The stock market has worked its way higher, but remains a bit below the unchanged mark. Helping stocks pare gains has been another retreat in oil prices. Financial stocks (+0.4%) have also come off their afternoon low.
Сrude prices have been trading gains and losses for nearly the entire session. Oil was up 2.1% at its high and down 0.8% at its low. Week-to-date, oil prices have lost 11.3%.

Barclays Capital technical analysts say the, "S&P 500 needs to rally above 1,266 and 1,277 to signal bearish sentiment is lifting for the summer."
The S&P 500 stands at 1,260.37 after trading in a 1,252.55 to 1,262.00 range. The index is up 4.9% from the 2008 lows near 1,201 seen Monday and down 20.0% from the life-time high of 1,576.06 seen Oct 11, 2007.

The dollar headed for a weekly advance against the euro, rebounding from a record low on signs U.S. investment banks will withstand credit-market losses stemming from the collapse of the subprime-mortgage market.
The U.S. currency rose versus the yen today after Citigroup Inc., the biggest U.S. bank, reported better-than-expected second-quarter results.
``The risk of a systematic meltdown has been reduced,'' said Benedikt Germanier, a currency strategist in Stamford, Connecticut, at UBS AG, the world's second-largest foreign- exchange trading firm. ``It lends some support to the dollar.''
The dollar traded at $1.5834 per euro in New York Friday, compared with $1.5863 Thursday and $1.5938 at the end of last week. It dropped to an all-time low of $1.6038 on July 15. The currency climbed to 106.88 yen from 106.28 yen Thursday. The Japanese currency traded at 169.23 per euro, from 168.58 and 169.46 on July 11.

Stocks trade with losses as the S&P 500 approaches its session low. There is currently a noticeable lack of leadership in the session's action. Financials (+0.1%) had been providing a boon to the session's earlier advance. However, selling has picked up and pushed the sector lower. Nonetheless, financials are holding on to a 10% week-to-date advance, which has helped propel the stock market to a 1.2% week-to-date advance.

Peter Kretzmer says Fed has described stagflation in its documents when talking about "the environment of undesired high inflation and recessionary conditions." He says "For now, uncertainty remains high and conditions rather bleak."

Financials (+1.7%) have built upon their advance and oil has retreated to trade slightly above the unchanged mark. The combination of the two events has helped lift the S&P 500 back into positive territory.
The Nasdaq continues to trade with a sizeable loss, however. Weighing on its performance are the large-cap tech names of Microsoft (MSFT 25.50, -2.02) and Google (GOOG 486.53, -46.91). Google reported earnings results for the most recent quarter that fell shy of the consensus earnings per share estimate.
The impact of the industry heavyweights is being felt in the S&P 500 technology sector (-1.3%), which is the worst performing sector this session.

Reached Y106.85 area as euro-yen provides some lift, that latter pair notching fresh highs for the session as Dow stocks build their best gains of the morning. Dollar pair remains a shade below earlier Y106.94 highs and supply is mentioned ahead of Y107.00 although stops are tipped behind there. Tech resistance remains around Y107.15/20 zone.

The S&P 500 spiked higher, breaking into positive ground momentarily. A portion of that advance has been surrendered as the index has since moved back into the red.
Spurring the initial advance was support from the financial sector. Despite initially opening with a gain, financials had been trading lower for much of the morning. The sector is now up 0.7%, thanks to leadership from Citigroup (C 19.65, +1.68).
Citigroup announced earlier this morning a loss of $0.49 per share, which is less severe than the expected loss of $0.66 per share. Citigroup reported revenue of $18.65 billion, down 29% from the prior year. The results included $7.2 billion of write-downs in its securities and banking division. Write-downs were 40% lower than the first quarter.

Pressing back towards the earlier highs, with traders suggesting a break would then expose offers in the Y169.30 area. A steeper move would bring this week's lifetime high at Y169.69 back into play, with strong offers then noted into option barrier interest at Y170.00.

Stocks continue to trade with losses. The Nasdaq is the worst performer, down 1.5%. Losses are generally broad based. Yet, energy and utilities are moving higher. They are up 1.9% and 2.0%, respectively.Both sectors encountered selling pressure in recent sessions. In past sessions, oil's retreat from its highs pushed energy stocks out of favor, while the defensive-oriented utilities sector was shunned as investors sought bargains in more aggressive names.

EUR/USD $1.5850, $1.5800, $1.5750, $1.6000
USD/JPY Y106.50, Y106.00
AUD/USD $0.9710, $0.9685

Stock futures are oscillating as oil futures rise in electronic trading (S&P futures +0.6, Nasdaq futures -18.0). Oil is now indicated roughly 0.7% higher at $130.20 per barrel. Schlumberger reported earlier this morning its earnings totaled $1.16 per share for the most recent quarter, topping the consensus earnings estimate by $0.04. Demand for Schlumberger's oil and gas exploration and production services runs high when oil commands rich prices.
Despite reporting better-than-expected earnings results Thursday morning, Coca-Cola has been removed from Goldman Sachs's Conviction Buy List. Separately, Lehman Brothers had its rating trimmed to A2 by Moody's with a negative outlook.
After yesterday's close, heavy hitters Microsoft, Merrill Lynch , and Google all reported results that failed to meet estimates. On the other hand, IBM and Honeywell reported better-than-expected earnings results. Citigroup reported a loss that was less severe than feared.

- Inflation more persistent than expected a few months ago
- Signs of acceleration in internal production costs
- Economic impact of oil shock less severe than 30 years ago

The dollar headed for a weekly advance against the euro, rebounding from a record low on signs U.S. investment banks will withstand credit-market losses stemming from the collapse of the subprime-mortgage market.
The U.S. currency also rose versus the pound on speculation the U.K. government will boost borrowing as Chancellor of the Exchequer Alistair Darling introduces new spending guidelines. The yen was set for a weekly loss against the South African rand as a rally in U.S. stocks following JPMorgan Chase & Co.'s better-than-expected earnings encouraged so-called carry trades.
``We've had a big two-day rally in financial stocks in the U.S., which brought about a degree of stability Generally speaking there's a belief in the market that conditions will stabilize,'' said Derek Halpenny, head of currency research in London at Bank of Tokyo-Mitsubishi. ``That's given the impetus to the dollar against the euro.''
``Currency traders are likely to take their cue from the stock market,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``Earnings season isn't as bad as many had feared. There will be some pressure on the yen to weaken.''
Profit at JPMorgan, the largest U.S. bank by market value, fell 52 percent on mortgage-related writedowns and costs from the takeover of Bear Stearns Cos. Second-quarter net income of 54 cents a share compared with expectations for 44 cents in a survey of analysts.
Citigroup Inc. reports quarterly earnings later today. Wells Fargo & Co., the second-biggest U.S. mortgage lender, on July 16 announced profit that beat analyst estimates. Merrill Lynch & Co., the third-biggest U.S. securities firm, fell after it yesterday reported a fourth straight quarterly loss.
Cheaper oil is still helping to support the greenback against the euro. Crude oil for August delivery is set for a record weekly drop in dollar terms, having lost more than $14 a barrel since July 11 in New York.
The euro-dollar exchange rate and oil have moved in the same direction 90 percent of the time during the past year, according to calculations based on the correlation of their value changes.

EUR/USD The rally extended further into early European dealing, touching a high at $1.5887 before easing. .
GBP/USD traded within $1,9900-$2,0000.
USD/JPY rose from Y105.90 to Y106.80.

AT 12:15 GMT ECB Council member Mario Draghi is due to speak on "monetary policy expectations". Also today will be published at 13: 00 GMT Leading Indicators (MoM) (Jun) of Cnada.

Dropped back from around $1.5875 to trade around $1.5830, as the dollar gets a general boost from the release of better than expected Citi earnings.

The dollar headed for a weekly advance against the euro, rebounding from a record low on signs U.S. investment banks will withstand credit-market losses stemming from the collapse of the subprime-mortgage market.
The U.S. currency also rose versus the pound on speculation the U.K. government will boost borrowing as Chancellor of the Exchequer Alistair Darling introduces new spending guidelines. The yen was set for a weekly loss against the South African rand as a rally in U.S. stocks following JPMorgan Chase & Co.'s better-than-expected earnings encouraged so-called carry trades.
``We've had a big two-day rally in financial stocks in the U.S., which brought about a degree of stability Generally speaking there's a belief in the market that conditions will stabilize,'' said Derek Halpenny, head of currency research in London at Bank of Tokyo-Mitsubishi. ``That's given the impetus to the dollar against the euro.''
``Currency traders are likely to take their cue from the stock market,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``Earnings season isn't as bad as many had feared. There will be some pressure on the yen to weaken.''
Profit at JPMorgan, the largest U.S. bank by market value, fell 52 percent on mortgage-related writedowns and costs from the takeover of Bear Stearns Cos. Second-quarter net income of 54 cents a share compared with expectations for 44 cents in a survey of analysts.
Citigroup EPS -$0.49, better than expected. Wells Fargo & Co., the second-biggest U.S. mortgage lender, on July 16 announced profit that beat analyst estimates. Merrill Lynch & Co., the third-biggest U.S. securities firm, fell after it yesterday reported a fourth straight quarterly loss.
Cheaper oil is still helping to support the greenback against the euro. Crude oil for August delivery is set for a record weekly drop in dollar terms, having lost more than $14 a barrel since July 11 in New York.
The euro-dollar exchange rate and oil have moved in the same direction 90 percent of the time during the past year, according to calculations based on the correlation of their value changes.

Resistance 3: Y108.40
Resistance 2: Y107.70
Resistance 1: Y107.00
Current price: Y106.35
Support 1: Y105.90
Support 2: Y105.40
Support 3: Y104.60
Comments: Techs on yen hasn’t changed. Resistance is at Y107.00 (yesterday’s high). Break above will open the way to Y107.70, then - Y108.40. Support comes near session lows on Y105.90. Below correction may widen to Y105.40 and Y104.60.

Resistance 3: Chf1.0380
Resistance 2: Chf1.0320
Resistance 1: Chf1.0260
Current price: Chf1.0198
Support 1: Chf1.0140
Support 2: Chf1.0080
Support 3: Chf1.0010
Comments: Techs hasn’t changed. Dollar tries to rebound after testing Chf1.0260 (yesterday’s high). Above the resistance comes at channel line from Jun 13 on Chf1.0320, with a break above will strengthen bullish momentum and open the way to Chf1.0380. Support is around Chf1.0140, then – on Chf1.0080 and Chf1.0010 (Jul 15 low).

Resistance 3: $2.0200
Resistance 2: $2.0160
Resistance 1: $2.0070
Current price: $1.9960
Support 1: $1.9900
Support 2: $1.9810
Support 3: $1.9750
Comments: Sterling tries to rebound with yesterday's highs are the resistance now at $2.0070. Above the strong level comes at channel line from Jun 13 on $2.0160/70. Break above will open the way to $2.0200. Support comes near session lows on $1.9900. Below correction may widen to $1.9810 and $1.9750.

Resistance 3:$1.6080
Resistance 2: $1.6030
Resistance 1: $1.5940
Current price: $1.5862
Support 1: $1.5800
Support 2: $1.5760
Support 3: $1.5600
Comments: Minor resistance is at $1.5940/60. Above the target comes at life-time high on $1.6030, then - $1.6080. Support comes near lows on $1.5800. Below – around channel support line from Jun 13 on $1.5760/70 with stronger – on Jul 07 low at $1.5600/10.

EUR
Bids: $1.5820
Offers: $1.5880/85, $1.5910, $1.5950

JPY
Bids: Y105.90, Y105.50/40
Offers: Y106.50, Y107.00/10

GBP
Bids: $1.9925/20, $1.9910/00

Offers: $2.0000, $2.0020/25, $2.0040/50

AUSSIE
Bids: $0.9660/20
Offers: $0.9790/0.9800

"The week of the 12th is survey week for the employment report. A survey week comparison reveals that initial claims have fallen by 18,000. Our preliminary projection is for a 60,000 decline in July payrolls while the unemployment rate remains unchanged at 5.5%."

The dollar headed for a weekly advance against the euro, rebounding from a record low on signs U.S. investment banks will withstand credit-market losses arising from the nation's subprime mortgage collapse.
The yen was set for a weekly loss against the South African rand as a rally in U.S. stocks following JPMorgan Chase & Co.'s better-than-expected earnings encouraged so-called carry trades. The yen fell 1.1% this week against the South African rand. It also declined 0.5% versus Australian dollar and weakened by 0.1% versus the New Zealand dollar.
The Bank of Japan held its target lending rate at 0.5 percent this week, the lowest among major economies. Benchmark rates are 12% in South Africa, 7.25% in Australia and 8.25% in New Zealand.

EUR/USD tested $1.5885 before retreated to $1.5850.
GBP/USD consolidated within the $1.9965/$2.0000 range before sliding to $1.9912.
USD/JPY held between the Y105.00/50 zone.

At 09:00 GMT EU trade balance will be released. There are no key US data.

Japan's benchmark stock indices ended Friday's session lower across the board, fall sharply from early morning highs. The Nikkei 225 lost 84.25 points, or 0.65%, to stand at 12803.70. The broader-based TOPIX was down 11.22 points at 1252.43.

Stock market fixing:
Nikkei +127.15 +1.00% 12,887.95
Topix +14.37 +1.2% 1 263.65
CAC +113.54 +2.76% 4,225.99
FTSE +135.70 +2.63% 5,286.30
DAX +115.90 +1.88% 6,271.27
Dow +207.38 +1.85% 11,446.66
NASDAQ +27.45 +1.20% 2,312.30
S&P +14.96 +1.20% 1,260.32
10yr Note +1.0400 +0.264% 4.038%
NYMEX Crude Oil -5.31 -3.95% 129.29
Gold +8.00 +0.83% 970.70

Japanese stocks rose, snapping a four-day drop by the Topix index, as concerns eased that credit losses will continue to plague banks and cause capital shortages.
Mizuho Financial Group Inc., Japan's third-biggest bank by market value, rose to the highest in a month while Orix Corp., the nation's biggest leasing company, surged. Brokerage Nomura Holdings Inc. climbed the most in almost three months.
Mizuho rose 4.6%, the highest level since June 20, while Mitsubishi UFJ Financial Group Inc. gained 3%. Orix jumped 5%.
Nomura climbed 5%, the most since April 28. Daiwa Securities Group Inc. surged 5% after the Nikkei newspaper said it will form an alliance with Brazil's Banco Itau.
Inpex Holdings Inc. lost 0.9%. Japan Petroleum Exploration Co. declined 2.2%.
Denso Corp. lost 2.5%, making it the second-biggest loser on the Nikkei. Its shares were cut to ``hold'' at Nikko Citigroup Ltd. due to a forecast for slower production growth by its main customer, Toyota Motor Corp.

European stocks surged the most in three months after Nokia Oyj and JPMorgan Chase & Co. reported earnings that beat analysts' estimates, easing concern a slowing economy and credit losses will stifle profit growth.
Royal Bank of Scotland Group Plc led banking shares to their biggest gain since March. Nokia climbed to a six-week high as the world's biggest maker of mobile phones raised its forecast for industry sales. CRH Plc rallied 9.2% as a report showed U.S. housing starts unexpectedly rose in June.
Royal Bank climbed 8.8%. UBS AG jumped 7.9%. BNP Paribas SA rose 6.7%.
Allied Irish Banks increased 13%, the most since 1989. Bank of Ireland Plc added 10%.
Swedbank AB surged 9.6% after reporting earnings that beat analysts' estimates.
Nokia rose 7.9%. The company reported second-quarter earnings of 37 cents a share, excluding costs, and sales of 13.2 billion euros ($21 billion). Analysts had predicted 36 cents on sales of 12.8 billion euros. The company raised its forecast for industry sales on higher demand in markets including Russia and India.

Stocks on Wall Street rallied Thursday.
Housing starts and permits both rose unexpectedly, but that was because of a jump in apartment construction due to a change in New York City building rules. Starts of single-family homes fell to a 17-year low.
Initial jobless claims rose, but was still much lower than forecast.
Banks Investors are keeping a close eye on financial shares as earnings in the bank sector keep trickling in.
JPMorgan Chase reported a 52% decline in net income Thursday, but earnings topped expectations. JPMorgan posted a profit of $2 billion, or 54 cents per share.
The earnings continues with tech heavyweights Google, Microsoft and IBM scheduled to release their results after the market close.
Online auction site eBay reported a jump in quarterly profit late Wednesday, but offered a weak outlook for the current period.
Two Dow components, Coca-Cola and United Technologies, also both topped forecasts with their results. Coke reported a rise in earnings excluding items, although a writedown related to its bottler resulted in a drop in net income. Diversified manufacturer United Technologies reported improved earnings and revenue.

The yen dropped against the dollar and the euro as better-than-expected earnings at JPMorgan Chase & Co. encouraged investors to sell the currency to buy higher- yielding assets outside Japan.
The dollar fell against the euro as a report showed manufacturing in the Philadelphia region contracted in July for an eighth month.
The dollar weakened versus the euro on a sign of contraction in manufacturing. The Philadelphia Fed's general economic index improved to minus 16.3 this month from minus 17.1 in June, the bank reported today. Readings less than zero signal a decline.
Builders started work in June on the fewest single-family U.S. homes since 1991, the Commerce Department said.

EUR/USD printed highs on $1.5890 and retreated to $1.5780. Laterraterebounded$1.5860.
GBP/USD printed session high on $2.0040 before it failed to set above. Furtherratefellto$1.9940.
USD/JPY tested resistance at Y107.10 before corrected to Y105.92.

At 09:00 GMT EU trade balance will be released. TherearenokeyUSdata.

Resistance 3: Chf1.0380
Resistance 2: Chf1.0320
Resistance 1: Chf1.0260
Current price: Chf1.0180
Support 1: Chf1.0140
Support 2: Chf1.0080
Support 3: Chf1.0010
Comments: Dollar tries to rebound after testing Chf1.0260 (yesterday’s high). Above the resistance comes at channel line from Jun 13 on Chf1.0320, with a break above will strengthen bullish momentum and open the way to Chf1.0380. Support is around Chf1.0140, then – on Chf1.0080 and Chf1.0010 (Jul 15 low).

Resistance 3: $2.0200
Resistance 2: $2.0160
Resistance 1: $2.0070
Current price: $1.9985
Support 1: $1.9940
Support 2: $1.9900
Support 3: $1.9810
Comments: Sterling tries to rebound with yesterday's highs are the resistance now at $2.0070. Above the strong level comes at channel line from Jun 13 on $2.0160/70. Break above will open the way to $2.0200. Support comes near session lows on $1.9940. Below correction may widen to $1.9900 and $1.9810.

Resistance 3:$1.6080
Resistance 2: $1.6030
Resistance 1: $1.5940
Current price: $1.5870
Support 1: $1.5800
Support 2: $1.5760
Support 3: $1.5600
Comments: Techs on euro hasn’t changed. Minor resistance is at $1.5940/60. Above the target comes at life-time high on $1.6030, then - $1.6080. Support comes around channel support line from Jun 13 on $1.5800. Below will bring the rate down to $1.5760 with stronger – on Jul 07 low at $1.5600/10.

The Wall Street Journal is to cut 50 journalists' jobs as the paper acquired last year by Rupert Murdoch's News Corporation scales back, the Telegraph reports.

High Low Close
EUR/USD 1.5892 1.5782 1.5856
USD/JPY 107.08 104.74 106.16
GBP/USD 2.0073 1.9948 1.9985
USD/CHF 1.0257 1.0133 1.0193

EUR/JPY 169.09 165.97 168.35
EUR/GBP 0.7932 0.7906 0.7932
GBP/JPY 213.61 209.62 212.17
GBP/CHF 2.0478 2.0289 2.0374

Change % Change Last
Nikkei +127.15 +1.00% 12,887.95
Topix +14.37 +1.2% 1 263.65
CAC +113.54 +2.76% 4,225.99
FTSE +135.70 +2.63% 5,286.30
DAX +115.90 +1.88% 6,271.27
Dow +207.38 +1.85% 11,446.66
NASDAQ +27.45 +1.20% 2,312.30
S&P +14.96 +1.20% 1,260.32
10yr Note +1.0400 +0.264% 4.038%
NYMEX Crude Oil -5.31 -3.95% 129.29
Gold +8.00 +0.83% 970.70

06:00 Germany PPI (June) 0.6% 1.0%
06:00 Germany PPI (June) Y/Y 6.5% 6.0%
08:30 UK M4 money supply (June) provisional - 0.4%
08:30 UK M4 money supply (June) provisional Y/Y - 10.0%
08:30 UK M4 lending (June) provisional, bln - +4.8
08:30 UK PSNCR (June), bln 12.0 10.1
09:00 EU(15) Trade balance (May) unadjusted, bln - 2.3