FOREX

Overnight News Bullets

• EC PMI Services (SEP) out at 54.2 vs. 54.0 expected. Prior 54.0.

• PMI Composite (SEP) out at 54.7 vs. 54.5 expected. Prior 54.5.

• UK Official Reserves (Changes-SEP) out at $1069M. Prior $344M.

• EC Euro-Zone Retail Sales (AUG) MoM/YoY out at 0.1%/1.0% vs. 0.4%/0.5% expected. Revised prior figures 0.4%/1.3%

• US MBA Mortgage Applications (28 SEP) out at -2.7%. Prior -2.8%

• US Challenger Job Cuts YoY (SEP) out at -28.5%. Prior 21.7%

• US ADP Employment Change (SEP) out at 58K vs. 60K expected. Revised prior 27K

• US ISM Non-Manufacturing (SEP) out at 54.8 vs. 54.6 expected. Prior 55.8

• TU Consumer Prices MoM/YoY out at 1.0% / 7.1% vs 1.1%/7.2% exp. Prior 0.0%/7.4%

• TU Producer Prices out at 1.0%/ 5.0% vs 0.6%/4.6% exp. Prior 0.9%/3.7%

• AU AiG Performance of Service Ind (SEP) out at 56.4. Prior 51.6

• JN MOF Foreign Net Stocks Invest (SEP 28) out at ??223.4B. Revised prior -??156.7B

• JN MOF Foreign Net Bonds Invest (SEP 28) out at -??90.1B. Prior -1160.0

• AU Building Approvals (AUG) MoM/YoY out at -1.7%/-0.1% vs -0.5% MoM expected. Revised prior 0.2%/-7.6%.

• NZ ANZ Commodity Price (SEP) out at 0.4%. Prior 1.4%

• RU (SEP 28) Gold & Forex Reserve USD out at 425.1B. Prior 422.5B

Markets

• FX: USD strength continued o/n against all major currencies.

• Fixed Income: US Treasuries were still little changed. European bonds slightly lower.

• Stocks: US and Asian equities lower across the board. European stocks mixed

• Commodities: Oil below $80 on reports after unexpected increase in the US stockpiles. Gold little changed.

O/N Data Heat map:

Calendar

Today's Highlights:

What's going on?

• E-Z Retail Sales slightly disappointing yesterday, but US data robust. The retracement in EURUSD could continue another figure lower.

• Stocks are consolidating ahead of the US labor market data tomorrow. The ADP Employment Change was out at 58K yesterday, which predicts Nonfarm Payrolls in the range of 8K-108K. That would be a confirmation of the current softening in the US labor market.

• Fitch has downgraded $18.4B worth of subprime bonds due to increased risk of default after an ???unprecedented??? slump in home prices. That amounts to 11 percent of all securities rated by Fitch from 2006 onwards.

• ECB and BoE Rate Decision today. No change is expected. We expect December-2007 Euribor to go higher and have a stop at 94.35 for a long position. Trichet??™s comments are important.

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FX

USD strength to continue, short-term.

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