After drifting lower from its session high, the stock market has made an upward turn, holding its ground above 1400.
Of the economic sectors sporting gains this session, consumer staples (+0.4%) are showing the most modest advance. Leaders in the sector include Clorox (CLX 57.50, +4.49) and Colgate-Palmolive (CL 72.77, +2.07). Clorox announced this morning earnings of $0.79 per share, which is better than the $0.75 per share that analysts forecast. Colgate announced its first quarter results yesterday; the company earned an adjusted $0.90 per share, topping the consensus earnings per share estimate by one penny.
Treasuries have gone out of favor this session. The benchmark 10-year Treasury Note has fallen six ticks and is currently yielding 3.75%.

RBC economist Rishi Sondhi: ISM "is still consistent with growth in the overall economy. For instance, the index averaged 43.5 and 42.4 in the prior two recessions. The Institute of Supply Management, which compiles this measure, suggests a reading of 41.1 has historically been associated with economic expansion. It's clear the index is being propped up by a solid export sector, which is benefiting from a weak dollar and still-decent global growth."

The major indices are drifting off their best levels, but continue to sport healthy gains. Four of the ten economic sectors are posting a gain in excess of 2%. Consumer discretionary, up 3.1%, is now posting a modest gain of 0.7% year-to-date.
Dollar Index is spiking 1.16%, marking its largest one-day percent gain in more than three years. Yesterday, the Fed cut the fed funds rate by 25 basis points, but indicated its recent rate cutting cycle is over.
The gains in the dollar are fueling selling interest in commodities (-2.8%). Gold finished the day down $13.70 to $851.40 per ounce. Although the precious metal is up 1.5% this year, it has plummeted 18% from its all-time nominal high of $1033.90 per ounce that was reach on March 17.

The dollar rose to the highest level in five weeks against the euro on speculation the Federal Reserve will stop reducing borrowing costs.
The currency increased versus the Norwegian krone, Swiss franc and pound a day after the Fed cut its target interest rate by a quarter-point to 2 percent and said previous decreases were ``substantial.'' The pound appreciated to the highest level in more than a month against the euro as the Bank of England said the worst of the credit crisis in the U.K. may be over.
``The market is saying the economy is bottoming,'' said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon, the world's largest custodial bank, with more than $20 trillion in assets under administration. ``We may possibly see a turn in monetary policy.''
Futures on the Chicago Board of Trade show a 70 percent chance policy makers will keep the fed funds target unchanged when they next meet June 25. The balance of bets is for a cut of a quarter-percentage point. The dollar has increased 3.5 percent against the euro from the all-time low of $1.6019 touched April 22 on speculation the Fed will stop cutting borrowing costs and European economic growth is starting to slow.
``We are seeing selling pressure on the euro across the board,'' said John McCarthy, director of currency trading at ING Financial Markets LLC in New York. ``The focus is shifting to Europe, with the belief that the worst is over here now while Europe is slowing down.''
The dollar extended its gain versus the euro after a report from the Institute for Supply Management showed U.S. manufacturing contracted less than forecast in April. Its index was at 48.6, while the median forecast of 78 economists surveyed by Bloomberg News was for a reading of 48. Fifty is the dividing line between contraction and expansion.

1. Yes.............................21%;
2. Yes vs. Europe; Not vs. Asia... 46%;
3. No .............................33%.

HFE economist Ian Shepherdson: on April ISM, "Based on historic experience the headline index is consistent with real GDP growth of about 1-1/2%, but this will likely prove too optimistic because of the unique, consumer/housing driven nature of this downturn. So far, manufacturing is playing only a bit part. This will likely change as consumption weakens further, so we have not yet seen the floor for ISM in this cycle."

Stocks are continuing their advance and establishing new session highs.
Financials (+3.2%) are leading the market. Particular strength is being found among thrifts and mortgage players (+5.2%) and regional banks (+4.6%). There is glaring weakness in the energy (-4.1%) and materials (-2.5%) sectors, partly attributable to a strengthening dollar. The dollar index is up 1.0% this session to 73.2. The dollar index is now at its highest level in one month.

The Nasdaq surged and the broader market inched higher Thursday morning amid strength in technology, lower oil prices and better-than-expected readings on consumer spending and manufacturing.
Exxon Mobil's earnings miss dragged on other oil services stocks and kept a lid on blue-chip gains.
Personal income rose a less-than-expected 0.3% in March, while personal spending rose a greater-than-forecast 0.4%, the Commerce Department reported. The Core PCE deflator, the report's inflation component, rose a greater-than-expected 0.2%.
Weekly jobless claims rose ahead of Friday's April employment report. The number of Americans filing new claims for unemployment jumped by 35,000 last week, the government said, topping forecasts for a rise of 18,000. (Full story).
Construction spending fell 1.1% in March versus forecasts for a drop of 0.7%. Spending rose 0.4% in the previous month.
The ISM index of manufacturing activity held steady at 48.6 in April, unchanged from March. Economists thought it would fall to 48. Any reading below 50 represents a slowdown in the sector.
Company news: Exxon Mobil (XOM) reported sharply higher quarterly sales and earnings on surging oil prices, but results were shy of forecasts, sending shares more than 4% lower in morning trade.
JDS Uniphase (JDSU) reported fiscal third-quarter revenue that was short of estimates and warned that fourth-quarter profit would miss expectations, sending shares 18% lower in active Nasdaq trading.
But a variety of large technology shares gained, lifting the Nasdaq. Advancers included Intel (INTC), Oracle (ORCL) and Apple (AAPL).
U.S. light crude oil for June delivery fell $2.91 to $110.55 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $13.10 to $852 an ounce.
Treasury prices gained modestly, lowering the yield on the benchmark 10-year note to 3.72% from 3.73% late Wednesday.

"As a result of construction revisions, we see Q1 GDP growth being adjusted up to +0.9% from +0.6%. We look for a sharp reversal of this strange strength in nonres going forward, however, and continue to see Q2 growth tracking at -1.5%."

The pare continues to chop around $1.5450, just off earlier low at $1.5442. Chatter eyeing some bids at $1.5420.

Traders report selling from fund accounts, with move comes amid dollar recovery and recent rise in crude oil supply. WTI Nymex crude oil is at $111.15, down $2.31 on session

After taking a bit of a breather the S&P 500 is now at its best level of the morning. The Nasdaq continues to outperform its counterparts; shares of Apple (AAPL 177.18, +3.23) and Google (GOOG 582.74, +8.45) are helping to lead large-cap tech names higher.
According to a recent article in London Times, Microsoft (MSFT 28.84, +0.32) may be willing to raise its offer to acquire Yahoo! (YHOO 27.79, +0.38) to a price between $32 and $33 per share. Another article in The Wall Street Journal noted that Microsoft's board recently came to an impasse regarding its proposed takeover, though, an increased offer price may be an option. Shares of the two tech firms are also trading higher.

Economist Annalisa Piazza at Newedge says breakdown in ISM "confirms that the US manufacturing sector is sleepwalking through Q2 and no turn-around in the business cycle is expected soon. The production sub-index remained below the 50-neutral level for the second consecutive month... New orders were stable at the very weak 46.5 level."

"Economic activity in the manufacturing sector failed to grow in April... the PMI fell below 50 percent for the third consecutive month. Manufacturers are in a situation where both new orders and production are slowly declining, but prices continue to rise at highly inflationary rates. Bright spots this month are the growth in the Backlog of Orders Index after six consecutive months of decline,
continued strength in new export orders and a reduction in customers' inventories." 7 industries grew. WHAT RESPONDENTS ARE SAYING: "The decline in the value of the dollar is dramatically affecting our material prices because we purchase over half of our material requirements from overseas." (Transportation Equipment) "Higher energy rates, unfavorable exchange rates, high levels of inflation in Asia and a drop in demand are challenging our business and supply chain." (Nonmetallic Mineral Prods)

the next data was issued

08:30UKCIPS manufacturing index (April)51.0 51.3

The dollar rose to the highest level in five weeks versus the euro after the Federal Reserve signaled it may pause cutting interest rates. The U.S. currency climbed after the Fed said yesterday that the seven rate reductions since September were ``substantial.''
The pound rose against the euro after the Bank of England signaled the worst of the credit crisis in the U.K. may be over. ``Risk appetite will return gradually in the coming months,'' it said today in its twice-yearly financial stability report.

EUR/USD: European dealing opened with euro-dollar coming back to test the overnight lows, stops then hit through $1.5600 as thin conditions exacerbated the move, London the only fully staffed centre in Europe. The move was able to gather momentum, rate ultimately taking out Wednesday's $1.5517 low, with euro-dollar making a brief show under $1.5500, triggering a large one-touch option barrier payout. Corporate demand kicked in here, with rate ending the morning back at $1.5520. Bids $1.5495, tech $1.5490, $1.5411, $1.5389, offers $1.5550

GBP/USD: Opened early Europe at $1.9867. Sterling retained a buoyant tone into Europe, with early buys able to take rate to $1.9909. Failure to trigger stops above $1.9910 saw cable sink. Cable rallied back from $1.9842 on release of stronger than expected CIPS data but recovery capped by $1.9890/95. Further euro-dollar losses took cable back to $1.9860. Cable bids $1.9845/35, $1.9805/795. Offers $1.9910, $1.9925, $1.9950.

USD/JPY: European dealing saw fresh lows for the day at Y103.55, though time spent around the base was brief, with rate able to push back above offers at Y104.00 as the greenback found demand across the board. Stops above Y104.20 managed to hold in as the pair topped out here, ending a quiet session at Y104.00. Dlr-yen stops Y104.20, offers Y104.40/50, stronger Y104.80/00

Trading volumes may be less than normal today due to public holidays in Singapore, Hong Kong, Switzerland, and most European countries. U.S. payrolls fell by 75,000 in April, the fourth-straight monthly decline, based on the median forecast. The Institute for Supply Management's factory index, due today, fell to 48 last month from 48.6 in March, a separate survey showed.

``The Fed's statement erred on the hawkish side and showed an inclination to pause in cutting rates,'' said Kamal Sharma, a currency strategist in London at JPMorgan Chase & Co. ``Having said that, the Fed didn't actually close the door on further rate cuts. The moves in the market today are also influenced by thin liquidity during a holiday.''

Extends recovery, breaks above reported resistance at $1.5530/35 to $1.5540, as rate edges away from earlier lows of $1.5497. Reported option barrier interest(including a one touch structure with a payout of E20mln) at $1.5500 was the main downside target during the European morning session (though the UK the only major centre working). Next offers seen placed between $1.5545/55, more toward $1.5570.

The dollar rose to the highest level in five weeks versus the euro after the Federal Reserve signaled it may pause cutting interest rates. The U.S. currency climbed after the Fed said yesterday that the seven rate reductions since September were ``substantial.'' The dollar posted the first monthly advance against the euro this year in April as the European currency's yield advantage over the greenback has eroded. The spread between two-year German notes and equivalent U.S. Treasuries has narrowed to 1.47 percentage points from a record high of 1.85 points at the end of March.
Trading volumes may be less than normal today due to public holidays in Singapore, Hong Kong, Switzerland, and most European countries, said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp., Australia's fourth-largest bank. ``I expect very thin trading today,'' he said.
Futures on the Chicago Board of Trade showed a 98 percent chance policy makers will keep the fed funds target on hold at 2 percent on June 25. The ECB has kept its benchmark rate at a six- year high of 4 percent since June to curb inflation.
The ECB will cut its main refinancing rate to 3.75 percent by September and to 3.50 percent by the end of the year, according to economists surveyed by Bloomberg.
The pound rose against the euro after the Bank of England signaled the worst of the credit crisis in the U.K. may be over. ``Risk appetite will return gradually in the coming months,'' it said today in its twice-yearly financial stability report.

Resistance 3: Y106.00
Resistance 2: Y105.30
Resistance 1: Y104.80
Current price: Y104.02
Support 1: Y103.50

Support 2: Y103.30

Support 3: Y102.60

Comments: Dollar rebounded. The nearest resistance is around recent highs on Y104.80 while further comes at Y105.30 and then – on Y106.00. Support is around Y103.50, further – on Thursday’s low on Y103.30 with a break under will open the way to Apr 22-23 lows on Y102.60/70.

Resistance 3: Chf1.0540
Resistance 2: Chf1.0480
Resistance 1: Chf1.0450

Current price: Chf1.0434

Support 1: Chf1.0330
Support 2: Chf1.0150

Support 3: Chf1.0000

Comments: The dollar could gain testing resistance which now is near Chf1.0440 with a break above will extend rise up to Chf1.0480. Stronger resistance is near Fibo level on Chf1.0540 (61.8% of Chf1.1110 - Chf0.9640 decline). Support is around today's low on Chf1.0330. Below Thursday’s low at Chf1.0150 the rate may dip to Chf1.0000.

Resistance 3: $2.0190
Resistance 2: $2.0050
Resistance 1: $1.9960
Current price: $1.9860
Support 1: $1.9800
Support 2: $1.9760
Support 3: $1.9670
Comments: Techs on pound is steady. Resistance comes at Tuesday’s high at $1.9960 with a break above will target $2.0050 (Apr 04 high) and stronger – on $2.0190 (Mar 27 high). Strong support comes at $1.9800, with a break under widens the correction to $1.9760 and then – to Friday’s low on $1.9670.

Resistance 3:$1.5770
Resistance 2: $1.5640
Resistance 1: $1.5600
Current price: $1.5507

Support 1: $1.5500
Support 2: $1.5460
Support 3: $1.5340

Comments: Euro trades near lows at $1.5500. Fall lower $1.5460 will widen the correction to $1.5340. The nearest resistance is broken support level at $1.5600. Break above 23.6% Fibo at $1.5640 (euro’s decline from life-time high to $1.5500) will open a way to 50% Fibo on $1.5770.

GBP/USD still holds around $1.9860 as rate reacts to the release of stronger than expected CIPS manufacturing PMI data (April 51.0). Offers between $1.9895/00 still caps the rate.

EUR/USD: $1.5575
USD/JPY: Y103.45, Y104.50
GBP/USD: $1.9720
USD/CHF: Chf1.0150
USD/CAD: C$0.9855
AUS/USD: $0.9330/40, $0.9400, $0.9500

GBP/USD challenged resistance/offers at $1.9900. A break above here to open a retest on earlier highs at $1.9909, with stops noted to $1.9910. If stops triggered seen opening a technical target at $1.9950, with offers noted ahead at $1.9925 and $1.9940/50.

EUR/USD fell to $1.5515, triggering stops at $1.5550. Currently euro holds near $1.5534 with bids ahead of $1.5510/00.

Analyst Tony Crescenzi at Miller, Tabak: “The Federal Reserve delivered on expectations for a cut and a preference for pausing but did little else.The action and the accompanying statement reinforces the basis for recent movements in stocks, bonds, the dollar, and commodities, but provides no new basis for extending these moves.”

MS’s economist David Greenlaw: “We believe that today's move will represent the last rate cut in this easing cycle. However, should the economy show signs of a double dip after the temporary impact of fiscal stimulus fades away, the FOMC could certainly reduce rates further.”

Mark Wan, chief analyst at Hang Seng Investment Services Ltd: “I don't think at this moment investors should be bullish about the U.S. economy. And I don't think the FOMC will hold off rate cuts in the foreseeable future.”

The dollar declined for a fourth day against the yen, its longest losing streak since March, before manufacturing and employment reports that may add to evidence the U.S. economy is faltering.
The U.S. currency fell for a second day against the euro after the Federal Reserve cut its benchmark rate by a quarter point to 2% yesterday and said the economy is weak. The dollar has lost 10% versus the euro since Sept. 18, when the central bank began lowering the fed funds target.
“I remain super dollar-bearish,” said Michiyoshi Kato at Mizuho Corporate Bank Ltd.. “With the U.S. economy still deteriorating, I see a very good chance of a rate cut in June.”
The dollar rose 4.2% against the yen and 1.1% versus the euro in April. It's down about 7% against both currencies this year.

EUR/USD printed high on $1.5640 before consolidating for some time. Close to EU session rate tested $1.5610.
GBP/USD held around $1.9860 before rising to $1.9905/10.
USD/JPY tested Y103.80 before sliding to Y103.50.

U.S. payrolls fell by 75,000 in April, the fourth-straight monthly decline, based on the median forecast. The Institute for Supply Management's factory index, due today, fell to 48 last month from 48.6 in March, a separate survey showed.

Japan's stocks fell a second day after the central bank lowered its growth forecast, and as companies including Kirin Holdings Co. delivered disappointing earnings. The Nikkei 225 Stock Average declined 67.32, or 0.5%, to 13,782.67. The broader Topix index fell 10.21, or 0.8%, to 1,348.44.

Stock market fixing:
Nikkei 225 -44.38(-0.3%)13,849.99
Topix-3.10(-0.2%)1,358.65
DAX 30 +63.48(+0.9%)6948.82
САС 40 +19.44(+0.4%)4996.54
FTSE 100 -2.10(-0.01%)6087.30
Dow -11.81(-0.09%)12820.13
Nasdaq -13.30(-0.55%)2412.80
S&P -5.35(-0.38%)1385.59
10YR +21/3298 1/323.74%
OIL NYMEX -2.17(-1.86%)$114.69

Japan's stocks fell, led by commodities companies.
Sumitomo Metal Mining Co. led metals and energy companies lower after saying profit will decline this year. Daiwa Securities Group Inc. sent brokerages higher as recent earnings indicated it won't have major losses on U.S. mortgage investments. Matsushita Electric Industrial Co. soared the most in almost nine years after projecting profit that surpassed analyst estimates.
Daiwa climbed 5.2%, while Monex Beans Holdings Inc. surged 9.1%, the biggest gain since Oct. 3.
Sumitomo Metal Mining tumbled 7.8%, the steepest decline since March 21 after saying annual profit may drop 34% this year because of energy costs and the stronger yen.
Inpex Holdings Inc. lost 4.1%, the lowest since April 9.
Mitsubishi Corp. lost 3.2%, the biggest drop since March 21.

European stocks rose, capping their biggest monthly gain since 2003, as better-than forecast U.S. economic growth and results from Clariant AG, Siemens AG and Storebrand ASA eased concern that a slowdown in the world's largest economy will curb profits.
Clariant soared 19% after the company reported a first-quarter profit that beat analyst estimates as 400 job cuts helped widen margins.
Aegis Group Plc advanced 9.1% after the world's largest independent buyer of advertising space said first-quarter sales rose on increased Internet orders.
SAP AG declined 2% after the world's biggest maker of business-management software maker said first- quarter profit dropped 22% to 242 million euros. Analysts had predicted profit of 340 million euros.
Alcatel-Lucent SA slumped 3.6%.

Stocks ended lower Wednesday, erasing earlier gains, as investors took a 'sell the news' reaction after the Federal Reserve cut a key short-term interest rate, as expected, and signaled it may not cut rates again anytime soon.
The Federal Reserve cut the fed funds rate, a key overnight bank lending rate, by a quarter-percentage point to 2%, as expected. In its closely-watched statement, the central bank indicated that the economic outlook is not as dour as it has been recently and that its rate-cutting campaign could soon take a breather.
Before the open, investors eyed the latest reading on the health of the economy. Gross domestic product grew at an 0.6% annual rate in the first quarter, as it did in the final quarter of 2007. That was slightly better than the 0.5% rate expected by economists.

Corporate news: General Motors reported a steeper quarterly loss that was nevertheless narrower than what analysts were expecting, and weak sales that beat forecasts.

Citigroup said it was boosting the size of its previously announced common stock offering to $4.5 billion from $3 billion.

Despite the sell-off after the Fed’ rate decision, the dollar showed its first monthly advance against the euro this year on speculation a cut in interest rates by the Federal Reserve will be followed by comments signaling policy makers are about done with easing.
The U.S. currency was poised for its biggest monthly gain against the yen since December 2001 as interest-rate futures showed the Fed may keep rates on hold after reducing borrowing costs. The yen dropped against all of the major currencies as an advance in U.S. stocks encouraged investors to increase holdings of higher-yielding assets financed in Japan.
Policy makers have reduced the Fed's target rate for overnight loans between banks 3% since September and made an additional 25 points cut yesterday to avert a recession and spur lending. Fed also has cut DR by 25 points to 2.25%.
The lower U.S. rates have made the dollar less attractive to investors than the euro as the European Central Bank has kept its rates on hold at 4.0%.
Yesterday’s euro zone economic news helped to lift expectations slightly the ECB may be tempted to cut its borrowing costs sooner than expected, further pressuring the single currency against the U.S. currency. Euro zone inflation eased to a provisional 3.3% in April from 3.6% in March. The March reading was the highest recorded since the start of the monetary union. At the same time, the European Commission said its euro zone economic sentiment indicator fell to 97.1 in April from 99.6 in March, reaching its lowest level since late 2005. Economists said this points to a further slowdown in euro zone growth.

EUR/USD initially fell to $1.5520 lows after the weak economic data. But ahead of the FOMC’s decision it rocketed to $1.5630 before retreating to $1.5610/00.
GBP/USD rose from $1.9620 to $1.9890, triggering some stops.
USD/JPY tested strong resistance at Y104.80, but failed to break above and retreated back to Y103.80.

In Europe attention will be on UK CIPS manufacturing index, that may weight on pound’s trading.
Todays’ focus will be on US data, including personal income and spending, core PCE price index and ISM index.

Resistance 3: Y106.00
Resistance 2: Y105.30
Resistance 1: Y104.80
Current price: Y104.51
Support 1: Y103.90
Support 2: Y103.30
Support 3: Y102.60
Comments: Dollar is around recent highs on Y104.80 with resistance comes at Y105.30 and then – on Y106.00. Support is around Y103.90, further – on Thursday’s low on Y103.30 with a break under will open the way to Apr 22-23 lows on Y102.60/70.

Resistance 3: $2.0190
Resistance 2: $2.0050
Resistance 1: $1.9960
Current price: $1.9870
Support 1: $1.9800
Support 2: $1.9760
Support 3: $1.9670
Comments: Techs on pound hasn’t changed. Resistance comes at Tuesday’s high at $1.9960 with a break above will target $2.0050 (Apr 04 high) and stronger – on $2.0190 (Mar 27 high). Strong support comes at $1.9800, with a break under widens the correction to $1.9760 and then – to Friday’s low on $1.9670.

Resistance 3:$1.5830
Resistance 2: $1.5770
Resistance 1: $1.5640
Current price: $1.5630
Support 1: $1.5600
Support 2: $1.5520
Support 3: $1.5460
Comments: Euro challenges 23.6% Fibo at $1.5640 (euro’s decline from life-time high to $1.5520). Above the target comes at 50% Fibo on $1.5770 and $1.5830 (61.8%). Support is around $1.5600, stronger – on $1.5520 with a break down will widen the correction to $1.5460.

High Low Close
EUR/USD 1.5641 1.5524 1.5618
USD/JPY 104.85 103.68 103.94
GBP/USD 1.9892 1.9623 1.9873
USD/CHF 1.0441 1.0327 1.0349

EUR/JPY 162.96 161.58 162.32
EUR/GBP 0.7945 0.7838 0.7855
GBP/JPY 207.76 203.66 206.58
GBP/CHF 2.0699 2.0298 2.0564

Change % Change Last
Nikkei 225 -44.38 (-0.3%) 13,849.99
Topix -3.10 (-0.2%) 1,358.65
DAX 30 +63.48 (+0.9%) 6948.82
САС 40 +19.44 (+0.4%) 4996.54
FTSE 100 -2.10 (-0.01%) 6087.30
Dow -11.81 (-0.09%) 12820.13
Nasdaq -13.30 (-0.55%) 2412.80
S&P -5.35 (-0.38%) 1385.59
10YR +21/32 98 1/32 3.74%
OIL NYMEX -2.17 (-1.86%) $114.69

08:30 UK CIPS manufacturing index (April) - 51.3
12:30 USA Jobless claims (week to 26.04) 359K 342K
12:30 USA Personal income (March) 0.4% 0.5%
12:30 USA Personal spending (March) 0.2% 0.1%
12:30 USA PCE price index ex food, energy (March) 0.1% 0.1%
12:30 USA PCE price index ex food, energy (February) Y/Y - 2.0%
14:00 USA ISM index (April) 48.5 48.6
14:00 USA Construction spending (March) -0.8% -0.3%
20:30 USA M2 money supply (21.04), bln - -15.0