The Nikkei 225 recovers 13,000, despite the decline in USD/JPY

Forex: The USD is weaker against most currencies as the WSJ notes that the greenback may be due for profit taking following the recent gains. Also the gains in commodities prices are weighing on the USD. The EUR is currently above $1.4700, USD/CHF is below 1.0950 and USD/JPY is below 110.50. Additionally the NZD and AUD are both higher against the USD, as AUD/USD moved above 87 cents. Although the yen is gaining against the USD and GBP, the Japanese currency is weaker against the NZD, AUD and EUR.

Asian Equities: The Nikkei 225 opened lower, but the index has since moved above 13,000 and is higher by more than 1.3%. Equity gains in Tokyo are being led by shares of banks and exporters. The S&P ASX 200 is higher by more than 0.30%, led by advances in shares of resources stocks. The Kospi is lower by more than 0.30%, led by declines in shares of technology companies. Chinese equities are lower by more than 2.75% on losses in shares of energy companies, while the Hang Seng is lower by more than 0.50%. Ahead of the equity open in Shanghai an unconfirmed report in the South China Morning Post disclosed that Chinese insurance companies have been urged by regulators to lower their holdings in A-shares due to the uncertain economic outlook.

Commodities: Crude oil prices are higher by more than 0.70% and trading well above $114.00/bbl. Energy traders are watching Tropical Storm Fay, which could approach hurricane strength when it reaches western Cuba on Sunday night. Additionally a hurricane watch has been issued for parts of Florida, as Fay may reach Florida Keys in the next 24 hours. In other energy news, the WSJ quoted Iran's OPEC governor as saying that the oil cartel could decide to roll over or cut crude oil production at its September meeting. Spot Gold is higher by more than 1% and has recovered the $800/oz level.

Russia Update: Over the weekend, Russia's President Medvedev signed a cease-fire agreement related to Georgia and said that Russian troops will begin their withdrawal on Monday. However, the NYT is reporting that according to US officials, the Russian military has been moving launchers for short-range ballistic missiles into South Ossetia. Additionally, a report in the UK Times said that Russia is mulling arming its Baltic fleet with nuclear warheads.