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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

In this issue: Thoughts on the Continuing Crisis Fool Me Once, Shame on You Delinquencies and Foreclosures Spike UP Unemployment Rises to 6.1% Action Is Needed Now Annapolis, La Jolla and Wedding Videos We are entering the next stage of the credit crisis, and one which is potentially more troubling than what we have seen over the past year, absent some policy reactions by the central banks and governments world wide. The crisis was started by an intense run-up in leverage by financial

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The German trade balance and current account are likely to have deteriorated, as is usually the case in July . French and Italian industrial production are expected to have decreased in July , because the correlated climate indicators continued deteriorating. EMU industrial production is also likely to have declined in July , just as most of the corresponding national figures will probably have done. Q2 Italian GDP is not expected to be revised significantly.

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Highlights Disappointing European economic indicators ECB lowers growth forecast, warns of second-round effects EUR-USD hits lowest level this year This week the euro dropped to 1.42 against the dollar, the lowest it has been this year. The pound Sterling also remained under pressure: cable slipped to 1.755 for a time – its lowest level since April 2006. The gloomy economic outlook is dragging the UK currency down. The OECD, for instance, sees Britain as the only G7 country which will slide

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

U.S. Review Even Weaker Than The Headlines The stronger-than-expected upward revision to second quarter real GDP and better than expected news on factory orders had briefly bolstered optimism about near-term economic prospects. That optimism was dashed this week, however, as jobless claims and the unemployment rate both came in much worse than expected. Monthly chain store and motor vehicle sales also remain exceptionally weak. Conditions feel very recession-like, even though year-to-year real

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

London, 08 September 2008 - While gold was able to close last week above $800/oz the precious complex again showed its vulnerability to improving dollar sentiment as silver dipped to fresh lows for the year while palladium headed back towards the lows of last month. EUR/USD closed off it low of 1.4197 at 1.4267 however speculation of economic contraction in the Eurozone could see the Euro lose further ground in the week ahead and would have a negative effect on commodities. NYMEX crude oil

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Past Week's Data and Events The dollar rallied big across the board and the surge started in a sneaky way during the Labor Day holiday. This upmove reflects mainly liquidation of long-term short dollar positions. The burst of the commodity bubble helped, but let’s not get carried away while a barrel of oil still costs more than $100. Only dollar/yen collapsed because of ongoing long liquidation of yen crosses, including carry trades. But mind you, only the dollar and the yen can rally while

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Monday, September 08, 2008 Economic 11:00am Treasury's 10-year note announcement 3:00pm July Consumer Credit (last $14.3B) Events 1:00pm Fed's Fisher speaks in Austin. 8:00am FDA Reproductive Health Drugs Advisory Committee. 8:30am FDANanotechnology public meeting. FDA/PDA Joint Regulatory Conference.Credit Suisse Services & Processors Conference. Deutsche BankSecurities Technology Conference. Wachovia Transportation &Packaging Conference. Garner CRM Summit. Marcus Evans Treasury and

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The US dollar ended the day little changed from Thursday’s close despite a choppy morning of trading, though the currency does still remain relatively strong across the majors. The big news of the day was US non-farm payrolls (NFPs), which fell more than expected in August by 84,000, marking the eighth consecutive month of contraction in US job growth. US Dollar Holds Strong Despite Jump in Unemployment Rate to 5-Year High of 6.1% Japanese Yen Japanese Yen the Only Currency Stronger Than the

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

U.S. seizes Fannie & Freddie The dollar weaker versus euro and up versus yen Asian stocks soar on Fannie, Freddie bailout Today’s main events: GBP Producer Price Index EUR ECB’s Stark speaks USD FED’s Fisher speaks American Time Zone: U.S. stocks advanced U.S. stocks rose as speculation Lehman Brothers Holdings Inc. will raise money through asset sales helped pare losses in the worst week for global equities in six years. Lehman rallied 7.2 % on a Reuters report the securities firm may

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The US dollar was mixed against a basket of currencies in choppy trading. The US unemployment data showed 84,000 jobs were lost in August which was unexpectedly higher than the forecasted 75,000, and revisions added another 58,000 to job losses for the prior two months. This 6.1 % increase in unemployment rate was the highest in nearly 4 ½ years. Employment is one of the many indicators utilized by the National Bureau of Economic Research to gauge recession. With bleak hiring data, analysts

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

- A summary of the FRE/FNM bailout plan: The companies will open Monday morning, only with stronger backing for the holders of MBS, senior debt and subordinated debt. The U.S. is now buying MBS securities direct from GSEs in the open market, and there is no explicit limit specified. Herb Allison, Vice Chairman of Merrill Lynch, is to be the new CEO of Fannie Mae and David Moffett, Vice Chairman and CFO of US Bancorp, the CEO of Freddie Mac. In order to conserve capital, the common stock and

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Overview Friday seems soooo far away now. The overnight news that the US government will be bailing out Freddie and Fannie has all but eroded any impact that Friday's payrolls data may have had today. The immediate reaction from the market was to sell the USD, and buy US stocks. As a result, we've seen a wide ranging rally in most currencies against the greenback, along with a good move up in the precious metals and crude oil. The question now is - how long will this last? I think this change

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

August Employment Situation: Pronounced Weakness Confirms Recession Is Underway Civilian Unemployment Rate: 6.1% in August vs. 5.7% in July; cycle low is 4.4% in March 2007 Payroll Employment: -84,000 in July vs. -60,000 in July, net loss of 58,000 jobs after revisions of payroll estimates for June and July. Hourly earnings: +7 cents to $18.14, 3.6% yoy change vs. 3.4% yoy change in July; cycle high is 4.28% yoy change in Dec. 2006. Household Survey – The civilian unemployment rate rose to

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

EURO The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4195 level and was capped around the $1.4345 level.  The common currency reached its lowest level since October 2007 as traders continued to speculate the European Central Bank’s next rate move will be lower despite nagging inflation pressures in the eurozone.  The common currency got a bump higher to intraday highs after the release of weak U.S. August non-farm payrolls data

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

9/4/2008 10:58 PM: EUR/$..1.4273 $/JPY..106.95 GBP/$..1.7562 $/CHF..1.1117 AUD/$..0.8182 $/CAD..1.0676 Yen Rallies, Traders Await Jobs The yen rallied sharply across the board, advancing to 186.20 against the sterling, 150.59 versus the euro and 105.71 to the dollar. With global equity bourses posting sharp losses, traders scaled back carry trades as a result of the heightened risk aversion. Meanwhile, the greenback jumped to its highest level since October 2007 against the euro at 1.4213 and

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Overview : The US unemployment rate jumped to a five-year high of 6.1% in August from 5.7% in July. Labour market dynamics are now sending mixed signals, as the move in the unemployment rate is consistent with a recessionary US economy, while the trends in job losses continue to look more moderate. The economy shed 84K jobs in August (DB -90K, Consensus -75K) and the net revision to employment figures for the previous months amounted to -58K. Thus, overall job losses amounted to 142K persons.

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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

- The soft economic data is dragging down markets this morning. The Labor Department reported that the August unemployment rate rose to 6.1%, its highest level in nearly five years, well above the expected 5.7% reading. August non-farm payrolls decreased by 84,000, slightly more than expected, while the prior month's number was revised upward (from -51K to -100K) for the seventh month in a row. In addition, the Q2 mortgage delinquencies reading rose to 6.41%, the highest level since records

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Gold Gold rose sharply soon after the poor unemployment report as the dollar fell and equities have again come under pressure with sharp falls in international markets. The US economy appears to be slowing quite sharply as seen in the unemployment rate unexpectedly rising to 6.1 percent in August, its highest in more than 4 1/2 years. Employers cut payrolls for an eighth straight month and labor markets showed signs of accelerating decline. A slowing US economy will likely lead to a lower

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Weak economies can bring down presidents, and can certainly bring down commodity prices. The commodity market has, broadly speaking, experienced a six-year-long boom driven by supply disruptions and galloping demand. Hence, the past couple of months have been a rude awakening for the market. Oil prices have collapsed by close to USD 40 from the peak and major base metals like copper and aluminium have seen their 2008 gains more or less erased in two months. Many commentators have pointed to

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

· The Rupee pared its initial gains, to touch its lowest level since December 2006, as equity markets remained in the red. However, further depreciation was restricted due to Central Bank intervention. The USD/INR pair ended at 44.66 from 44.38 yesterday. · The 6- month and 1-year forward premium was at 2.83% and 2.56% as compared at 2.63% and 2.46% yesterday. · The Dollar trimmed some of its gains against most majors after non-farm payrolls for the month of August turned out to be worse than

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

This past week volatility increased on currency markets. Investors were anxiously waiting for the European Central Bank’s (ECB) and Bank of England’s (BoE) decision regarding interest rates. To no surprise, both central bank’s kept interest rates unchanged at their current levels of 4.00% and 5.00% respectively. Markets did not react very strong since everybody was waiting for Friday’s U.S labor market report. Unemployment rate in the United States increased to 6.1% while nonfarm payrolls

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Financial turmoil rocked the markets once again this week as a very negative cocktail of bad financial news and weak economic data put pressure on risky assets. On the financial front several stories are weighing on sentiment. First, there is a lot of uncertainty over a large amount of funding that banks need to roll soon. Floating rate notes that were issued by banks in 2006 to borrow money will come due over the next year and a large chunk of that will expire over the next month when USD

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

We expect a cocktail of lower oil prices, slowing growth and base effect to drag down inflation in the EMEA area in the coming quarters. In some countries inflation has already peaked - for example, in Bulgaria where inflation dropped for the first time this year in July. Other countries could follow this downward trend when numbers on August inflation are released - for example, the Czech Republic, Poland and Hungary. There are relatively large differences between the outlooks for inflation

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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Overview Tremendous moves in the Foreign Exchange market, buffeted from all sides, so no wonder implied volatility is on its way up. The Yen has gained against all currencies bar none, and Yen crosses slumped towards their lowest prices of the last year or two (the collapse only just dawning on many). The US dollar has gained against all other currencies, notably Cable where daily two cent declines are almost the norm (low $1.7537), also setting a record low against the Euro at £0.8187. The

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Statistics Estonia released its consumer price inflation (CPI) figures for August. Inflation remains stable as CPI decelerated to only 11.0% y/y (0.1 % m/m) in August from 11.1% y/y in July. The outcome was above our forecast of 10.8% y/y mainly due to our underestimating the impact of the previous hike in excise duties for tobacco products.

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The jump in the August unemployment rate to a new 5-year high of 6.1% from 5.7% leaves little doubt to currency traders that the USD rally remains largely a manifestation of broadening economic weakness outside of the US, rather than any signs of strength at home. August nonfarm payrolls fell by 84K vs expectations of -75K, in track to match the length of consecutive monthly job losses in the recessions of 1990-91 (11 months) and 2001-2 (15 months). We reiterate that we do not expect prolonged

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Despite an almost 3% drop in the DJIA, the U.S. dollar continued its strengthening trend yesterday. Oil dropped marginally yesterday and is down again today. The Japanese yen continued to appreciate versus the dollar as investors unwound the carry trade. The yen hit its highest level against the euro in over a year. The dollar is currently up over 3% versus the yen year to date. The euro fell further against the dollar and is now down over 10% from its July high. Yesterday, the euro dropped

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Gold Heads for 5% Weekly Loss as "Super Dollar" Whacks Stocks & Commodities; Gold Mining Output Fails to Revive on Record Indian Demand SPOT GOLD PRICES struggled below $800 per ounce in Asia and London on Friday, heading towards a 5% loss for the week as the US Dollar rose yet again versus everything else except Treasury bonds. Crude oil dipped towards $106 per barrel, while the Australian Dollar – a key "commodity currency" – hit new 12-month lows. The German stock market fell nearly 6%

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Unstable global economic environment has brought “unwinding carry trades. We have seen the free fall JPY crosses, especially the GBP/JPY that hit a remarkable low at 186.07. looking back the week on September 8th, both the Bank of England and the European Central Bank decided to hold the rates unchanged at 5.00% and 4.25% respectively. The ECB president Trichect's comments seemed as dovish side that has pushed the EUR/USD down further. On the other hand, as the BoE decided to hold the ongoing

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Data - (FR) July Central Govt. Balance: -51.4B v -€33. - (SP) July Industrial Output WDA Y/Y: -4.4% v -6.5%e; NSA Y/Y: - 3.0% v -9.7% prior - (SW) August Budget Balance: SEK0.0B (Flat) v SEK51.5B prior - (IT) June Trade Balance (Total): -1.0B -€1.0Be, Trade balance EU: 1.3B v 1.69B prior - (NO) July Industrial Production: M/M 1.2% v -0.7% prior; Y/Y 1.9% v 5.9% prior - (NO) July Industrial Prod Manufacturing: M/M 0.1% v -0.2%e 3.7% v 4.0%e - (GE) Jul Industrial Production M/M -1.8% v 0.8%e;

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

CDS spreads widened late this week upon ECB’s decision to increase the haircuts on the collateral it accepts. Across asset classes, haircuts were increased for senior bank bonds and ABS, whereas covered bonds remained untouched. In the primary market we saw some corporate issuers coming to the market with a significant premium to the CDS. The ECB action and new issue premiums overshadowed positive influences from further declines in the oil price.

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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Carry unwind savages Euro As expected, the ECB left interest rates at 4.25% at the latest council meeting. In the press conference following the decision, Chairman Trichet repeated that the growth risks were skewed to the downside with current conditions weak. The central bank head also warned over inflation, stating that it would stay above target for a prolonged period. There was a particular focus on wage pressures and the need to avoid secondary inflationary effects. The relatively tough

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

On Friday, we are expecting the number one most market moving release for the US dollar - August Non-farm payrolls. Based upon the leading indicators for NFP, there is a decent chance that job losses could have topped 100k last month. The US dollar hit a 7 month high against the Euro following the hotter than expected service sector ISM number, but rather than buying into the dollar rally, we are more worried about the sharp drop in the employment component of service sector ISM, which has a

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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The European Central Bank (ECB) has left its interest rate on hold at 4.25% as markets originally expected. Consumer prices will, according to Trichet, remain above the margins of price stability for a protracted period, and the GDP growth for 2008 has been revised down, but the ECB’s president believes that lower oil prices will come to strengthen spending power. In his first conference after having announced the decision of keeping interest rates unchanged at 4.25%, Trichet has affirmed that

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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Market Brief The EURUSD dropped away yesterday in end of day trading as U.S Stocks ended their trading day 3% lower. The Euro Dollar pair subsequently traded range bound from 1.4297 to 1.4253 after initially dropping to 1.4214 on first move - a 1 year low. ECB's downgrading of the Euro zone’s growth prospects increased downside risks and sentiment weakening the currency further. This offset the weak US jobless claims and sluggish same-store retail sales. Oil continues to be weaker despite EIA

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The ECB is digging the trenches and bolstering its defenses in preparation for a long siege by a growing number of consumers, producers and market participants clamoring for lower rates. With the Eurozone flirting with technical recession and headline inflation already edging down thanks the oil price correction, the ECB today focused its efforts on taking the wind out of the sails of those asking for monetary easing. Trichet prepared the ground for arguing that a sustained reduction in oil

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

London, 05 September 2008 - Despite a strong start for the complex the precious metals finished Thursday in negative territory as the dollar continued gaining ground, eventually reaching a six-month high against the Euro in late trade. EUR/USD posted a high of 1.4544 in Europe before slumping to a low of 1.4214 on the close in reaction to comments from various European Finance ministers calling the Euro "overvalued" and the Eurozone economy "weak". Economic data from the US today will show

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Headlines Currencies: Czech foreign trade boost for the koruna was short lived Fixed Income: Core market gains send Polish and Czech yields lower Currencies The slump in the euro following the ECB press conference rally had a devastating effect on the Polish zloty yesterday afternoon. EUR/PLN edged past the 3.375 resistance level with no difficulty whatsoever as the flight from the region continued only to slide well into the 3.40-3.41 area overnight. Markets remain worried that the ECB might

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

Previous session overview On Thursday, the euro fell to its lowest level of the year against the dollar, and the U.K. pound was also crushed after the European Central Bank downgraded its economic growth forecast for 2009 to as low as 0.6%. In comments after the ECB left its key interest rate steady at 4.25%, bank President Jean-Claude Trichet noted a slowing in corporate and household demand in countries that use the euro, and said the euro zone economy is stuck in a "trough." EURUSD showed

FXstreet.com: Fundamental
FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.

The ADP employment report showed US employment falling by 33 000 in August, which is in line with the expectations. The details showed an improvement in the service providing sector (45 000) and small businesses (20 000), while the goodsproducing (-78 000) and within this sector the manufacturing (-56 000) sector deteriorated. Construction employment showed its twenty-first consecutive monthly decline (-25 000) and employment in financial activities fell 2 000. Assuming that government