MORNING BRIEFING: Rising oil prices on expectations of economic recovery, the dollar declined against its major rivals. G8 finance ministers to meet this weekend in Italy.

What’s new?
France: Current account deficit is 44 billion Euros in 2008, 2.30% of GDP.
Oil: Prices end higher for 3rd day in a row.
Swine Flu: WHO declares a state of pandemic.
World Bank: Forecasts a negative global growth of 3% in 2009.
United States: Retail sales and employment increasing.
FED Volcker: Possibility of growth in the US by the end of 2009.
Switzerland: UBS stops layoffs in its investment bank.

Today:
08h45 France: Current Account April, previous €-2.20B.
08h45 France: Consumer Price Index May, exp 0.20%, previous 0.10%.
11h00 Euro zone: Industrial Production April, exp -0.40%, previous -2.00%.
14h30 United States: Import Prices May, exp 1.30%, previous 1.60%.
14h30 United States: Export Prices May, exp 0.40%, previous 0.50%.
15h55 United States: University of Michigan consumer confidence June, exp 69.5, previous 68.7.

Overnight Rates and Indices:
EURUSD: 1.4061 – 1.3965.
USDCHF: 1.0823 – 1.0754.
GBPUSD: 1.6437 – 1.6341.
EURJPY: 137.67 – 137.13.
USDJPY: 98.30 – 97.74.
DowJones: 8'771 +0.37%.
NASDAQ: 1’862 +0.50%.
S&P 500: 945 +0.61%.
Nikkei: 10’136 +1.55%.
Gold: $958.20

Comments:

The latest US economic figures supported investors looking for a stabilization of the financial crisis, resulting in a renewed optimism for risk that encouraged many operators to focus on high-yielding currencies and commodities at the expense of the US dollar. Initial jobless claims fell last week for the fourth week in a row, while retail sales increased in May for the first time in three months.
    
News is expected today from the G8 as finance ministers from the G8 countries will discuss possible exit strategies from the crisis. The G8, which includes the United States, Japan, Germany, United Kingdom, France, Italy, Canada and Russia, will meet today and tomorrow in Lecce, Italy. Besides the preparation for the summit of Heads of State of G8 scheduled for the 8th to the 10th of July in Italy, the discussion on Russia’s decision to reduce its share of US treasury bonds may become “hot”.

According to a note from Goldman Sachs, talks of the BRIC countries to use the SDR of the IMF as a reserve currency exchange as an alternative to the dollar will probably be analyzed very carefully by the largest owners of funds in dollars.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies.
Good Day

Emman Xuereb
RTFX Ltd
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