Apple Inc reported fiscal third-quarter earnings that beat forecasts on strong sales of Mac computers and iPhones. But the company's outlook for the fourth quarter disappointed investors.

American Express Company said its second-quarter net income fell 38%.

Caterpillar Inc said its second-quarter earnings jumped 34% as stronger international sales outpaced higher raw material and freight costs.

Brocade Communications, the world's largest maker of switches for data-storage networks, agreed to buy Foundry Networks Inc for $3B, or about $19.25 in cash and stock.

US Airways Group Inc missed second quarter revenue projections.

Texas Instruments Incorporated said profit fell 3.6%, the first decline in four quarters, on slowing orders for mobile-phone chips.

Ual Corp reported a $2.7B loss including massive one-time charges.

Takashi Yamamoto, trader at Mitsubishi UFJ Trust & Banking: “The RBA will probably either raise rates or keep them unchanged. Interest-rate differentials favor the Aussie versus the yen and the dollar, so we'll likely see further strengthening in the Aussie.”

August contract remains down about $4.06 on the day at $127.03 but is about $1.50 off its earlier low of $125.63 and plenty of attention still being paid to Tropical storm/soon to be Hurricane Dolly which is swirling in the GOM and is expected to make landfall on the south Texas coast Wednesday.

USD/JPY extended its rise to Y107.45 before the pair stalled to Y107.28. Offers seen from Y107.50, said to extend in layers to at least Y107.80.

The dollar rose the most against the euro in more than two weeks as Treasury Secretary Henry Paulson voiced support for the currency and the Federal Reserve Bank of Philadelphia president said interest rates should be raised.

The greenback extended its gain after breaking $1.5900 and as crude oil prices fell.
The U.S. currency strengthened today as Paulson said in a speech that he's ``confident'' that lawmakers will pass the bill to ``boost confidence'' in Fannie Mae and Freddie Mac, the largest sources of U.S. mortgage financing. He reiterated that a strong dollar is ``really very important.'' The dollar touched the record low earlier this month on concern Fannie and Freddie, which own or guarantee almost half of the $12 trillion in U.S. home loans outstanding, may fail to survive the housing slump.
Philadelphia Fed President Charles Plosser said in a speech today in King of Prussia, Pennsylvania, that the U.S. central bank should raise interest rates ``sooner rather than later.''
Futures traded on the Chicago Board of Trade showed a 47% chance the Fed will increase its 2% target rate for overnight lending between banks by at least a quarter- percentage point by Sept. 16.

2."Seeing light at end of tunnel" on market turmoil
3.Sees 2008 eurozone GDP growth under 2%, clearly worse than in 2007

Hans Nilsson, FX strategist at CMS Forex: “The AUD/USD advanced following three days of consolidating the 25-year high of $0.9848 set last week. The pair rose despite lower-than-expected Q2 Australian producer-price inflation. The market focused on positive growth aspects for the Australian economy. If the Reserve Bank of Australia does not need to raise interest rates further to curb inflation, that will be positive for Australia’s economic growth outlook. There is strong support in the $0.96-area.”

USD/JPY continues to press to the highs of the day around Y107.17/20. Offers remain in place in a thick layer from Y107.30 to Y107.50 but risk may be for a few more stops scattered in that range also.

Chotaro Morita, strategist at Deutsche Securities: “It seems that the phase of falling interest rates, on concerns about the U.S. financial market, is coming to an end. And it would not be a surprise if the market re-assesses the ustainability of a downtrend in interest rates.”

EUR/USD continues to decline after printing new session lows on $1.5775/80. Traders say that volumes are not as impressive as may have been expected given the scale of the move. Currently rate holds near $1.5786.

Stocks opened sharply lower amid a slew of grim quarterly financial reports. In addition to earnings reports, investors listened to Treasury Secretary Henry Paulson urge Congress to pass a bill to support mortgage giants Fannie Mae and Freddie Mac. Also, the Philadelphia Federal Reserve chief Charles Plosser said Tuesday that inflation concerns may warrant a hike in the key federal funds rate, despite the economic slowdown.

Stocks closed modestly lower Monday, as rising oil prices and concerns in the tech and drug sectors overpowered a better-than-expected earnings report from Bank of America.
In the news Tuesday: Wachovia Corp. posted a loss of nearly $9 billion for its second quarter Tuesday on losses related to home mortgages. The shortfall exceeded the estimates of Wall Street analysts.
US Airways missed second quarter revenue projections, just barely, but reported a smaller loss than expected. The carrier reported a net loss of $101 million for the second quarter, or $1.11 per share. United Airlines reported Tuesday a net loss of $2.7 billion for the second quarter.
UPS Inc. said Tuesday its profit fell nearly 21% in the second quarter despite a 6.7% increase in sales. The company also lowered its outlook for the year amid a slumping U.S. economy.
American Expressdelivered some ugly news after the market closed Monday, posting a smaller-than-expected second-quarter profit and withdrawing its 2008 earnings guidance.

Gary Thomsonfrom CMC Markets says “Although the banking sector generally impressed last week, the massive quarterly loss from Countrywide that was reported yesterday is certainly weighing on sentiment and there's an expectation that more bad news will follow as the regional banks report over the coming days.”

Niels Christensen, senior currency strategist at Societe Generale: “Without any big numbers, it is equity markets that are driving currencies. U.S. stocks are down and putting pressure on the dollar.”

The major indices remain in negative territory, but have climbed off their worst levels in broad-based buying interest. A 2.7% drop in crude prices is aiding in the recovery effort. Strength in industrials (+1.1%) is helping to offset weakness in financials (-1.7%).

August Nymex crude oil now trading below $128.00 asselling continues on expectations that Tropical Storm Dolly will not disrupt oil production in the Gulf of Mexico. Prices also lower ahead of the futures contract expiry today. Nymex crude oil currently trades at $127.70.

EUR/USD $1.5920, $1.5900, $1.5850, $1.5800
USD/JPY Y107.05, Y105.85, Y105.50, Y107.30, Y105.00
GBP/USD $1.9900
AUD/USD $0.9695
NZD/USD $0.7600, $0.7595

A lower open is expected, although futures have recovered from their worst levels (S&P futures -8.2, Nasdaq futures -30.5).
UAL Corp, parent company of United Airlines, reported a second quarter loss of $1.19 per share, ex items, which is $0.86 better than the consensus estimate.
American Express , SanDisk , Texas Instruments and Wachovia all reported earnings that missed Wall Street's expectation. The latter company also cut its dividend to $0.050 from $0.375. Apple topped its earnings estimate, but issued an earnings guidance that fell short of estimates, sending shares tumbling 10% in premarket trading. Caterpillar topped its earnings estimates, but had some cautious comments regarding the economy.
GE is partnering with Mubadala on initiatives including commercial finance, clean energy research and development, aviation, industry and corporate learning. The two companies will each provide $4 billion in capital over the next three years.

The dollar traded near a record low against the euro after American Express Co. said profit dropped because more consumers defaulted on loans, raising concern the U.S. economic slowdown will deepen.
The currency also slid against the yen before reports this week forecast by economists to show that U.S. home sales and durable-goods orders dropped in June. The yen rebounded from a near record-low against the euro.
``The numbers out of the U.S. are still pretty grim and there's no immediate prospect that things are going to get better,'' said Daragh Maher, a London-based currency strategist at Calyon, the investment-banking arm of Credit Agricole SA, France's second-biggest lender. ``This has been driving the dollar lower.''
American Express, the biggest U.S. credit-card company by purchases, said yesterday second-quarter profit fell 37 percent on bad consumer loans, as the housing market slumped and economic growth slowed.
Wachovia Corp reports a loss of $4.20 against expectations of -$0.68
``Traders will look for opportunities to sell the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``The housing market and corporate earnings show that the U.S. economy's fundamentals are weak.''
``If the rally in financials continues, we could see some near-term support for the dollar against the yen,'' analysts led by Hans-Guenter Redeker, the London-based global head of currency strategy at BNP Paribas SA, France's biggest bank, wrote in a research note yesterday.

EUR/USD Bids $1.5900, $1.5880/70, stops $1.5850, offers $1.5950, stops above.
GBP/USD Bids $2.0005/00, $1.9980. Offers $2.0064-70/80, $2.0100/10.
USD/JPY Offers Y106.60/80, tech Y107.04, offers Y107.20, bids Y106.00.

The Canada’s Retail Sales is due at 12:30 GMT. Also today will be published at 14:00 GMT Housing Price Index and Richmond Fed Manufacturing Index (Jul) of USA.

The dollar traded near a record low against the euro after American Express Co. said profit dropped because more consumers defaulted on loans, raising concern the U.S. economic slowdown will deepen.
The currency also slid against the yen before reports this week forecast by economists to show that U.S. home sales and durable-goods orders dropped in June. The yen rebounded from a near record-low against the euro.
``The numbers out of the U.S. are still pretty grim and there's no immediate prospect that things are going to get better,'' said Daragh Maher, a London-based currency strategist at Calyon, the investment-banking arm of Credit Agricole SA, France's second-biggest lender. ``This has been driving the dollar lower.''
American Express, the biggest U.S. credit-card company by purchases, said yesterday second-quarter profit fell 37 percent on bad consumer loans, as the housing market slumped and economic growth slowed.
``Traders will look for opportunities to sell the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``The housing market and corporate earnings show that the U.S. economy's fundamentals are weak.''
``If the rally in financials continues, we could see some near-term support for the dollar against the yen,'' analysts led by Hans-Guenter Redeker, the London-based global head of currency strategy at BNP Paribas SA, France's biggest bank, wrote in a research note yesterday.

"We expect GDP to plummet 2.5% in 4Q and see a similar decline in 1Q. In all, we have shaved our 2009 GDP forecast to -0.5% a full percentage point lower that where it was previously, while 2008 is broadly unchanged at 1.5%."

Slips back toward $2.0040 fter the 1000 GMT fix comes and goes. Offers now seen placed toward resistance at $2.0064, a break above to open a move on toward $2.0100/10. Bids remain in place toward $2.0000.

EUR
Bids: $1.5900
Offers: $1.5940/50

Resistance 3: Y108.40
Resistance 2: Y107.70
Resistance 1: Y107.00
Current price: Y106.25
Support 1: Y106.00
Support 2: Y105.40
Support 3: Y104.60
Comments: Techs on yen hasn’t changed. Key resistance is around channel line from Jun 25 on Y107.00/10. Above the target is around Y107.70 and Y108.40 (Jun 25 high). Friday’s lows comes at Y106.00 (support). Stronger level is near 50% Fibo on Y105.40. Below losses may widen to Y104.60.

Resistance 3: Chf1.0380
Resistance 2: Chf1.0310
Resistance 1: Chf1.0250
Current price: Chf1.0165 Support 1: Chf1.0130Support 2: Chf1.0080Support 3: Chf1.0020Comments: Techs hasn’t changed. Dollar retreats a bit, breacking thrugh the channel line from Jul 16 on Chf1.0180. Sustained move under will widen losses to Chf1.0130 and then – to Chf1.0080. Strong resistance is around Chf1.0250 (Jul 17 high). Above the key level comes at channel line from Jun 13 on Chf1.0310. Break above will fuel bullish momentum and open the way to Chf1.0380.

Resistance 3: $2.0130
Resistance 2: $2.0070
Resistance 1: $2.0040
Current price: $2.0055
Support 1: $1.9900
Support 2: $1.9840
Support 3: $1.9800
Comments: Resistance comes at Jul 17 highs on $2.0070 with a break above will target $2.0100. Stronger level comes at $2.0130 (Jul 15 high). Support is around Friday’s lows on $1.9900. Below correction may extend to $1.9840 and $1.9800/10.

Resistance 3:$1.6120
Resistance 2: $1.6030
Resistance 1: $1.5950
Current price: $1.5924
Support 1: $1.5800
Support 2: $1.5780
Support 3: $1.5610
Comments: Euro holds within the range, keeping optimistic tone. Strong resistance is around Jul 16 high on $1.5950, further – near life-time high on $1.6030. Strong support comes near channel line from Jun 13 on $1.5830. Below rate may dip to $1.5780 with stronger support is around Jul 07 low on $1.5600/10.

Economist Brian Wesbury at FTA says he ests Q2 real growth at +3%, "more bullish than almost any other economist." He says hsg weakness has not spread and rest of the economy is "downright strong, reflecting relatively low tax rates and loose monetary policy." FTA says real consumption grew at a 2.0% annual rate in Q2 and business investment, trade and govt will add to growth.

Weaker earnings reports and outlooks from Amex, Apple and Texas Instruments after the bell are weighting on sentiments. The S&P Sep contract was last down 9.40 points at 1252.20, with the Nasdaq Sep contract lower by 28.75 points at 1798.75.

Resistance 3: Y108.40
Resistance 2: Y107.70
Resistance 1: Y107.00
Current price: Y106.55
Support 1: Y106.00
Support 2: Y105.40
Support 3: Y104.60

Comments: Techs on dollar hasn’t changed. Key resistance is around channel line from Jun 25 on Y107.00/10. Above the target is around Y107.70 and Y108.40 (Jun 25 high). Friday’s lows comes at Y106.00 (support). Stronger level is near 50% Fibo on Y105.40. Below losses may widen to Y104.60.

Resistance 3: Chf1.0380
Resistance 2: Chf1.0310
Resistance 1: Chf1.0250
Current price: Chf1.0171
Support 1: Chf1.0130
Support 2: Chf1.0080
Support 3: Chf1.0020


Comments: Dollar retreats a bit, breacking thrugh the channel line from Jul 16 on Chf1.0180. Sustained move under will widen losses to Chf1.0130 and then – to Chf1.0080. Strong resistance is around Chf1.0250 (Jul 17 high). Above the key level comes at channel line from Jun 13 on Chf1.0310. Break above will fuel bullish momentum and open the way to Chf1.0380.

Resistance 3: $2.0130
Resistance 2: $2.0070
Resistance 1: $2.0040
Current price: $2.0015
Support 1: $1.9900
Support 2: $1.9840
Support 3: $1.9800

Comments: Resistance comes at today's highs on $2.0035/40 with a break above will target $2.0070 (Jul 17 high). Stronger level comes at $2.0130 (Jul 15 high). Support is around Friday’s lows on $1.9900. Below correction may extend to $1.9840 and $1.9800/10.

FTSE -32, the DAX -45, the CAC -39 and the Eurostoxx 50 -34.

Crude futures are trading lower in Asian trade Tuesday, although off of their worst levels. The front-month Nymex WTI contract was last at $130.67, down 37 cents on the day. The contract traded a session range of $130.27 - $131.06. The market bounced back modestly on Monday on fears over the early hurricane season threat in the Gulf of Mexico.

Resistance 3:$1.6120
Resistance 2: $1.6030
Resistance 1: $1.5950
Current price: $1.5913
Support 1: $1.5800
Support 2: $1.5780
Support 3: $1.5610

Comments: Euro holds within the range, keeping optimistic tone. Strong resistance is around Jul 16 high on $1.5950, further – near life-time high on $1.6030. Strong support comes near channel line from Jun 13 on $1.5830. Below rate may dip to $1.5780 with stronger support is around Jul 07 low on $1.5600/10.

High Low Close
EUR/USD 1.5930 1.5836 1.5826
USD/JPY 107.16 106.32 106.42
GBP/USD 2.0040 1.9905 2.0028
USD/CHF 1.0240 1.0165 1.0170

EUR/JPY 169.91 169.06 169.50
EUR/GBP 0.7973 0.7932 0.7949
GBP/JPY 213.82 212.09 213.15
GBP/CHF 2.04423 2.0315 2.0370

Change % Change Last
CAC +27.78 +0.65% 4,327.14
FTSE +27.90 +0.52% 5,404.30
DAX +42.19 +0.66% 6,424.84
Dow -28.99 -0.25% 11,467.58
NASDAQ -3.25 -0.14% 2,279.53
S&P -0.68 -0.05% 1,260.00
10yr Note -0.0800 -0.020% 4.073%
NYMEX Crude Oil +1.37 +1.06% 130.25
Gold +5.70 +0.59% 963.70

06:15 Switzerland Trade Balance (Jun) 1.87B
08:45 UK BoE's Governor King Speech
12:30 Canada Retail Sales (MoM) (May) 0.6%
12:30 Canada Retail Sales ex Autos (MoM) (May) 1.1%
14:00 USA Housing Price Index (YoY) (Jun) -4.6%
14:00 USA Richmond Fed Manufacturing Index (Jul) -12
14:00 USA Housing Price Index (MoM) (Jun) -0.8%