoE

The sterling plunged 1.4% from its session highs against the dollar and 1.6% versus the yen after a report from the Bank of England not only tempered expectations for future rate hikes but raised the scope for a shift in stance toward potential rate cuts in the coming months. The BoE sees inflation reaching its 2% target in two years using market rates, which, were based on the Bank’s assumption for two 25-basis point rate cuts.

Economic data released from the UK saw the September ILO unemployment rate remain unchanged at 5.4%. The claimant count for October was -9.9k versus a prior reading of -12.8k while 3-month average earnings in September crept higher to 4.1% from 3.7%.

Cable fell by nearly three-big figures on the session relinquishing all of its previous day’s gains to 2.0550. Support is seen at 2.0520, followed by 2.05 and 2.0465. Additional floors will emerge at 2.0420, backed by 2.04 and 2.0360. On the upside, resistance is eyed at 2.06, followed by 2.0640 and 2.0685. Subsequent ceilings are seen at 2.07, backed by 2.0730 and 2.0770.