FX Highlights

• USD rebounds as equity markets decline pressured by profit-taking, investors are reluctant to push risk sentiment higher waiting for more signs that the global recession is ending, USD was also supported by report that Asian central banks will continue to buy US treasuries, China, India and South Korea are expected to continue to buy US treasuries because there are no legitimate alternatives, Reuters reports that Asian countries will continue buying US treasuries even if US credit rating is downgraded
• Russia's president calls for alternatives to the USD as the world's reserve currency, Japan is expected to upgrade its economic outlook EU services PMI rises to a seven-month high, UK consumer confidence rises in Australia's GDP rises more than expected, the trade awaits today's release of ADP employment and factory orders and Bernanke's testimony before Congress
• Russian President says that the world needs more reserve currencies, may seek the establishment of world currency as alternatives to the USD
• Japan is expected to remove worsening from its June economics assessment, JPY lower
• Australia's Q1 GDP rises to 0.4%, a 0.2% rise was expected, May new vehicle sales rise 4.5%, AUD lower
• UK May Nationwide consumer confidence index rises to 53 from 51 April, this is the highest level since last November, GBP lower
• EU April producer prices fall 1%, Q1 GDP confirmed at -2.5%, inventory and investment plunge in the EU, April services PMI rises to 44.8 from 43.8 last month, EUR lower
• Feds Fischer says US economy getting less worse, recent rise in long-term yields not based on inflation fears
• Treasury Secretary Geithner repeats support for strong dollar and says China's US assets are safe
• US equity markets set to open lower, European equities fall 2%, Nikkei closed 128 points higher

Upcoming Events

• US-Wednesday, May ADP employment will be released expected at -525K, along with April factory orders expected to rise to -0.5% compared to -0.9% last month, and May non manufacturing ISM expected to rise to 45.3 from 43.7 last month, EIA petroleum inventories are also scheduled for release, chairman Bernanke to testify before the House Budget Committee

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