"This week saw the market scale back its expectations of a 25-bp rate hike at the Fed's August meeting on the prompting of unnamed senior Fed officials. We believe that this is prudent considering the substantial economic problems that Chairman Bernanke must still manage. However, the Fed will continue to talk tough on inflation, and be ready to act even as the US economy remains sluggish heading into 2009."

After moving sideways for much of the afternoon, the stock market has tripped and fallen lower. In turn, the major indices have found new session lows.
Pessimism has been prevalent for the entire session; 85% of the S&P 500 components are trading lower.
General Motors (GM 13.83, -0.96) and Ford (F 5.86, -0.46) were placed on watch negative at Standard & Poor's. The stocks have fallen to their worst level of the session.
Small and mid-cap stocks also remain strongly out of favor. The Russell 200 is down 2.1% and the S&P 400 is down 1.5%.

Ford Motor Co said 2008 would be hard and it might not break-even in '09. Ford lowered its '08 auto sales forecast to 14.7-15.2 million units and said it plans to cut truck production.

Stocks remain largely unchanged from previous levels, holding on to substantial losses. All ten of the major economic sectors are showing losses.
Automobile manufacturers (-6.1%) are one of the weakest indutsries in Friday's trading. Shares of Ford Motor Company (F 5.88 -0.44) and General Motors (GM 14.10, -0.69) are both dragging.
The Dow Jones Transportation Average is down 1.9% this session. However, the index is up 13.6% year-to-date.

The dollar was headed for its biggest weekly drop against the euro in almost three months on speculation the Federal Reserve will delay increasing interest rates to protect the U.S. economy.
The greenback dropped this week versus all of the other major currencies as Lehman Brothers Holdings Inc. said losses at Fannie Mae and Freddie Mac, the two largest U.S. mortgage- finance companies, may mount. The euro was headed for a sixth weekly advance against the yen, the longest stretch in more than a year, as German producer price inflation accelerated.
``The re-emergence of financial concern places a question mark on the Fed's ability to raise interest rates,'' said Matthew Strauss, a senior currency strategist in Toronto at RBC Capital Markets Inc., a unit of Canada's biggest bank by assets. ``The possibility of a revisit to $1.60 is still in the cards.''
The U.S. currency has fallen 1.5 percent against the euro this week, its biggest drop since March 28. The dollar rose 2.5 percent last week, the most since 2005, and touched a one-month high of $1.5303 per euro after Fed Chairman Ben S. Bernanke said economic risk had faded, raising bets that the central bank would increase borrowing costs this year to slow inflation.
The dollar decreased 0.6 percent against the yen this week, while the euro increased 0.9 percent versus Japan's currency in the longest winning streak since May 2007.
The Australian and New Zealand dollars headed for weekly advances on speculation the countries will maintain their yield advantage over the U.S. The target lending rates of 7.25 percent in Australia and 8.25 percent in New Zealand compare with 2 percent in the U.S.
Futures on the Chicago Board of Trade showed a 10 percent chance the Fed will increase the target rate for overnight lending between banks by a quarter-percentage point on June 25, compared with 22 percent odds a week ago. The odds of an increase in August also fell.
Fannie Mae and Freddie Mac, the two largest sources of U.S. home loans, may post further losses in the second quarter as the housing market continues to deteriorate, Lehman said in a note to clients today. Moody's Investors Service stripped bond insurers MBIA Inc. and Ambac Financial Group Inc. of their Aaa ratings yesterday.
Crude oil for July delivery climbed 2.8 percent to $134.60 a barrel today as the weaker dollar made commodities more attractive as a currency hedge and the New York Times reported that Israel rehearsed for a potential bombing attack on nuclear targets in Iran. Oil reached a record $139.89 on June 16.
The correlation of the dollar versus the euro and oil prices is minus 0.93 for the past year, indicating they move in the opposite direction 93 percent of the time, according to Bloomberg calculations based on value changes.
German producer-price inflation, an early indicator of price pressures in the economy, accelerated to the fastest pace in almost two years in May on energy costs. Prices for goods from newsprint to plastics increased 6 percent from a year earlier, the most since July 2006, the Federal Statistics Office in Wiesbaden said today.
European Central Bank President Jean-Claude Trichet said on June 5 that the bank may increase its 4 percent main refinancing rate by a quarter-percentage point next month.
``Monetary policy expectations will prevent any rapid declines in the euro versus the dollar and the yen,'' said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland in Tokyo and a former Bank of Japan currency trader. ``A July rate hike is a done deal.''

Falling oil prices propelled the Nasdaq higher Thursday, but the Dow struggled after Citigroup warned that it will take big second-quarter mortgage-related writedowns. Concerns about the financial sector again dragged on stocks Friday.
Financials under fire: Ratings agency Moody's cut its credit ratings on MBIA (MBI) and Ambac Financial (ABK) on worries about the company's financial strength.
That contributed to a Merrill Lynch downgrade of a number of regional banks, according to published reports. Meanwhile, large financial firms including Morgan Stanley, Bank of America and Citigroup all tumbled.
But declines were broad based, with Chevron and Coca-Cola the only two gainers of the 30 big stocks that make up the Dow.
U.S. light crude oil for July delivery rose $4.42 to $136.35 a barrel on the New York Mercantile Exchange. Prices rose on reports that Israel may be conducting test runs for an attack on Iran and further thoughts on China's announcement Thursday that it's boosting fuel subsidies.
COMEX gold for August delivery rose $2.60 to $906.80 an ounce.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.13% from 4.21%.

Stocks are trending upward from their session lows, but remain deep in negative territory. Financials (-0.9%) are leading the upswing, having reclaimed a substantial portion of the day's losses.
Large-cap tech remains under considerable pressure. The Nasdaq 100 is down more than 2.0%. Apple (AAPL 177.53, -3.37) and Qualcomm (QCOM 48.81, -1.55) are weighing on the index.

Has slipped back under Chf1.0320, taking out Thursday's low in the process as the greenback comes under pressure across the board. Small demand now noted into Chf1.0300 and Chf1.0270, stronger around the June lows at Chf1.0150.

Though off its morning low, the stock market continues to sport strong losses in Friday's early going. The morning's losses are broadbased - only the energy sector (+0.2%) is showing a gain.
Oil prices have rebounded to reclaim their recent losses. Crude is currently trading 3.25% hihger at $136.20 per barrel.
The pessimism surrounding equities has prompted buying in Treasuries. The benchmark 10-year Note is up 18 ticks, lowering its yield to 4.13%.

The pare posted fresh lows for the day below Y107.30 as US stocks go down further, Dow lost 180 and now trades sub 12,000 mark. Bids eyed Y107.00/10 with further stops below there.

Each of the major indices is trading more than 1.0% lower. The Nasdaq is the leading loser, down 1.5%.
Weighing on the tech heavy Nasdaq are the likes of Apple (AAPL 178.03, -2.87), Cisco (CSCO 24.94, -0.59), and Intel (INTC 22.40, -0.45). Each made gains in yesterday's session.

EUR/USD; $1.5200, $1.5300
USD/JPY; Y108.00/10
GBP/USD; $1.9640

Stocks appeared poised for losses at the start of Friday's session as investors kept an eye on oil prices and worries about financial firms persisted. WTI Nymex crude oil extended gains to $136.00, up $4.07 on session.
Companies: Moody's Investor Service said it has lowered its credit rating on bond insurers MBIA (MBI) and Ambac Financial Group (ABK). The ratings agency cut MBIA's "Aaa" rating to "A2" and Ambac's "Aaa" rating to "Aa3" amid concerns about the companies' financial strength.
A Wachovia investment unit has liquidated a fund that specialized in mortgage-backed securities worth $403 million, the Wall Street Journal reported. The news comes amid fears about Wachovia's financial health after the company slashed jobs and announced the departure of its chief executive earlier this month.
Yahoo is planning a major reorganization of its business, according to the Journal. The report comes amid a flurry of executive departures at the tech firm, which announced last week that merger talks with Microsoft had failed.
Continental and UAL Corp.'s United Airlines announced a marketing alliance Thursday that they hope will help raise revenue to offset rising fuel costs.
Live Nation (LYV) is negotiating the exit of its chairman, Michael Cohl, the Wall Street Journal reported late Thursday.

- Says illogical to ask OPEC to increase output
- Will "argue against" output increase at Jeddah meeting
- Says OPEC should not increase oil output.

Canadian dollar finds favour on the back of the April retail sales data (fifth increase in seven months), moving to the day's highs versus the greenback at C$1.0104. Bids still noted into C$1.0100 with stops below.

the next data was issued
06:00 Germany PPI (May) Y/Y 6,0% 5,8% 5,2%
06:00 Germany PPI (May) 1,0% 0,9% 1,1%

The euro climbed against the dollar and the yen, heading for weekly gains versus both currencies. The dollar fell against a basket of major currencies on Friday after a rally in oil and a ratings downgrade of two U.S. insurers that raised fresh jitters about the financial sector and broader U.S. economic health.Investment bank Citigroup also warned late on Thursday that it could take substantial writedowns in the second quarter.
The pound fell against the euro after Bank of England Deputy Governor John Gieve said U.K. house prices will extend their slide, denting consumer confidence. The currency dropped from near the highest level in three weeks as investors reduced bets the central bank will raise interest rates to curb inflation. Gilts snapped a two-day decline after Gieve told business leaders yesterday property values ``have further to fall'' and the ``shock to expectations appears to be having a wider impact on confidence.''

EUR/USD: edged higher from$1.5530 to $1.5600/10. Bids: $1.5490, $1.5460. Offers: $1.5585/90 ($1.5600).
GBP/USD: Opened early Europe at $1.9719. European dealing opened with cable trading around $1.9720, with traders anticipating a quiet session due to no UK or US data. Cable did
manage to extend highs to $1.9736 in early trade. Cable was pulled to late morning highs at $1.9748 as the greenback came under general pressure. Early US dealing then saw rate advancing to $1.9789 as the greenback came under general pressure, oil also hitting session highs.Cable offers $1.9800, stops above, offers $1.9840/50, bids $1.9700
USD/JPY: Opened in early Europe around Y107.87. European dealing saw a slow grind lower, dollar-yen marking initial lows at Y107.65 before a bounce back to Y108.00 as euro-yen moved higher. Rate slipped to marginal lows around Y107.60 at the end of the morning. Early US trade pulled dollar-yen to fresh lows for the week at Y107.40 as stocks took a tumble. Dlr-yen offers/exps Y108.00/10, stops Y108.40/60, bids Y107.10/00

Friday the only report will be Canadian retail sales figures at 12:30 GMT.

EUR/USD; $1.5200, $1.5300
USD/JPY; Y108.00/10
GBP/USD; $1.9640
USD/CAD; C$1.0100, C$1.0150, C$1.0300

Stops triggered through $1.9750 and $1.9775, with the late-morning rally then topping out at $1.9778. Techs note the break back above the 100-day moving average at $1.9753, with traders now eyeing offers placed around this month's $1.9800 high.

The dollar headed for a weekly decline against the euro on speculation the Federal Reserve will hold off from raising interest rates next week to support the U.S. economy.
The currency is also poised to drop this week versus the yen after a contraction in U.S. manufacturing prompted traders to pare bets for a rate increase on June 25. The euro was set for a sixth weekly advance against the yen, its longest in more than a year, on speculation European Central Bank President Jean-Claude Trichet will signal in a speech today that policy makers may raise borrowing costs next month.
``The dollar's decline comes as hawkish sentiment wanes,'' said Paul Robinson, a London-based foreign-exchange strategist at Barclays Capital and a former Bank of England economist. ``We don't actually expect the Federal Reserve to raise rates for the next few months.''
Futures on the Chicago Board of Trade showed a 12 percent chance the Fed will increase the target rate for overnight lending between banks by a quarter-percentage point on June 25, compared with 22 percent odds a week ago.
The Philadelphia Fed reported yesterday that its general economic index, a gauge of manufacturing, dropped to minus 17.1 in June, from minus 15.6 the previous month. Data this week also showed U.S. housing starts fell in May to a 17-year low and industrial production unexpectedly declined.
``Monetary policy expectations will prevent any rapid declines in the euro versus the dollar and the yen,'' said Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland in Tokyo and a former Bank of Japan currency trader. ``A July rate hike is a done deal.''

July Nymex crude oil is trading near session high at $133.00 after comments from Iran official saying consensus on crude output change at the Jeddah meeting as "unlikely". Traders are braced for a volatile session given it is the July Nymex crude oil contract expiry today.

Resistance 3: Y110.00
Resistance 2: Y109.20
Resistance 1: Y108.60
Current price: Y107.69
Support 1: Y107.40
Support 2: Y106.80
Support 3: Y106.20
Comments: Pair continues to trade within a tight downside range since June 16. Below yesterday's lows on Y107.40, support is around Y106.80. Below correction may reach Y106.20. Above Y108.60 (Monday’s high), further resistance comes at Y109.20. Rise above may extend to Jan 10 high on Y110.00/10.

Resistance 3: Chf1.0540
Resistance 2: Chf1.0500
Resistance 1: Chf1.0470
Current price: Chf1.0402
Support 1: Chf1.0320
Support 2: Chf1.0300
Support 3: Chf0.0260
Comments: Dollar falls. The nearest support at today's lows at Chf1.0320, then is June 12 low at Chf1.0300, than comes Chf1.0260. Break above Chf1.0470 will open a way to Chf1.0500. Further level comes on Chf1.0540.

Resistance 3: $1.9850
Resistance 2: $1.9800
Resistance 1: $1.9740
Current price: $1.9718
Support 1: $1.9470
Support 2: $1.9400
Support 3: $1.9360Comments: Tecjs is steady. Minor resistance spotted at yesterday high on $1.9740, then – near Jun 09 on $1.9800, with a break above this level there is a room for testing $1.9850. The nearest support is $1.9470 with a break under will open the way to $1.9400 (Last Friday’s low) and then – to May 15 lows on $1.9360.

Resistance 3:$1.5820
Resistance 2: $1.5660
Resistance 1: $1.5580
Current price: $1.5564
Support 1: $1.5460
Support 2: $1.5340
Support 3: $1.5300
Comments: Euro failed to break above the resistance which comes at yesterday's session high on $1.5580, then – at $1.5660. Stronger level is around $1.5820. Strong support comes at recent day's low on $1.5460, then – on $1.5340 with a break under will open the way to $1.5300 (Friday’s low).

EUR
Bids: $1.5490, $1.5460.
Offers: $1.5585/90 ($1.5600).
JPY
Bids:Y107.80/70, Y107.50/40. Offers: Y108.10, Y108.40, Y108.60 (Y108.70, Y109.00).
GBP
Bids: $1.9700,
Offers: $1.9750, $1.9800
AUSSIE
Bids: $0.9650
Offers: $0.9490, $0.9520

EUR/USD triggered stops on the break of $1.5550, printing high on $1.5567 at time of writing. Next supply noted at $1.5580/85, with stops through $1.5600.

Euro has slightly raised after the publication PPI Germany. PPI in may has raised at 6.0% Y/Y. Analysts expected value at 5.8%.
The Australian and New Zealand dollars headed for weekly gains on speculation the nations will maintain their interest-rate advantage over the U.S. as the Federal Reserve may delay raising borrowing costs.
The currencies climbed to the highest in more than a week as traders pared bets the Fed will increase its 2 percent benchmark rate next week after a U.S. manufacturing report signaled yesterday the economy is weakening.
Benchmark rates are 7.25 percent in Australia and 8.25 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the Australian and New Zealand currencies favorites for so-called carry trades.

EUR/USD printed high on $1,5540 before sliding to support on $1,5490.
GBP/USD trades in range $1,9600-1,9640.
USD/JPY fell from the area of session high on Y108.05 to session lows on Y107.71.

On Friday the only report will be Canadian retail sales figures at 12:30 GMT.

Japan's benchmark stock indices ended Friday's session sharply lower, although off the session's worst levels. The benchmark Nikkei 225 was down 188.09 points, or 1.33%, at 13942.08. The broader-based TOPIX was 18.86 points, or 1.37%, lower at 1356.92.

Stock market fixing:
Nikkei 225 -322.65(-2.2%)14,130.17
Topix-34.04(-2.4%)1,375.60
DAX 30 -7.74(-0.12%)6721.17
САС 40 -27.36(-0.59%)4591.39
FTSE 100 -48.50(-0.84%)5708.40
Dow +34.03(+0.28%)12063.09
Nasdaq +32.36(+1.33%)2462.07
S&P +5.02(+0.38%)1342.83
10YR -20/324.21%97 8/32
OIL NYMEX -4.75(-3.48%)$131.93

Japan's stocks fell the most in two months.
Chuo Mitsui Trust Holdings Inc., Japan's second-largest publicly traded trust bank, sank the most in three months. Honda Motor Co. led automakers to their deepest drop in two months after Citigroup Inc. and Deutsche Bank AG predicted U.S. vehicle sales may plunge to a 15-year low.
Chuo Mitsui tumbled 5.8%, the most since March 26, to 704 yen. Nomura Holdings Inc., Japan's largest brokerage, sank 4%. Orix Corp., which provides financial services including credit-card loans and mortgages, tumbled 4.6%. Honda, which gets more than half of its profit from North America, retreated 3.4%, and Mazda Motor Corp. sagged 5.5%. Nissan Motor Co. lost 4.3%. The Topix Transportation Equipment Index had its sharpest drop since April 4.

European stocks fell to a three- month low as speculation grew that banks will post more losses and a U.S. manufacturing report provided the latest evidence the world's largest economy is slipping into a recession.
UBS AG and Deutsche Bank AG retreated for a second day as Goldman Sachs Group Inc. forecast more writedowns, while HBOS Plc slumped the most in a week after saying bad home loans rose. Stora Enso Oyj declined as Merrill Lynch & Co. recommended selling shares in the world's second- biggest papermaker on lower earnings prospects.
UBS fell 3.7%. Deutsche Bank, Germany's biggest bank, lost 1.7%. Deutsche Bank and UBS face ``earnings headwinds'' of 480 million euros ($743 million) and 4 billion francs ($3.8 billion), respectively, Goldman analysts said in a report.
HBOS dropped 6.9%. The U.K.'s biggest mortgage lender said home prices will fall as much as 9% this year, more than it earlier forecast, and bad home loans rose 17%.
European, Aeronautics, Defence & Space Co. slipped 2.5%. Boeing Co. successfully challenged the U.S. Air Force's $35 billion aerial-tanker award to EADS and Northrop Grumman Corp., giving Boeing another shot at the program after a three-month lobbying blitz.
TietoEnator Oyj lost 6%. The biggest computer-services company in the Nordic region said it ended talks with bidders after no ``firm and actionable offers'' emerged.

Stocks drifted Thursday morning as investors weighed falling oil prices and a big drop in a key manufacturing index.
Stocks have been under pressure this week as oil prices have flirted with new records, adding to worries about inflation. Concerns about the ongoing credit market fallout have also been in play after Morgan Stanley and Goldman Sachs both reported big drops in quarterly profit.
Economy: The Philadelphia Fed index, a regional reading on manufacturing, fell to -17.1 in June from -15.6 in May. The number of Americans filing new claims for unemployment fell modestly by 5,000 last week to 381,000, but stayed at levels that continued to reflect a struggling economy.
Another economic report was more positive. The Conference Board's index of leading economic indicators rose 0.1% in May, as it did in April. Economists had expect LEI to remain unchanged.
Company news: Shares of Ford were little changed despite news that billionaire Kirk Kerkorian's Tracinda Corp. had boosted its stake in Ford to 6.49% from 5.5%.
Circuit City reported a wider loss from a year earlier on weaker revenue due to sluggish sales amid the consumer spending slowdown.

The dollar rose against the euro for the first time in four days after an unexpected surge in U.K. retail sales led traders to sell the 15-nation currency versus the greenback and buy the pound.
The pound increased to a two-week high versus the euro and advanced against the dollar as U.K. retail sales increased in May by the most since records began in 1986. The Office for National Statistics said in London that British retail sales rose 3.5% last month after falling 0.3% in April. The median forecast of 37 economists was for a 0.1% decrease.
Futures on the Chicago Board of Trade show a 12% chance the Fed will increase the 2% target rate for overnight lending between banks by a quarter-percentage point on June 25, compared with 22% odds a week ago.
The U.S. currency has traded in a range of $1.53 to $1.56 per euro this week after last week's 2.5% increase, the biggest since 2005.
Canada's dollar rose against its U.S. counterpart for a fourth day, its longest winning streak in a month, after a government report showed inflation accelerated in May on fuel prices.

EUR/USD printed high on$1,5585 before sliding to support on $1,5460.
GBP/USD rose from $1,9585 to $1.9740 amid strong statistic releases.
USD/JPY was boosted by bids on Y107,40 to session highs on Y108.04.

Friday the only report will be Canadian retail sales figures at 12:30 GMT.

Resistance 3: Y110.00
Resistance 2: Y109.20
Resistance 1: Y108.60
Current price: Y107.85
Support 1: Y107.50
Support 2: Y106.50
Support 3: Y106.20
Comments: Pair trades in range. Above Y108.60 (Monday’s high), further resistance comes at Y109.20. Rise above may extend to Jan 10 high on Y110.00/10. Below yesterday's lows on Y107.45, support is around Y106.50. Below correction may reach Y106.20.

Resistance 3: Chf1.0540
Resistance 2: Chf1.0500
Resistance 1: Chf1.0470
Current price: Chf1.0420
Support 1: Chf1.0320
Support 2: Chf1.0300
Support 3: Chf0.0260
Comments: Pair failed to break above the resistance at yesterday's session high on Chf1.0470, break above will open a way to Chf1.0500. Further level comes on Chf1.0540. The nearest support at today's lows, then is June 12 low at Chf1.0300, than comes Chf1.0260.

Resistance 3: $1.9850
Resistance 2: $1.9800
Resistance 1: $1.9740
Current price: $1.9726
Support 1: $1.9470
Support 2: $1.9400
Support 3: $1.9360Comments: Minor resistance spotted at yesterday high on $1.9740, then – near Jun 09 on $1.9800, with a break above this level there is a room for testing $1.9850. The nearest support is $1.9470 with a break under will open the way to $1.9400 (Last Friday’s low) and then – to May 15 lows on $1.9360.

Resistance 3: $1.5820
Resistance 2: $1.5660
Resistance 1: $1.5580
Current price: $1.5534
Support 1: $1.5460
Support 2: $1.5340
Support 3: $1.5300
Comments: Euro failed to break above the resistance $1.5580. The nearest resistance comes at yesterday'ssession high on $1.5580, then – at $1.5660. Stronger level is around $1.5820. Strong support comes at recent day's low on $1.5460, then – on $1.5340 with a break under will open the way to $1.5300 (Friday’s low).

High Low Close
EUR/USD 1.5585, 1.5465, 1.5500
USD/JPY 108.04, 107.39, 107.93
GBP/USD 1.9742, 1.9577, 1.9719
USD/CHF 1.0472, 1.0318, 1.0447

EUR/JPY 167.67, 166.76, 167.31
EUR/GBP 0.7945, 0.7846, 0.7857
GBP/JPY 213.27, 210.80, 212.84
GBP/CHF 2.0654, 2.0232, 2.0603

Change % Change Last
Nikkei 225 -322.65 (-2.2%) 14,130.17
Topix -34.04 (-2.4%) 1,375.60
DAX 30 -7.74 (-0.12%) 6721.17
САС 40 -27.36 (-0.59%) 4591.39
FTSE 100 -48.50 (-0.84%) 5708.40
Dow +34.03 (+0.28%) 12063.09
Nasdaq +32.36 (+1.33%) 2462.07
S&P +5.02 (+0.38%) 1342.83
10yr Note +0.4500 (+0.108%) 4.199%
OIL NYMEX -4.75 (-3.48%) $131.93
Gold +10.70 +1.18% 904.20

06:00 Germany PPI (May) 0.9% 1.1%
06:00 Germany PPI (May) Y/Y 5.8% 5.2%
12:30 Canada Retail sales (April) - 0.1%
12:30 Canada Retail sales excluding auto (April) - 0.0%