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Yesterday, the collapse which roiled global financial markets spread to forex markets, causing the Yen to loosen from its moorings and sending the currency upward against most of the worlds major currencies, including a 2% rise against the USD. While the Yen has already given back some of these gains, many analysts are already speculating that this jolt some life into the Yen and put an end to the carry trade which has sent the Yen to record lows. Ultimately, it is volatility that will lift the Yen, and Yen bulls are surely hoping for another week like this one. CBS Marketwatch reports: “One of the things that carry trade relies on is relative low levels of volatility. Clearly the most recent catalyst has been the Chinese market meltdown triggering a meltdown in other emerging markets and basically a shift out of riskier assets into less risky assets.” Read More: http://www.marketwatch.com/news/story/carry-trade-unwinding-roils-currency/story.aspx?guid=%7BD649A4E9-FEB2-4BDB-93DF-BFEEE4CD4D10%7D

LONDON (Thomson Financial) - A dip in a key measure of US core inflation pushed the dollar lower on speculation that the US Federal Reserve may soon be in a position to cut interest rates as inflationary pressures ease.

Figures released this afternoon showed core inflation, as measured by the core personal consumption expenditures price index, was unchanged in March on a monthly basis after rising by 0.3 pct in February.

On a year-on-year basis, the core PCE deflator slowed to 2.1 pct from 2.4 pct in the year to February.

“Easier core inflation is helping raise hopes that the Fed can begin to focus more on flagging growth than on stubborn inflation,” said Jamie Coleman at Thomson IFR Markets.

He noted, however, that US rate-setters will want to see more than one month’s inflation moderation “before declaring the battle won”.

At 13.58 pm BST, the euro was trading at 1.3625 usd, up from 1.3616 just before the data were released, while the pound rose to 1.9952 usd from 1.9935 previously.

jessica.mortimer@thomson.com

jkm/ic

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LONDON (AFX) - Here are the top stories on AFX News

Dell 4Q earnings and revenues drop

DALLAS (AP) - Dell Inc.’s fourth-quarter profits plunged 33 percent because of weak sales of laptops and notebooks, and the computer maker still faces an unresolved federal accounting probe, customer service complaints, several shareholder lawsuits and stiff competition from rivals.

But amid another disappointing quarter, analysts said Dell at least appears ready to do something about its many problems, even if it takes years to resolve.

Gallaher FY pretax pre-ex profit up 4.9 pct, says current trading in line

LONDON (AFX) - Gallaher Group PLC, Britain’s third-biggest tobacco group, posted a 4.9 pct rise in full-year pretax profit, beating market expectations, on the back of a strong performance from the CIS region.

Pretax profit before amortisation and exceptional charges rose to 597 mln stg from 570 mln stg a year ago. Analysts were expecting profit of some 580 mln stg.

Oracle to buy Hyperion for $3.3 billion

SAN FRANCISCO (AP) - Business software maker Oracle Corp. will buy Hyperion Solutions Corp. for $3.3 billion in cash, renewing a shopping spree aimed at toppling rival SAP AG.

The deal announced Thursday will give Oracle an arsenal of Hyperion products that are widely used by SAP’s customers. Hyperion’s tools, known as “business intelligence” software, help chief financial officers and other top corporate executives track their company’s performance.

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BANGKOK (XFN-ASIA) - New finance minister Chalongphob Sussangkarn said the government will maintain the existing currency rules, which require 30 pct of all incoming investment to be held by financial institutions for up to one year.

The market had been speculating that the government would soon lift the measures, imposed by the army-backed government in December to curb the Thai baht’s rise.

Many exemptions have since been made to the controls but the general policy remains at least in theory.

The appointment of Chalongphob as the new finance minister earlier this week raised hopes that the government would end the stringent rules as the former World Bank economist had previously come out against them.

But Chalongphob said the capital rules are needed to control the Thai unit, which has risen nearly 12 pct against the dollar over the past year.

“Regarding the 30-pct reserve rules, I personally think that Thailand still needs measures to manage capital flows in and out of the country,” he told reporters.

“At the moment, appropriate measures (to replace the capital rules) have not been found and any policy changes must be made appropriately and gradually to minimize impacts on the stock market,” he said.

The Thai baht, which yesterday hit a new nine-year high of 35.10 against the dollar on hopes for an end to the measures, fell to 35.30-36 following Chalongphob’s remarks before picking up again to the 35.20 levels.

The central bank chief, Tarisa Watanagase, said in a newspaper interview yesterday that she was waiting for the “right time” to completely lift the currency controls.

Chalongphob also said that investor confidence had declined sharply since last year’s coup, which ousted premier Thaksin Shinawatra, and he vowed to restore sagging sentiment.

“As the global economy remains volatile, the government’s economic policies should help boost investor confidence, not lessen it further,” the new minister said.

Chalongphob did not discuss the military government’s approval of limiting foreign investors to holding no more than 49 pct of the shares or voting rights in Thai companies, another issue that has raised investor concerns.

But he insisted Thailand would maintain good relationships with foreign businesses.

afp/net

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ROME (AFX) - Italy’s GDP, unadjusted to the number of working days, rose 1.9 pct year-on-year in 2006 compared with a 0.1 pct rise in 2005, according to the statistics office ISTAT.

ISTAT added that the public deficit totalled 4.4 pct of GDP compared with 4.1 pct a year earlier.

On Feb 13, ISTAT released preliminary GDP data, adjusted to the number of working days, that showed that 2006 GDP rose 2.9 pct.

There were two working days less in 2006 than in 2005.

philip.webster@thomson.com

pw/jlc

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