NEWS / Foreign Exchange

U.S. Forex Market Commentary

EURO

The euro moved higher vis-? -vis the U.S. dollar today as the single currency tested offers around the US$ 1.4525 level and was supported around the $1.4415 level.  The common currency established a new lifetime high before coming off in the North American session.  U.S.October non-farm payrolls growth was stronger-than-expected at 166,000,above the 85,000 estimated by economists, and the unemployment rateheld steady at 4.7%.  There was a cumulative downward revision to August??™s and September??™s non-farm payroll tallies of 10,000.  Also,average hourly earnings came in lower-than-expected at 0.2% m/m and3.8% y/y while September??™s average hourly earnings printed wasdownwardly revised to 0.3%.  The Fed will bepleased with the pullback in wage inflation and traders continue toscale back their expectations for another rate cut by the FOMC inDecember.  The fed funds futures market is now discounting only a 60% chance the FOMC will take the rate lower 25bps by the end of January.  Ineurozone news, German manufacturing PMI fell to its weakest level intwo years at 51.7 while EMU-13 October manufacturing PMI came in at51.5.  Euro bids are cited around the US$ 1.4385 level.

JPN/CNY

The yen depreciated vis-? -vis the U.S. dollar today as the greenback tested offers around the ??115.40 level and was supported around the ??114.35 level.  BoJGovernor Fukui reported he is ???painfully aware of the difficulty ofchoosing the right time" for raising interest rates, adding ???But if wewaver too much it could cloud our policy judgment, and we cannot letthat happen.??? Fukui added a raise in rates will be important to help prevent an excessive accumulation of short-yen carry trades.  Theswap futures market is now discounting about a 50% chance the BoJ willlift the overnight call rate by 25bps to 0.75% by the end of thecurrent fiscal year in March 2008.  The Nikkei 225 stock index lost 2.09% to close at ??16,517.48.  Dollar bids are cited around the ??113.85/ ??112.55 levels.  The euro moved higher vis-? -vis the yen as the single currency tested offers around the ??166.85 level and was supported around the ??165.00 figure.  The British pound and Swiss franc moved higher vis-? -vis the yen as the crosses tested offers around the ??240.05 and ??99.85 levels, respectively.  The Chinese yuan depreciated vis-? -vis the U.S. dollar as the greenback closed at CNY 7.4558 in the over-the-counter market, up from CNY 7.4543.

STERLING

The British pound lost appreciated vis-? -vis the U.S. dollar today as cable tested offers around the US$ 2.0865 level and was supported around the $2.0765 level.  The pair came within a few pips of establishing a new multi-decade high that was reached yesterday.  IDS reported that U.K. wage gains fell to 3.2% in the three months through October, down from 3.4% - the smallest gain in more than one year.  Cable bids are cited around the US$ 2.0600 figure.  The euro moved highervis-? -vis the British pound as the single currency tested offers aroundthe ?‚¤0.6965 level and was supported around the ?‚¤0.6930 level.

SWISS