0617 HEADLINES

	AP Dollar Falls Against Euro in Asian Trading Thursday June 16, 11:08 pm ET   Dollar Slips Against Euro in Asian Trading, but Holds Steady Against Yen TOKYO (AP) -- The dollar slipped against the euro but held steady against the yen in Asian trading Friday morning from overnight levels as the market awaited the release of U.S. trade data later in the day. Worries about the massive U.S. trade deficit have weighed on the dollar but other concerns, such as the lack of confidence in the European Union, have helped boost the dollar against the euro. The U.S. dollar was trading at 108.94 yen late morning in Tokyo, down 0.40 yen from late Thursday but unchanged from its level in New York. The euro rose to US$1.2118 from US$1.2083 late Thursday but fell to 132.00 yen from 132.13 yen. Overnight in New York, the dollar was little changed against the euro despite fears about a tense European Union summit meeting in Brussels. The dollar dipped against the yen despite a fresh rise in crude oil prices, a factor that tends to weigh on the yen because Japan imports almost all its oil. European Union leaders extended the November 2006 deadline for ratifying the EU constitution, seeking to salvage the treaty following its recent rejection in French and Dutch referendums.

	AP Euro Dips Slightly Against U.S. Dollar Thursday June 16, 10:54 pm ET   Euro Dips Slightly Against U.S. Dollar Ahead of Potentially Fractious EU Summit TOKYO (AP) -- The dollar slipped against the euro but held steady against the yen in Asian trading Friday morning from earlier levels as the market awaited the release of U.S. trade data later in the day. Worries about the massive U.S. trade deficit have weighed on the dollar but other concerns, such as the lack of confidence in the European Union, have helped boost the dollar against the euro. The dollar was trading at 108.94 yen late morning in Tokyo, down 0.40 yen from late Thursday but unchanged from its level in New York. The euro rose to $1.2118 from $1.2083 late Thursday but fell to 132 yen from 132.13 yen. The dollar dipped against the yen despite a fresh rise in crude oil prices, a factor that tends to weigh on the yen because Japan imports almost all its oil. In New York Thursday, the dollar was little changed against the euro despite fears about a tense European Union summit meeting in Brussels. The British pound dropped to $1.8229 from $1.8237. The dollar traded at 1.2731 Swiss francs, up from 1.2691; and 1.2366 Canadian dollars, up slightly from 1.2360. The euro reached an all-time high of $1.3667 at the end of last year, powered by concerns about the wide U.S. trade and budget deficits. The U.S. currency remains vulnerable to concerns about the strength of the economy, but data Thursday appeared to have little effect. New figures showed that the number of Americans filing new claims for unemployment benefits increased slightly last week after a steep decline the previous week. Construction of new homes rose by 0.2 percent in May -- short of economists' forecasts for a 0.6 percent gain. Last year's euro surge clipped the competitiveness of European exports. "It's still the case that the euro is clearly higher than we had ever assumed," Germany's deputy finance minister, Barbara Hendricks, told lawmakers in Berlin Thursday. The "slight downward tendencies that we have seen over the past weeks are of benefit to the German economy," she said. European Union leaders extended the November 2006 deadline for ratifying the EU constitution, seeking to salvage the treaty following its recent rejection in French and Dutch referendums.

	Reuters Dollar edges up vs euro, Aussie shines Thursday June 16, 8:44 pm ET By David McMahon TOKYO (Reuters) - The dollar edged up against the euro on Friday after European Union leaders agreed to push back a deadline to ratify their troubled constitution. While the decision came as little surprise after referendums in France and the Netherlands rejected the new EU treaty earlier this month, dealers said it provided one more reason to sell the European currency. "Ever since the French and Dutch votes there's been a lot of noise about political turmoil in the euro area, and this is all going to keep weighing on the euro," said a senior dealer at a U.S. bank in Tokyo. Even so, the euro's losses were muted after its tumble of more than 10 percent against the dollar in three months. Overall, the dollar's gains were also being kept in check by a surge in commodity prices which has sent dealers flocking to currencies such as the Australian and New Zealand dollars which usually gain as their commmodity exports boom. "This is creating some very nice demand for the commodity currencies, which in turn should cool off dollar buying a little," said the U.S. bank dealer. The euro was around $1.2100 as of 0020 GMT, down slightly from late U.S. trade where it slipped as low as $1.2056, not far from a nine-month low around $1.2015 hit on Wednesday. The dollar traded around 108.80 yen down around 0.1 percent on the day. It touched an eight-month high around 109.70 yen earlier in the week but dealers said it had been pulled back down after aggressive selling by Japanese exporters. The Australian dollar was trading at around 77.40 U.S. cents not far short of a five-week high of 77.44 cents hit on Thursday. The Reuters CRB commodities index has jumped more then two percent this week. The dollar was barely ruffled by a reading of minus 2.2 in the Philadelphia Federal Reserve's business outlook survey for June on Thursday. It was below economists' forecasts for a reading of 10.0 and the first negative reading in 25 months. Despite a recent mixed bag of U.S. economic data, the dollar has been supported this month by a steady chorus of Fed officials suggesting that U.S. interest rates still have room to rise, even after a series of eight straight rate hikes. U.S. Treasury yields fell on Thursday after Kansas City Fed President Thomas Hoenig said the central bank's neutral level for benchmark rates is probably between 3.5 and 4.5 percent. The Fed is widely expected to raise rates by a quarter percentage point to 3.25 percent on June 30. Later on Friday traders will be watching U.S. current account data for the first quarter of 2005, due at 1230 GMT, which is expected to show a slight widening of the U.S. deficit to $190 billion from $187.90 billion in the fourth quarter. "Unless the deficit widens notably more than expected, we would not expect the USD to weaken substantially," Morgan Stanley strategists said in a note to clients. The market will also focus on a speech by European Central Bank President Jean-Claude Trichet at 1600 GMT.

	Daily FX Euro Slides As France Calls For An Emergency Meeting at EU Summit Thursday June 16, 5:39 pm ET By Kathy Lien, Chief Strategist Euro Slides As France Calls For An Emergency Meeting at EU Summit US Philly Fed Index Plunges, Causing Concern For National ISM UK Consumer Spending Growth Continues to Weaken US Dollar The dollar is acting rationally against every other major currency except for the euro and the Swiss franc. Today's much weaker than expected Philadelphia Fed survey should have sent the dollar plunging. It did, but only momentarily before the pair did a 360-degree turn to collapse back to the early European trading levels. The dollar did however sell-off against the British Pound, as well as the Australian, New Zealand and Canadian dollar. The market had originally expected the Philly Fed survey to improve to 10.0 from 7.3 in May. To everyone's surprise and in complete contrast to the Empire State survey, the Philly Fed plunged to 2.2. Both new orders and shipments eased, providing cause for concern. The expectations and employment components edged higher, suggesting that the components were stronger than the headline report. Even so, there is no denying that the latest release could push the national ISM index below the 50 boom/bust line. In the continual "when will the Fed stop tightening" debate, Kansas City Fed President Hoenig shed some more light on Fed's policy. He said that the Fed wants to get to the neutral rate 'sooner rather than later'and that most economists are predicting that neutral lies somewhere between 3.50% and 4.50% - so that will be what they are shooting for. His comments are a bit more hawkish and suggest that recent data has not deterred the Fed's policy makers. A quarter point hike is a shoe-in at the end of this month with an August rate hike also a near certainty. After that, the rest is pretty much up in the air. The fact that oil prices climbed to a two month high is also disconcerting. Greenspan has already warned that they are closely watching the trend of energy prices. If you recall, rising oil prices was one of the primary triggers for the slow patch that the global economy entered around November of last year. Since then, the world has been struggling to grow. Euro The European Summit across the Atlantic has made it very difficult for the Euro to rally with each move higher met with equally strong selling interest. Things are not going well out there. French President Chirac called for an emergency summit to discuss the European Union's future. Everyone attending the summit agreed that they have lost touch with the needs of their citizens and need to do some 'soul-searching.' The progress so far is summed up best by Edward Hughs on a Fistful of Euros - 'European leaders plunged into a full-blown crisis at a summit, with a battle raging over long-term EU financing and their lofty plans for an EU constitution nearly in tatters...French President Jacques Chirac called for an emergency meeting to extricate the bloc from the mess created by deep splits over the bloc's budget and by a growing popular revolt against the proposed EU treaty. Leaders had hoped a deal on the 2007-2013 EU budget would let them show a united front after French and Dutch voters delivered stinging rejections of their constitution, meant to lay the ground rules for an enlarged 25-nation alliance. Instead, the summit was overwhelmed by an embarrassing squabble over money, with British Prime Minister Tony Blair refusing demands by the other 24 EU nations, led by France, that he surrender an annual budget rebate. British Pound Rocketing higher earlier on in the session, merely missing the 1.8300 figure, the British pound plummeted on rather tepid retail sales figures as whispers of a slowdown were heard throughout the market. Expected to rise to a 1.8 percent reading in the month of May, the report rose a disappointing 1.3 percent on an annualized basis. Additionally disappointing was the fact that the consensus estimate was far below the previous period's 2.3 percent rise and continues the overall decline in the figure since September of 2004. So far sales receipts, indicative of consumer demand, has fallen from a high of 7.2 percent over the past nine months suggesting softer consumption patterns. As a result, coupled with softer housing data earlier on in the week, there seems to be increasing justification for the recent rate decision by the Bank of England officials. With that said, speculation looks to be mounting on an expected rate cut decision to once again bolster consumer demand and boost the paltry production figures as of late. Currently, short sterling futures are pricing in no further hikes in the benchmark repurchase rate with any subsequent cuts unbecoming till earlier in 2006. Japanese Yen Gaining for the third straight session, the Japanese yen moved higher on better than expected machine tool orders data and relatively nothing else. With suggestions of a slowdown in global foreign demand, economists were pleasantly surprised as orders rose more than expected. Rising 2.5 percent on an annualized basis in the month of April, the data resides below the 13.2 percent surge in the previous period and may be indicative of a retracement till inventories are reestablished in the near term. Separately, the currency of the world's second largest economy did not seem hampered by two-month highs hit by crude oil during the session, touching intraday highs of $56.90. This is particularly interesting since Japan imports close to 98% of its oil and should crude prices continue to rise, output would be adversely affected, as would the spot rate. Taking that into consideration, traders will be looking towards the leading and co-incident indicators tomorrow as the final April figures are set for release. Estimated to improve slightly over the month, the leading indicators may contribute little towards price action capping the week, as it is a compendium of previous releases and subsequently highly predictable.

	Reuters Dollar steadies, looks to EU summit Friday June 17, 4:17 am ET By Carolyn Cohn LONDON (Reuters) - The dollar steadied near this week's multi-month highs against the euro and the yen on Friday, consolidating recent gains made on the relative interest rate outlook and on political crises in the euro zone. The dollar has gained more than 8 percent against the euro over the last two months, as investors focus on expectations of higher interest rates in the U.S. and on concerns over the future of political and monetary integration in Europe. But the greenback has found its way blocked at key technical levels of $1.20 per euro and 110 yen, and markets are looking for further direction from U.S. data later on Friday, as EU leaders meet to hammer out a long-term budget deal at the second day of their summit. "U.S. current account data should show some signs of stabilization in the deficit, while markets will be looking to see how euro zone politicians and policymakers are going to tie themselves in knots," said Jeremy Stretch, strategist at Rabobank. The euro was near the day's highs of $1.2142 at 0800 GMT, up a quarter percent from late U.S. trade and more than a cent above its highest levels since August hit on Wednesday. Dealers said options-related buying had frustrated attempts earlier this week to drive the euro below $1.2000, a level where stop-loss orders could accelerate the currency's fall. Instead, markets were consolidating ahead of the weekend, close to the week's opening levels. "It's all because we couldn't quite take out $1.20. There is no longer the sort of enthusiasm that we saw earlier to buy dollars," said Junya Tanase, a currency strategist at JP Morgan Chase in Tokyo. The dollar traded around 108.95 yen, virtually unchanged on the day. It touched an eight-month high around 109.70 yen earlier in the week. The dollar at one point had gained about 10 percent this year against a basket of major currencies, reversing a three-year, 30 percent slide fueled by worries about growing external deficits. But its gains were now being kept in check in part by a surge in commodity prices that has sent dealers flocking to currencies such as the Australian and Canadian dollars which often gain as their commodity exports boom. The Australian dollar was trading close to the previous session's five-week highs against the dollar and five-year highs against the euro, and the Canadian dollar was near two-month highs set on Thursday. DEFICIT WIDENING? Traders will be watching U.S. current account data for the first quarter of 2005, due at 1230 GMT, which is expected to show a slight widening of the U.S. deficit to $190 billion from $187.90 billion in the fourth quarter. But worries about U.S. deficits have taken a back seat in recent months, as the market has latched onto political turmoil in the euro zone and rising U.S. interest rates as an excuse to buy dollars and dump euros. EU leaders agreed on Thursday to extend the deadline for ratifying their troubled constitution, after France and the Netherlands voted against it in referendums earlier this month. FED CHORUS Despite a recent mixed bag of U.S. economic data, the dollar has been supported this month by a steady chorus of Fed officials suggesting that U.S. interest rates still have room to rise, even after a series of eight straight rate increases. Kansas City Fed President Thomas Hoenig said on Thursday the central bank's neutral level for benchmark rates is probably between 3.5 and 4.5 percent. The Fed is widely expected to raise rates by a quarter percentage point to 3.25 percent on June 30. Also on Friday, the University of Michigan releases its preliminary June consumer sentiment index at 1345 GMT, forecast to show a rise of 89.0 from 86.9 in May. In the euro zone, markets are looking for the next move in rates to be a cut from the current 2 percent. European Central Bank Governing Council member Klaus Liebscher said on Friday the ECB's neutral position on interest rates did not mean a bias in one direction or another, after ECB President Jean-Claude Trichet said this week he was not preparing the markets for a rate cut. Trichet speaks again on Friday at an ECB conference in Frankfurt, along with ECB officials Gertrude Tumpel-Gugerell, Jose Manuel Gonzalez Paramo and Otmar Issing, and Bank of England Monetary Policy committee member Stephen Nickell.

	AP Euro Edges Up Against U.S. Dollar Friday June 17, 4:43 am ET   Euro Edges Up Against Dollar as Markets Await Release U.S. Trade Figures BERLIN (AP) -- The euro edged up against the U.S. dollar Friday as markets awaited the release of new U.S. trade figures. The 12-nation euro bought $1.2132 in morning European trading, up from $1.2093 late Thursday. The dollar also dipped against the British pound, which rose to $1.8238 from $1.8229; and against the Japanese currency, falling to 108.88 yen from 108.94 yen. The euro rose to an all-time high of $1.3667 at the end of last year on worries about the wide U.S. trade and budget deficits, but has gradually slipped back. In recent weeks, it has lost steam amid the crisis over French and Dutch voters of the EU constitution, which EU leaders sought to salvage at a summit Thursday and Friday. The 25 EU members also faced deep divisions over the bloc's future spending plans. Still, the dollar remains vulnerable to concerns over the health of the U.S. economy. Economists expected the U.S. current account deficit -- the broadest measure of foreign trade -- to have widened to $190 billion in the first quarter from $187.90 billion the previous quarter. The figures were due later Friday.

	Budget Battle Dominates EU Leaders Talks Friday June 17, 7:16 am ET By Constant Brand, Associated Press Writer   EU Leaders Demand Blair Give Up Britain's Multibillion Dollar Rebate in Budget Talks BRUSSELS, Belgium (AP) -- Twenty-four European Union leaders confronted British Prime Minister Tony Blair on Friday and demanded he give up his country's multibillion dollar rebate in talks aimed at securing a new EU budget. The EU leaders also clashed on other key points in a draft budget, seeking further cuts and lower contributions in new spending plans for 2007-2013. Failure to agree on the 2007-2013 budget, worth some $120 billion annually, would deepen the sense of crisis touched off by French and Dutch votes against a European constitution, and reinforce impressions that the 50-year process of European integration has lost direction. Talks so far have led to a personal clash between Blair and French President Jacques Chirac over Britain's rebate it gets back annually from the EU. Blair is determined to defend the rebate then-Prime Minister Margaret Thatcher won in 1984, however his EU counterparts claim the refund is out of date and unfair. It currently totals some $5.5 billion a year. French President Jacques Chirac told his counterparts at the talks the British rebate had to be reduced immediately, according to a transcript distributed by the French delegation. A proposal to freeze the payment was not enough, he said. Chirac added that by 2013 the EU "should foresee the disappearance of the check" to London. Chirac said a cut in the rebate "should in no case be conditioned on the revision of farm spending" after 2013, which was proposed in the latest budget draft. He said France would be willing to accept a compromise to solve the budget deadlock, but was not willing to concede more than $12 billion in reduced funding. "I am ready to make this effort if, and only if, we stop there," Chirac said. Sweden's Prime Minister Goran Persson said nothing had changed to move the leaders closer to the long-term budget deal, and called for a delay of up to a year to sort out problems. "I think we shall not rush into a deal today, we have time to continue to negotiate on a better budget and on better distribution in the budget," he said. "We are quite many who are disappointed about the structure. ... It's better to take a year more and continue to negotiate." German Chancellor Gerhard Schroeder, however, called on leaders to "send a signal that we are able to get an agreement." He said others should compromise and end the appearance of deadlock. "Others have to move or take back expectations that go beyond the compromise proposal," said Schroeder. European Commission President Jose Manuel Barroso said it was vital leaders reach an agreement even if it was not perfect, to show that Europe works. He suggested a 2008 review of the budget to assess spending plans. "We have a window of opportunity and we should grasp that opportunity and get a deal," said Danish Prime Minister Anders Fogh Rasmussen, but he demanded the new budget add more money for research and education. The EU leaders put aside their problems with their embattled constitution -- the summit is the first after French and Dutch voters rejected the document -- and were to spend all their second summit day on closed-door talks aiming to get agreement on a new EU budget. EU External Relations Commissioner Benita Ferrero-Waldner acknowledged the negotiations would be "very, very tough." Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the EU presidency, suggested a freezing of the British handback until 2013, after which a reduction of the rebate would be linked to cuts in farm handouts that disproportionately benefit France. However British officials rejected the compromise, while Chirac has refused cuts to the farm aid it gets. Britain has argued it would only accept doing away with the rebate if agriculture spending is overhauled further beyond current reforms. The Netherlands and Sweden, meanwhile, are leading a strong charge to reduce their contributions, while Italy, Spain and Portugal are resisting cuts in aid to poorer regions. The latest proposal foresees cuts in EU farm handouts of $7.2 billion during the 2007-2013 budget years and lowers overall contributions from EU member states. The Netherlands, Germany, France, Austria, Sweden, and Britain are all net payers, contributing more to the budget than they get back in benefits. They want spending in 2007-2013 capped at 1 percent of the EU's annual gross national income.

	Reuters US current account gap more than expected Friday June 17, 8:33 am ET WASHINGTON (Reuters) - The U.S. current account deficit widened more than expected in the first quarter to a record $195.1 billion, driven by a growing merchandise trade gap and an increase in unilateral transfers such as government grants, a government report showed on Friday. The quarterly shortfall overshot Wall Street expectations for $190.0 billion deficit. The Commerce Department also raised the current account deficit for the fourth quarter of 2004 to $188.4 billion, from $187.9 billion previously. The current account, the broadest measure of U.S. trade with the rest of the world as it includes investment flows, ran at a record 6.4 percent of gross domestic product in the first quarter, the Commerce Department said. Economists generally consider that to be an unsustainably high level. The first-quarter decline reflects a goods deficit which increased to $186.3 billion, from $182.2 billion in the fourth quarter. Increases in U.S. government grants and in private remittances and other transfers boosted net outflows of unilateral transfers to $27.1 billion in the first quarter, from $22.4 billion in the fourth. The increase was driven in part by American relief efforts to help victims of the tsunami that hit Southeast Asia in December. Concerns about the U.S. current account have contributed to the dollar's three-year decline against the euro and a basket of major currencies. The dollar depreciated another 1 percent in the first quarter, the Commerce Department said.

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	AP Euro Rises Against the U.S. Dollar Friday June 17, 9:45 am ET By Geir Moulson, Associated Press Writer   Euro Rises Against Dollar As U.S. Current Account Deficit Soars BERLIN (AP) -- The euro rose against the U.S. dollar Friday as new data showed that the United States' current account deficit climbed to an all-time high in the first quarter. The 12-country euro bought $1.2192 in afternoon European trading -- up about a cent from its level in New York late Thursday of $1.2093. The dollar also fell against the British pound, which rose to $1.8264 from $1.8229; and against the Japanese currency, falling to 108.63 yen from 108.94 yen. The euro rose despite deadlock at a European Union summit over the bloc's future funding plans -- a dispute that comes amid a crisis over the proposed EU constitution, triggered by French and Dutch voters' rejection of the charter. Still, the dollar remains vulnerable to concerns over the health of the U.S. economy. The euro was driven to its all-time high of $1.3667 at the end of last year by worries about the wide U.S. trade and budget deficits, and Friday's data from Washington underlined those concerns. The Commerce Department reported Friday that the deficit in the U.S. current account -- the broadest measure of international trade -- rose to $195.1 billion from January through March of this year as the country sank deeper into debt to Japan, China and other nations. Economists had predicted a deficit of some $190 billion. The EU's political turbulence has undermined the euro over recent weeks, but it had long been clear that this week's summit would struggle to reach a deal on the bloc's budget plans. "I think the market has fully discounted that already," said Mark Austin, a foreign exchange strategist with HSBC in London. "I think, to be honest, the concept of crisis in Europe is losing some traction in the market." Markets may now focus their attention back on undiminished worries about the U.S. deficits and prospects of a weaker U.S. economy in the second half of the year, Austin said. He predicted that the euro was more likely to recover than drop further, and likely would be "back in the mid-$1.20s over the next couple of months."