Massive profit-taking is seen after crude oil surged above 72 as the rally over the past 3 days was mainly driven by strong macro-economic data and robust sentiment. WTI crude oil is currently trading at 70.5, down $1 from yesterday's close.

There have been heated debates on the impact of high oil price on economic growth. Fatih Birol of the International Energy Agency, told the press that prices higher than $70/bbl would hurt recovery. The Chief Economist said that 'if we see prices go much higher than that, we may see it slow down and strangle economic recovery'. Birol also said that demand in China will be an important driver for oil price and should other countries begin to grow in 2011 and 2012, the worldwide supply and demand balance could be tightened a lot.

His opinion has been shared and opposed by other analysts. Francisco Blanch from Bank of America said that $80 will be the upper band of the tolerable range for developed countries. If oil price surges to $90-100/bbl, economy in China will also be affected.

On the other hand, Anthony Nunan from Mitsubishi Corp disagreed as 'what Saudi Arabia has been saying all along is that you need $70 oil to finance new projects, and that is a concern as we return to growth, that we have enough production capacity in the future'.

Stocks decline in European morning with UK's FTSE 100 Index dropping -0.9% to 4642 as Standard Chartered said it may raise 1B pound of capital by selling shares while William Hill reported -26% reduction in Q09 earnings/ Germany's DAX and France's CAC 40 Index slide -0.9% and -0.7%, respectively.

Gold price also retreats in European morning after soaring to 965 yesterday. In the short-term, the yellow metal should remain trading within a range unless 960 is firmly broken. USD recovers after diving to 1.44, the lowest since December 2008, against the euro yesterday, We believe the greenback can continue rising until it meets resistance levels at 1.41/1.43.

Silver price also pulls back from 7-week high of 14.465. Currently trading at 14.13, we believe better economic outlook should benefit silver more than gold as industrial demand should improve.

The Reserve Bank of Australia announced to keep its policy at 3% in August. At the same the time, the central bank's stance on monetary policy has turned to neutral from mildly easing in previous meetings as driven by better domestic and global economy. Currently, the market has speculated that Australia will be the first country to raise interest rate.