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Wednesday, April 2, 2008

US Market Summary on April2nd, 2008

Dollar soared as improved U.S. economic reports, weak European data turned tables in FX markets. Euro dropped more than 3 U.S. cents from Monday's high, while USD advanced sharply vs yen and hit 2-month peak against Canadian dollar. USD rallied after UBS announced another $19 billion in write-downs on illiquid U.S. real estate assets, while weak Feb retail sales data in Germany also supported.

Analysts say dollar poised to make broad move higher as market has oversold USD. "Technically, the market is very short dollars, particularly against euro, yen and Swiss franc," said Paresh Upadhyaya, a senior vice president at Putnam Investments in Boston. "So (with) this near-term sign of stability, the markets are excited." Late in New York EUR/USD 1.5604 vs 1.5784 late Monday, USD/JPY 101.92 vs 99.73, GBP/USD 1.9775 vs 1.9837, EUR/JPY 159.02 vs 157.42. Treasurys down on surging stocks, better-than-expected March manufacturing sector report; 2-year yield +16.8 bps at 1.79%, 10-year +12.8 bps at 3.56%. Stocks up sharply after a capital raising by UBS and Lehman Brothers. UBS said will raise about $15.1 billion in rights issue after announcing new writedowns.

UBS +14.6%, Lehman +17.8%. Dow +3.2%, Nasdaq +3.7%, Philly semicons +4.2%. June Comex gold fell $33.70 to $887.80/oz on liquidation triggered by stronger dollar. Nymex May crude settled 60 cents lower at $100.98/bbl.

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