Monbdy, October 6, 2008

By Ben Rooney, CNNMoney.com staff writer

Last Updated: October 3, 2008: 4:17 PM ET

NEW YORK (CNNMoney.com) -- The dollar was mixed Friday after the House approved a massive intervention in the nation's financial system.

At 4 p.m. ET, the euro traded at $1.3805, down from $1.3844 late Thursday in New York.

The 15-nation currency rose to $1.3878 just before the legislation was passed. But it quickly retreated after the vote.

The dollar edged up against the Japanese yen to ¥105.16 from ¥105.06. And the British pound was quoted at $1.7752, up from $1.7686.

House lawmakers passed a sweeping $700 billion rescue package aimed at bailing out the financial system. The plan seeks to stabilize the U.S. economy by ridding the market of illiquid assets that have crippled the banking sector.

The news reversed gains on the stock market as investors took a "buy the rumor, sell the news" reaction. And credit markets remained frozen.

Investors are "cautiously optimistic" about the plan's ability to succeed, said Steve Malyon, currency analyst at Scotia Capital in Toronto.

The landmark legislation is only "the first step down a long road" and there is "considerable uncertainty" about how it will work and how effective it will be, Malyon said. "That's probably why we're not seeing a more dramatic move."

Labor market weakness. The government's monthly jobs report highlighted the challenges facing the U.S. economy.

The Labor Department reported Friday that the nation's economy had a net loss of 159,000 jobs in September, the ninth straight month of job cuts, according to the Labor Department. The August job loss was revised to 73,000 jobs from 84,000. Year-to-date, the U.S. has shed 760,000 jobs.

Economists surveyed by Briefing.com had expected the government to announce a nationwide loss of 105,000 jobs for September.

The unemployment rate was unchanged at 6.1%, in line with estimates.

Friday's jobs report was "very bad," said Ashraf Laidi, currency market analyst at CMC Markets in New York. "It reflects marked deterioration in the real economy."

The ongoing weakness in the labor market has prompted speculation that the Federal Reserve will lower its benchmark interest rate at its Oct. 28-29 meeting.

Market turmoil overseas. The euro came under pressure this week amid increasing strains on the European economy.

On Thursday, the 15-nation currency fell to a one-year low of $1.3746, after the European Central Bank hinted that interest rates may come down.

Meanwhile, the turmoil in Europe's banking sector continued Friday with Swiss bank UBS announcing it will cut an additional 2,000 investment banking jobs, bringing the total headcount reduction to 6,000 over the past year.

Also on Friday, France's national statistics agency said the country has tumbled into a recession, with economic growth expected to contract over the next six months.

The Insee statistics agency said it expects France's economy to shrink by 0.1% in both the third and fourth quarters. Following on a 0.3% fall in the second quarter, that would bring growth down to 0.9% for 2008.

2) Commentary by David Zwebner, CEO of CommStock Trading 

U.S. Economy - Congress Approves Bailout/Rescue Bill
The U.S. unemployment rate remained at 6.1% in September, but non-farm payrolls were down 159,000, the biggest job loss in over five years. In August, non-farm payrolls were revised higher from a loss of 84,000 jobs to a loss of 73,000. The December U.S. T-bonds finished up 19/64ths at 119.44/64ths.

The Institute of Supply Managements' index of services slipped from 50.6 to 50.2, a little better than expected and still a sign of slight growth.

The House of Representatives approved the $800+ billion bailout plan today, giving the Treasury Secretary authority to buy questionable assets from financial firms in hopes of freeing up capital in the financial system. President Bush, both presidential candidates, and the Senate have already given their approval. The price of the October one-month Libor showed a little improvement (the rate was slightly lower).

Some are wondering if the Federal Reserve will be more likely to act on the credit crisis, possibly as soon as Monday, now that the bailout bill has been approved.

Wells Fargo announced that it was buying Wachovia for $15.1 billion in stock, erasing an earlier deal to be bought by Citigroup for $2 billion with help from the FDIC. Also, AIG said that they plan to sell off various business units so that they can pay off the government loan and stay in the insurance business.

Grains and Cotton
December corn was higher for much of the day, partly on hope that relief is on the way for the credit crisis. By the end however, December corn closed down a penny at $4.53.

Now that the bailout plan has passed, maybe grain traders will pay attention to fundamentals again next week? The harvest weather forecast looks safely warm next week for most of the Midwest with some chances for rain.

The National Weather Service is predicting above average precipitation for the Mississippi Delta in the next 6 to 10 days, but December cotton was lower anyway, ending down 1.03 at 57.41.

Coffee
December coffee continues to fall, closing down 3.55 cents at another new contract low of $1.2190. Brazil's crop is currently in the flowering stage.

Energies
November crude oil was relatively quiet today, closing down .09 at $93.88.

Currencies
An index of services in the U.K. fell from 49.2 to 46.0 in September, the lowest since records began 12 years ago and a sign of contraction. According to Bloomberg news, Bank of England Governor King said that his Bank will "will take all actions necessary to ensure that the banking system has access to sufficient liquidity." The December British pound was up 1.08 cents at $1.7741.

Eurostat reported that retail sales volume in the Euro area 15 was up .3% in August., better than expected, but still down 1.8% from a year ago.

Gmar Hatima Tova from all at CommStock Trading Ltd.

David Zwebner, CEO
CommStock Trading Ltd.
Tel: +972-(0)2 624-4963
Fax: +972-(0)2 624-4876
www.ecommstock.com

3) A Fan of Forex?

Interested in reading perspectives and analyses on the Forex market?  In learning what factors affect the Forex market every week and what to be on the lookout for?  In getting trade recommendations?   Email mona@ecommstock.com  to get your copy of a weekly Forex report.

4) Closing Prices for Friday, October 3, 2008 

Amidex: Amidex35 (Class No Load Shares), $12.48; Index, 1725.08, Daily Change, .40%; “A” Shares NAV, $9.62.

Global Asset Management: Capital Appreciation, $245.37; Composite Absolute Return, $845.70; Diversity, $689.27; GAMCO, $806.95; Interest Trend, $208.20; Trading IV-US$ Class, $141.09; US$ Special Bond Fund, $374.57.

Invesco: Asian Equity Core, $3.65; Bond, $25.00; Emerging Markets Bond, $17.94; European Bond, EUR 4.3563;

Gilt, GBP 12.30; Global High Income, $10.65; Japanese Equity Core, $1.260; UK Equity, GBP 4.43. 

JPMorgan Fleming: JF Eastern Smaller Co., $75.57; JF Japan, JPY 13,288; JF Japan Equity, $10.62;

JF Japan OTC, JPY 837; JF Japan Smaller Companies, JPY 28,658; JF Japan Technology, JPY 37,760; JF Korea, $29.49;

Pacific Securities, $151.76; Pacific Smaller Companies $17.63; Global Bond & Currency, $20.76;

JF America, $38.88; JF Europe, $35.06; JF Germany, EUR 17.35; JF Global Equity, $33.36.

PCP: North America, $10.80; Europe, $16.27; Emerging Markets, $13.78; Balanced, $7.63; Aggressive, $6.44.                                                                                              

Platinum (updated once a month – August 2008 Prices): All Weather, $129.99; Equity Plus, $91.40;

Prot. Equity Plus, $83.66; Prot. Income Plus, $87.33; Cap. Prot. Income Plus A, $90.70.

Scottish Provident: Adventurous 1, GBP 2.537; Balanced 1, GBP 2.095; USD Adventurous 1, $1.295;

USD Balanced 1, $1.952; USD Cautious 1, $1.895; For Preference: Baring GUF Eastern Europe, $98.31;

Fidelity Funds International, $28.13; Invesco Asian Equity Core, $3.720.

 Mona Liss
CommStock Trading Ltd
PO Box 7777
Jerusalem 91077
Tel: +972-2-6244963
Fax: +972-2-625 9515