Crude oil price recorded the first winning day after losing for 7 consecutive days. However, there's nothing worth celebrating as we view that's a technical rebound after several days' severe selloff. In fact, the benchmark contract tumbled to as low as 59.25, the lowest since May 19, before recovering and closing +0.5% higher at 60.41. Gasoline and natural gas also rose +1.9% and +1.6%, respectively while heating oil dropped another -0.2% Thursday. Today in Asia, the energy complex makes little change as the market is probably waiting for more guidance from the macro front.

Stabilization in stock markets and retreat in USD also helped rebound in crude oil. Dow Jones Industrial Average edged +0.06% higher to 8183 while S&P 500 climbed +0.35% to 883 after upgrade of Goldman Sachs boosted buying interest on banking shares. Moreover, lower-than-expected increase in natural gas storage also spurred buying in energy stocks.

The apparently encouraging US jobless claims data might have helped the markets too. The Labor Department reported that initial jobless claims decreased to 565K, compared with consensus of 608K, in the week ended July 4 from 617K in the prior week. However, the better-than-expected reading was masked by seasonal factors related to the auto sector. Usually, auto plants were shut down for retooling for new models during summer. However, due to bankruptcy of GM and Chrysler, some plants were in May and June, thus applications of jobless insurance were pushed earlier while the claims in July looked lower. Moreover, we have got a short week due to public holiday on July 3. This might also have distorted the figure. In fact, if we look at 4-week moving average which declined 10K to 606K,or continuing claims which rose 159K to record-high level of 6883K, we will know that the employment conditions remained bleak .

USD erased previous gains against major currencies as developing nation criticized USD as the dominant reserve currency at the G-8 summit. Dai Bingguo, the State Council representative, said there should be a 'diversified and rational international reserve currency system' while the Brazilian President Luiz Inacio was quoted to have urged developing nations use their own currencies, instead of USD, in settling trade accounts.

Decline in USD helped gold and other precious metals. Gold for August delivery rose +0.8% to settle at 916.2 while benchmark contracts for silver platinum and palladium also gained +0.6%, +0.8% and +0.7% to close at 12.94, 1110.5 and 235.75, respectively. We doubt if the rebounds can sustain but it all depends on the dollar's outlook in the near-term.

Expectations on inflation have diminished, as shown in the 10-year TIPS breakeven rate. This probably has put pressure on gold as one of gold appeals is it provides hedge against inflation. Recent speeches from Fed officials have been trying to downplay the effect the central bank's QE measures on inflationary outlook. Gary Stern, president of the Minneapolis Fed, said that Thursday in Helena that he's concerned that the expansion in the Fed's balance sheet will result in inflation. 'While this has been a long, broad, and deep recession, the first stage of recovery of the economy is close at hand. Although there are concerns about a potential burst of inflation, owing to considerable liquidity provision by the Federal Reserve during the recession and financial crisis, this is not likely in my judgment to pose a major threat to the economy. More worrisome in the longer-term is the possibility of renewed volatility in asset prices'.

In another occasion, Donald Kohn, Fed Vice Chairman, talked about Fed's monetary independence. He mentioned that 'any substantial erosion of the Federal Reserve's monetary independence likely would lead o higher long-term interest rates as investors begin to gear future inflation' while 'a threat to the Federal Reserve's independence could lower the Treasury's debt rating and thus raise its cost of borrowing'. Judging from what the Vice Chairman said, the Fed will strive to maintain independence and contain inflation, though whether it will succeed is another story.