USD's rebound continued in Asian session on Monday. This sent commodities and other growth assets lower as they have recently ridden on the dollar's weakness. Oil prices slipped for a third day. Extending Thursday's reversal after faltering below 84.43 (a 5-monht high made on October 7), the front-month contract for WTI crude oil fell to as low as 80.56 today. Gold price lost ground as the dollar recovered and the benchmark contract plunged to 1356.2 today. Speculations on Fed's easing moderated ahead of speeches from Atlanta Fed Dennis Lockhart and Chicago Fed's Charles Evan later this week. On Friday, Fed Chairman Ben Bernanke hinted 'further actions' will be needed to boost the economy. Yet, what he said was just echoing the September FOMC minutes without offer more details on the program and the timing. Bernanke said that 'consumer spending has been inhibited by the painfully slow recovery in the labor market, which has restrained growth in wage income and has raised uncertainty about job security and employment prospects'. On inflation, he said that recent readings on underlying inflation of approximately 1% is 'too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve's dual mandate in the longer run'. In light of the recent decline in inflation, 'the degree of slack in the economy, and the relative stability of inflation expectations, it is reasonable to forecast that underlying inflation - setting aside the inevitable short-run volatility - will be less than the mandate-consistent inflation rate for some time'. Against these backdrops, it would appear to be a case 'for further action' although 'nonconventional policies have costs and limitations'. The dollar plummeted initially after the comments but a recovery followed as investors took profits from the 'anti-dollar' trades as recent selloff appeared excessive. Economic data released on Friday were indeed mixed rather than indicating a 1-way direction for the dollar's movement. Headline CPI edged +0.1% higher in September while core inflation was flat during the month. Both readings were below market expectations. University of Michigan Confidence unexpectedly fell to 67.9 in October from 68.2 a month ago. The market had anticipated an improvement to 69.2. However, pleasant surprises came from retail sales and manufacturing data. Retail sales rose +0.6% m/m (consensus: +0.4%) in September while August's reading was revised up to +0.7%. The Empire State manufacturing index improved +11.6 points to 15.7 (consensus: 7.1), the best reading since June, in October. The indicators gave both hawks and doves supports for arguments regarding their monetary stances, increasing the variations in Fed' policy announcement in November. Commitments of Traders Speculators held mixed views on commodity outlooks in the week ended October 12. In the energy complex, speculators were bullish on crude oil and gasoline but were bearish on heating oil and natural gas. Net length for crude oil futures increased +13 300 to 129 326 contracts, the highest level since January 2010, while that for gasoline futures soared to a 5-month high of 64 883 contracts. After a sharp rise in the prior week, decline in long positions in heating oil futures outpaced the drop in short positions, resulting in a net fall of net length by -7 162 contracts. Net short for natural gas futures rose 4 983 contracts to 174 241 contracts. With the exception of platinum, net lengths fell in the precious metal complex as investors locked in profits by liquidating long positions. Moreover, some began betting for corrections in coming weeks as the complex has rallied sharply recently. Net length for gold futures slipped -3 746 to 255 874 contracts last week. The decline was the first time in 3 weeks and the biggest weekly decline since July 2010. Net length for silver futures dropped for a second week, by -3 131 to 45 352 contracts. Net length for silver futures surged to a 32-monthh high of 51 481 on the week ended October 4. For PGMs, net length for platinum futures rose for a 6th week, by 1 598, to 25 247 contracts while that for palladium futures slid for a second week, by-193, to 15 166 contracts.

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