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The euro gained ground vis-? -vis the U.S. dollar today as the single currency tested offers around the US$ 1.2830 level and was supported around the $1.2775 level. Technically, today??™s intraday high was just above the 61.8% retracement of the move from $1.2940 to $1.2630. The common currency was up significantly yesterday on growing concerns the U.S. economy is staggering. The Philadelphia Fed business activity survey released yesterday evidenced its first negative reading in more than three years, slumping to -0.4 in September from 18.5 in August. There is sometimes a strong correlation between this survey and the national ISM surveys of manufacturing activity and economists are concerned the U.S. economy may be cooling too much. Similarly, the Chicago Fed national activity index reached its lowest level in eleven months last month, down to -0.18 from -0.07 in July. In eurozone news, EMU-12 July industrial orders were up 1.8% m/m and 9.7% y/y. Also, French household consumption of manufactured goods was up 3.3% m/m in August. Traders are talking about the wage settlement involving Germany??™s IG Metall union in which the steel industry agreed to a 3.8% price hike. This reflects rising inflationary pressures in the eurozone and will be noted by the European Central Bank. Euro bids are cited around the US$ 1.2745 level.

??/ CNY

The yen was little-changed vis-? -vis the U.S. dollar today as the greenback tested bids around the ??116.05 level and was capped around the ??116.60 level. Technically, today??™s intraday high was right around the 38.2% retracement of the move from ??113.95 to ??118.30. Data released in Japan today saw the business sentiment diffusion index improve for the first time in three quarters, rising to 10.5 from 1.8. Also, capital flows data confirmed that foreign investors were net buyers of Japanese equities for the third consecutive week. Additionally, a joint quarterly survey released by the Cabinet Office and Ministry of Finance today predicted corporate capital spending and private consumption will keep expanding. The Nikkei 225 stock index shed 1.26% to close at ??15,634.67. Dollar bids are cited around the ??115.60 level. The euro gained ground vis-? -vis the yen as the single currency tested offers around the ??149.30 level and was supported around the ??148.60 level. The British pound and Swiss franc moved higher vis-? -vis the yen as the crosses tested offers around the ??221.90 and ??94.30 levels, respectively. The Chinese yuan extended recent gains to all-time post-revaluation highs and appreciated vis-? -vis the U.S. dollar as the greenback closed at CNY 7.9195 in the over-the-counter market, down from CNY 7.9233, and at CNY 7.9160 in the exchange-traded market. Data released in China today saw January ??“ August industrial firms??™ profits climb 29.1%. U.S. Treasury Secretary Paulson reported his meetings with Chinese leaders this week have been ???substantive and unscripted.???

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The British pound came off marginally vis-? -vis the U.S. dollar today as cable tested bids around the US$ 1.9005 level and was capped around the $1.9060 level. The pair reached levels today not seen since 5 September and chartists are eyeing the $1.9090 level as the pair??™s next upside target. Notably, sterling is now at a two-year high on Bank of England??™s trade-weighted index. Many traders still believe BoE??™s Monetary Policy Committee will tighten monetary policy in November. Cable bids are cited around the US$ 1.8960 level. The euro moved higher vis-? -vis the British pound as the single currency tested offers around the ?‚¤0.6735 level and was supported around the ?‚¤0.6715 level.

CHF

The Swiss franc made strong advances vis-? -vis the U.S. dollar today as the greenback tested bids around the CHF 1.2320 level and was capped around the CHF 1.2430 level. Stops were reached below the CHF 1.2355 level today, representing the 38.2% retracement of the move from CHF 1.1920 to CHF 1.2620. The franc is rallying on account of some emerging market volatility. First, the Thai military coup remains bloodless but there are indications the military is cracking down on democracy. Second, Poland??™s coalition government collapsed and Bank of Poland??™s independence is under fire. Third, anti-government protests continue in Hungary. Fourth, there are mounting fears that Ecuador could default on debt. Fifth, Brazil is enveloped by a pre-election scandal. U.S. dollar offers are cited around the CHF 1.2455 level. The euro and British pound came off vis-? -vis the Swiss franc as the crosses tested bids around the CHF 1.5795 and CHF 2.3455 levels, respectively.

AUD

The Australian dollar depreciated vis-? -vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7495 level and was capped around the US$ 0.7575 level. Technically, today??™s intraday low was right around the 38.2% retracement of the move from $0.7015 to $0.7790. Many traders were caught off-guard by the pair??™s stiff depreciation today. Australian dollar bids are cited around the US$0.7465 level.


CAD

The Canadian dollar appreciated marginally vis-? -vis the U.S. dollar today as the greenback tested bids around the C$ 1.1110 level and was capped around the C$ 1.1205 level. U.S. dollar offers are cited around the C$ 1.1245 level.

NZD

The New Zealand dollar depreciated vis-? -vis the U.S. dollar today as the kiwi tested bids around the US$ 0.6565 level and was capped around the $ 0.6635 level. Data released in New Zealand yesterday saw its trade deficit reach 9.7% of GDP and these data had a negative impact on Antipodean currencies. New Zealand dollar offers are cited around the US$ 0.6685 level.


Gold/ Silver

Gold gained ground vis-? -vis the U.S. dollar today as the yellow metal tested offers around the US$ 592.60 level and was supported around the $ 584.40 level. Oil??™s modest resurgence higher helped the pair gain ground, as did the dollar??™s steep declines yesterday. Silver came off marginally vis-? -vis the U.S. dollar as the pair tested bids around the $11.08 level and was capped around the $11.38 level.

Crude Oil

Crude oil moved lower vis-? -vis the U.S. dollar today as light, sweet NYMEX crude oil futures for November delivery tested bids around the $60.54 level and was capped around the $62.23 level. The pair had gained ground yesterday after Venezuelan President Chavez continued his angry remarks against President Bush. Counter to that, Iran indicated it is willing to negotiate the suspension of its nuclear development activities if it receives firm guarantees from the West.