Risk returned to markets overnight with......>

DOLLAR: Risk returned to markets overnight with moderate gains for NOK, AUD &

CAD at the European crossover. Despite the PBoC setting the mid-rate for USDCNY

above 7 for the first time in 10 years, this was actually lower than

expectations of 7.02 and was seen to underpin risk. USDCNY dipped nearly 4 big

figures to Cny7.0633 on react, while Asian equites remained in the green.

- The DXY holds toward the base of its 97.51-62 range. Key support remains at

97.39/33 from the 61.8% retracement of the Jun-Aug rise & 100-dma.

- Gold remains choppy, holding above the key $1500 level at typing. Yesterday's

multi-year high provides the next area of resistance at $1510.46, ahead of the

December 2011 lows at $1522.8.

- WTI & Brent are $1.50 off yesterday's respective lows, but still remain

defensive.

- UST yields staged a recovery with the 10y extending to 1.7481%, before fading.

- Jobless Claims & Wholesale Inventories the main data release today. The level

of initial jobless claims is expected to hold steady at 215,000 in the August 3

week after an 8,000 gain in the previous week.