USD - With a slew of key economic data releases last week, the greenback
was subject to a high degree of event risk, which culminated with Friday's
highly anticipated employment reports. The ADP Employment Report last
Wednesday (-298K in Aug. vs. -250K exp.) was a harbinger of the official
government reports released on Friday, though mixed signals from the
various releases contributed to volatility in the markets-a phenomenon
further exacerbated by thinning trading conditions ahead of (and during)
yesterday's Labor Day holiday. The NFP defied expectations with its
sanguine release (-216K in Aug. vs. -230K exp.), though the official
headline unemployment rate edged up to its highest level in over two
decades (9.7% in Aug. vs. 9.4% prior). Consequently, the dollar declined to
its lowest level this year against the EUR as the ostensibly improving
economic landscape bolstered equity markets, stoking speculation that the
global recession is easing, thus further sapping demand for the greenback as
a haven. The weaker dollar also underpinned gold and oil prices this
morning, causing both commodities to break through technically significant
levels at $1000/oz and $70/bbl, respectively. With very little on the
economic docket for the balance of this holiday-shortened week, America's
currency will likely continue to take its cue from global equity markets.
However, tomorrow's release of the Fed's Beige Book should offer markets
further insight into the future direction of US monetary policy and the USD,
as well as the health of the world's largest economy.

EUR - The euro climbed to its highs for the year vs. the dollar amid
optimism over the global economy. The single currency rose to $1.4522,
gaining over 2 cents vs. the dollar today as US markets returned from the
Labor Day holiday. The euro was boosted after Germany reported that
exports expanded 2.3% in July-the third consecutive month of gains
Markets shrugged-off news that German industrial production fell 0.9%
in July, preferring instead to focus on news that output would likely rise
going forward. In further signs that the Eurozone is gaining momentum,
France revised upwards its estimates for Q3'09 growth to 0.3% from zero
growth previously. The positive news from Germany and France-the E-
16's largest economies-bodes well for growth in the region underpinning
the euro.

GBP - The GBP climbed to the highest level in more than two weeks
against the USD as stocks advanced and a report showed British
manufacturing increased three times as much as forecast in July. The
Office for National Statistics announced that output jumped 0.9% from
June, the biggest gain in 18 months. Also the industrial production data
came in above expectations at a respectable 0.5%. On Thursday the BoE
will meet and there is some speculation as to whether any new policy
decisions will be announced. The BoE is expected to remain fairly neutral
at this meeting after last month's surprise.

JPY - Weak fundamentals such as soft US payroll data last Friday helped
boost safe-haven demand for the yen. The yen tends to rise when risk
aversion becomes a strong sentiment amongst investors. The yen gained
further this morning on positive news that Japan's corporate bankruptcies
dropped 1% in August, the first drop in three months. The yen is expected
to appreciate further on speculation Japan's new government may refrain
from intervening to weaken the currency as they have hinted they are
going to be less interventionist. A senior lawmaker in the new Japanese
ruling party said Tokyo should not intervene in the currency markets
unless exchange rates move abnormally, adding the strong yen was good
for Japan as it curbs import costs.

CAD - The loonie continued to chip away at the dollar reversing earlier
pullbacks on weaker commodity and equity markets. Weak conditions,
however, were short lived as our northern partner's currency gained 3%
vs. USD (1.1081 - 1.0754) on a general return to riskier assets and crude
oil's quick bounce back. Crude oil gained 4.7% for the week almost
squaring positions form earlier in the session. Commodities in general are
charging ahead as the USD loses the ground it has gained of late on 'safehaven'
status. Gold broke the psychological $1000/oz barrier for a new
five-year high of $1006.60 and continues to trade north of $1K as
investor's hedge against the inevitable inflation created globally by
quantitative easing. Relevant data this week will be Housing Start, New
Housing Price Index and Thursday's Bank of Canada rate decision.

MXN - The peso benefited as well from a general USD softness and a
return to commodity based currencies. Mexico's currency gained nearly
3% vs. USD and continues to rally south of 13.30. However, the peso
tumbled earlier in last week's session on news that the Central Bank may
begin to reduce USD sales that have been largely responsible for
underpinning the peso of late. Banco de Mexico sells $50M daily and
another $250M when the peso weakens more than 2% in a day. Last week
Mexican President Felipe Calderon proposed measures to shore-up the
country's fiscal situation and bolster the economy: Mexico must expand
tax collection, end corruption at state energy companies and extend access
to health care to all citizens.

CNY - The yuan rose to 6.8275 vs. USD. Beijing said would continue its
stimulative policies until further signs that the economy is more
solid. Markets are forecasting CNY appreciation of 1.5% over the next
year-the highest level in 3-months.