``The Fed has a more balanced view on inflation and growth,'' said Matthew Strauss, a senior currency strategist at RBC Capital Markets in Toronto, a unit of Canada's biggest bank by assets. The dollar decline has ``lost momentum.''

FTSE 100 -16.50 -0.27% 6,181.60
CAC 40 +1.19 +0.02% 5,028.74
Xetra Dax +29.50 +0.42% 7,070.33

1. Q2 2008 - 29%;
2. Q3 2008 - 26%;
3. Q4 2008 - 3%;
4. Q1 2009 - 13%;
5. Q2 2009 - 3%;
6. NOT IN THIS CYCLE - 26%.

The dollar snapped two days of declines against the euro, rallying from the lowest level in a month, as traders added to bets the Federal Reserve will raise interest rates by year-end and oil retreated.
The U.S. currency also gained versus the yen after minutes of the Fed's April meeting yesterday showed most policy makers viewed the cut in the target rate to 2 percent as ``a close call,'' indicating the central bank has gone on hold to stem inflation. The New Zealand dollar rose against all of the major currencies after tax cuts reduced the need to lower rates.
U.S. house prices fell less than expected in the first quarter. The Office of Federal Housing Enterprise Oversight said its house price purchase index declined 0.2 percent, after rising 0.3 percent the previous quarter. The median forecast in a survey of 13 economists was for a drop of 1.3 percent.
Futures on the Chicago Board of Trade show traders see a 92 percent likelihood the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25, up from odds of 88 percent yesterday. Traders also see a 32 percent probability the Fed will lift the rate in September to 2.25 percent, up from a 21 percent chance yesterday.
The dollar has fallen 2 percent against the euro since May 8, after European Central Bank President Jean-Claude Trichet said inflation remains the bank's top priority. That signaled policy makers won't cut the 4 percent benchmark interest rate soon.
Gains for the dollar may be limited as the market starts to focus on the Fed's downgrade of its 2008 economic growth estimate, which accompanied the minutes yesterday, wrote Derek Halpenny, head of currency research at Bank of Tokyo-Mitsubishi in London, in a note to clients today.
The European single currency may rise to $1.5850 against the dollar in one week, based on charts used to predict price movements, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.
The pound rose to a three-week high against the dollar after a government report showed U.K. retail sales declined less than forecast in April.

Stocks continue to reclaim their recent losses, but still remain off the session's best levels. Nearly 65% of the stocks in the S&P 500 are showing gains.

EUR/USD $1.5550
USD/JPY Y103.00, Y105.00
EUR/JPY Y163.00
EUR/CHF Chf1.5910, Chf1.6565
AUD/USD $0.9500
Kiwi; $0.7825
USD/CAD C$0.9850

Traders noting the sharp turnaround in various commodities, oil trading at $131.80 now vs $134.30 at the start of the US session. Gold trading at $920 now vs $924.00 earlier and down from session highs at $935.00.

U.S. stocks advanced for the first time in three days as an unexpected drop in jobless claims spurred optimism that the economy can withstand record energy prices and $379 billion in credit-market losses.
International Business Machines Corp. and JPMorgan Chase & Co. led gains in the Dow Jones Industrial Average after the government said first-time unemployment claims decreased by 9,000 last week. Limited Brands Inc. rallied after the operator of the Victoria's Secret lingerie chain posted earnings that topped analysts' estimates. Eight of 10 industry groups in the Standard & Poor's 500 Index rose as the benchmark for U.S. equities rebounded from its biggest two-day tumble since March.
Limited Brands climbed 2.3%. Profit excluding items was 11 cents a share, 3 cents above the average estimate of analysts surveyed by Bloomberg. The company also forecast higher annual earnings than it previously projected.
Utility shares gained after NRG Energy Inc. made an unsolicited offer to buy Calpine Corp. for $9.6 billion in stock. NRG, the second-biggest power producer in Texas, offered 0.534 share for every Calpine share, or 6.7% above yesterday's closing prices, as it seeks to become the largest independent power company in the U.S. NRG lost 4%. Calpine jumped 9.4%.
Dynegy Inc., the owner of power plants in 12 U.S. states, gained for the eight day, rising 2.6 percent to $9.83.

- no need for OPEC to review output levels to help poor nations as proposed by Ecuador
- Says record oil prices due to speculation, weak dollar & hedge funds
- Says OPEC output hike would not help lower oil prices
- Reiterates OPEC ready to take action if sees supply shortage in mkt
- Says no need for immediate output hike despite record oil prices
- Says no plans to hold extraordinary meeting before Sept meet.

Rallied up to Y163.50 after triggering stops through Y163.15/20, with rate remaining buoyed just shy of best levels at time of writing. Techs note the move has so far stalled in line with the 76.4% retracement of the move down from Y164.96 to Y158.67, adding the 10-day momentum is now sharply higher in buy territory. Small offers now noted into Y164.00, though little of any significance ahead of supply placed around the April high at Y164.90/165.00.

Stocks have kicked off the trading session in positive fashion after finishing lower in the previous two sessions. There has been plenty of news for market participants to digest.
Crude hit a new all-time high in electronic trading, crossing the $135 per barrel threshold. Crude is currently trading around $133.35 per barrel.
Ford Motor Company (F 7.20, -0.60) announced it will lower production volume of large trucks and sport-utility vehicles, while shifting more focus toward models in-line with consumers' preferences. Ford also trimmed its profit outlook.

Swiss banking giant UBS (UBS 29.61, +0.27) announced plans to raise some $15 billion through a rights offering to existing shareholders. Shares available in the offering will be priced at a 31% discount to yesterday's closing price. Additionally, UBS finalized the sale of $15 billion of subprime and Alt-A mortgage assets to investment management outfit BlackRock (BLK 200.32, -0.46).

Also pushing to fresh highs for the day as new dollar demand emerges in the wake of the weekly jobless claims data, the pair lifting to Y103.62 and thus to the area of Wednesday highs. Offers in the Y103.60/70 zone providing some nearby resistance after some 'too close' stops were rattled atop Y103.60 but supply said to extend to Y104.00 and likely to cap.

Stock futures have picked up a bit and now indicate a more decidedly positive start to Thursday's session (S&P futures vs fair value: +4.0. Nasdaq futures vs fair value: +6.0.). In earnings news, Computer Sciences (CSC), Limited Brands (LTD), Ann Taylor (ANN), Hormel (HRL), and Gamestop (GME) all announced earnings results for their latest quarter that beat analysts' estimates. Each company also issued an in-line forecast.

HFE's Ian Shepherdson - "The underlying trend in claims remains upwards but the rate of increase has slowed after the rapid rise earlier this year. Over the next few months claims should climb towards the 400K mark, as companies seek to control costs in the face of persistent very soft demand. In the near-term, expect volatility over the next couple of weeks as a result of Memorial Day seasonals, and then look for claims to spike in early July. The automakers will temporarily lay off far more people than usual in their summer shutdown, as they seek to reduce inventory, so adjusted claims will jump."

The pare pushes back to test offers in the C$0.9870 area. Stops noted above here, ahead of additional supply at C$0.9920/30.

- Mar retail sales 0.0% ex-autos m/m

The dollar snapped two days of declines against the euro, rallying from the lowest level in a month, as traders added to bets the Federal Reserve will raise interest rates by year-end.
The U.S. currency also rose from a one-week low versus the yen as futures showed the odds of a quarter-point increase in the Fed's target rate rose. Minutes of the Fed's April meeting, released yesterday, showed most policy makers viewed the cut in the rate to 2 percent as ``a close call,'' judging risks between weaker growth and faster inflation had become more balanced. The New Zealand dollar rose to a two-week high.
``The minutes certainly didn't give you any reasons to sell the dollar,'' said Daragh Maher, a senior currency strategist in London at Calyon, the investment-banking unit of Credit Agricole SA, France's third-biggest lender. ``The minutes validated the market's view that the Fed is going to keep rates on hold for the time being.''
Futures on the Chicago Board of Trade show traders see an 88 percent chance the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25. Traders also see a 21 percent chance the Fed will lift the target in September to 2.25 percent, up from a 19 percent chance yesterday.

EUR/USD initially failed to break above $1.5780 and retreated to lows around $1.5740 before traded within $1.5740/75 range. Bids $1.5730, $1.5710/00, $1.5680/70. Offers $1.5815/30

GBP/USD kept positive mood in the wake of CBI data and currently trades around $1.9830. having posted high at $1.9848. Offers remain in place around $1.9840/50. Bids seen in place back at $1.9750, more at $1.9730/20.

USD/JPY printed high Y103.45 before set stable around Y103.10/40. Offers Y103.60/70, bids Y102.70/60.

At 12:30 GMT US will release its Jobless claims data.

Gains for the dollar may be limited before a government report that will probably show falling U.S. house prices. The Office of Federal Housing Enterprise Oversight will today say prices fell 1.3 percent in the first quarter.

The rate currently holding back around $1.9830 in the wake of CBI data. Offers remain in place ahead of $1.9840/50. Bids seen in place back at $1.9750, more at $1.9730/20.

EUR/USD $1.5750, $1.5850, $1.5600
USD/JPY Y103.00
GBP/USD $1.9720
EUR/GBP stg0.8035
NZD/USD $0.7640, $0.7600
USD/CAD C$0.9850

The dollar snapped two days of declines against the euro, rallying from the lowest level in a month, as traders added to bets the Federal Reserve will raise interest rates by year-end.
The U.S. currency also rose from a one-week low versus the yen as futures showed the odds of a quarter-point increase in the Fed's target rate rose. Minutes of the Fed's April meeting, released yesterday, showed most policy makers viewed the cut in the rate to 2 percent as ``a close call,'' judging risks between weaker growth and faster inflation had become more balanced. The New Zealand dollar rose to a two-week high.
``The minutes certainly didn't give you any reasons to sell the dollar,'' said Daragh Maher, a senior currency strategist in London at Calyon, the investment-banking unit of Credit Agricole SA, France's third-biggest lender. ``The minutes validated the market's view that the Fed is going to keep rates on hold for the time being.''
Futures on the Chicago Board of Trade show traders see an 88 percent chance the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25. Traders also see a 21 percent chance the Fed will lift the target in September to 2.25 percent, up from a 19 percent chance yesterday.
Gains for the dollar may be limited before a government report that will probably show falling U.S. house prices. The Office of Federal Housing Enterprise Oversight will today say prices fell 1.3 percent in the first quarter, according to the median forecast of 13 economists surveyed by Bloomberg.

Resistance 3: Y105.00

Resistance 2: Y104.40
Resistance 1: Y103.70
Current price: Y103.26
Support 1: Y102.70

Support 2: Y102.20

Support 3: Y101.60

Comments: Dollar tries to rebound with strong support comes at session low on Y102.70. Below losses may widen to Y102.20 and Y101.60. Resistance is around May 21 highs on Y103.70. Above there is a room for a rise to Y104.40 and Y105.00.

Resistance 3: Chf1.0570

Resistance 2: Chf1.0400
Resistance 1: Chf1.0310

Current price: Chf1.0272

Support 1: Chf1.0230

Support 2: Chf1.0140

Support 3: Chf1.0080

Comments: Dollar remains under pressure. Strong support comes at session lows on Chf1.0230 with a break under will point to Chf1.0140 and then – to Chf1.0080. Resistance comes at Chf1.0310 (23.6% of Chf1.0570 - Chf1.0230 decline). Stronger level is around Chf1.0400 (50%) and then – near Chf1.0570 (May 19 high).

The latest CBI survey warns that the price of manufactures will rise sharply over coming months even as activity in the sector continues to slow down. The Confederation of British Industry's survey for May shows the prices balance hitting a balance of +30, the highest seen since February 1995 and up from +25 in April. The CBI's Chief Economic adviser Ian McCafferty warned that these results meant it was "ever more unlikely that we will see the cuts in interest rates expected by the markets only a few weeks ago".

Resistance 3: $1.9900
Resistance 2: $1.9800
Resistance 1: $1.9740Current price: $1.9774
Support 1: $1.9670
Support 2: $1.9580
Support 3: $1.9450Comments: Cable looks optimistic, holding around session highs near $1.9730/40 (strong resistance), with a break above will extend the rise to $1.9800. Key level comes at $1.9900 (May 02 high). Below $1.9670 correction may widen to 50% Fibo from May 19 at $1.9580/90. Below losses will extend to May 19 lows on $1.9450.

Resistance 3:$1.6010
Resistance 2: $1.5920
Resistance 1: $1.5800
Current price: $1.5774

Support 1: $1.5740
Support 2: $1.5660
Support 3: $1.5540

Comments: Euro set stable a bit below session high on $1.5800 (strong resistance). Above the rise may extend to $1.5920. Main resistance is around Apr 22 highs on $1.6010. Support comes at $1.5740 (61.8% of $1.6010 - $1.5290 decline). Stronger level comes at 50% Fibo on $1.5660 with further losses down to $1.5540.

GBP/USD breaks below $1.9700 after the data release. But rate sharply back above to current $1.9743. Bids seen placed to $1.9690, a break below to open

a deeper move toward $1.9675/70 ahead of $1.9650/40.

EUR
Bids: $1.5760/50
Offers: $1.5850

JPY
Bids: Y102.50, Y102.20
Offers: Y103.20, Y103.60/65

GBP
Bids: $1.9700, $1.9675/70, $1.9650/40
Offers: $1.9770/80, $1.9800

AUSSIE

Bids: $0.9600/0.9580

The dollar traded near a one-month low against the euro on speculation a surge in oil prices to a record will accelerate inflation while slowing economic growth in the U.S., the world's biggest oil importer.
The currency also traded near the lowest level in almost two weeks versus the yen before a government report that will probably show falling U.S. house prices.
The New Zealand dollar rose after Finance Minister Michael Cullen cut taxes, easing pressure on the central bank to lower interest rates to support the economy.
The dollar fell yesterday after minutes of the Fed's April meeting showed most policy makers viewed the decision to cut the benchmark interest rate to 2% as ``a close call,'' judging risks between weaker growth and faster inflation had become more balanced.
The Federal Reserve cut its 2008 economic growth projection to a range of 0.3% to 1.2% from its January forecast of 1.3% to 2%, according to minutes of its April meeting.

EUR/USD initially failed to break above $1.5780 and retreated to lows around $1.5760. Later rate has got close to $1.5800.
GBP/USD rose from $1.9615 to $1.9750.
USD/JPY printed low on Y102.70 before set stable near Y103.10.

Today’s focus is on UK retail sales figures and CBI orders data. Also in Europe EU industrial orders report due to come.
At 12:30 GMT US will release its Jobless claims data.

Japan's benchmark stock indices ended Thursday's session higher with the Nikkei 225 was up 52.16points, or 0.37%, at 13978.46, while TOPIX gained 9.58 points to stand at 1379.67.

Stock market fixing:
Nikkei 225 -233.79 -1.70% 13,926.30
Topix -29.75 -2.10% 1,370.09
FTSE +6.50 +0.10% 6,198.10
CAC -27.33 -0.54% 5,027.55
DAX -77.67 -1.09% 7,040.83
Dow -227.49 -1.77% 12,601.19
NASDAQ -43.99 -1.77% 2,448.27
S&P -22.69 -1.61% 1,390.71
10yr Note +0.4600 +0.122% 3.822%
NYMEX Crude Oil +4.19 +3.25% 133.17
Gold +8.40 +0.91% 928.60

Japan's stocks fell the most in almost two weeks after Mitsubishi UFJ Financial Group Inc. said profit growth will stall, fueling concern the slowing economy will diminish lending demand.
Mitsubishi UFJ fell the most in two months, while Mizuho Financial Group Inc. dropped the most in two weeks. Sumitomo Metal Mining Co. gained after gold prices rose to almost a one-month high. Mitsubishi UFJ yesterday predicted profit that fell short of analysts' estimates as it expects lending to stagnate. The shares sank 4.5%, the sharpest loss since March 17, and contributed the most to the Topix's decline. Mizuho fell 5% and was most the actively traded stock by value on the first section of the exchange. Banks posted the biggest decline among groups on the index.
T&D Holdings Inc. tumbled 5.5% and was the biggest loser on the Nikkei. HSBC Holdings Plc yesterday downgraded T&D after valuation losses on securities contributed to a decline in earnings.
Canon Inc. fell 3.5% and Toyota Motor Corp. lost 3.3%. Sony Corp. dropped 2.7%.

European stocks fell for a second day after oil breached $130 a barrel, stoking concern higher fuel costs will curb profits for carmakers and airlines.
Porsche SE led automakers lower after Merrill Lynch & Co. recommended selling the maker of the 911 sports car on concern over rising raw-material costs. Ryanair Holdings Plc, Europe's biggest discount airline, and Air France-KLM Group fell as crude oil climbed as much as $3.01 to $132.08.
Renault, France's second-biggest carmaker, fell 3.3%, while Continental slid 2.8%.
Ryanair lost 6.7%. Air France slid 3.5%.
AMR Corp.'s American Airlines, the world's largest carrier, will slash U.S. capacity as much as 12%, retire as many as 85 jets and cut jobs to blunt surging fuel prices and slowing demand.
Yell Group Plc retreated 15%.

Stocks retreated Wednesday as oil spiked past $130 a barrel, following a weaker-than-expected weekly supply report. Oil prices have been climbing lately amid ongoing supply concerns and the weakness in the dollar, which makes dollar-traded commodities such as oil less expensive.
Company news: Time Warner, the parent company of CNNMoney, will receive a $9.25 billion dividend as part of its legal and structural separation from Time Warner Cable.
Boeing and Hewlett-Packard were among the other big Dow losers.
AMR shares slumped 12% after its American Airlines unit said it was cutting capacity by 11% to 12% in the fourth quarter due to record-high oil prices.

The euro headed for its biggest two- day gain versus the dollar since March after German business confidence unexpectedly rose, bolstering speculation the European Central Bank won't cut interest rates.
The British pound fell against all of the major currencies after minutes from this month's Bank of England meeting signaled policy makers remain reluctant to lower interest rates to stimulate growth. Currencies of commodity-exporting nations including Australia and Canada surged as crude oil rose above $132 a barrel.
The minutes of the Federal Reserve's April 30 meeting showed mkts improved and econ data were as expected, though housing continued to weaken and infl data were mixed. FOMC is worried about up-drift of infl expectations. There was little change in staff econ forecasts, tho FOMC lowered theirs (see below).
Futures on the Chicago Board of Trade show traders see an 88 percent likelihood the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25. The balance of bets is for a reduction to 1.75 percent.

EUR/USD rose from $1.5630/70 to the highs around $1.5780 amid strong Ifo report.
GBP/USD fell initially from $1.9679 to $1.9627 lows area, but bids on $1.9630/20 capped losses. After the MPC minutes rate managed to rebound to $1.9685 and then – to $1.9720.
USD/JPY rose from Y103.10 to Y103.69. Later rate retreated below Y103.00.

Today’s focus is on UK retail sales figures and CBI orders data. Also in Europe EU industrial orders report due to come.
At 12:30 GMT US will release its Jobless claims data.

Resistance 3: Y105.00
Resistance 2: Y104.40
Resistance 1: Y103.70
Current price: Y103.05
Support 1: Y102.70
Support 2: Y102.20
Support 3: Y101.60
Comments: Dollar tries to rebound with strong support comes at session low on Y102.70. Below losses may widen to Y102.20 and Y101.60. Resistance is around May 21 highs on Y103.70. Above there is a room for a rise to Y104.40 and Y105.00.

Resistance 3: Chf1.0570
Resistance 2: Chf1.0400
Resistance 1: Chf1.0310
Current price: Chf1.0240
Support 1: Chf1.0230
Support 2: Chf1.0140
Support 3: Chf1.0080
Comments: Dollar remains under pressure. Strong support comes at session lows on Chf1.0230 with a break under will point to Chf1.0140 and then – to Chf1.0080. Resistance comes at Chf1.0310 (23.6% of Chf1.0570 - Chf1.0230 decline). Stronger level is around Chf1.0400 (50%) and then – near Chf1.0570 (May 19 high).

Resistance 3: $1.9900
Resistance 2: $1.9800
Resistance 1: $1.9740
Current price: $1.9716
Support 1: $1.9670
Support 2: $1.9580
Support 3: $1.9450
Comments: Cable looks optimistic, holding around session highs near $1.9730/40 (strong resistance), with a break above will extend the rise to $1.9800. Key level comes at $1.9900 (May 02 high). Below $1.9670 correction may widen to 50% Fibo from May 19 at $1.9580/90. Below losses will extend to May 19 lows on $1.9450.

Resistance 3:$1.6010
Resistance 2: $1.5920
Resistance 1: $1.5800
Current price: $1.5787
Support 1: $1.5740
Support 2: $1.5660
Support 3: $1.5540
Comments: Euro set stable a bit below session high on $1.5800 (strong resistance). Above the rise may extend to $1.5920. Main resistance is around Apr 22 highs on $1.6010. Support comes at $1.5740 (61.8% of $1.6010 - $1.5290 decline). Stronger level comes at 50% Fibo on $1.5660 with further losses down to $1.5540.

1. Japan economy to grow at slower pace for now, followed by moderate growth
2. Monetary conditions remain accommodative

High Low Close
EUR/USD 1.5795 1.5629 1.5793
USD/JPY 103.67 102.94 102.98
GBP/USD 1.9732 1.9617 1.9715
USD/CHF 1.0391 1.0237 1.0241

EUR/JPY 163.12 161.55 162.64
EUR/GBP 0.8031 0.7948 0.8008
GBP/JPY 203.98 202.60 203.05
GBP/CHF 2.0409 2.0177 2.0192

Change % Change Last
Nikkei 225 -233.79 -1.70% 13,926.30
Topix -29.75 -2.10% 1,370.09
FTSE +6.50 +0.10% 6,198.10
CAC -27.33 -0.54% 5,027.55
DAX -77.67 -1.09% 7,040.83
Dow -227.49 -1.77% 12,601.19
NASDAQ -43.99 -1.77% 2,448.27
S&P -22.69 -1.61% 1,390.71
10yr Note +0.4600 +0.122% 3.822%
NYMEX Crude Oil +4.19 +3.25% 133.17
Gold +8.40 +0.91% 928.60

07:30 Italy Consumer confidence (May) adjusted - 99.8
08:00 Italy Retail sales (March) - 0.3%
08:00 Italy Retail sales (March) Y/Y unadjusted - 2.7%
08:30 UK Retail sales (April) -0.5% -0.4%
08:30 UK Retail sales (April) Y/Y 4.2% 4.6%
09:00 EU(15) Industrial orders (March) 0.0% 0.6%
09:00 EU(15) Industrial orders (March) Y/Y 5.0% 9.9%
10:00 UK CBI industrial order books balance (May) -11% -13%
12:30 Canada Retail sales (March) - -0.7%
12:30 Canada Retail sales excluding auto (March) - -0.3%
12:30 USA Jobless claims (week to 17.05) 370K 371K
20:30 USA M2 money supply (12.05), bln - +1.1
23:50 Japan BoJ meeting minutes (08-09.04)