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The euro gained marginal ground vis-? -vis the U.S. dollar today as the single currency tested offers around the US$ 1.2800 figure and was supported around the $1.2750 level. Technically, today??™s intraday low was right around the 38.2% retracement of the move from $1.2460 to $1.2940. Data released in the U.S. today saw the September trade deficit narrow 6.8% to US$ 64.3 billion, the largest percentage decline since December 2004 and the largest dollar decline since February 2001. On a year-to-date basis, the deficit is now around US$ 781.7 billion. Other U.S. data released today saw weekly initial jobless claims recede 20,000 to 308,000 while continuing jobless claims rose to 2.45 million. Additionally, October import prices came off 2.0% and are now off 0.1% over the last twelve months, the first year-on-year decline since September 2002. Moreover, prices of imported capital goods receded 0.1%, the first decline since April. These import prices data will likely be a comfort to Federal Reserve policymakers who expect a pullback in overall inflation pressures. In eurozone news, the European Central Bank??™s monthly bulletin was released and the central bank defended its habit of not adjusting interest rates as regularly as other monetary authorities. The ECB reiterated its need for ???strong vigilance??? against inflation and most traders believe policymakers will lift the main refinancing rate next month by +25bps. The big question on traders??™ minds relates to 2007 and how proactive the ECB will be in countering price risks. The ECB??™s Survey of Professional Forecasters was released today and it sees 2006 GDP growth of 2.6%, up from 2.2%, while 2007??™s growth rate is expected to be around the 2.0% level with inflation around 2.1%. Euro bids are cited around the US$ 1.2720 level.

??/ CNY

The yen depreciated vis-? -vis the U.S. dollar today as the greenback tested offers around the ??118.40 level and was supported around the ??117.70 level. Technically, today??™s intraday high was above the 76.4% retracement of the move from ??121.40 to ??109.00. Data released in Japan today saw October bank lending rise 1.1% y/y while the October money supply was up +0.7% y/y. Capital flows data saw foreign investors as net sellers of Japanese equities in the week to 4 November. Traders await the release of September machinery orders data tonight followed by July ??“ September quarterly GDP data next week. The Nikkei 225 stock index shed 0.11% to close at ??16,198.57. Dollar bids are cited around the ??117.85 level. The euro moved higher vis-? -vis the yen as the single currency tested offers around the ??151.35 level and was supported around the ??150.30 level. The British pound and Swiss franc rallied vis-? -vis the yen as the crosses tested offers around the ??225.25 and ??94.80 levels, respectively. The Chinese yuan weakened marginally vis-? -vis the U.S. dollar today as the greenback closed at CNY 7.8665 in the over-the-counter market, up from CNY 7.8861, and at CNY 7.8865 in the exchange-traded market. A media report today suggests Tianjin??™s Binhai New Area will implement trials designed to make the yuan fully convertible on China??™s capital account, a significant step towards full liberalization of China??™s currency regime.

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The British pound came off vis-? -vis the U.S. dollar today as cable tested bids around the US$ 1.8975 level and was capped around the $1.9075 level. Stops were hit below the $1.8990 level, representing the 23.6% retracement of the move from $1.8515 to $1.9135. As expected, Bank of England??™s Monetary Policy Committee lifted its repo rate to a five-year high of 5.00% with the central bank reporting ???It is likely that inflation will rise further above the target in the near-term, but then fall back as energy and import price inflation abate.??? Minutes from today??™s MPC meeting will be released on 22 November and the quarterly inflation report will be released on 15 November. Data released in the U.K. today saw the September global trade in goods deficit print at -?‚¤6.6 billion, down from -?‚¤6.9 billion in August. Also, Halifax October house prices were up 1.7% m/m and 8.6% y/y. Cable bids are cited around the US$ 1.8895 level. The euro moved higher vis-? -vis the British pound as the single currency tested offers around the ?‚¤0.6730 level and was supported around the ?‚¤0.6695 level.

CHF

The Swiss franc appreciated marginally vis-? -vis the U.S. dollar today as the greenback tested bids around the CHF 1.2470 level and was capped around the CHF 1.2520 level. Technically, today??™s intraday high was right around the 38.2% retracement of the move from CHF 1.1285 to CHF 1.3285. Data released in Switzerland today saw October consumer sentiment improve to +13 from July??™s tally of +12. Dollar offers are cited around the CHF 1.2580 level. The euro moved higher vis-? -vis the Swiss franc as the single currency tested offers around the CHF 1.5970 level while the British pound moved lower vis-? -vis the Swiss franc and tested bids around the CHF 2.3720 level.

AUD

The Australian dollar weakened sharply vis-? -vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7645 level and was capped around the $0.7705 level. The October unemployment rate fell to 4.6% from 4.8% in September. Australian dollar bids are cited around the US$ 0.7610 level.

CAD

The Canadian dollar came off vis-? -vis the U.S. dollar today as the greenback tested offers around the C$ 1.1330 level and was supported around the C$ 1.1285 level. Data released in Canada today saw the September trades surplus recede 5.3% to C$ 3.97 billion. U.S. dollar offers are cited around the C$ 1.1355 level.

NZD

The New Zealand dollar depreciated vis-? -vis the U.S. dollar today as the kiwi tested bids around the US$ 0.6625 level and was capped around the $0.6670 level. New Zealand dollar offers are cited around the $0.6685/ 0.6870 levels.

Gold/ Silver

Gold moved higher vis-? -vis the U.S. dollar today as the yellow metal tested offers around the US$ 626.85 level and was supported around the $ 615.13 level. Silver rallied vis-? -vis the U.S. dollar as the pair tested offers around the $12.81 level and was supported around the $12.45 level.

Crude Oil

Crude oil gained ground vis-? -vis the U.S. dollar today as light, sweet NYMEX crude oil futures for December delivery tested offers around the US$ 60.88 level and was supported around the $59.83 level. Traders believe OPEC is trying to defend the psychologically-important US$ 60.00 figure with its supply reduction and another such pullback in output may be announced next month. Weekly U.S. inventories data confirmed that U.S. distillate stocks fell by 2.7 million barrels, more-than-expected, and this also is adding some premium into the price. Additionally, the Democratic victory in the U.S. House of Representatives and Senate could see energy prices move higher as they roll back tax and business incentives to energy companies.