Daily info

Trading Discussion News and Economy
1

The US $ has under-performed in the O/N trading session. Currently it is down against 13 of the 16 most actively traded currencies, in a �subdued� trading session. Today is Martin Luther King Day and a Financial Holiday in the US. Expect the currency market to remain �tepid� until tomorrow. This week we have the BOJ rate decision announcement (a two day meeting 17th and 18th of Jan.). The recent JPY movements (120.53) have traders speculating that �no rate� increase is warranted (0.25%). Remember, the BOE was capable of surprising us.

The US $ currently is trading lower against the EUR +0.17%, GBP +0.32%, CHF -0.15% and stronger against JPY +0.11%. The commodity currencies are higher with AUD +0.19% and CAD -0.14%. The �loonie� continues to trade under pressure, hitting a 13 month low last week, as commodity prices have started the year on the �soft� side. With the Canadian Economy failing to show signs of growth over the last few months, traders are willing to sell CAD on any US $ pull back and see 1.2000 as a short term target.

Crude is higher ($53.56 up 55c), as Algeria has backed further cuts in production by OPEC (ideally to stem the recent fall in oil prices). It is anticipated that the announced Feb. cuts will be brought forward. Winter storms up the east coast of North America will further support oil. Gold eases ($626) O/N after appreciating 2.6% on Friday as investment demand increased because of accelerating global inflation. Some investors took profit this morning as they feared that last weeks move was over extended. With thin illiquid markets today, one will experience further potential price exaggeration.

The Nikkei closed at 17,210 up +152. The DAX index in Europe was up +21 points at 6,726; the FTSE (UK) currently is 6,22o, -66 points. The US markets are closed today. Yields of the US 10-year note �backed up� 3bps on Friday (4.77%), as the US core retail sales number indicated no short term easing will be seen from the FED.

Euro-land industrial production excluding construction rose 0.2% in Nov. after falling 0.1% in Oct., this morning. The increase was below economists expectations of a 0.7% rise. The EUR is little changed (1.2946) as the market waits for the investor confidence numbers tomorrow.

JPY had gained earlier this morning against the US $ after a report showed accelerating growth in machinery orders (3.8% vs. 3.5%), strengthening the BOJ�s case for hiking interest rates this week (0.25%). But, lawmakers will continue to pressurize the Central Bank to support the economy thus adding further pressure to �Yen�. Traders anticipate JPY to hit 122.75 in the short term.

This morning, Sterling rose to its highest against the EUR (65.83) since Aug. 2004 after a report showed factory prices rose for the first time in four months in Dec., strengthening the case for further interest-rate increases (5.25%). The Producer Output Prices rose 0.2% after a flat reading in Nov. Traders wait for the CPI out tomorrow, which should provide further support for �the pound� (1.9654).

On Tap:

All Day USD Holiday: Martin Luther King Day
8:30 am CAD New Motor Vehicle Sales m/m 2.8% vs. -1.6%
6:50 pm JPY CGPI m/m 0.0% vs. -0.1%
6:50pm JPY Import Price Index m/m -2.2%
7:01pm GBP RICS House Price Balance

Many thanks

2

Very informative first post with good info. :slight_smile:

3

The US $ has under-performed in the O/N trading session. Currently it is down against 14 of the 16 most actively traded currencies, in a �whippy� trading session. Trading desks this morning will be fully staffed after MLK day and the markets wait for the US Empire State index. The whisper number is lower (18 vs.23), expect the �greenback� to remain under short term pressure.

The US $ currently is trading lower against the EUR +0.35%, GBP +0.04%, CHF -0.46% and JPY -0.12%. The commodity currencies are higher with AUD +0.14% and CAD -0.29%. Traders expect the BOC to remain on hold this morning (4.25%). Governor Dodge has indicated his concern with the recent �softer� export data to the US (implying that they are not close to �easing rates� some time soon). The recent slide of the �loonie� has had the same effect of �loosening� Canadian monetary conditions. The MPR (Monetary Policy Report) is released this Thurs., traders will wait till then to make longer term bets.

Crude is higher ($53.00 up 1c), as traders speculate that prices have fallen �too far� after last weeks EIA report showed surging US fuel inventories. OPEC will have to follow through on cutting production to retain any market credibility. Winter storms up the east coast of North America will further support oil in the short term. Gold eases ($625) O/N, as traders speculate that the �yellow metal� will under-perform due to the decline in global commodity prices.

The Nikkei closed at 17,202 down -7. The DAX index in Europe was down -5 points at 6,726; the FTSE (UK) currently is 6,253, -10 points. The early call for the open of key US indices is to be lower. Yields of the US 10-year note �backed up� 3bps on Friday (4.77%), as the US core retail sales number indicated no short term easing will be seen from the FED.

EUR climbed against the US $ (1.2974) as the German index of investor confidence rose to the highest level in six months (-3.6 vs. -19 for Dec.). This number will provide a �positive catalyst� for the ECB to hike O/N rates again (3.50%). The currency futures indicate traders expect the ECB to increase borrowing costs two more times this year to 4%.

CBL rises (1.9660) after a government report today showed consumer prices quickens at the fastest pace in a decade (+3% y/y). This raises the probability that the BOE will increase interest rates further (5.25%). Also, UK house prices this morning fell to a four month low in Dec. (the BOE rate hikes are now beginning to affect the property market), alternatively this could stall Sterling�s recent rise.

Bank of Thailand deliberately created `uncertainty� in the foreign exchange market to drive out foreign speculators, when it imposed curbs on investment, Governor Watanagase said yesterday in Bangkok. They have successfully managed to create uncertainty and volatility and investors are questioning if they are capable of managing their economy (THB 35.99). I assume this is a ploy to further weaken their currency.

The Yuan closed at its highest level 7.7900 up +0.02% vs. the US $. Its appreciation will help balance �global imbalances� the commerce ministry said on its Web site earlier this morning. Yesterday the ministry said the currency will rise as much as 5% this year. The Chinese Government is keeping up their end of the bargain by talking up the value of the Yuan (its also part of the Govt. effort to be more transparent for the market).

In Japan there is a big debate whether or not the BOJ should raise rates this week (0.25%). This is a rather unusual scenario. Japan MOF’s Omi is playing down need for a BOJ vote delay. Futures traders are pricing in a 78% probability of a rate hike.

On Tap:
8:30 am USD Empire State Business Conditions Index 18.0 vs. 23.1
9:00 am CAD Interest Rate Statement 4.25% vs. 4.25%
4:45 pm NZD CPI q/q -0.1% vs. 0.7%
4:45 pm NZD FPI m/m 0.1%
6:50 pm JPY Trade Balance § 900b vs.756b

JIM:D

4

The US $ is stronger in the O/N trading session. Currently it is up against 11 of the 16 most actively traded currencies, in a �subdued� trading session ahead of today�s US Consumer Sentiment. Yesterday, FED Chairman Bernanke said the US economy would be seriously �weakened� unless fiscal reform is implemented. Strong economic growth is unlikely to solve these problems. Taxes must be set at levels that can balance spending and revenues. Benanke believes that if meaningful action is not taken soon, the U.S. economy could be seriously weakened with future generations bearing much of the cost.

The US $ currently is trading higher against the EUR -0.03%, GBP -0.13%, CHF +0.19%, and JPY +0.04%. The commodity currencies are mixed with AUD -0.15% and CAD +0.25%. The �loonie� continues to trade under pressure as the price of oil eases and the BOC lowered its 2007 economic growth forecast. Traders see short term US $ gains limited to around the 1.1800 mark and prefer to sell CAD on any US $ pull back. The AUD $ continues to appreciate vs. JPY (95.78) as traders speculate that investors will keep putting money into the nation’s high yielding assets (6.25%) after the BOJ kept rates on hold yesterday (0.25%). Foreign investors will continue to be attracted to the higher yields offered by the nation’s debt for some time.

Crude is little changed ($50.49 up 2c) O/N. Yesterday, the EIA reported stockpiles of gasoline and distillate fuels rose last week. Crude oil stockpiles jumped +6.7m barrels to 321.5m and gasoline stockpiles jumped +3.5m barrels to 216.8m. According to the National Weather Service yesterday, oil demand should rise next week because of cooler temperatures in the eastern part of the US. They expect below normal conditions from Jan. 23 through Jan. 27. Gold rose ($628 up $1.10) O/N, as the weaker US $ should increase the demand for the �yellow metal� as an alternative investment.

The Nikkei closed at 17,315 down -55. The DAX index in Europe was down -20 points at 6,669; the FTSE (UK) currently is 6,187, -22 points. The early call for the open of key US indices is lower. Yields of the US 10-year note were little changed yesterday (4.76%), as housing starts in the US unexpectedly rose last month (1.64m), coupled with the stronger CPI number (+0.5%, core +0.2%) should provide further evidence that the US economy is strong enough to allow the FED to keep interest rates on hold short term. The consumer confidence number may put pressure on treasuries.

UK retail sales rose last month (+1.1 vs. 0.5) the most in 18 months as faster economic growth spurred shoppers to increase spending on electrical goods. This data provides further evidence that consumer spending has survived two interest rate increases last year; it may also convince the BOE to raise borrowing costs again (5.25%). Inflation reached 3% in Dec., the highest in almost 10 years and 1 % above the CB target. Futures traders have priced in one more rate hike by April.

European member�s �hawkish� rhetoric has supported the EUR this week. ECB member�s Weber and Bini Smaghi yesterday said rate policy was �very accommodating� reiterating Trichet views from last week. The ECB is worried about inflation and there’s a tightening cycle in place, so expect rates to go higher and the EUR appreciate further (1.2960).

Analysts expect JPY to depreciate another 3% to 125 after the BOJ voted 6-3 to keep rates on hold at 0.25%. The bigger issue is the BOJ�s credibility, some investors may view that the BOJ buckled to political pressure and this, not fundamentals will weaken �Yen� further. Policy board members are questioning Governor Fukui’s leadership and decision making (121.30).

CHF is set to fall for a second week against EUR as investors take advantage of the carry trade. Swiss interest rates are the second lowest among the world’s industrialized nations after the BOJ. Low interest rates make the CHF and JPY the favorite currencies for investors to put on the carry trade (by selling the �funding currencies�). The NZD, AUD and ZAR have been the best performers against the US $ this week.

On Tap:

8:00 am USD Richmond Fed President Lacker Speaks
8:30 am CAD Wholesale Sales m/m 0.5% vs. -0.2%
8:30 am CAD Wholesale Inventories m/m 0.3% vs. 0.7%
10:00 am USD Consumer Sentiment § 92.5 vs. 91.7
1:15pm USD Kansas City Fed President Hoenig Speaks

5

The US $ is mixed in the O/N trading session. Currently it is up against 11 of the 16 most actively traded currencies, in a �tepid� trading range ahead of today�s US Leading Index. Do not expect too many surprises in this lack luster market. The US $ has performed well over the past week, currently there is no reason to break out of its tight range.

The US $ currently is trading higher against the EUR -0.02%, CHF +0.09%, JPY +0.30% and lower against GBP +0.02%.The commodity currencies are weaker with AUD -0.08% and CAD +0.25%. The �loonie� continues to trade under pressure not from oil, but from futures trader�s �paring� position on the exchange, coupled with some M & A deals. Traders see short term US $ gains limited to around the 1.1800 mark and prefer to sell CAD on any US $ pull back. The AUD $ continues to appreciate, the interest rate differential debate has investors looking for the high yielding assets to invest in. Traders see a 43% chance that Governor Stevens will raise RBA�s O/N rates on Feb. 6th.

Crude is higher ($52.68 up 68c) O/N. According to the National Weather Service Friday, oil demand should rise this week because of cooler temperatures in the eastern part of the US. They expect below normal conditions from Jan. 23 through Jan. 27. Gold is little changed ($634 down $1) O/N, traders are looking to buy the �yellow metal� on any pull back as an alternative investment to the US $.

The Nikkei closed at 17,424 up +113. The DAX index in Europe was up +8 points at 6,756; the FTSE (UK) currently is 6262, +25 points. The early call for the open of key US indices is higher. Yields of the US 10-year note backed up 2bp on Friday, (4.78%). According to a report by PIMCO, OPEC nations are selling Treasuries at the fastest pace in more than three years as crude oil prices ease (Yields backing up). This should provide support for the �greenback�, with the interest rate debate, higher yields will bring �forth� investors who will require the US $.

Some analysts are looking for the EUR to appreciate by 10-12% this year (1.4200-4500), as the ECB welcomes a stronger currency to curb inflation. Higher interest rates have increased the EUR demand over the past 12 months (3.5%), it has appreciated 6.9%. An appreciating EUR will have the same effect as Tichet�s current tightening policies (1.2955).

CHF trades heavy against EUR (1.6192), as inflation indicators are easing and investors take advantage of the �carry trade�. Recent producer and import price data have slowed recently. Hawkish rhetoric from ECB council members coupled with a muted SNB have traders anticipating that Swiss rates are close to their �top� (2%).

Traders still expect Sterling to outperform the EUR short term (65.65), after reports showed house prices rose in Jan. and the economy will expand this year at its fastest pace since 2004. Futures traders are anticipating that the BOE will raise interest rates a quarter point by Mar. (5.25%). Look for CBL to trade close to $2 over the next three months, as the market prefers to be a buyer on any pull backs.

On Tap:
10:00 am USD Leading Index m/m 0.2% vs. 0.1%
3:20 pm USD San Fran Fed President Yellen Speaks

Jim

6

The US $ is stronger in the O/N trading session. Currently it is higher against 12 of the 16 most actively traded currencies, in a �subdued� trading range. The main focus this week is the two day FOMC meeting beginning tomorrow and the employment report to be released Friday (expected +145), with no data today and the Fixed Income yields backing up of late, traders see no easing bias from the Fed�s rhetoric short term (5.25%).

The US $ currently is trading higher against GBP -0.04%, CHF +0.04% and JPY +0.24% and lower against EUR +0.09%. The commodity currencies are mixed with AUD +0.07% and CAD +0.01%. The �loonie� is little changed even with a boost from commodity pieces. Canadian core inflation last week was weaker 2% vs. 2.2% m/m. Traders still anticipate that the CAD will under-perform short term due to the fundamentals and prefer to buy the US $ on pull backs. AUD continues to gain support as a �high� yielding asset.

Crude is lower ($55.21 down 21c) O/N. Traders speculate that the colder weather in the US will increase the use of heating fuel as OPEC prepares to implement a further cut in supplies next week. Heating demand will be 14% above normal through Feb.1 according to Weather Derivatives on Thursday. Gold is little changed ($647) O/N, as the rise in oil prices has revived the �yellow� metal’s appeal as a hedge against inflation.

The Nikkei closed at 17,470 up +49. The DAX index in Europe was up +16 points at 6,708; the FTSE (UK) currently is 6235, +7 points. The early call for the open of key US indices is lower. Yields of the US 10-year note backed up 1bp on Friday (4.88%), and are little changed O/N. U.S. Traders speculate that reports this week will point to a strengthening US economy, fuelling the thoughts that the FED will refrain from easing interest rates. Current yields are close to recent highs, expect a base to form here short term.

JPY continues to trade under pressure and eased against most of it major trading partners after the retail sales figures disappointed early this morning (-0.3% vs. -0.2%). The market is scaling back it bets that the BOJ will hike rates sooner (0.25%). Consumption figures in Japan are weak, coupled with a slower pace of price increases; this should make it more difficult for Governor Fukui from the BOJ to raise rates next month. (The danger is that �everyone� becomes over bearish).

According to a Financial Times poll this morning, a majority of Europeans are downbeat about the �single� currency. A majority of people in France, Germany, Spain and Italy feel the EUR has hurt their national economies, and they would prefer to use their former currency, as they believe the �single� currency has had a negative impact on their economies.

It was only a matter of time before the Thai Central bank implemented something different to stem current appreciation of the THB. Foreign banks have been using offshore �forwards� to make bets on the THB and avoid restrictions placed on onshore trades. Thailand’s central bank has cracked down on investors betting on gains by reiterating a ban on local banks trading derivatives in the currency. The central bank had banned local banks from entering NDF contracts with overseas investors since Nov. 2003, and now wants to reiterate that the contract is still banned for Thai banks, making it more difficult for the �offshore� speculator. Investor sentiment should be hit again short term.

Sterling continues to trade near its two week low (1.9567) against the US $ and the EUR (65.99) as investors pare their bets for a second interest rate increase by the BOE this year (5.25%). This morning the UK CBI distributive index rose to a 25 month high of +30 for Jan. vs. +25 for Dec. BOE dissenter Blanchflower said this morning that he would support a rate �hike� in the unlikely event that British pay increases were to accelerate. Traders expect CBL to form a base here short term.

On Tap:

8:30 am CAD Expected Manufacturing Production -1 vs. -5
6:30 pm JPY Overall Household Spending y/y -1.2% vs. -0.7%
6:30 pm JPY Unemployment Rate 4.0% vs. 4.0%
6:50 pm JPY Industrial Production m/m 0.4% vs. 0.8%
7:30 pm AUD NAB Business Confidence 6
9:00 pm NZD M3 Money Supply y/y 15.5%

7

The US $ is lower in the O/N trading session. Currently it is weaker against 11 of the 16 most actively traded currencies, in a �whippy� trading range. Yesterday, US pending home re-sales rose 0.7% to 109.3 (after a revised 4.2% drop in Jan.), and it was down 8.5% y/y. Analysts believe rising incomes and lower prices are making homes more affordable, thus offsetting some of the concerns that sub-prime mortgage defaults could add to the properties already on the market. Fed policy makers believe the damage to the economy from the housing �slump will be contained�, allowing the expansion to proceed at Bernanke�s �moderate� pace. Some analysts believe that this data suggests a �floor� is taking place in the housing market, but it will take another month or two months of reports to clarify this position. Traders are turning their focus to NFP numbers for this Friday. It is a shortened week due to the Easter holidays but that should create greater volatility.

The US $ currently is trading lower against EUR +0.16%, GBP +0.06%, CHF -0.20% and JPY -0.12%. The commodity currencies are stronger and the overall sentiment remains positive, AUD +0.04% and CAD -0.10%. Stronger commodity prices coupled with some M&A activity continues to support the �loonie� in a tight range. Recent fundamental data further support the currency, and traders continue to look for levels to buy on USD$ strength. Last night the RBA stood firm and kept key O/N cash rates on hold at 6.25%. The decision has surprised many traders, particularly after recent strong fundamental data. A rate hike is still on the cards and expect the AUD$ to remain well supported as the �interest rate differential debate� continues to be positive.

Crude is little changed ($64.15 down -50c) O/N. Oil continues to remain range bound as the concerns over Iran’s detention of British servicemen have not eased, thus disrupting supplies from the Middle East. Iran has the second largest oil reserves in the world and is the second biggest producer in OPEC. Nearly 25% of the world’s oil is transported through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf. The Iranian situation will be a major driving force for oil prices in the short term. There continue to be numerous rumors that positive action may be undertaken by both sides soon. Gold ($670) rises O/N. Higher crude prices have increased the appeal of the �yellow� metal as a hedge against inflation.

The Nikkei closed at 17,544 up +300. The DAX index in Europe was up +13 points at 7,057; the FTSE (UK) currently is 6,352, -15 points. The early call for the open of key US indices is higher. Yields of the US 10-year bond backed up 1bp yesterday (4.65%) and are little changed O/N. Treasuries fell as recent government reports show that the economy remains healthy, thus leading traders to reduce bets that the Fed will �cut� interest rates.

JPY continues to stumble against most of its major trading partners. Recent BOJ official�s rhetoric implies that they will not rush to �hike� interest rates (0.05%). Deputy Governor Muto today said the BOJ will keep its benchmark �very low� for some time. (Currently their key rates are the lowest among major economies). Some analysts are predicting that the currency will slump 5% this quarter, making it the worst start to a fiscal new year since 1989 (USD/JPY at 125). Global Investors’ risk appetite has returned as Equity indexes have recouped their losses from the Feb. Traders continue to �pile� into the carry trade applying further pressure on the �yen� (118.90). Expect the Yen to be a topic of concern at the next G7 meeting in Washington.

INR continues to strengthen and currently trades at its strongest level in eight years (USD/INR +0.2%, 42.93 O/N). Domestic Banks continue to sell the �greenback� to avoid borrowing rupees in the O/N market, where interest rates have surged. Banks must set aside as much as 6% of their deposits and this will rise to 6.5% at month end. The value of the INR is been driven by �liquidity� factors and not �genuine� demand. Analysts anticipate that the Central Bank will intervene shortly; its appreciation continues to hurt its exporter�s earnings.

Cable strengthens as gains in global equities has prompted the buying of high yielding currencies (1.9750), and with UK consumer confidence rising to its highest level in four months (an index of UK sentiment rose 3 points to 88), it continues to be in favor for �carry� trading. Most analysts anticipate that the MPC committee will not adjust O/N rates tomorrow (5.25%), but after Jan. surprise decision, traders continue to error on the side of caution as sterling should remain better bid until the announcement.

On Tap:

8:15 am USD ADP Non-farm Employment Change 125k vs. 57k
8:30 am CAD Building Permits m/m -8.5% vs. 11.3%
10:00 am USD ISM Non-Manufacturing Index 54.8 vs. 54.3
10:00 am USD ISM Non-Manufacturing Prices 53.0 vs. 53.8
10:00 am USD Factory Orders m/m 1.9% vs. -5.6%
10:30 am USD Crude Oil Inventories -0.9m

Jim

8

The US $ is lower in the O/N trading session. Currently it is weaker against 9 of the 16 most actively traded currencies, in a �subdued� trading range. Yesterday, the ADP employment report showed an increase in private payrolls of + 106k for Mar. (market expectations of +135k) from an upward revision of +65k in Feb. Initial expectation for Friday�s NFP number is +135k. A handful of analysts believe that weather related factors might lead to extreme volatility for last months data. The US Non-Man. ISM index fell to 52.4 in Mar. vs. 54.3 for Feb. The breakdown of the report shows a modest decline in the new orders component (down to 53.8 vs. 54.8). The employment component also declined in Mar., as the sub-index eased to 50.8 from 52.2 in Feb. Maybe be an indicator for a surprise NFP number. The prices paid component rose to 63.3 vs. 53.8, probably justifying the recent Fed rhetoric. Traders are turning their focus to Fridays NFP data.

The US $ currently is trading lower against EUR +0.03%, CHF -0.02% and unchanged against GBP 0.00% and JPY 0.00%. The commodity currencies are stronger and the overall sentiment remains positive, AUD +0.03% and CAD -0.03%. Yesterday, the sharp contraction in the Canadian building permits data has not done the �loonie� any short term favors (-22.4% vs. -8.4%). Traders wait for this mornings employment reports for further guidance. The short term fundamentals support the currency and investors continue to look for better levels to purchase the CAD$. The AUD$ rose to the strongest in more than a decade against the �greenback� and the �yen� as the price of metals continue to surge. Strong fundamentals supports a further rate hike (6.25%) and traders see a lot more room to the upside as the �interest differential debate continues�.

Crude is little changed ($64.59 up +21c) O/N. Oil continues to remain range bound after Iranian President Ahmadinejad said that the British naval personnel seized 13 days ago in the waters separating Iran and Iraq were pardoned as a �gift� to the British. EIA reported yesterday that crude supplies surged 4.31m barrels to 332.7m last week (+500k was expected). Gas stockpiles fell 5.03m barrels to 205.2m (a drop of -150k was expected). Year to date supplies have slipped 9.7%, and refineries are operating at 87% of capacity. Gold ($678) rises O/N. Gold rose as traders speculate that a decline in the US$ will increase the appeal of �yellow� metal as an alternative to the currency. Trader�s �short� positions have technically been squeezed out in the past 24h adding a further bid tone to the commodity.

The Nikkei closed at 17,491 down -52. The DAX index in Europe was up +2 points at 7,076; the FTSE (UK) currently is 6,364, -1 point. The early call for the open of key US indices is lower. Yields of the US 10-year bond fell 2bp yesterday (4.63%) and are little changed O/N. Treasuries rose after industry reports on employment growth and service industries were weaker than forecasted yesterday. Traders seem to be setting up for a downside surprise in payrolls.

This morning UK factory production unexpectedly fell the most in more than a year for Feb. (-0.6% vs. -0.3%), led by a decline in transport equipment (a sign that manufacturing will most likely struggle affecting this years growth prospects). The BOE had seen the report before today�s rate announcement. This data is a good reason to take a pause on interest rates (5.25%). Traders have pared back their CBL positions (1.9737), and futures trading suggest there will one more rate �hike� this quarter. The implied yield for June futures is currently 5.77%.

The Carry Trade is firmly back in play after the recent global equity meltdown. Investors risk appetite has returned. Higher yielding currencies are benefiting while the historical funding ones continue to under-perform (JPY, CHF). South Africa’s rand continues to gain as rising global stock markets prompt investors to switch to higher yielding assets. The currency is the best performer versus the US$, the rand has gained as much as 0.4% percent to 7.149, its strongest since late Feb.

The �greenback� continues to under-perform vs. EUR and JPY as signs of a US economic slowdown increase the likelihood that the Fed will �cut� borrowing costs in the 3rd Q. recent fundamentals point to a slowdown in the economy, and traders are playing futures anticipating an �ease�. Analysts believed that any positive resolution to the recent Iran situation would be more positive for the US$, currently this has failed to materialize or the markets are more focused on tomorrows job data. People don’t want to put big positions on before the payroll as it�s a holiday shortened day globally. It seems that the FI market is setting up for a downward surprise to the data.

On Tap:

7:00 am CAD Employment Change 12.0k vs. 14.2k
7:00 am CAD Unemployment Rate 6.1% vs. 6.1%
7:00 am GBP Interest Rate Statement 5.25% vs. 5.25%
8:30 am USD Unemployment Claims 314k vs. 308k
10:00 am CAD Ivey PMI 61.0 vs. 60.5
7:01 pm GBP NIESR GDP Estimate 0.5%