AMBAC Inc - Standard & Poor's said it would remove the bond insurer from the S&P 500 index next week.
Bob Evans Farms Inc - The restaurant owner and sausage maker reported fourth-quarter profit of 52 cents a share, beating analysts’ expectations.
Guess?, Inc - The clothing maker reported first-quarter profit that exceeded analysts' estimates and forecast full-year earnings higher than it previously forecast.
Hovnanian Enterprises, Inc - The New Jersey-based homebuilder posted its seventh straight quarterly loss, one that was 10 times greater than the one posted a year earlier, as the value of its land continued to decline.
Ual Corp - The airline announced it will ground 100 of its airplanes from its domestic fleet in a cost-cutting move; between 2008 and 2009, the company will reduce its domestic capacity by about 17% due to soaring fuel costs.

Michael Woolfolk, economist at Bank of New York at Thomson Financial News - "While a positive surprise to Friday's payrolls appears increasingly likely, there is a understandable element of caution ahead of tomorrow's ECB and BOE meetings. Once this event risk has passed, expect the dollar to gain ground on the recent positive US data and in anticipation of a positive surprise to non-farm payrolls."

The dollar traded near a two-week high against the euro on signs the economy is weathering the housing slump and record gasoline prices.
An index gauging the greenback against the currencies of six U.S. trading partners rose for a third day after reports showed services industries expanded in May at a faster pace than forecast and companies unexpectedly added jobs.
``The tone is still dollar-bullish for the day,'' said Boris Schlossberg, senior currency strategist in New York at DailyFX.com, an online currency dealer. ``The U.S. economy doesn't have the worst-case scenario.''
Weaker Pound. The pound fell to a two-week low against the dollar after a report showed British consumer confidence dropped in May to a four-year low. Sterling dropped as much as 0.5 percent to $1.9527, the weakest level since May 20.
Еconomists predicted the Bank of England will keep borrowing costs unchanged tomorrow. Expectations for inflation over the next decade held near an eight-year high, as measured by the spread between the 10-year gilt and its index-linked counterpart.
The dollar traded within a cent of a two-week high against the euro as reports showed unexpected signs of resilience in the world's largest economy.
The Institute for Supply Management's index of non- manufacturing businesses decreased to 51.7 last month from 52 in April. The median forecast of 73 economists surveyed by Bloomberg News was for a drop to 51. A reading of 50 is the dividing line between growth and contraction.
Company Hiring U.S. companies added 40,000 jobs, followed a revised gain of 13,000 for the prior month that was more than previously estimated, ADP Employer Services said. The median forecast economists was for a reduction of 30,000.
The dollar has increased 3.5 percent since touching the all-time low of $1.6019 per euro on April 22, as the Fed signaled it will stop cutting interest rates. It has traded between $1.54 and $1.58 since mid-May.
The U.S. Dollar Index, tracking the greenback's performance versus six peers, increased 0.2 percent to 73.501. It touched 73.501 yesterday, the highest since May 15.
Futures on the Chicago Board of Trade show a 63 percent chance the Fed will raise the 2 percent target rate for overnight lending between banks by at least a quarter-percentage point by December, compared with 59 percent odds a month ago.
The European Central Bank will hold its main refinancing rate at a six-year high of 4 percent tomorrow, all 59 economists surveyed by Bloomberg News predicted. The ECB has kept the rate at that level since June 2007.
The dollar will strengthen to $1.50 against the euro and trade at 105 yen by the end of the year, according to the median forecast of 41 economists surveyed by Bloomberg News.

The major indices climb to fresh session highs thanks to strength in tech (+1.4%), utilities (+1.1%), materials (+1.3%) and consumer discretionary (+1.2%) stocks.

FTSE 100 -87.60 -1.45% 5,970.10
CAC 40 -68.64 -1.38% 4,915.07
Xetra Dax -53.70 -0.77% 6,965.43

``The tone is still dollar-bullish for the day,'' said Boris Schlossberg, senior currency strategist in New York at DailyFX.com, an online currency dealer. ``The U.S. economy doesn't have the worst-case scenario.''

Stocks struggled Wednesday morning as investors eyed falling oil prices, an upwardly revised reading on productivity and talk of more problems for Lehman Brothers.
Lehman Brothers slides anew. Shares of the bank fell for a second session on reports that the company could be forced to sell some or all of itself to another bank due to ongoing balance sheet woes.
United Airlines announces cuts. The unit of UAL Corp. said it will reduce its fleet by 100 planes and cut as much as 1,600 jobs amid losses related to higher fuel costs.
Intel Corp., the biggest semiconductor company, Hewlett- Packard Co., the largest maker of personal computers, and EBay Inc., the biggest online auction site, advanced as the Institute for Supply Management's service index expanded more than projected. American Express, the biggest U.S. credit-card lender, rallied the most in a month after predicting profit that topped forecasts. Bank of America Corp. dropped to the lowest since 2002, limiting the market's advance, after Merrill Lynch & Co. reduced earnings forecasts through 2010.
Ambac Financial Group Inc. tumbled the most since April 23, losing 12 percent to $2.65. The second-biggest bond insurer will be replaced by Lorillard Inc. in the Standard & Poor's 500 Index after the close of trading June 10.
Guess? Inc. gained 14 percent, the biggest jump since November, to $43.20. The clothing maker reported first- quarter profit that exceeded analysts' estimates and forecast full-year earnings may rise more than it previously predicted.
Hovnanian Enterprises Inc. fell 6.7 percent, the most since May 8, to $7.78. New Jersey's biggest homebuilder reported its seventh consecutive quarterly loss as the value of its land continued to decline.

RBC analyst TJ Marta says "The ISM release indicates a softening (though not sharply so) services sector that refuses to deteriorate into recessionary territory, likely helped by the weak US dollar and de-synchronization of global growth. Unfortunately, prices remain a significant problem, lending legitimacy to the Fed's balanced rhetoric."

WTI Nymex crude oil is now at $122.95. Crude oil went higher initially violently to $125.00 level from $123.94 following release of US DoE weekly inventory data, which showed a much bigger than expected draw in crude oil inventories of 4.8mln barrels.

ADP report from HFE's Ian Shepherdson – “This is something of a surprise and, other things equal, it increases the chance that Friday's official payroll number will beat the current -60K.”

Prices paid 77.0 vs 72.1
Employment 48.7
New orders 53.6

USD/JPY: Y106.55, Y107.50
GBP/USD: $1.9685
AUS/ISD: $0.9660, $0.9400
Kiwi; $7770
USD/CAD: C$1.0000, C$0.9950

U.S. stocks were set to open lower Wednesday and oil prices were down as investors focused on the services sector.
Oil prices rose above $124 a barrel on news of refinery fire in Kansas. This is far below the $135 peak in May.
Economy: Economic reports showed first-quarter productivity rose 2.6% versus the preliminary estimate of 2.5%. After the open, is the Institute for Supply Management's report on the services sector. The index is expected to stay unchanged at 52.0 in May.
Corporate news: The J.M. Smucker Company, maker of jams and peanut butter, agreed to purchase Procter & Gamble's Folgers coffee business for $2.95 billion.
The homebuilder Hovnanian Enterprises posted its seventh straight quarterly loss, one that was 10 times greater than the one posted a year earlier.

EUR/GBP edges back up to stg0.7910. Offers remain in place toward stg0.7920 (earlier rally high stg0.7918, seen after disappointing CIPS data). A break and clear above to open a move on toward stg0.7940/45. Bids now seen in place at stg0.7895 (38.2% stg0.7856/0.7918), with further demand seen dotted down to stg0.7885 with stops below.

Crude oil prices squeezing higher on news of refinery fire in Kansas. WTI Nymex crude oil is at $124.10, having hit $123.15 low earlier.

The following data were issued
07:45ItalyPMI services (May) 48.1 - 49.8
07:50FrancePMI services (May) 50.5 50.7 52.8
07:55GermanyPMI services (May) seasonally adjusted 53.8 53.7 54.9
08:00EU(15)PMI services (May) 50.6 50.6 52.0
08:30UKCIPS services index (May) 49.8 50.5 50.4
09:00EU(15)Retail sales (April) adjusted -0.6% 0.3% -0.4%
09:00EU(15)Retail sales (April) adjusted Y/Y-2.9% -0.5% -1.6%

The yen rose against the dollar and the euro as concern that credit-market related losses at banks will widen discouraged investors from buying higher-yielding assets funded with loans in Japan.
The dollar traded near a two-week high against the euro after Federal Reserve Chairman Ben S. Bernanke said policy makers are ``attentive'' to the impact the U.S. currency's decline may have on inflation.
The dollar was supported after Bernanke said interest rates are ``well positioned'' to promote growth and stable prices, signaling the Fed is done cutting borrowing costs.
The dollar has tumbled 5.6% against the euro this year.

EUR/USD opened around $1.5456. European dealing saw an early move to the downside, though bids in the $1.5420 area. Later euro-dollar was able to push higher, taking out the Asian peak en-route to $1.5481. Offers ahead $1.5490, stops above, offers $1.5520, bids $1.5420.
GBP/USD opened early Europe at $1.9620. Sterling came under strong sell pressure in early Europe which punched cable through $1.9600, touching an early low of $1.9570 before rebounding to $1.5480.
USD/JPY opened around Y105.17. Dollar-yen slipped to a Y104.58 low, remaining heavy under Y105.00 over the remainder of the morning. Tech Y104.52, bids Y104.40, tech Y104.04, offers Y105.30, stops Y105.50

At 12:30 GMT Productivity and Unit labour cost for 1Q will be released. At 14:00 GMT ISM Non-mfg composite index is due to come. Analysts predict index remained unchanged in April (at 52.0).

USD/JPY: Y106.55, Y107.50
GBP/USD: $1.9685
AUS/ISD: $0.9660, $0.9400
Kiwi; $7770
USD/CAD: C$1.0000, C$0.9950

Challenger: "Planned job cuts soared to a 29-month high of 103,522 in May, marking the first time since December 2006 that monthly layoff announcements surpassed 100,000. Job cuts last month were 15 percent higher than the 90,015 announced in April.It was the second consecutive increase in monthly job cuts, following April's 68 percent jump from March (53,579).May was 46 percent higher than a year ago (71,115)."

The pound weakened somewhat against other major currencies after an indicator showed the services sector, the backbone of the U.K. economy, shrunk in May for the first time in over five years.

The services PMI for May fell to 49.8, the weakest since March 2003 and below the 50 mark that separates activity expansion from contraction.A sharp fall was seen in employment, which deteriorated at its sharpest rate since the survey began in 1996. However, the inflation components continued to rise, both for input prices as well as prices charged, adding to the Bank of England's worries and limiting the pound's fall.

“The services PMI index adds to the signs that the economy is in its biggest downturn since 1991,” said Mic Mills, a trader at TradIndex.com.“But the Bank of England can't cut rates because inflation is soaring, and that's why the pound has stayed where it is,” he said.

The dollar held steady versus a basket of six major currencies on Wednesday, keeping hefty gains made the previous session on Federal Reserve Chairman Ben Bernanke's warning about the inflationary threat from a weak U.S. currency.

The euro was pressured by soft euro zone retail sales data which added to an impression that the European economy is also facing stiff headwinds. The euro has now retreated more than 3% from record highs of $1.6018 hit in April.

"Factory orders jumped a larger than expected 1.1% in April as the durables component was revised down marginally to -0.6% but nondurables surged 2.8% on what was likely a mostly price-related spike in petroleum. Nondefense capital goods ex aircraft orders, the key core gauge, still posted a sharp gain in April after several declines, but the upside was revised down slightly to +4.0%. Details bearing on GDP growth were negative overall. Inventories were flat... we now see inventories subtracting 1.0pp from Q2 GDP growth, down from our prior forecast of -0.6pp. Meanwhile, nondefense capital goods ex aircraft shipments were revised lower in April to +0.2% from +0.5%... We now see investment in equipment and software falling 2.2% in Q2 and overall investment declining 0.5%, up from our prior forecasts of -2.9% and -1.0%. Netting the inventory and investment adjustments, we reduced our Q2 GDP forecast to -0.9% from -0.6%."

``We're bearish on the pound,'' said Kimihiko Tomita, head of foreign exchange in Tokyo at State Street Bank & Trust Co., a unit of the world's largest money manager. ``The U.K. housing market is turning out to be worse than some people expected and their financial sector is facing a difficult time.''

Resistance 3: Y106.70
Resistance 2: Y106.30
Resistance 1: Y105.50
Current price: Y104.62
Support 1: Y103.80
Support 2: Y103.20
Support 3: Y102.60
Comments: Dollar holds within the recent range, limited by Y103.80/Y105.50 (support and resistance respectively). Below May 28 lows on Y103.85/90 the downside move may extend to Y103.20 and then – to May low on Y102.70/60. Above yesterday’s high on Y105.50 the target comes at trend line from July 2007 at Y106.30. Break higher will accelerate the rise to Y106.70.

Resistance 3: Chf1.0580
Resistance 2: Chf1.0520
Resistance 1: Chf1.0480
Current price: Chf1.0385
Support 1: Chf1.0380
Support 2: Chf1.0260
Support 3: Chf1.0220
Comments: Dollar trades lower. Support comes at hourly lows on Chf1.0380, stronger one at Chf1.0280/60 and around May lows around Chf1.0220. The nearest resistance is yesterday's high at Chf1.0480. Friday’s high around Chf1.0520 is a medium resistance with a break above will target Chf1.0580.

Resistance 3: $1.9850
Resistance 2: $1.9740
Resistance 1: $1.9630
Current price: $1.9562
Support 1: $1.9530
Support 2: $1.9480
Support 3: $1.9350
Comments: Cable remains under pressure. The nearest support is session low at $1.9530, then – at $1.9480. Stronger level on $1.9350 (May 15 low). Rise above session high on $1.9630 will open the way to $yesterday’s high on $1.9740. Neat resistance is around May high at $1.9850.

Resistance 3:$1.5760
Resistance 2: $1.5620
Resistance 1: $1.5520
Current price: $1.5461
Support 1: $1.5400
Support 2: $1.5360
Support 3: $1.5280
Comments: Euro trades within yesterday's range. The nearest resistance is at 50% Fibo on $1.5520, next band of resistance is around yesterday's high $1.5620 and then – on Wednesday’s peak on $1.5760. The nearest support comes near session low on $1.5400, below – at $1.5360, then – on $1.5280.

1.Fed should keep rates low till recovery at hand, then hike
2.Urges caution on upward drifting inflation expectations
3.Far from certain that market turmoil has passed its peak
4.Nations must resist measures to offset high oil, commodities
5.US 2008 GDP +1.2%, 2009 +1.1%; CPI +3.2% '08, +2.0% '09
6.EMU 2008 GDP +1.7%, 2009 +1.4%; CPI +3.4% '09, +2.4% '08
7.EMU HICP to be close to ECB 2% target by the end of 2009

USD/JPY: Y106.55, Y107.50
GBP/USD: $1.9685
AUS/ISD: $0.9660, $0.9400
Kiwi; $7770
USD/CAD: C$1.0000, C$0.9950

"We consider that Bernanke's speech was well balanced, with the door still open for cuts if needed." SocGen says mkt is afraid of upcoming broker earnings in the week of June 16. LEH's report should come at start of the week, Morgan Stanley at the end of the week. and Goldman on June 17.

- Must find new checks and balances

The currency was near a three-month high against the yen after Bernanke also said interest rates are ``well positioned'' to promote growth and stable prices, signaling the Fed is done cutting borrowing costs. Australia's currency rose from a three- week low after government data showed the economy grew at twice the pace economists expected last quarter.

EUR/USD traded within $1.5420/60 range.
GBP/USD retreated from $1.9630 and. having pierced support around $1.9600 posted session's low at $1.9540.
USD/JPY lowered from Y105.30 to Y104.80.



European events for Wednesday start at 0730GMT when ECB President Jean-Claude Trichet is due to address the OECD. PMI releases, with the Eurozone number expected at 50.6 for May, while at 0900GMT Eurozone retail trade is expected to come in at 0.3% m/m, -0.5% y/y for April.
UK data at 0830GMT include May official reserves as well as the CIPS services PMI data.

The market was boosted by exporters and multi-nats rallying in the wake of a stronger dollar. Nikkei 225 gained 226.40 points, or 1.59%, to stand at 14435.57. TOPIX gained 23.03 points to stand at 1430.47.

Clawing its way higher, after the early downside pressure in Europe took rate through support at $1.9600 and down to lows of $1.9550. Rate currently trades around $1.9580. Offers remain in place between $1.9600/10, a break above to open a move toward $1.9625/30 ahead of stronger level at $1.9650. Bids remain in place on the approach to $1.9550 (61.8% $1.9361/1.9852).

Resistance 3: Y106.20

Resistance 2: Y105.90
Resistance 1: Y105.50
Current price: Y105.04
Support 1: Y103.90

Support 2: Y103.20

Support 3: Y102.70

Resistance 3: Chf1.0580
Resistance 2: Chf1.0520
Resistance 1: Chf1.0440

Current price: Chf1.0419

Support 1: Chf1.0320
Support 2: Chf1.0280

Support 3: Chf1.0220

Comments: Dollar trades higher. The nearest resistance is yesterday's high at Chf1.0440. Friday’s high around Chf1.0520 is a medium resistance with a break above rate will target Chf1.0580, then - Chf1.0640. Support comes at hourly lows on Chf1.0400- Chf1.0390, stronger one at Chf1.0280/60 and around May lows around Chf1.0220.

The front-month Nymex WTI Jul 08 contract was last 32 cents lower at $123.99, shy of the session low at $123.80. Traders said the market is awaiting the US inventories data due at 1435GMT.

Resistance 3: $1.9850
Resistance 2: $1.9770
Resistance 1: $1.9740
Current price: $1.9614
Support 1: $1.9600
Support 2: $1.9520
Support 3: $1.9440

Comments: Cable drifts lower. The nearest support is yesterdays low at $1.9600. Importnant level is also at $1.9520. Further losses may widen till May 16 low at $1.9440. Growth above recently piersed support at $1.9700 will open a way to $1.9740/70 and than to May high at $1.9850.

Resistance 3:$1.5760
Resistance 2: $1.5630
Resistance 1: $1.5570

Current price: $1.5455

Support 1: $1.5420
Support 2: $1.5390
Support 3: $1.5365

Comments: Euro trades within yesterday's range. The nearest resistance is at $1.5570/90, next band of resistance is around yesterday's high $1.5630 and then – on Wednesday’s peak on $1.5760.The nearest support remains at $1.5420. Below losses may extend to $1.5365/70.

Major European bourses are initially seen trading lower, reacting to the late sell-off in the US. FTSE -38, the DAX -45, the CAC -33 and the Eurostoxx 50 -30.

The S&P June contract was 0.2 points higher at 1378.8, with the Nasdaq June contract higher by 1.75 points at 2000.00.

High Low Close
EUR/USD 1.5625, 1.5410, 1.5432
USD/JPY 105.55, 103.86, 105.14
GBP/USD 1.9740, 1.9605, 1.9616
USD/CHF 1.0487, 1.0277, 1.0434

EUR/JPY 163.18, 161.81, 162.27
EUR/GBP 0.7938, 0.7852, 0.7865
GBP/JPY 207.08, 204.00, 206.26
GBP/CHF 2.0563, 2.0218, 2.0470

Change % Change Last
Nikkei -230.97 -1.60% 14,209.17
Topix -17.66 -1.20% 1,407.44
FTSE +50.10 +0.83% 6,057.70
DAX +10.36 +0.15% 7,019.13
CAC +48.50 +0.98% 4,983.71
Dow -100.97 -0.81% 12,402.85
NASDAQ -11.05 -0.44% 2,480.48
S&P -8.02 -0.58% 1,377.65
10yr Note -0.7300 -0.184% 3.898%
NYMEX Crude Oil +0.41 +0.32% 127.76
Gold -4.40 -0.49% 892.60

07:45 Italy PMI services (May) - 49.8
07:50 France PMI services (May) 50.7 52.8
07:55 Germany PMI services (May) seasonally adjusted 53.7 54.9
08:00 EU(15) PMI services (May) 50.6 52.0
08:30 UK CIPS services index (May) 50.5 50.4
09:00 EU(15) Retail sales (April) adjusted 0.3% -0.4%
09:00 EU(15) Retail sales (April) adjusted Y/Y -0.5% -1.6%
12:15 USA ADP employment (May) - +10K
12:30 USA Productivity (Q1) revised 2.5% 2.2%
12:30 USA Unit labour cost (Q1) revised - 2.2%
14:00 USA ISM Non-mfg composite index (April) 52.0 52.0
14:00 USA ISM Non-mfg business index (April) - 50.9
21:00 New Zealand RBNZ meeting announcement 8.25% 8.25%