The stock market continues to trade with hefty gains after taking another step higher.The Dow Jones Industrial Average is now up 2.7%.
All 30 components in the Dow are trading higher.Home Depot is posting the largest percentage-based advance in the index.The stock is currently at a fresh session high.
Sliding oil prices continue to bolster optimism among market participants.Crude is down 4% and trading near $115 per barrel.

NYMEX September light sweet crude oil futures hold at $116.47 per barrel, after trading in a $115.61 to $120.08 range. The front contract, which settled at $120.02 Thursday, posted a record high of $147.27 onJuly 11. Analysts are watching key support at $109.60, where the 200-day moving average comes in.

The homebuilder Beazer Homes USA, Inc’s posted a narrower loss of $109.8M in its fiscal third quarter despite lower revenue as expenses declined; nevertheless quarterly results fell short of Wall Street's expectations.

The movie theater operator Cinemark Holdings Inc reported a drop in second-quarter earnings, though it still beat analysts' estimates by a penny on increased sales of tickets and concessions.

Deckers Outdoor Corp posted its first quarterly loss since 2002.

Fannie Mae reported a much larger-than-expected net loss of $2.3B in the second quarter.

World Fuel Services Corporation reported second-quarter profit of 73 cents a share well above analysts’ forecasts.

MBIA Inc returned to profitability in the second quarter on $3.32B.

McDonald's Corporation says strong demand for breakfast items helped lift global same-store sales 8% in July; U.S. same-store sales grew 6.7%.

Bob Sinche of BOA suggests that the euro should be trading around $1.5400.Accordingly, BOA decided to take profit (at $1.5040) on their euro short established mid July (euro posted life-high at $1.6040 on July 15).

The euro fell the most in almost eight years against the dollar as traders pared bets the European Central Bank will raise interest rates as the economy slows.

“The euro's decline below $1.53 and the break of the 200-day moving average at $1.5226 marks a significant change in sentiment for the dollar, pointing to a further decline to $1.46,” Kevin Edgeley, technical analyst at Goldman Sachs Group Inc., wrote. “It was the first time the euro fell below the 200-day moving average since 2006”, he added.

Slumping oil prices and a rising dollar fired up a big stock market rally Friday, enabling investors to look beyond mortgage finance firm Fannie Mae's steep quarterly loss.

Stocks tumbled Thursday on continued economic worries, sparked by reports showing sluggish retail sales, higher consumer borrowing costs and more problems for the financial sector.

The decline in oil prices gave a lift to a variety of stocks, with 29 out of 30 Dow components rising.
The financial sector remained in focus Friday, after Fannie Mae reported a big quarterly loss that was more than triple what analysts were expecting, reflecting ongoing deterioration in housing market conditions. Fannie swung to a loss of $2.3 billion, or $2.54 per share, due to big reserves for credit losses in the quarter, versus a profit of $1.86 a year ago. Analysts had thought Fannie would lose 68 cents per share. The mortgage finance behemoth also slashed its quarterly dividend. Fannie shares slumped 10% in active trade.
Merrill Lynch said late Thursday that it will buy back around $12 billion over a one-year period starting in January.
On Thursday, Citigroup agreed to buy back over $7 billion.

GBP/USD breaks below the "neckline" (head and shoulders pattern) at $1.9350 on the weekly chart. Strategists at CIBC World Market maintain a downside target between $1.75/$1.76 and stress that "an overshoot towards the market base at $1.7050 cannot be ruled out."

USD/JPY lifted to Y110.37 amid dollar’s rise, but pair is easing back a bit now for trade to Y110.15. Offers on Y110.50 and Y110.80. Might be a barrier Y110.50, not mentioned but always a risk.

Spot gold holds at $853.25/oz on the low side of a $852.00/$873.50 range. UBS maintains their one-month forecast of $850.

EUR/USD fell to $1.5000 before recovering to current $1.05035. Area of $1.5000 offered as psychological support, barrier strikes also suggested here.Below there, $1.4980/60 area seen as critical with stops expected below.

USD/CAD earlier traded to a high of C$1.0695, currently holding back around C$1.0665. Traders begin to talk about option barrier interest on C$1.0700.

A relatively mixed tone is indicated during premarket action (S&P futures +0.7, Nasdaq futures +3.5).
McDonald's announced global same-store sales climbed 8% in July. Its U.S. comparable-store sales were up 6.7%. Meanwhile, Merrill Lynch is planning to buy back auction rate securities from its clients. They are mostly AAA and not credit impaired. Additionally, Korea Investment Corp. disclosed a 7.4% stake in Merrill in a regulatory filing.
Second quarter nonfarm productivity increased 2.2%, though economists were looking for 2.5% after the first quarter's 2.6% increase. Unit labor costs were up 1.3% after climbing 2.5% in the first quarter. Economists thought unit labor costs would climb 1.4%.
Separately, relative strength in the dollar is helping push oil prices lower.

Lofts over Y110.00 area as the dollar scores fresh gains across the board and as euro-yen steadies for now, the dollar stalling for now around Y110.05 area as tech resistance from the Jan 9 high at Y110.10 becomes a feature. Offers in place at Y110.20.

Michael Hume of Lehman says, "The growth scare is clearly seen as being sufficient for the time being to counter the inflation risks that have been building for some time. It seems reasonable to expect no change in rates over the next few months."

The euro slumped to a five-month low against the dollar as traders pared bets the European Central Bank will raise interest rates as the economy slows.
The euro also fell to a three-week low versus the yen after ECB President Jean-Claude Trichet said economic growth will be ``particularly weak'' through the third quarter and policy makers kept the benchmark rate unchanged yesterday. The New Zealand and Australian dollars led losses among the most-traded currencies on speculation central banks will cut borrowing costs. The U.K. pound sank to the weakest in 17 months against the dollar as Royal Bank of Scotland Group Plc posted its first loss in 40 years.
Trichet said yesterday he has ``no bias'' or ``pre- commitment'' toward future rate movements after the central bank left the main refinancing rate at 4.25 percent. He told reporters in Frankfurt that while inflation remains a threat, risks to economic growth are ``materializing.''
Traders pared bets the ECB will lift rates a second time this year after increasing its main rate by a quarter-point to 4.25 percent last month. The implied yield on the December interest rate futures, an indication of expectations, has retreated 21 basis points from the previous meeting, to 4.94 percent today.
``We do not expect a significant recovery in the euro from current levels,'' Ashley Davies, a currency strategist in Singapore at UBS AG, the world's second-largest foreign-exchange trader, wrote in a research note today. ``Trichet delivered fairly standard comments, which were interpreted in a dovish fashion.''
``Oil prices have turned out to be much more supportive of the dollar than I expected,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``It does temporarily relieve some concern that the U.S. economy will weaken further. This is a plus for sentiment.''
Losses in the yen against the dollar may accelerate on speculation a slowing economy will prevent the Bank of Japan from raising interest rates from 0.5 percent, the lowest among industrialized economies.

EUR/USD: Rate posted low at $1.5100.

The euro slumped to a five-month low against the dollar as traders pared bets the European Central Bank will raise interest rates as the economy slows.
The euro also fell to a three-week low versus the yen after ECB President Jean-Claude Trichet said economic growth will be ``particularly weak'' through the third quarter and policy makers kept the benchmark rate unchanged yesterday. The New Zealand and Australian dollars led losses among the most-traded currencies on speculation central banks will cut borrowing costs. The U.K. pound sank to the weakest in 17 months against the dollar as Royal Bank of Scotland Group Plc posted its first loss in 40 years.
Trichet said yesterday he has ``no bias'' or ``pre- commitment'' toward future rate movements after the central bank left the main refinancing rate at 4.25 percent. He told reporters in Frankfurt that while inflation remains a threat, risks to economic growth are ``materializing.''
Traders pared bets the ECB will lift rates a second time this year after increasing its main rate by a quarter-point to 4.25 percent last month. The implied yield on the December interest rate futures, an indication of expectations, has retreated 21 basis points from the previous meeting, to 4.94 percent today.
``We do not expect a significant recovery in the euro from current levels,'' Ashley Davies, a currency strategist in Singapore at UBS AG, the world's second-largest foreign-exchange trader, wrote in a research note today. ``Trichet delivered fairly standard comments, which were interpreted in a dovish fashion.''
``Oil prices have turned out to be much more supportive of the dollar than I expected,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``It does temporarily relieve some concern that the U.S. economy will weaken further. This is a plus for sentiment.''
Losses in the yen against the dollar may accelerate on speculation a slowing economy will prevent the Bank of Japan from raising interest rates from 0.5 percent, the lowest among industrialized economies.

Resistance 3: Y111.50
Resistance 2: Y110.40
Resistance 1: Y110.00
Current price: Y109.92
Support 1: Y109.30
Support 2: Y108.40
Support 3: Y107.60
Comments: Dollar challenges strong resistance is near session highs on Y110.00 (Y109.90, 50% of Y124.15 - Y95.75 decline). Above the rise may extend to Y110.40. Key level is around resistance line from Mar 2008 on Y111.50. Support comes at around Y109.30 with a break under correction may dip to Y108.40 (23.6% of the Y103.70 - Y109.80 rise), and then – to Aug 05 lows on Y107.60.

Resistance 3: Chf1.1040
Resistance 2: Chf1.0840
Resistance 1: Chf1.0760
Current price: Chf1.0760
Support 1: Chf1.0470
Support 2: Chf1.0380
Support 3: Chf1.0300
Comments: Strong resistance comes at Chf1.0760 (Jan low). Next level comes near Chf1.0840. Above the rise may extend to Chf1.1040. Strong support is around Chf1.0470 (23.6% of the rise from Chf1.0010 to Chf1.0610, also channel support line from Jul 16). Below losses may widen to Chf1.0380. Stronger level comes around 50% Fibo on Chf1.0300/10.

Resistance 3: $1.9500
Resistance 2: $1.9400
Resistance 1: $1.9340
Current price: $1.9240
Support 1: $1.9180
Support 2: $1.9100
Support 3: $1.9040
Comments: Sterling remains under pressure. Below $1.9180 losses may widen to $1.9040. Key support is around $1.9100/30 (trend line from Jan 2002 and 50% Fibo of the $1.7091 - $2.1160 move). Resistance is on $1.9520. Above here the rate may rebound to recent on $1.9400 and $1.9500.

Resistance 3:$1.5520
Resistance 2: $1.5400
Resistance 1: $1.5300
Current price: $1.5165
Support 1: $1.5140
Support 2: $1.5000
Support 3: $1.4950
Comments: Rate resumed fall and having broked strong support around $1.5140 (session low) then $1.5000 intermediate level. Strong support is May-June lows at $1.5300. Resistance is around $1.5300 with a break above will tsrget $1.5400 and $1.5500/20 (Wednesday and Thursday lows).

The euro slumped to a five-month low against the dollar as traders pared bets that the European Central Bank will raise interest rates as the economy slows.
The euro also fell to a three-week low versus Japan's currency after ECB President Jean-Claude Trichet said economic growth will be ``particularly weak'' through the third quarter. The dollar headed for its biggest weekly gain against the yen in almost two months as oil dropped 19 percent from a record. The New Zealand and Australian dollars led losses among the most- traded currencies on speculation central banks will cut rates.
``Trichet triggered the euro's decline when he went out of his way to highlight weakness in the economy,'' said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. in Tokyo. ``A rate increase is off the cards for the time being, and the euro is likely to adjust lower.''

EUR/USD fell from $1.5340 to $1.5140. Later the rate retreated to $1.5170.

GBP/USD followed thу euro and slumped to $1.9260 from $1.9440.

USD/JPY held within the Y109.30/00.

The benchmark Shanghai Comp ended the morning down 14.43 points or 0.53 pct at 2,713.15. The Shanghai A was down 14.96 points or 0.52 pct at 2,846.73, while the Shenzhen A fell 4.58 points or 0.55 pct to 826.21

EUR/USD: $1.5225, $1.5400

USD/JPY: Y110.00, Y109.50, Y109.00, Y108.80

The S&P Sep contract was last 3.80 points higher at 1271.70, with the Nasdaq Sep contract up 6.00 points at 1892.

Resistance 3: Y111.50
Resistance 2: Y110.40
Resistance 1: Y109.80
Current price: Y109.92
Support 1: Y109.30

Support 2: Y108.40

Support 3: Y107.60

Comments: Dollar challenges strong resistance is near yesterday’s highs on Y109.80 (Y109.90, 50% of Y124.15 - Y95.75 decline). Above the rise may extend to Y110.40. Key level is around resistance line from Mar 2008 on Y111.50. Support comes at around Y109.30 with a break under correction may dip to Y108.40 (23.6% of the Y103.70 - Y109.80 rise), and then – to Aug 05 lows on Y107.60.

Resistance 3: Chf1.0760

Resistance 2: Chf1.0720
Resistance 1: Chf1.0690
Current price: Chf1.0690
Support 1: Chf1.0470
Support 2: Chf1.0380
Support 3: Chf1.0300

Comments: Minor resistance comes at session highs on Chf1.0690 (channel line). Stronger level comes near Chf1.0720 (Feb lows). Above the rise may extend to Chf1.0760. Strong support is around Chf1.0470 (23.6% of the rise from Chf1.0010 to Chf1.0610, also channel support line from Jul 16). Below losses may widen to Chf1.0380. Stronger level comes around 50% Fibo on Chf1.0300/10.

Resistance 3: $1.9640

Resistance 2: $1.9580

Resistance 1: $1.9520
Current price: $1.9287
Support 1: $1.9260
Support 2: $1.9180

Support 3: $1.9100

Comments: Sterling remains under pressure. Below $1.9260 losses may widen to $1.9180. Key support is around $1.9100/30 (trend line from Jan 2002 and 50% Fibo of the $1.7091 - $2.1160 move). Resistance is near last session high on $1.9520. Above here the rate may rebound to recent highs on $1.9580 and $1.9640.

The benchmark Nikkei 225 was higher by 43.42 points, or 0.33%, at 13168.41.The broader-based TOPIX was higher by 1.12 points at 1259.93.

FTSE down 20, the DAX down 15, the CAC down 19 and the Eurostoxx 50 down 14.

Resistance 3:$1.5520

Resistance 2: $1.5400

Resistance 1: $1.5340
Current price: $1.5225
Support 1: $1.5230

Support 2: $1.5170
Support 3: $1.5140

Comments: Rate resumed fall and having broked strong support around $1.5280 (May-June lows) target $1.5170 intermediate level. Below support is around Mar lows on $1.5140. Resistance is around $1.5340 with a break above will tsrget $1.5400.

The front-month Nymex WTI Sep 08 contract was last down 4 cents at $119.98, just shy of the session high at $120.08. The contract had touched an early low at $119.50.

The Nikkei was last 102 points higher at 13227, having touched an early low at 12962.

High Low Close
EUR/USD 1.5501 1.5307 1.5322
USD/JPY 109.68 109.10 109.33
GBP/USD 1.9538 1.9418 1.9432
USD/CHF 1.0637 1.0521 1.0609

EUR/JPY 169.47 167.47 167.53
EUR/GBP 0.7935 0.7874 0.7882
GBP/JPY 213.73 212.38 212.45
GBP/CHF 2.0672 2.0554 2.0620


Change % Change Last
Nikkei 225 -129.90 -1.0% 13 124.99
Topix -18.46 -1.5% 1 258.81
FTSE -8.60 -0.16% 5,477.50
DAX -17.90 -0.27% 6,543.49
CAC +9.10 +0.20% 4,457.43
Dow -224.64 -1.93% 11,431.43
NASDAQ -22.64 -0.95% 2,355.73
S&P -23.12 -1.79% 1,266.07
10yr Note -1.1300 -0.279% 3.935%
NYMEX Crude Oil +1.44 +1.21% 120.02
Gold -5.10 -0.58% 877.90

09:00 Italy GDP (Q2) preliminary - 0.5%
09:00 Italy GDP (Q2) preliminary Y/Y - 0.3%
11:00 Canada Employment (July) - -5K
11:00 Canada Unemployment rate (July) - 6.2%
12:30 USA Productivity (Q2) preliminary 2.8% 2.6%
12:30 USA Unit labour cost (Q2) preliminary - 2.2%
14:00 USA Wholesale inventories (June) 0.6% 0.8%