US dollar mixed after Thai coup; Fed meeting in focus Wednesday, September 20, 2006
NEW YORK- The dollar traded mixed Tuesday as news of a coup in Thailand prompted investors to turn away from risky assets, and traders looking ahead to a Federal Reserve announcement on US monetary policy.
At 2100 GMT, the euro fell to 1.2675 usd from 1.2705 usd late Monday in New York.
The dollar stood at 117.71 yen, compared with 117.91 yen late on Monday.
Reports from Thailand said a state of emergency had been declared after an apparent military coup, with plotters said to have taken control of all six of the kingdom's public television stations, as well as radio stations.
The news sparked selling in the Thai baht and quickly spread to other Asian and Latin American currencies as the news caused investors to curb their risk appetite, with the Australian dollar also falling to a day low of 0.7515 against its US counterpart.
"It's been a long time since the word contagion has been in use but the events in Thailand could prove to be just that if players decide to take risk off the table by taking money off on their other emerging market trades," said Divyang Shah at IDEAglobal.com.
The US dollar benefited from the news meanwhile, erasing some of its earlier losses which came in the wake of weaker-than-expected US housing starts and inflation data which further reduced the chances of the Federal Reserve raising interest rates any further.
Jamie Coleman at Thomson IFR Markets said the trouble in Thailand was likely to spark jitters in financial markets, particularly as the Thai devaluation of July 1997 was the catalyst for the Asian financial crisis.
The initial dollar reaction during that crisis was a period of dollar strength, he noted, followed by a weakening as Asian nations repatriated foreign holdings.
"This present crisis looks contained, but few felt a devaluation by a small country would have such profound impact around the world for more than a year in its wake," he cautioned.
The yen made a sharp recovery after Monday's selloff, which came after the Group of Seven made no specific reference to the Japanese currency.
Ian Gunner at Mellon Financial said the yen saw "a dramatic turn of fortune" after comments by Japanese Finance Minister Sadakazu Tanigaki who dismissed the notion of a secret deal between Japan and the euro zone on exchange rates.
In the United States, the Federal Reserve was widely expected to keep its key interest rate unchanged at 5.25 pct at its meeting on Wednesday, but market will be looking for clues on future moves by the central bank.
A report Tuesday showed US wholesale prices edged up 0.1 pct in August, in a further sign of easing inflation pressures.
Peter Morici, an economist at the University of Maryland School of Business, said inflation may be even less of a problem as a result of the decline in energy costs in recent weeks.
"Since early August, crude oil prices have fallen nearly 15 usd a barrel and gasoline has dropped more than 50 cents a gallon," he noted.
"Inflation should cool significantly in September and October, and the Fed should become more comfortable, keeping interest rates at current levels."
In late New York trade, the dollar stood at 1.2512 sfr after 1.2505 Monday. The pound was being traded at 1.8813 usd from 1.8802.
At 2100 GMT, the euro fell to 1.2675 usd from 1.2705 usd late Monday in New York.
The dollar stood at 117.71 yen, compared with 117.91 yen late on Monday.
Reports from Thailand said a state of emergency had been declared after an apparent military coup, with plotters said to have taken control of all six of the kingdom's public television stations, as well as radio stations.
The news sparked selling in the Thai baht and quickly spread to other Asian and Latin American currencies as the news caused investors to curb their risk appetite, with the Australian dollar also falling to a day low of 0.7515 against its US counterpart.
"It's been a long time since the word contagion has been in use but the events in Thailand could prove to be just that if players decide to take risk off the table by taking money off on their other emerging market trades," said Divyang Shah at IDEAglobal.com.
The US dollar benefited from the news meanwhile, erasing some of its earlier losses which came in the wake of weaker-than-expected US housing starts and inflation data which further reduced the chances of the Federal Reserve raising interest rates any further.
Jamie Coleman at Thomson IFR Markets said the trouble in Thailand was likely to spark jitters in financial markets, particularly as the Thai devaluation of July 1997 was the catalyst for the Asian financial crisis.
The initial dollar reaction during that crisis was a period of dollar strength, he noted, followed by a weakening as Asian nations repatriated foreign holdings.
"This present crisis looks contained, but few felt a devaluation by a small country would have such profound impact around the world for more than a year in its wake," he cautioned.
The yen made a sharp recovery after Monday's selloff, which came after the Group of Seven made no specific reference to the Japanese currency.
Ian Gunner at Mellon Financial said the yen saw "a dramatic turn of fortune" after comments by Japanese Finance Minister Sadakazu Tanigaki who dismissed the notion of a secret deal between Japan and the euro zone on exchange rates.
In the United States, the Federal Reserve was widely expected to keep its key interest rate unchanged at 5.25 pct at its meeting on Wednesday, but market will be looking for clues on future moves by the central bank.
A report Tuesday showed US wholesale prices edged up 0.1 pct in August, in a further sign of easing inflation pressures.
Peter Morici, an economist at the University of Maryland School of Business, said inflation may be even less of a problem as a result of the decline in energy costs in recent weeks.
"Since early August, crude oil prices have fallen nearly 15 usd a barrel and gasoline has dropped more than 50 cents a gallon," he noted.
"Inflation should cool significantly in September and October, and the Fed should become more comfortable, keeping interest rates at current levels."
In late New York trade, the dollar stood at 1.2512 sfr after 1.2505 Monday. The pound was being traded at 1.8813 usd from 1.8802.
Labels: Forex News, US Dollar
Bonds rally ahead of Fed meeting
NEW YORK- Treasury bond prices mounted a strong rally Tuesday ahead of a key Federal Reserve meeting, as investors were cheered on by economic data that solidified the case for the Fed to hold interest rates steady.
At 5 p.m. EDT, the 10-year Treasury note was up 19/32 from late Monday. Its yield, which moves in the opposite direction, fell to 4.73 percent from 4.81 percent.
The 30-year bond was up 1 1/32. Its yield fell to 4.85 percent from 4.93 percent.
The 2-year note was up 4/32, yielding 4.80 percent, down from 4.88 percent.
Yields on 3-month Treasury bills were 4.95 percent as the discount rate fell to 4.82 percent from 4.83 percent.
Prices rose most sharply in the wake of government data that showed wholesale prices last month rose by a smaller-than-expected amount. Also aiding the Treasury bond market were housing data showing a continued slowing in the sector.
"Today's numbers won't be missed by the Fed," said Kevin Giddis, managing director in fixed income for investment fund Morgan Keegan & Co. in Memphis. "This type of data should make it easier for them on one hand, and possibly disturb them on another," he said. While inflation numbers are moving the way the central bankers would like them to, the housing sector may be slowing down more than the Fed would like to see, Giddis said.
The Labor Department said its producer price index rose by 0.1 percent overall for August, less than the expected rise of 0.2 percent. The core PPI, which strips out food and energy, fell by 0.4 percent even though it was expected to rise by 0.2 percent.
The PPI data follow on the heels of Friday's consumer price index, which was also tame. Collectively, the data suggest that the inflation threat faced by the economy is fading, which helps bolster the case for the Fed holding monetary policy steady.
That is a significant development, coming just ahead of Wednesday's gathering of the interest-rate setting Federal Open Market Committee. Wall Street universally expects the Fed to keep the federal-funds target rate at 5.25 percent for the second straight meeting after two years of raising rates. Central bankers generally believe a cooling economy will moderate inflation pressures most officials still call too high.
Housing data from the Commerce Department helped reinforce the market's view on the economy and rate policy. August housing starts marked their fifth straight decline in six months and slipped by 6 percent to a 1.665 million unit annual rate, the lowest level in three years. Housing numbers have broadly been cooling, and that is also aiding the Fed's case.
Labels: Market News
Economists: cheaper oil not a panacea
WASHINGTON - It should only be this simple: Oil prices plunge 20 percent, leading businesses and consumers to ramp up their spending, which gives a nice jolt to the economy.
That seems to be the conventional wisdom on Wall Street right now, where the pullback in energy prices is being cheered by investors.
But some contrarians think that view could be missing the point. While the decline in prices will provide some relief to motorists, it also reflects the country's weakening economic outlook. In other words, any benefit from falling pump prices may be outweighed by higher interest rates and a stagnating real-estate market.
Moreover, the economy did not crater in the face of soaring fuel prices -- because energy costs are only a small portion of the average U.S. household budget -- so why should the reverse be true?
"Lower oil prices don't mean that the economy is going to improve," said David Resler, chief economist at Nomura Securities in New York.
Crude oil futures fell sharply to around $62 a barrel Tuesday as traders focused on rising global inventories, easing supply threats and weakening demand. The interplay between energy and the economy, in the context of a real-estate slowdown, is likely to be a key issue at Wednesday's Federal Reserve meeting. The agency left interest rates unchanged in August amid signs of slower economic growth, and many economists expect the central bank to again hold its short-term rate steady at 5.25 percent.
To be sure, the nickels and dimes Americans save on fuel add up -- the country is spending roughly $70 million a day less on gasoline today than a year ago, according to the Oil Price Information Service. This may make consumers feel a little wealthier, and they could very well spend the extra pocket change on other things.
"But it's not going to stimulate spending that wouldn't have been there," said Resler. "It's just going to reallocate the spending" -- from, say, Exxon Mobil Corp. to Wal-Mart Stores Inc.
That somewhat pessimistic view is even a little too sunny for Peter Schiff, president of Euro Pacific Capital, Inc. of Darien, Conn.
Schiff said the economy has grown in recent years despite soaring gasoline prices thanks to historically low interest rates that made credit-card debt look cheap while fueling a housing boom that prompted many homeowners to take out home-equity loans.
According to the Federal Reserve, U.S. consumers owed $841 billion in credit-card and other revolving debts in July, compared with $804 billion a year earlier. Non-revolving debt, which includes automobile and personal loans, totaled $1.51 trillion in July, compared with $1.46 trillion a year earlier.
But as adjustable rates on mortgages and credit cards rise, "all of a sudden, $2.50-a-gallon might feel more expensive than $3," Schiff said.
Instead of spending all of their savings at the pump on other goods and services, Schiff expects many consumers to buckle down by either paying down debts or putting more money in the bank.
Indeed, the nation's retailers have a somewhat similar outlook. The National Retail Federation said Tuesday it expects retail sales in November and December to rise by 5 percent -- below last year's 6 percent increase.
That assessment is backed up by signs from the trucking industry that its peak pre-holiday shipping season will be a disappointment even after the benefits of cheaper diesel prices are factored in.
"The negative freight trends significantly outweigh the benefits of declining fuel prices," Merrill Lynch trucking analyst Ken Hoexter said in a research note.
And as if any further confirmation of the housing market's woe was necessary, the Commerce Department reported Tuesday that construction of new homes dropped a bigger-than-expected 6 percent in August -- the fifth decline in six months.
Still, Global Insight chief economist Nariman Behravesh sees reason for optimism.
He acknowledged that the anemic housing market is like a dark cloud hanging over the economy, but said it is all the more reason why the drop in oil prices should be seen as a ray of light.
"It helps to cushion the blow, in terms of the impact on the consumer," Behravesh said.
With oil at $65 instead of $75, Behravesh sees U.S. gross domestic product getting one- to two-tenths of a percentage point bump over the next year. A chunk of money that had flowed to foreign oil-producing nations will now go to American companies, he said.
Indeed, Wall Street already seems to have factored in a likely economic boon. Since July 14, when oil prices peaked above $78 a barrel, the S&P 500 Index has climbed by almost 7 percent. (Of course, part of the stock market surge is tied to expectations that the Federal Reserve is done raising rates for the time being.)
Merrill Lynch economist Sheryl King said investors may not be putting the recent drop in oil prices in the proper perspective.
Over the past 52 weeks, retail gasoline prices have averaged $2.62 a gallon, or 12 cents more than the current nationwide average of $2.50, according to Energy Department data. So it doesn't make much sense to get giddy about the post-summer slump, King said.
"The $3 gas price wasn't there for very long," King said.
Or as Schiff put it: "We're talking about $60 instead of $70. We're not talking about $20."
Labels: Market News
Yen Extends Slide
The yen extended its post G7 slump against the majors, dropping to a 5-month low versus the dollar past the 118-level and drifting toward the 150-level against the euro. The whipsaw action in the Japanese currency was attributed to comments from European officials about excessive yen weakness being unwarranted. Nevertheless, the G7 communiqué refrained from naming Japan, instead singling out only China in its calls for a more flexible currency regime. As such, traders capitalized on higher yen levels to reinitiate shorts against the euro, sterling, and dollar.
The greenback lost ground versus the euro on the heels of a larger than expected US current account deficit. The Q2 deficit exceeded forecasts of a rise to $213.0 bln to $218.4 bln, and up from Q1 at $208.7 bln. Traders will turn their attention to inflation and housing data due out on Tuesday. The August PPI is forecasted to remain relatively tame, edging up marginally to 0.2%, from 0.1% a month earlier. The core PPI is expected to reverse last month’s 0.3% decline to 0.2%.
The housing market is anticipated to have slowed further in August. Housing starts in August are seen decline to 1.75-mln units, down from 1.795-mln units. Building permits are forecasted to fall to 1.75-mln units versus 1.763-mln units previously.
The greenback lost ground versus the euro on the heels of a larger than expected US current account deficit. The Q2 deficit exceeded forecasts of a rise to $213.0 bln to $218.4 bln, and up from Q1 at $208.7 bln. Traders will turn their attention to inflation and housing data due out on Tuesday. The August PPI is forecasted to remain relatively tame, edging up marginally to 0.2%, from 0.1% a month earlier. The core PPI is expected to reverse last month’s 0.3% decline to 0.2%.
The housing market is anticipated to have slowed further in August. Housing starts in August are seen decline to 1.75-mln units, down from 1.795-mln units. Building permits are forecasted to fall to 1.75-mln units versus 1.763-mln units previously.
Labels: Japnese Yen
Homebuilders down Monday, September 18, 2006
WASHINGTON - A measure of home builders' views of the housing market declined in September for the eighth straight month, to its lowest point since February 1991, the National Association of Home Builders (NAHB) said Monday.
The NAHB's Housing Market Index, which measures builders' perceptions of new single-family home sales and near-term sales prospects, fell to 30 in September from a revised figure of 33 in August. A reading below 50 indicates that many builders see conditions as "poor."
David Seiders, NAHB chief economist, said lowered expectations persisted despite significant sales incentives offered by builders.
"Builders are adopting an increasingly cautious attitude in their near-term outlook for new-home sales," Seiders said. "They're experiencing falling sales, rising sales cancellations and increasing inventories of unsold units."
Seiders said the housing market is adjusting from the "record-breaking and unsustainable highs" reached in recent years. He forecast that the index will flatten by the middle of next year and "gradually" recover in 2008.
The index, compiled by the NAHB and Wells Fargo, showed declines in three of four regions in September. The Northeast saw the largest decline, from 34 to 28, while the West fell from 43 to 38 and the South saw a three-point drop to 38. The Midwest remained at 16.
Shares of leading home builders were mixed in afternoon trading. Toll Brothers Inc. rose 15 cents to $28.24 on the New York Stock Exchange, while Hovnanian Enterprises Inc., gained 2 cents to $29.32. Pulte Homes, added 21 cents at $32.18.
The NAHB's Housing Market Index, which measures builders' perceptions of new single-family home sales and near-term sales prospects, fell to 30 in September from a revised figure of 33 in August. A reading below 50 indicates that many builders see conditions as "poor."
David Seiders, NAHB chief economist, said lowered expectations persisted despite significant sales incentives offered by builders.
"Builders are adopting an increasingly cautious attitude in their near-term outlook for new-home sales," Seiders said. "They're experiencing falling sales, rising sales cancellations and increasing inventories of unsold units."
Seiders said the housing market is adjusting from the "record-breaking and unsustainable highs" reached in recent years. He forecast that the index will flatten by the middle of next year and "gradually" recover in 2008.
The index, compiled by the NAHB and Wells Fargo, showed declines in three of four regions in September. The Northeast saw the largest decline, from 34 to 28, while the West fell from 43 to 38 and the South saw a three-point drop to 38. The Midwest remained at 16.
Shares of leading home builders were mixed in afternoon trading. Toll Brothers Inc. rose 15 cents to $28.24 on the New York Stock Exchange, while Hovnanian Enterprises Inc., gained 2 cents to $29.32. Pulte Homes, added 21 cents at $32.18.
Labels: Market News
FTI Consulting to offer $215M in debt
BALTIMORE - FTI Consulting Inc., a provider of forensic accounting and litigation support services, on Monday said it plans to sell $215 million worth of debt to institutional investors.
The senior notes mature in 2016.
The company said it intends to use proceeds from the sale to partly finance the $260 million acquisition of FD International Ltd. that it announced earlier this month.
Shares of FTI Consulting fell 7 cents to $24.87 in midday trading on the New York Stock Exchange.
The senior notes mature in 2016.
The company said it intends to use proceeds from the sale to partly finance the $260 million acquisition of FD International Ltd. that it announced earlier this month.
Shares of FTI Consulting fell 7 cents to $24.87 in midday trading on the New York Stock Exchange.
Labels: Forex News
Dollar dented by drop in investment flows; yen continues lower
LONDON - The dollar drifted lower after a day of conflicting signals, with the slump in portfolio flows into the US denting sentiment eventually outweighing other factors.
The trading day started off quite well for the dollar, with the G7's omission of any mention of recent yen weakness only serving to worsen the currency's downtrend. The dollar, along with most other majors managed to gain on the Japanese unit.
That aside, the dollar got a fleeting boost earlier when US Treasury Secretary Henry Paulson said that the US will not budge from its strong dollar policy.
He was speaking after annual talks of the G7 and the IMF.
Things changed, however, when the US Treasury revealed that portfolio capital flows to the US slowed sharply, to their lowest level in over a year, during July. Inflows during the month totaled just 32.9 bln usd in July, down from 75.1 bln in June and their lowest level since May 2005.
Significantly, the inflow was not enough to cover the trade deficit of 68 bln usd over the same month.
"The final total looks grim at 32.9 bln usd -- an outcome that could hit the dollar and halt its recent appreciation," said Mitul Kotecha at CALYON.
"The fact that the data is backward looking, but more importantly, the lack of attention to structural imbalances at present suggests that the dollar may escape from significant damage, however," he added.
Kotecha was proven correct as the dollar's falls were limited after sharp initial knee-jerk selling.
Earlier, the dollar ignored a wider US current account gap. The Commerce Department said the US current account deficit widened to 218.4 bln usd in the second quarter to reach 6.6 pct of GDP. The shortfall was wider than expected and the second highest ever. And, to make matters worse, the deficit in the first quarter was revised to 213.2 bln usd from the initial estimate of 208.7 bln usd.
"The US current account deficit came in about 4 bln usd wider than expected, but with numbers this large, 4 bln seems like a rounding adjustment. Dealers are mostly sitting back," said Jamie Coleman at Thomson IFR markets.
The yen, meanwhile, continued lower after the weekend's G7 meeting failed to make mention of the yen's weakness.
The final communique from the G7 meeting called for greater currency market flexibility from emerging economies and especially China. The yen appeared to have escaped notice even though behind-the-scenes wrangling is almost certain to have occurred.
There were pointed comments from Japanese Finance Minister Sadakazu Tanigaki and European Central Bank Governor Jean-Claude Trichet. The former said there was no specific discussion on the yen or euro during the meeting.
But Trichet hinted that more did go on: "We noted that the exit from the zero interest rate policy (in Japan) and that its recovery is now broadly based -- we agree that the yen will reflect these developments."
Analysts at BNP Paribas believe the yen has scope to weaken further. Against the euro, any break above the 149.85 yen initial resistance level will trigger renewed pressure towards 150.75, they said.
However, they recommended caution as the yen's weakness against the euro "remains vulnerable to a corrective pullback".
Elsewhere, the pound stayed little changed after news that a growing majority of Britons are predicting a rate hike over the next 12 months, signifying a rise in inflation expectations.
According to the Bank of England's latest quarterly survey of inflation expectations, the proportion of Britons predicting higher interest rates over the next 12 months has hit a 2-year high as inflation expectations stay at elevated levels.
The survey, conducted in August by pollsters NOP, found that 65 pct of respondents expect a rate hike over the next 12 months, up from just 48 pct in the previous survey in May.
The trading day started off quite well for the dollar, with the G7's omission of any mention of recent yen weakness only serving to worsen the currency's downtrend. The dollar, along with most other majors managed to gain on the Japanese unit.
That aside, the dollar got a fleeting boost earlier when US Treasury Secretary Henry Paulson said that the US will not budge from its strong dollar policy.
He was speaking after annual talks of the G7 and the IMF.
Things changed, however, when the US Treasury revealed that portfolio capital flows to the US slowed sharply, to their lowest level in over a year, during July. Inflows during the month totaled just 32.9 bln usd in July, down from 75.1 bln in June and their lowest level since May 2005.
Significantly, the inflow was not enough to cover the trade deficit of 68 bln usd over the same month.
"The final total looks grim at 32.9 bln usd -- an outcome that could hit the dollar and halt its recent appreciation," said Mitul Kotecha at CALYON.
"The fact that the data is backward looking, but more importantly, the lack of attention to structural imbalances at present suggests that the dollar may escape from significant damage, however," he added.
Kotecha was proven correct as the dollar's falls were limited after sharp initial knee-jerk selling.
Earlier, the dollar ignored a wider US current account gap. The Commerce Department said the US current account deficit widened to 218.4 bln usd in the second quarter to reach 6.6 pct of GDP. The shortfall was wider than expected and the second highest ever. And, to make matters worse, the deficit in the first quarter was revised to 213.2 bln usd from the initial estimate of 208.7 bln usd.
"The US current account deficit came in about 4 bln usd wider than expected, but with numbers this large, 4 bln seems like a rounding adjustment. Dealers are mostly sitting back," said Jamie Coleman at Thomson IFR markets.
The yen, meanwhile, continued lower after the weekend's G7 meeting failed to make mention of the yen's weakness.
The final communique from the G7 meeting called for greater currency market flexibility from emerging economies and especially China. The yen appeared to have escaped notice even though behind-the-scenes wrangling is almost certain to have occurred.
There were pointed comments from Japanese Finance Minister Sadakazu Tanigaki and European Central Bank Governor Jean-Claude Trichet. The former said there was no specific discussion on the yen or euro during the meeting.
But Trichet hinted that more did go on: "We noted that the exit from the zero interest rate policy (in Japan) and that its recovery is now broadly based -- we agree that the yen will reflect these developments."
Analysts at BNP Paribas believe the yen has scope to weaken further. Against the euro, any break above the 149.85 yen initial resistance level will trigger renewed pressure towards 150.75, they said.
However, they recommended caution as the yen's weakness against the euro "remains vulnerable to a corrective pullback".
Elsewhere, the pound stayed little changed after news that a growing majority of Britons are predicting a rate hike over the next 12 months, signifying a rise in inflation expectations.
According to the Bank of England's latest quarterly survey of inflation expectations, the proportion of Britons predicting higher interest rates over the next 12 months has hit a 2-year high as inflation expectations stay at elevated levels.
The survey, conducted in August by pollsters NOP, found that 65 pct of respondents expect a rate hike over the next 12 months, up from just 48 pct in the previous survey in May.
Labels: Japnese Yen, US Dollar
U.S. stocks rise as energy shares stage rebound
NEW YORK, Sept 18- U.S. stocks gained on Monday as oil prices rebounded from last week's sell-off, lifting energy company shares, and investors were optimistic the Federal Reserve will keep interest rates steady.
Crude prices rose nearly 1 percent to $63.95 a barrel after suffering their steepest slump in more than a decade last week.
Exxon Mobil Corp was up 2 percent to $65.98 while oil field services provider Schlumberger Ltd. gained 2.7 percent to $57.81.
"Energy's bouncing after the short correction that we saw last week. There's still some downside risk to energy stocks in the weeks to come, but there's some energy stocks that are oversold," said Sam Rahman, portfolio manager at Baring Asset Management Inc. in Boston.
The Dow Jones industrial average <.DJI> was up 22.89 points, or 0.20 percent, at 11,583.66. The Standard & Poor's 500 Index <.SPX> was up 4.33 points, or 0.33 percent, at 1,324.20. The Nasdaq Composite Index <.IXIC> was up 10.80 points, or 0.48 percent, at 2,246.39.
Gains in the microchip industry helped to keep the Nasdaq on the positive side. Freescale Semiconductor Inc. rose 5.7 percent to $39.28. The chip maker said on Friday it agreed to be bought for $17.6 billion by a private equity consortium. [ID:nN15193123]
Applied Materials Inc. shares climbed 2.9 percent to $17.69, after the supplier of chip making tools said it bought $2.5 billion worth of its own stock in an accelerated stock repurchase program. [ID:nWNAS7183]
Semiconductor maker Intel Corp. rose despite a brokerage downgrade. Intel shares added 0.7 percent to $19.65.
Trading was light as many investors were reluctant to place big bets before the Federal Reserve's policy meeting on Wednesday, traders said. Stocks ended a strong week on Friday, closing near their 2006 highs. The Nasdaq closed higher for a sixth consecutive session.
Home Depot Inc., the biggest drag on the Dow, fell 1.8 percent to $36.55 after Credit Suisse lowered its rating on the largest home improvement retailer and cut its price target to $37 from $40. [ID:nBNG153909].
Shares of Ford Motor Co. fell more than 2 percent to $7.83 after the company was downgraded by Thomas Weisel Partners. Ford had risen in electronic trading before the market's open on a report in industry newspaper Automotive News that senior executives at Ford and General Motors Corp. discussed a merger or alliance. [ID:nN18229034]. General Motors slid 0.6 percent to $31.48.
Weakness in housing has increased concern about a slowdown in consumer spending, so investors will scrutinize the National Association of Home Builders Index for September, which will be released at 1 p.m. (1700 GMT). Economists on average expect a decline to 31 from 32.
Crude prices
Exxon Mobil Corp
"Energy's bouncing after the short correction that we saw last week. There's still some downside risk to energy stocks in the weeks to come, but there's some energy stocks that are oversold," said Sam Rahman, portfolio manager at Baring Asset Management Inc. in Boston.
The Dow Jones industrial average <.DJI> was up 22.89 points, or 0.20 percent, at 11,583.66. The Standard & Poor's 500 Index <.SPX> was up 4.33 points, or 0.33 percent, at 1,324.20. The Nasdaq Composite Index <.IXIC> was up 10.80 points, or 0.48 percent, at 2,246.39.
Gains in the microchip industry helped to keep the Nasdaq on the positive side. Freescale Semiconductor Inc.
Applied Materials Inc.
Semiconductor maker Intel Corp.
Trading was light as many investors were reluctant to place big bets before the Federal Reserve's policy meeting on Wednesday, traders said. Stocks ended a strong week on Friday, closing near their 2006 highs. The Nasdaq closed higher for a sixth consecutive session.
Home Depot Inc.
Shares of Ford Motor Co.
Weakness in housing has increased concern about a slowdown in consumer spending, so investors will scrutinize the National Association of Home Builders Index for September, which will be released at 1 p.m. (1700 GMT). Economists on average expect a decline to 31 from 32.
Labels: US Dollar
Yen Rebounds on Rate Hike Expectation
The yen rebounded on the hawkish comment from Bank of Japan board member Atsushi Mizuno. He said in an interview published today that inflation and economy growth are in line with the central bank¡¦s forecast. He indicated that a commitment by the central bank to raise rates gradually does not mean the policy changes will be delayed. His comment attracted the market attention back to the BoJ rate hike issue and boosted the expectations for BoJ to raise rates sooner than previously anticipated. The minutes for the BoJ meeting in August also showed that the economy is expanding steadily and consumer prices will keep its positive trend.
The yen is supported by the speculation that the G7 meeting to be held this week in Singapore may discuss currency manipulation in Asia countries, such as China and Japan. It is uncertain yet whether US Treasury Secretary Henry Paulson will push China quicken the Chinese yuan appreciation at the meeting.
USDJPY encounters interim resistance at 118, backed by 118.30 and 118.50. Subsequent ceilings will emerge at 118.70, followed by 119. On the downside, support begins at 117.40, followed by 117 and 116.60. Additional floors are eyed at 116.20, backed by 116 and 115.70.
The yen is supported by the speculation that the G7 meeting to be held this week in Singapore may discuss currency manipulation in Asia countries, such as China and Japan. It is uncertain yet whether US Treasury Secretary Henry Paulson will push China quicken the Chinese yuan appreciation at the meeting.
USDJPY encounters interim resistance at 118, backed by 118.30 and 118.50. Subsequent ceilings will emerge at 118.70, followed by 119. On the downside, support begins at 117.40, followed by 117 and 116.60. Additional floors are eyed at 116.20, backed by 116 and 115.70.
Labels: Japnese Yen
USD Loses Ground Ahead of CPI
The dollar slid against the majors, relinquishing the 1.27-level against the euro and briefly falling beneath 1.89 versus the British pound. Upbeat US economic data failed to deter selling in the greenback as markets look ahead to Friday’s inflation report and the upcoming weekend’s G7 Finance Minister’s meeting in Singapore. The major currency pairs have continued to consolidate within range as traders remain reluctant to commit prior to the forthcoming events.
US economic data released on Thursday included retail sales and weekly jobless claims. The August retail sales report unexpectedly improved to 0.2%, beating calls for a drop of 0.1%. The ex-autos figure was slightly softer than forecasts at 0.2%, and down from last month of 1.0%. The weekly jobless claims improved to 308k also, down from 310k previously. The key highlight will be Friday’s consumer inflation data. The August CPI report is expected to slip to 0.2%, from a month earlier at 0.4%. The core CPI is unchanged at 0.2%. Also due out tomorrow is industrial output, forecasted to slip to 0.2%, capacity utilization at 82.5% and the University of Michigan Consumer Sentiment at 83.7.
US economic data released on Thursday included retail sales and weekly jobless claims. The August retail sales report unexpectedly improved to 0.2%, beating calls for a drop of 0.1%. The ex-autos figure was slightly softer than forecasts at 0.2%, and down from last month of 1.0%. The weekly jobless claims improved to 308k also, down from 310k previously. The key highlight will be Friday’s consumer inflation data. The August CPI report is expected to slip to 0.2%, from a month earlier at 0.4%. The core CPI is unchanged at 0.2%. Also due out tomorrow is industrial output, forecasted to slip to 0.2%, capacity utilization at 82.5% and the University of Michigan Consumer Sentiment at 83.7.
Labels: Forex News, US Dollar
US Current Account Balance Sunday, September 17, 2006
Outlook: US Current Account deficit is expected to expand to a near record –213.0 Billion for the second quarter of 2006 as widening Trade deficits will likely show further deterioration in US balance sheet position. This week's record trade deficit of –68 Billion showed that US import demand for both energy and non-energy goods and services remains unabated and will continue to contribute to creating a Current Account deficit which is fast approaching one trillion dollar mark on an annual basis.
Previous: The U.S. current-account deficit shrank more than forecast in the first quarter from a record in the previous three months as the trade balance improved and Americans earned more on their overseas investments. The deficit, the broadest measure of trade because it includes transfer payments and investment income, declined to $208.7 billion from a revised $223.1 billion the previous three months, the Commerce Department said today in Washington. The gap narrowed to 6.4 percent of the economy from 7 percent in the fourth quarter.
Labels: Forex News
Canadian International Securities Transactions
Outlook: Net investment in Canadian assets is expected to rebound in July as international investors sought higher and more reliable yields. All three asset classes measured by the securities transaction read (equities, government debt and company bonds) were likely in demand through the month. Starting with the most risky, equities, a strong performance by the TSX/S&P Composite index was likely the first attraction for capital influx. The TSX index advanced to 11,900 after a brief retracement in the middle of the month, to match the highest level seen in two-and-a-half months. Furthermore, for those seeking the returns on stocks, a strong interest in owning Canadian resource producers was facilitated by record prices in a few key commodities and an intensifying M&A interest, which in itself likely boosted the balance. Despite the optimism in equities, most of the inflow of international capital probably found its way into corporate and government bonds. Though the Bank of Canada made it more than clear it wouldn’t raise rates again in the near future, the US Fed was saying much of the same. With spreads fixed between the two, and the US actively engaged in conflicts, verbal or otherwise, in Iraq, Iran and other places in the world; Canada was more secure in its neutrality. One potential problem however could have been fear over fluctuations in exchange rates. At a 28-year high against the US dollar, if the loonie appreciates dramatically while an investor has money in Canada, their returns would be shaved when they exchange back to their home currency.
Previous: Canada’s net surplus on securities investment fell to its lowest point this year in June as foreign investors lightened their supplies of Canada’s bonds and Canadians looked to use the favorable exchange rate and higher yields across the boarder to stretch the returns in foreign markets. According to Statistics Canada, international securities transactions shrank to a net C$343 million from C$5.876 billion in May. For global investors looking to place their money with less risky, yet high yielding assets, the appeal of Canadian bonds shrank after the BoC decided to halt its string of seven consecutive interest rate hikes. Perhaps more burdensome for the surplus however was Canadians investment abroad. With the US not yet revealing its decision to halt rate hikes, the rate differential was pulling more capital south of the border.
Labels: Forex News
UK Rightmove House Prices
Outlook: The Rightmove measure of UK house price growth could continue to decline in the month of September following August’s slip of 1.6%. Although last month’s figure was negative, the annual rate of house price expansion was still 9.0%, which could have been enough to temper demand even more. A reduction in the amount of potential buyers may also be exacerbated by the increase in interest rates in August by the Bank of England to 4.75%, as well as the potential for further hikes later in the year. On the other hand, a tighter labor market which has helped maintain wage growth, could have given purchasers more confidence in affordability, lending upside risk to the house price number.
Previous: House prices in the UK, as measure by Rightmove, declined 1.6% in August, which was the largest fall in nearly two years. Rightmove reported that the slowdown was partly due to seasonal factors, however, they also highlighted that they believe that prices had peaked for 2006. Adding to the already sky-high prices in the housing market was the BOE’s surprise 25 basis point hike on August 3rd to 4.75%. Potential home buyers were subsequently left with not only increased prices, but also rising borrowing costs, and likely kept some of them out of the market altogether.
Labels: Forex News
G7 MEETING Main points of statement Saturday, September 16, 2006
SINGAPORE - Here are the main points of the statement issued by the Group of Seven finance ministers and central bank governors after their meeting in Singapore today:
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
Labels: Forex News
G7 MEETING Main points of statement
SINGAPORE - Here are the main points of the statement issued by the Group of Seven finance ministers and central bank governors after their meeting in Singapore today:
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
On global economic growth and outlook:
-- In our economies, performance remains strong amid moderating growth in the US, growth in the euro zone...should remain strong in the second half of the year, growth in the UK is becoming stronger and more balanced, Canada remains on a strong balanced growth path, and Japan has exited the zero-interest rate policy and its recovery is now broadly-based.
The positive outlook, however, is not without potential outside risks, e.g., tight and volatile energy markets, rising inflation expectations in some economies, and the spread of protectionist tendencies. We will remain vigilant to these developments.
We are of the view that high energy prices reflect both rising demand from strong global expansion and concerns about current and future supplies, though the prices have eased recently. In addition to promoting greater transparency and reliability in energy market data, including through development of a global common standard for reporting oil reserves, we thus encourage investment in exploration, production, transportation and refinery capacity.
On global trade talks:
---We stress the importance of advancing multilateral trade liberalization, which is essential to enhancing global growth and reducing poverty. We urge all parties to show political will and flexibility necessary to resume the Doha Development Round as soon as possible, in order to achieve a comprehensive package in agriculture, industrial products, services, including financial services, intellectual property and WTO trade rules.
This must address the concerns of developing countries, in particular the least developed countries. We also emphasize the importance of delivering aid for trade to low-income countries, consistent with the principle of aid-effectiveness. We underline the need to combat counterfeiting and piracy.
On currency issues:
---We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur.
On IMF reforms:
---We reaffirm our strong belief... that fundamental reform is necessary for the IMF to maintain its legitimacy, relevancy, and credibility in the changing global economy. We welcome the resolution on quota and voice reform now being considered by IMF governors, and urge all members to support it.
We endorse the objectives of making IMF quota and voting shares more responsive to changes in global economic realities in the future and enhancing the participation and voice for low-income countries. We will work intensively with all members of the IMF to ensure these objectives are met equitably.
On financial sector regulation:
---The IMF should make appropriate revisions to the guidelines so that they better define its surveillance framework for fiscal, financial sector, exchange rate and monetary policies and their collective spillovers on other countries. Together with a remit to set priorities and enhance accountability, this will improve surveillance. We look forward to the completion of this work by the 2007 Spring Meetings.
On the question of a new instrument that allows economies with market access to forestall sudden disruption in capital flows, we ask the (IMF) Managing Director to present a concrete proposal that is deemed effective and realistic, as well as adequately safeguarding IMF resources, by the 2007 Spring Meetings.
On debt relief for poor nations:
---While welcoming the increasing role of new donor countries, we believe it is imperative that all donors share information and take account of debt sustainability issues in their lending practices.
We look forward to further discussions on strengthening the debt sustainability framework in the coming months, taking into account, e.g., IDA's (International Development Association's) recently-adopted policy.
In order to secure the full delivery of debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the IFIs (international financial institutions) should redouble their efforts to encourage non-Paris Club official bilateral and commercial creditor participation in the Initiative.
On the Middle East:
---The international community has a high stake in achieving long-term political and economic stability in the Middle East. In this light we support the Government of Lebanon's efforts towards reconstruction, development and economic reform. We welcome donors' commitments to help Lebanon, and look forward to a deeper involvement of the IFIs.
On combating money laundering and terrorist financing:
-- We agreed to intensify our efforts to combat money laundering; proliferation network as well as terrorist and illicit financing by addressing global financial vulnerabilities particularly those associated with jurisdictions that have failed to recognize international standards.
We urge the FATF to focus on identifying and adopting appropriate measures within its mandate. We ask the IMF and the World Bank to work closely with the FATF to foster implementation of the relevant international standards. We also encourage all countries to publish their full evaluations.
Labels: Forex News
U.S. August industrial output falls 0.1% Friday, September 15, 2006
Industrial output fell by 0.1% in the month, following an unrevised 0.4% gain in July, the Fed said. The decline was led by a 0.8% drop in production at utilities. Utilities' output rose by a revised 1% in July. Many parts of the United States experienced high temperatures in July.
Economists were expecting industrial production to rise by 0.2%. Year over year, industrial production is up 4.7%.
Manufacturing production was flat in August, the Fed report shows. It rose by a revised 0.4% in July and 0.9% in June. Output at manufacturers was previously estimated to have risen only 0.1%. Production of business equipment fell for the first time since May, by 0.2%. Despite the drop in August, it's up 13.5% year over year.
The moderating rate of industrial production may give the Federal Reserve another reason to hold interest rates steady at its next meeting, scheduled for Sept. 20.
Economists were expecting industrial production to rise by 0.2%. Year over year, industrial production is up 4.7%.
Manufacturing production was flat in August, the Fed report shows. It rose by a revised 0.4% in July and 0.9% in June. Output at manufacturers was previously estimated to have risen only 0.1%. Production of business equipment fell for the first time since May, by 0.2%. Despite the drop in August, it's up 13.5% year over year.
The moderating rate of industrial production may give the Federal Reserve another reason to hold interest rates steady at its next meeting, scheduled for Sept. 20.
Labels: Forex News
Annual inflation in the euro area slowed down to 2.3%, as it was expected
The data on annual inflation in the euro area (harmonized consumer price index), published today by Eurostat, the Statistical Office of the European Communities, absolutely justified the expectations.
The harmonized consumer price index rose in July by 0.1% in a month, compared with the reduction by 0.1% in July. The annual inflation amounted to 2.3% in August, having narrowed from 2.4% in July.
The major sectors, where the harmonized consumer price index substantially increased, were hotel and restaurant business (0.3%), clothes (0.2%), housing (0.2%) and recreation (0.2%). Consumer prices for fruit, transport fuel and telecommunications dropped.
The harmonized consumer price index rose in July by 0.1% in a month, compared with the reduction by 0.1% in July. The annual inflation amounted to 2.3% in August, having narrowed from 2.4% in July.
The major sectors, where the harmonized consumer price index substantially increased, were hotel and restaurant business (0.3%), clothes (0.2%), housing (0.2%) and recreation (0.2%). Consumer prices for fruit, transport fuel and telecommunications dropped.
Labels: Forex News
USD Mixed, Awaits Data
The foreign exchange market continues to seek direction, with the dollar’s performance mixed versus the majors in the Monday session. The greenback advanced against the yen while relinquishing ground versus the euro. With the key G7 Finance Ministers meeting this upcoming weekend, traders are exhibiting reluctance in committing to any particular direction.
The dollar however, was initially softer on a delayed response to PBOC Governor Zhou’s comments, in which he said China already possesses enough foreign exchange reserves. His comment can be interpreted as China not needing to further purchase dollars for its fx reserves. Zhou also added that the yuan was currently in the process of strengthening and moving toward greater flexibility in its currency regime. Yuan revaluation will no doubt be a topic of discussion at the G7 FinMin meeting, as will other Asian currencies with history of artificially weak exchange rates. The key will be how the G7 addresses the issue in its communiqué and whether it strongly condemns currency manipulation.
Meanwhile, St Louis Fed President Poole provided little fresh clues on upcoming monetary policy, but did say that it needs to be as tight as it needs to be and would rather act earlier than later if inflation does not diminish. He said that although monetary policy could not create jobs in the long-run, policy mistakes could result in painful unemployment – highlighting fears of overshooting. Poole added that future Fed policy is going to depend on surprises that cannot be predicted and that upcoming data could push the Fed to either a hike or to lower rates. Markets will look ahead to this week’s US CPI data on Friday and gauge whether the FOMC will continue to leave rates unchanged at its upcoming meeting next Wednesday.
The dollar however, was initially softer on a delayed response to PBOC Governor Zhou’s comments, in which he said China already possesses enough foreign exchange reserves. His comment can be interpreted as China not needing to further purchase dollars for its fx reserves. Zhou also added that the yuan was currently in the process of strengthening and moving toward greater flexibility in its currency regime. Yuan revaluation will no doubt be a topic of discussion at the G7 FinMin meeting, as will other Asian currencies with history of artificially weak exchange rates. The key will be how the G7 addresses the issue in its communiqué and whether it strongly condemns currency manipulation.
Meanwhile, St Louis Fed President Poole provided little fresh clues on upcoming monetary policy, but did say that it needs to be as tight as it needs to be and would rather act earlier than later if inflation does not diminish. He said that although monetary policy could not create jobs in the long-run, policy mistakes could result in painful unemployment – highlighting fears of overshooting. Poole added that future Fed policy is going to depend on surprises that cannot be predicted and that upcoming data could push the Fed to either a hike or to lower rates. Markets will look ahead to this week’s US CPI data on Friday and gauge whether the FOMC will continue to leave rates unchanged at its upcoming meeting next Wednesday.
Labels: US Dollar
Yen Edges Up on Jawboning
The major currency pairs continue to consolidate amid a dearth of fresh economic news. Traders remain reluctant to commit to any trends and have kept the currencies confined to range trading in recent sessions. The dollar gave back some of its gains against the yen, but held firm versus the euro. The foreign exchange market is still in search for a clear trend to emerge following months of consolidation as a result of summer trading.
US Treasury Secretary Henry Paulson reiterated calls for increased flexibility in China’s currency regime. He said that maintaining overly rigid exchange rates subjects China to greater risk of boom-bust cycles. Paulson said that China must accept its role as a global economic leader, and as such must take responsibility in maintaining global economic health. He emphasized diplomacy as well, saying harmful political rhetoric should be avoided and instead take a strategic view of the relationship between the US and China.
China’s Premier Wen Jiabao responded to the press by saying the government has continued to press forward with currency reform and gradually increases exchange rate flexibility. Moreover, former PBOC Governor Dai Xianglong said that increased flexibility in the yuan’s exchange rate should be done so gradually in order to prevent excessive increase in foreign exchange reserves, which would result in problems for the central bank’s monetary policy.
Labels: Japnese Yen
Yen Erases Gains on Concern China Won't Move Under Pressure Thursday, September 14, 2006
08:30AM US August Retail Sales ex-autos m/m (exp 0.3%, prev 1.0%) Canada July Manufacturing Shipments m/m (exp -0.1%, prev 1.9%) US Weekly Jobless Claims (exp 315k, prev 310k)
The yen erased gains from speculation the G7 meeting will urge China to strengthen the yuan. There is a rising concern that China will not make policy changes because of the pressures from foreign countries. The yen ended a two-day rally close to 117.30, down back 117.70 against the dollar.
US Treasury Secretary Henry Paulson talked mainly about China at a speech at the Treasury Departemnt in Washington yesterday. He said that the yuan is a symbol of unfair competition, and added that China should allow its currency more flexibility. Paulson will go to China next week in his first official visit. The International Monetary Fund also hopes to see the yuan strengthen against the dollar so as to reduce the huge US trade deficit.
The yen erased gains from speculation the G7 meeting will urge China to strengthen the yuan. There is a rising concern that China will not make policy changes because of the pressures from foreign countries. The yen ended a two-day rally close to 117.30, down back 117.70 against the dollar.
US Treasury Secretary Henry Paulson talked mainly about China at a speech at the Treasury Departemnt in Washington yesterday. He said that the yuan is a symbol of unfair competition, and added that China should allow its currency more flexibility. Paulson will go to China next week in his first official visit. The International Monetary Fund also hopes to see the yuan strengthen against the dollar so as to reduce the huge US trade deficit.
Labels: Chinese Yuan
Dollar Awaits Trade Deficit Wednesday, September 13, 2006
04:30AM UK August core CPI y/y (exp 1.1%, prev 0.9%) UK August CPI y/y (exp 2.4%, prev 2.4%) 08:30AM Canada July Trade Balance (exp C$5.0 bln, prev C$4.7 bln) US July Trade Balance ($-65.4 bln, prev $64.8 bln) 07:50PM Japan July Current Account Balance (exp 1.535 bln yen, prev 1.542 bln yen)
The dollar may weaken on concern that the US trade deficit due later might widen in July. The trade deficit is forecasted to grow to 65.4 billion in July from 64.8 billion in the previous month. In contrast, China trade surplus expanded in the same month and Japan Current Account Balance due later is expected to increase. The huge trade deficit still puts pressure on the dollar.
The yen weakened across the board after machinery orders posted their biggest decline in nearly twenty years, reducing the bearish expectations for a second rate hike by the Bank of Japan within year end. However, the yen is supported before the G7 meeting to be held in Singapore this week.
The dollar may weaken on concern that the US trade deficit due later might widen in July. The trade deficit is forecasted to grow to 65.4 billion in July from 64.8 billion in the previous month. In contrast, China trade surplus expanded in the same month and Japan Current Account Balance due later is expected to increase. The huge trade deficit still puts pressure on the dollar.
The yen weakened across the board after machinery orders posted their biggest decline in nearly twenty years, reducing the bearish expectations for a second rate hike by the Bank of Japan within year end. However, the yen is supported before the G7 meeting to be held in Singapore this week.
Output price annual inflation fell by 0.2% in the UK
As the UK National Office of Statistics reported today, the output producer prices did not change in August; consequently, output price annual inflation was 2.6% in August, compared with 2.8% in July.
Output producer prices excluding volatile sectors such as food and fuel fell by 0.2% in August and were +2.1% at the annual rate. In July, the index grew by 0.1% in a month and by 2.5% in a year.
Seasonally adjusted, input producer prices fell by 1.2%, which is connected with the reduction of crude oil prices. Input producer prices excluding food and fuel amounted to 7.4% at the annual rate. In July, annual input prices excluding food and fuel amounted to 9.7%.
Output producer prices excluding volatile sectors such as food and fuel fell by 0.2% in August and were +2.1% at the annual rate. In July, the index grew by 0.1% in a month and by 2.5% in a year.
Seasonally adjusted, input producer prices fell by 1.2%, which is connected with the reduction of crude oil prices. Input producer prices excluding food and fuel amounted to 7.4% at the annual rate. In July, annual input prices excluding food and fuel amounted to 9.7%.
The UK harmonized index of consumer prices rose by 0.4% in August
The UK harmonized index of consumer prices (HICP) in August rose by 0.4% in a month, compared with its drop by 0.1% in July. At the annual rate, the UK harmonized index of consumer prices amounted to 2.5%, compared with 2.4% in July. The analysts expected that HICP would grow by 0.3% in a month and by 2.4% in a year.
RPIX (the retail prices excluding mortgage interest payments) rose in August by 3.3% in a year, compared with 3.1% last month.
Retail prices in the UK grew in August by 0.4% in a month and 3.4% in a year, compared with 0.0% and 3.3% in July, month and year respectively.
The National Office of Statistics also emphasizes
RPIX (the retail prices excluding mortgage interest payments) rose in August by 3.3% in a year, compared with 3.1% last month.
Retail prices in the UK grew in August by 0.4% in a month and 3.4% in a year, compared with 0.0% and 3.3% in July, month and year respectively.
The National Office of Statistics also emphasizes
The deficit of US trade balance climbed to $68.0bln
The deficit of US trade balance climbed in August to $68.0bln, higher than analysts expected ($65 bln). The July reading was revised to $65.5bln from the previous $64.8bln.
The drastic growth of imports was largely connected with high crude oil prices and increasing shipments of equipment, raw materials and consumer goods from abroad. Imports grew by 1.0% in July up to $188bln. Exports fell by 1.1% toward June and amounted to $120bln.
Although the deficit of US trade balance climbed to its record in July, the data may produce slight and brief influence on current dollar position. However, the index will lay more serious pressure on economic growth this quarter.
The drastic growth of imports was largely connected with high crude oil prices and increasing shipments of equipment, raw materials and consumer goods from abroad. Imports grew by 1.0% in July up to $188bln. Exports fell by 1.1% toward June and amounted to $120bln.
Although the deficit of US trade balance climbed to its record in July, the data may produce slight and brief influence on current dollar position. However, the index will lay more serious pressure on economic growth this quarter.
USD Immune to Record Deficit
The dollar was higher against the euro and yen in New York trading, pushing the single currency beneath the 1.27-handle while edging up toward the 118-level against the yen. A clear direction in the foreign exchange market has yet to emerge given today’s disconnect between US economic data and the dollar’s movements. In spite of a worse-than-expected July trade deficit, the greenback managed to remain near 4-month highs versus the yen and multi-week highs against the euro.
Although the immediate reaction to the larger than forecast US trade deficit was selling of the dollar, the weakness was unsustainable. Markets were anticipating for a slight increase to $65.4-bln in July compared with $64.8-bln from June. Instead the deficit ballooned to a record $68-bln, with US exports decreasing for the first time in 7-months down 1.1%. The record deficit in July was partly attributed to higher oil costs for the month. Oil prices have since eased off its high levels and the dollar’s recovery in the session may reflect traders factoring in weaker energy costs in next month’s reporting.
The key economic report slated for release this week will be Friday’s consumer price inflation data. The August CPI report is forecasted to remain tame, with the headline monthly figure down to 0.2%, from 0.4%, while the core CPI is seen unchanged at 0.2%. However, on an annualized basis the core CPI reading is expected to creep up 2.9% from a year earlier at 2.7%.
Although the immediate reaction to the larger than forecast US trade deficit was selling of the dollar, the weakness was unsustainable. Markets were anticipating for a slight increase to $65.4-bln in July compared with $64.8-bln from June. Instead the deficit ballooned to a record $68-bln, with US exports decreasing for the first time in 7-months down 1.1%. The record deficit in July was partly attributed to higher oil costs for the month. Oil prices have since eased off its high levels and the dollar’s recovery in the session may reflect traders factoring in weaker energy costs in next month’s reporting.
The key economic report slated for release this week will be Friday’s consumer price inflation data. The August CPI report is forecasted to remain tame, with the headline monthly figure down to 0.2%, from 0.4%, while the core CPI is seen unchanged at 0.2%. However, on an annualized basis the core CPI reading is expected to creep up 2.9% from a year earlier at 2.7%.
Dollar Awaits Wage Costs
08:30AM US Q2 unit labor costs (exp 3.8%, prev 4.2%) US Q2 non-farm productivity (exp 1.5%, prev 1.1%) 09:00AM Canada Bank of Canada Monetary Policy Decision (exp 4.25%, prev 4.25%) 10:00AM US August non-manufacturing ISM (exp 55.0, prev 54.8) 02:00PM US Fed’s Beige Book 09:30PM Australia Q2 GDP y/y (exp 2.8%, prev 3.1%) Australia August Unemployment Rate (exp 4.8%, prev 4.8%) Australia August Employment Change (exp 10.0k, prev 50.7k)
The dollar is little changed against the euro before the US data release. The US unit labor costs are expected to decline from 4.2% to 3.8% in the second quarter. However, there is some concern that this figure may show a rise in wage costs which will boost the speculation of another rate hike by the Fed.
Other US economic data to be released later today are not likely to shake the market expectations of the Fed’s next move. The non-farm productivity is expected to rise from 1.1% to 1.5% in the second quarter. The non-manufacturing ISM is forecasted to rose slightly in August to 55.0 from 54.8 in the previous month. Also worth nothing is the Fed’s Beige Book due this afternoon. This report may confirm the slow down in US economy.
The dollar is little changed against the euro before the US data release. The US unit labor costs are expected to decline from 4.2% to 3.8% in the second quarter. However, there is some concern that this figure may show a rise in wage costs which will boost the speculation of another rate hike by the Fed.
Other US economic data to be released later today are not likely to shake the market expectations of the Fed’s next move. The non-farm productivity is expected to rise from 1.1% to 1.5% in the second quarter. The non-manufacturing ISM is forecasted to rose slightly in August to 55.0 from 54.8 in the previous month. Also worth nothing is the Fed’s Beige Book due this afternoon. This report may confirm the slow down in US economy.
USD Mixed, Awaits Data
The foreign exchange market continues to seek direction, with the dollar’s performance mixed versus the majors in the Monday session. The greenback advanced against the yen while relinquishing ground versus the euro. With the key G7 Finance Ministers meeting this upcoming weekend, traders are exhibiting reluctance in committing to any particular direction.
The dollar however, was initially softer on a delayed response to PBOC Governor Zhou’s comments, in which he said China already possesses enough foreign exchange reserves. His comment can be interpreted as China not needing to further purchase dollars for its fx reserves. Zhou also added that the yuan was currently in the process of strengthening and moving toward greater flexibility in its currency regime. Yuan revaluation will no doubt be a topic of discussion at the G7 FinMin meeting, as will other Asian currencies with history of artificially weak exchange rates. The key will be how the G7 addresses the issue in its communiqué and whether it strongly condemns currency manipulation.
Meanwhile, St Louis Fed President Poole provided little fresh clues on upcoming monetary policy, but did say that it needs to be as tight as it needs to be and would rather act earlier than later if inflation does not diminish. He said that although monetary policy could not create jobs in the long-run, policy mistakes could result in painful unemployment – highlighting fears of overshooting. Poole added that future Fed policy is going to depend on surprises that cannot be predicted and that upcoming data could push the Fed to either a hike or to lower rates. Markets will look ahead to this week’s US CPI data on Friday and gauge whether the FOMC will continue to leave rates unchanged at its upcoming meeting next Wednesday.
The dollar however, was initially softer on a delayed response to PBOC Governor Zhou’s comments, in which he said China already possesses enough foreign exchange reserves. His comment can be interpreted as China not needing to further purchase dollars for its fx reserves. Zhou also added that the yuan was currently in the process of strengthening and moving toward greater flexibility in its currency regime. Yuan revaluation will no doubt be a topic of discussion at the G7 FinMin meeting, as will other Asian currencies with history of artificially weak exchange rates. The key will be how the G7 addresses the issue in its communiqué and whether it strongly condemns currency manipulation.
Meanwhile, St Louis Fed President Poole provided little fresh clues on upcoming monetary policy, but did say that it needs to be as tight as it needs to be and would rather act earlier than later if inflation does not diminish. He said that although monetary policy could not create jobs in the long-run, policy mistakes could result in painful unemployment – highlighting fears of overshooting. Poole added that future Fed policy is going to depend on surprises that cannot be predicted and that upcoming data could push the Fed to either a hike or to lower rates. Markets will look ahead to this week’s US CPI data on Friday and gauge whether the FOMC will continue to leave rates unchanged at its upcoming meeting next Wednesday.
Jawboning Drives FX Tuesday, September 12, 2006
Currency movements were dictated by comments from government officials in the Thursday session with the yen and the dollar reaping the rewards. Germany’s Depute Finance Minister Mirow said the upcoming G7 FinMin meeting would likely mention the recent weakness in the yen – triggering sharp appreciation in the Japanese currency against the euro overnight. Traders will also look for renewed calls for China to revalue its currency and bolster efforts to correct global imbalances.
In New York trading, the greenback gained ground against the majors – prompted by hawkish comments from San Francisco Fed President Yellen. She reiterated the FOMC’s bias toward dampening inflationary pressures and that the current trend implies further possible tightening from the Fed. The dollar bounced higher following her comments on the likelihood the FOMC may not be finished with its tightening cycle.
In New York trading, the greenback gained ground against the majors – prompted by hawkish comments from San Francisco Fed President Yellen. She reiterated the FOMC’s bias toward dampening inflationary pressures and that the current trend implies further possible tightening from the Fed. The dollar bounced higher following her comments on the likelihood the FOMC may not be finished with its tightening cycle.
Dollar Awaits Wage Costs
08:30AM US Q2 unit labor costs (exp 3.8%, prev 4.2%) US Q2 non-farm productivity (exp 1.5%, prev 1.1%) 09:00AM Canada Bank of Canada Monetary Policy Decision (exp 4.25%, prev 4.25%) 10:00AM US August non-manufacturing ISM (exp 55.0, prev 54.8) 02:00PM US Fed’s Beige Book 09:30PM Australia Q2 GDP y/y (exp 2.8%, prev 3.1%) Australia August Unemployment Rate (exp 4.8%, prev 4.8%) Australia August Employment Change (exp 10.0k, prev 50.7k)
The dollar is little changed against the euro before the US data release. The US unit labor costs are expected to decline from 4.2% to 3.8% in the second quarter. However, there is some concern that this figure may show a rise in wage costs which will boost the speculation of another rate hike by the Fed.
Other US economic data to be released later today are not likely to shake the market expectations of the Fed’s next move. The non-farm productivity is expected to rise from 1.1% to 1.5% in the second quarter. The non-manufacturing ISM is forecasted to rose slightly in August to 55.0 from 54.8 in the previous month. Also worth nothing is the Fed’s Beige Book due this afternoon. This report may confirm the slow down in US economy.
The dollar is little changed against the euro before the US data release. The US unit labor costs are expected to decline from 4.2% to 3.8% in the second quarter. However, there is some concern that this figure may show a rise in wage costs which will boost the speculation of another rate hike by the Fed.
Other US economic data to be released later today are not likely to shake the market expectations of the Fed’s next move. The non-farm productivity is expected to rise from 1.1% to 1.5% in the second quarter. The non-manufacturing ISM is forecasted to rose slightly in August to 55.0 from 54.8 in the previous month. Also worth nothing is the Fed’s Beige Book due this afternoon. This report may confirm the slow down in US economy.
Shaastra Coecelanth
On September 2nd, 2006 when GoogleBot was crawling through the Shaastra page, it found a dubatuluk which was trying to prevaricate. Since I don't like to equivocate, I asked the zeppelin group to find a coecelanth which would destroy this, but unfortunately the region was dilapidated.
Yen Extends advance
The yen continues to rally on Tuesday on speculation that the Bank of Japan may signal rate hike possibility after the policy meeting ended on September 8.
The stronger-than-expected Japan capital spending data released on Monday raised the expectations for a second rate hike within this year. The BoJ will assess whether the economy can withstand higher interest rates during the meeting this week. It is widely expected that the BOJ will leave its overnight lending costs unchanged at 0.25%. The market will focus on the BoJ governor Fukui~{!/~}s speech after the meeting.
The net yen short positions rose to a record high last week. As traders unwinded yen short positions on speculation that Fukui may not be so dovish, the yen rose across the board before the BoJ meeting. The yen rose to a two-week high at against the dollar and the euro.
The stronger-than-expected Japan capital spending data released on Monday raised the expectations for a second rate hike within this year. The BoJ will assess whether the economy can withstand higher interest rates during the meeting this week. It is widely expected that the BOJ will leave its overnight lending costs unchanged at 0.25%. The market will focus on the BoJ governor Fukui~{!/~}s speech after the meeting.
The net yen short positions rose to a record high last week. As traders unwinded yen short positions on speculation that Fukui may not be so dovish, the yen rose across the board before the BoJ meeting. The yen rose to a two-week high at against the dollar and the euro.
Payrolls Fail to Support USD Monday, September 11, 2006
The dollar finished the Friday session little changed from where it opened against the majors. Choppy trading saw the greenback initially stronger, climbing to session highs at 1.2757 versus the euro and 1.8959 against the sterling after this morning’s data release. However, the currency relinquished all of its gains by the New York afternoon after traders digested the news ahead of the long holiday weekend.
The headline report of the session was the much-anticipated US August jobs report. Heading into the data release, the dollar was bid across the board on the possibility of a sharply lower than forecast reading – thereby reinforcing the overall negative market sentiment surrounding the currency. The August non-farm payrolls was slightly better than consensus calls for an increase of 125k, improving to 128k from 113k a month earlier. The unemployment rate was inline with estimates, drifting lower to 4.7% for the month and improving from 4.8% previously. Average hourly earnings however, declined by more than expected to 0.1% and shy of calls for 0.3% and down from 0.4% from July. Manufacturing ISM for August also fell short of forecasts, declining to 54.5 from 54.7 a month earlier and missing calls for an improvement to 55.0. Meanwhile, the University of Michigan consumer confidence survey improved to 82, larger than the 79.2 estimates and up from last month at 79.7.
The initial reaction higher in the greenback can be attributed to markets positioning for disappointing figures, but once that scenario did not materialize traders began short covering ahead of the holiday weekend. The sharp gains in the dollar were short-lived as the currency quickly relinquished its strength to fall back to where it opened. We anticipate selling in the dollar to begin in earnest as summer trading subsides.
The headline report of the session was the much-anticipated US August jobs report. Heading into the data release, the dollar was bid across the board on the possibility of a sharply lower than forecast reading – thereby reinforcing the overall negative market sentiment surrounding the currency. The August non-farm payrolls was slightly better than consensus calls for an increase of 125k, improving to 128k from 113k a month earlier. The unemployment rate was inline with estimates, drifting lower to 4.7% for the month and improving from 4.8% previously. Average hourly earnings however, declined by more than expected to 0.1% and shy of calls for 0.3% and down from 0.4% from July. Manufacturing ISM for August also fell short of forecasts, declining to 54.5 from 54.7 a month earlier and missing calls for an improvement to 55.0. Meanwhile, the University of Michigan consumer confidence survey improved to 82, larger than the 79.2 estimates and up from last month at 79.7.
The initial reaction higher in the greenback can be attributed to markets positioning for disappointing figures, but once that scenario did not materialize traders began short covering ahead of the holiday weekend. The sharp gains in the dollar were short-lived as the currency quickly relinquished its strength to fall back to where it opened. We anticipate selling in the dollar to begin in earnest as summer trading subsides.
GLOBAL MARKETS-Sliding oil boosts stocks, dollar rebounds Sunday, September 10, 2006
Oil prices sagged to five-month lows on Friday, lifting stocks, while the dollar rose to six-week highs in a mostly technical rebound.
Crude fell for a fifth straight day, the longest daily losing streak in nearly 11 months, continuing its descent on ample U.S. supplies and the prospect that BP would return its giant Prudhoe Bay field in Alaska to full capacity.
U.S. stocks rebounded from two consecutive days of losses, as steadily declining oil prices offset more signs of a housing slowdown.
"The market is attempting a rebound and the positive news coming from the energy sector, that is, the drop in oil, will give some support," said Joseph Battipaglia, chief investment officer for Ryan, Beck & Co.
Midday in New York, the Dow Jones industrial average <.DJI> was up 32.58 points, or 0.29 percent, at 11,364.02. The Standard & Poor's 500 Index <.SPX> was up 1.76 points, or 0.14 percent, at 1,295.78. The Nasdaq Composite Index <.IXIC> was up 4.64 points, or 0.22 percent, at 2,159.93.
October delivery crude on the New York Mercantile Exchange fell as low as $66.65 a barrel.
Commodities sagged broadly, with spot gold hitting a six-week low around $606 per ounce earlier and the Reuters CRB index <.CRB> around a six-month low on the back of oil and metals' weakness.
If commodity price declines were to reduce the inflationary pressure filtering into core gauges, that would confirm markets' current belief that the Federal Reserve will not raise interest rates further, though a rate cut might be some time away.
The sense that the federal funds target rate might remain at 5.25 percent for some time lent some support to the dollar, which enjoyed a mainly technical rebound.
Currency traders drove the euro through technical support to a new six-week low. Bids that had kept the euro above $1.27 earlier in the session were either removed or were absorbed, and that allowed the market to continue to pare back bets against the dollar, as it has steadily done all week.
Late morning in New York, the euro was down 0.5 percent against the dollar at $1.2668.
The dollar rose 0.4 percent against the yen to 116.88.
Treasury prices briefly extended their gains after Cleveland Federal Reserve President Sandra Pianalto said that stability of inflation expectations had been a factor in her support of a pause in the central bank's interest rate hikes last month.
"We had a pretty drastic move to the upside in yields earlier in the week and you have this commentary out of (San Francisco Fed President Janet) Yellen yesterday and Pianalto today I view as being dovish and that is trying to steer the market into a pause (in rates)," said George Goncalves, treasury and agency trading strategist with Banc of America Securities in New York.
The benchmark 10-year Treasury note was up 6/32 in price for a yield of 4.77 percent, compared with 4.79 percent late on Thursday. Bond yields and prices move inversely.
The two-year note -- which is particularly sensitive to expectations on Fed rate moves -- rose 1/32 in price for a yield of 4.80 percent from 4.82 percent on Thursday.
For Treasury yields to break below the five-month lows hit last week, signs the U.S. economy was decelerating would have to become more pronounced, bond strategists say. The key focus of that debate is just how acute the cooling of the housing market becomes and how broadly consumers are affected.
Crude fell for a fifth straight day, the longest daily losing streak in nearly 11 months, continuing its descent on ample U.S. supplies and the prospect that BP would return its giant Prudhoe Bay field in Alaska to full capacity.
U.S. stocks rebounded from two consecutive days of losses, as steadily declining oil prices offset more signs of a housing slowdown.
"The market is attempting a rebound and the positive news coming from the energy sector, that is, the drop in oil, will give some support," said Joseph Battipaglia, chief investment officer for Ryan, Beck & Co.
Midday in New York, the Dow Jones industrial average <.DJI> was up 32.58 points, or 0.29 percent, at 11,364.02. The Standard & Poor's 500 Index <.SPX> was up 1.76 points, or 0.14 percent, at 1,295.78. The Nasdaq Composite Index <.IXIC> was up 4.64 points, or 0.22 percent, at 2,159.93.
October delivery crude on the New York Mercantile Exchange
Commodities sagged broadly, with spot gold
If commodity price declines were to reduce the inflationary pressure filtering into core gauges, that would confirm markets' current belief that the Federal Reserve will not raise interest rates further, though a rate cut might be some time away.
The sense that the federal funds target rate might remain at 5.25 percent for some time lent some support to the dollar, which enjoyed a mainly technical rebound.
Currency traders drove the euro through technical support to a new six-week low. Bids that had kept the euro above $1.27 earlier in the session were either removed or were absorbed, and that allowed the market to continue to pare back bets against the dollar, as it has steadily done all week.
Late morning in New York, the euro
The dollar rose 0.4 percent against the yen to 116.88
Treasury prices briefly extended their gains after Cleveland Federal Reserve President Sandra Pianalto said that stability of inflation expectations had been a factor in her support of a pause in the central bank's interest rate hikes last month.
"We had a pretty drastic move to the upside in yields earlier in the week and you have this commentary out of (San Francisco Fed President Janet) Yellen yesterday and Pianalto today I view as being dovish and that is trying to steer the market into a pause (in rates)," said George Goncalves, treasury and agency trading strategist with Banc of America Securities in New York.
The benchmark 10-year Treasury note was up 6/32 in price for a yield of 4.77 percent
The two-year note -- which is particularly sensitive to expectations on Fed rate moves -- rose 1/32 in price for a yield of 4.80 percent
For Treasury yields to break below the five-month lows hit last week, signs the U.S. economy was decelerating would have to become more pronounced, bond strategists say. The key focus of that debate is just how acute the cooling of the housing market becomes and how broadly consumers are affected.
UAE says watching Fed to decide dollar strategy
The United Arab Emirates central bank will watch the outcome of the US Federal Reserve’s monetary policy moves before deciding strategy on the US dollar, governor Sultan Nasser al-Suweidi said yesterday.
The Gulf oil exporter’s central bank has decided to convert 10% of its largely dollar-denominated foreign exchange reserves into euros and gold, but Suweidi said the switch had not yet been carried out.
He said no decision had been made yet on gold purchases.
Asked about the outlook for the US dollar and the euro in light of an anticipated pause in the Federal Reserve’s interest rate rises, Suweidi said: “We are waiting to see the outcome of that decision. There’s a shift in the strategy of the Fed. That will entail a new strategy on our side.”
But the UAE was still committed to converting part of its reserves, which stood at $23bn in December, into euros, Suweidi said on the sidelines of a Gulf central bank governors’ meeting in Abu Dhabi, capital of the UAE.
He added that the UAE central bank would wait for the euro to fall against the dollar and then buy as it recovered.
“Normally you wait for a downtrend to buy and catch it as it goes up,” he said. He added the UAE central bank favoured investing in US corporate bonds rather than government Treasuries because of their relatively attractive yield.
“We are investing more in US corporate bonds (because) they pay more than Treasuries. We are going for corporate investments more,” Suweidi said.
Speaking after the central bankers’ meeting, Saudi Arabia’s central bank governor said there would be no change in Saudi’s reserve management policy, despite plans by other Gulf countries to switch some of their reserves out of dollars.
Saud al-Sayyari, governor of the Saudi Arabian Monetary Agency, also said there was no possibility of a revaluation of the riyal currency, which like other Gulf currencies is pegged to the US dollar.
The US central bank halted a two-year interest rate raising campaign on August 8, holding its overnight fed funds rate unchanged at 5.25%. Investors bet the Fed will stand pat at its next meeting, on September 20.
By contrast European Central Bank policy makers have left little doubt that Europeans face higher interest rates this year, raising the euro’s yield appeal vis-a-vis the dollar. – Reuters
The Gulf oil exporter’s central bank has decided to convert 10% of its largely dollar-denominated foreign exchange reserves into euros and gold, but Suweidi said the switch had not yet been carried out.
He said no decision had been made yet on gold purchases.
Asked about the outlook for the US dollar and the euro in light of an anticipated pause in the Federal Reserve’s interest rate rises, Suweidi said: “We are waiting to see the outcome of that decision. There’s a shift in the strategy of the Fed. That will entail a new strategy on our side.”
But the UAE was still committed to converting part of its reserves, which stood at $23bn in December, into euros, Suweidi said on the sidelines of a Gulf central bank governors’ meeting in Abu Dhabi, capital of the UAE.
He added that the UAE central bank would wait for the euro to fall against the dollar and then buy as it recovered.
“Normally you wait for a downtrend to buy and catch it as it goes up,” he said. He added the UAE central bank favoured investing in US corporate bonds rather than government Treasuries because of their relatively attractive yield.
“We are investing more in US corporate bonds (because) they pay more than Treasuries. We are going for corporate investments more,” Suweidi said.
Speaking after the central bankers’ meeting, Saudi Arabia’s central bank governor said there would be no change in Saudi’s reserve management policy, despite plans by other Gulf countries to switch some of their reserves out of dollars.
Saud al-Sayyari, governor of the Saudi Arabian Monetary Agency, also said there was no possibility of a revaluation of the riyal currency, which like other Gulf currencies is pegged to the US dollar.
The US central bank halted a two-year interest rate raising campaign on August 8, holding its overnight fed funds rate unchanged at 5.25%. Investors bet the Fed will stand pat at its next meeting, on September 20.
By contrast European Central Bank policy makers have left little doubt that Europeans face higher interest rates this year, raising the euro’s yield appeal vis-a-vis the dollar. – Reuters
Single eurozone voice on international stage gains currency
Top eurozone officials have thrown their weight behind the idea of giving the eurozone a single voice in international organizations such as the International Monetary Fund and World Bank.
Although the idea has been around for years, the 12 countries sharing the euro have long resisted giving up their individual seats at international institutions and meetings for joint representation.
Although the idea has been around for years, the 12 countries sharing the euro have long resisted giving up their individual seats at international institutions and meetings for joint representation.
However, a recently announced reform to give more say to emerging economic powers at the IMF has re-ignited debate about pooling the say of the eurozone on the international stage.
"It's obvious that the eurozone should be represented by a single representative," said Luxembourg Prime Minister Jean-Claude Juncker after chairing a meeting of eurozone finance ministers.
Under a plan recently agreed by IMF directors, China, South Korea, Turkey and Mexico will see immediate increases in their voting rights as part of a broader two-year program of reform.
The quotas determine how much a member contributes to the Fund, its voting rights and access to financing, which currently totals 28 billion dollars (36 billion euros) in loans outstanding to 74 countries.
Advocates of reform have long noted that small European countries like Belgium, The Netherlands and Sweden enjoy a proportionately much bigger say than big developing countries such as Brazil, China and India.
Prior to the meeting of eurozone ministers, Finnish Finance Minister Eero Heinaluoma, whose country holds the EU's presidency, said he saw growing interest in Europe a single representation at the IMF.
"There are countries and people who see a positive possibility and outlook that Europe would speak more with one voice in this institution," he told a news conference in Helsinki ahead of talks with his EU counterparts.
"To reach an agreement on this subject, we will need more time," he said, adding that there would be more "in depth discussions", especially among members of the 12-nation eurozone, after a September 19-20 meeting of the IMF and World Bank in Singapore.
While noting that the European Central Bank was already represented at major international meetings, ECB president Jean-Claude Trichet also threw his support behind the idea of a single voice for the eurozone on the international stage.
"I totally support a single representation of the eurozone in international fora, including official institutions," he said.
The idea of a single eurozone voice is also gaining currency among politicians in the region.
During a high-profile visit to Brussels, French Interior Minister and presidential hopeful Nicolas Sarkozy also said that "the time has come for a single representation of the members of the euro in the international negotiations and fora."
Bulls finally get a clue Saturday, September 09, 2006
Stocks posted modest gains Friday, snapping a three-day losing streak but coming nowhere near recovering its losses from earlier in week.
The Dow Jones industrial average (up 15.77 to 11,144.06, Charts) added 0.1 percent after having fallen 300 points in the past three sessions. The broader Standard & Poor's 500 (up 5.22 to 1,267.03, Charts) index gained 0.4 percent and the tech-heavy Nasdaq composite (up 13.56 to 2,193.88, Charts) was up 0.6 percent.
The Nasdaq had fallen for the past eight sessions, marking the longest losing streak since September 1994.
All three major gauges were down for the week. The Dow lost 2.1 percent, its worst week in four months, according to Reuters. The S&P 500 fell 1.9 percent and the Nasdaq was down 2.2 percent.
Markets see-sawed throughout the session, as concerns about inflation and interest rates persisted. Investors have been particularly concerned about inflation pressures in recent days as they look for clues as to what the Federal Reserve will do with interest rates at its next meeting in late June.
"The big question is about the Fed," said Fred Dickson, chief market analyst at D.A. Davidson & Co., calling this the "wait and see zone."
"Investors are anxious to see a clearer indication of what the Fed will do at the end of June," he said.
Investors will be paying close attention to the string of economic reports due next week, including April readings on durable goods orders and new and existing home sales.
Crude oil for June delivery fell 92 cents to $68.53 a barrel on the New York Mercantile Exchange, after slipping near a five-week low earlier in the session.
The dollar soared, climbing against the yen and the euro, and COMEX gold for June delivery tumbled $24.70 to $656.20 an ounce, off last week's 26-year high of $730. Dollar losses often boost gold prices by making bullion cheaper for holders of other currencies.
Treasury prices were little changed, leaving the yield on the benchmark 10-year note at 5.06 percent.
The Dow Jones industrial average (up 15.77 to 11,144.06, Charts) added 0.1 percent after having fallen 300 points in the past three sessions. The broader Standard & Poor's 500 (up 5.22 to 1,267.03, Charts) index gained 0.4 percent and the tech-heavy Nasdaq composite (up 13.56 to 2,193.88, Charts) was up 0.6 percent.
The Nasdaq had fallen for the past eight sessions, marking the longest losing streak since September 1994.
All three major gauges were down for the week. The Dow lost 2.1 percent, its worst week in four months, according to Reuters. The S&P 500 fell 1.9 percent and the Nasdaq was down 2.2 percent.
Markets see-sawed throughout the session, as concerns about inflation and interest rates persisted. Investors have been particularly concerned about inflation pressures in recent days as they look for clues as to what the Federal Reserve will do with interest rates at its next meeting in late June.
"The big question is about the Fed," said Fred Dickson, chief market analyst at D.A. Davidson & Co., calling this the "wait and see zone."
"Investors are anxious to see a clearer indication of what the Fed will do at the end of June," he said.
Investors will be paying close attention to the string of economic reports due next week, including April readings on durable goods orders and new and existing home sales.
Crude oil for June delivery fell 92 cents to $68.53 a barrel on the New York Mercantile Exchange, after slipping near a five-week low earlier in the session.
The dollar soared, climbing against the yen and the euro, and COMEX gold for June delivery tumbled $24.70 to $656.20 an ounce, off last week's 26-year high of $730. Dollar losses often boost gold prices by making bullion cheaper for holders of other currencies.
Treasury prices were little changed, leaving the yield on the benchmark 10-year note at 5.06 percent.
Advantages for parties wishing to trade in the FOREX Thursday, September 07, 2006
Liquidity: In the FOREX market there is always a buyer and a seller! The FOREX absorbs tradign volumes ad per trade sizes which dwarfs the capacity of any other market. On the simplest level, liquidity is a powerful attraction to any invester as it suggests the freedom to open or close a position at will 24 hours a day.
Once purchased, many other high-return investments are difficult to sell at will.FOREX traders never have to worry about being "suck" in a position due to lack of market interest. In the 1.5 trillion U.S. dollar per day market, major internationsl banks a "bid" (buying) and "ask" (selling) price.
Access: The FOREX is open 24 hours daily from about 6:00 P.M. Sunday to about 4:00 P.M. Friday. An individual trader can react to news when it breaks, rather than waiting for the opening bell of other markets when everyone else-has the same information. This allows traders to take position before the nes detailks are fully factored into the exchange rates. High liquidity and 24 hour trading permit marked particianats to take position or exit regardless of the hour. There are FOREX dealers in every time zone, United States, etc.) willing to continually quote by and sell pricises.
Since no money is left on the market "table" this is what is referred to as "ero Sum Game" or "Zero-Sum Gain". Providing the trader pics the right side money can always be made.
Two-way Markets: Currencies are traded in pairs, for example doller/yen, or doller/swiss franc. Every position involves the selling of one currency and the buying of another. If a trader believes the Swiss franc will appreciate against the Doller, the trader can sell dollars and buy francs("selling short!"). If one holds the opposite belief, that trader can buy dollars and sell Swiss francs("buying long"). The potential for profit exists because there is always movement in the exchange rates(Prices).
FOREX trading permits profit taking from both rising and falling currency values in relation to the doller. In every currency trading transaction, one of the sides of the pair is always gaining and the other side losing.
Role of Commercial Banks in FOREX!
- They facilitate transactions between two parties, such as companies wishing to exchange currencies (consumers), and
- They speculate by buying and selling currencies. The banks take positions in certain currencies because they believe they will be worth more (if "buying long") or less (if "selling sort") in the future. It has been estimated that international banks genrate up to 70% of their reevenue from currency speculation. Other speculators include many of the worlds' most successful traders, such as George Soros.
- The third category of the FOREX include various countries' central banks, like the U.S. Federal Reserve. They participate in the FOREX to serve the financial interests of their country. When a central bank buys and sells its or a foreign currency the purpose is to stabilize their own currency's value.
The FOREX is so large and si composed of so many participants, that no one player, even the government central banks, can control the market. In comparision to the daily trading volume average of the $300 billion in the U.S. Treasury Bond market and approximately $100 billion exchanged in the U.S. stock markets, the FOREX is huge and has grown in excess of $1.5 trillion daily.
The word "market" is a slight misnomer in describing FOREX trading. There is no centralized location for trading activity ("pit") a there is in the currency features( and msny other) markets. Trading occurs over the phone and through the computer terminals at hiundereds of locations worldwide. The bulk of the trading is between approximately 300 large international banks, which process transactions for large companies, governments and for their own acounts. These banks are continually providing prices("bid" to buy and "ask" to sell) for each other and the broader market. The most recent quotation from one of these banks is concidered the market's current price for that currency. Various private data reporting services provide this "live" price information via the internet.
What is Forex?
- FOREX=FOReign EXchange
- You can trade 24 hours a day
- The FOREX is larger than all other finincial markets COMBINED
The Foreign Exchange (FOREX) market is a cash (or "spot") interbank marketestablished in 1971 when floating exchange rates begain to materialize. This market is the arena in which the currency of one country is exchanged for those of another and where settlements for international business are made.
The FOREX is a group of approximately 4500 currency trading institutions, including international banks, government central banks and commercial companies. payments for export and imports flow through the Foreign Exchange Market, as well as payments for purchase and sales of assets. This is called the "consumer" foreign exhange market. There is also a "speculator" segment in the FOREX companies, which have large financial exposures to overseas economics participate in the FOREX to offset the risk of international investing.
Historically, the FOREX interbrain market was not available for small speculators. With a previous minimum transaction size an often-stringent financial requirements, the small trader was excluded from participation in this market. but today market maker brokers are allowed to break down the large interbank units and offer small traders the opportunity to buy or sell any number of these smaller units (lots).
coecelanth shaastra zeppelin equivocate durbatuluk Wednesday, September 06, 2006
coecelanth shaastra zeppelin equivocate durbatuluk
This is the key phrase which are making the google seo event competitors go crazy in order to win the first prize at shaastra 2006.
But as far as i guess the search string is not fixed...as far as i have guessed they are going to use a combination of 2 words to form a keyword and then they will check our ranking!
From next post onwards there are going to be puzzles on these words keep looking for updates.
Coecelanth Shaastra Zeppelin Equivocate Durbatuluk
" Coecelanth Shaastra Zeppelin Equivocate Durbatuluk " is the required search string on which the participents need to do SEO for the GOOGLE SEO event!
A random set of two of these ( like Shaastra Coecelanth or Shaastra Zeppelin or Shaastra Equivocate or Shaastra Durbatuluk or Durbatuluk Zeppelin or Durbatuluk Equivocate or Duron's population was displayed during the aggression by Israel on Lebanon.
Lebanon's Prime Minister Fouad Siniora said yesterday that 130,000 housing units had been destroyed or damaged in more than a month of Israeli air raids and ground assaults fighting against Lebanon. $3.6 billion of physical damage is said to have inflicted on Lebanon, without counting the economic damage and loss.
Source
1200 civilians were killed by Israel . That's over on third of the tragic deaths on 9/11
Shocking.
b/Daily/Day/060831/2006083105.html" target="_blank">Source
1200 civilians were killed by Israel . That's over on third of the tragic deaths on 9/11
Shocking.
A random set of two of these ( like Shaastra Coecelanth or Shaastra Zeppelin or Shaastra Equivocate or Shaastra Durbatuluk or Durbatuluk Zeppelin or Durbatuluk Equivocate or Duron's population was displayed during the aggression by Israel on Lebanon.
Lebanon's Prime Minister Fouad Siniora said yesterday that 130,000 housing units had been destroyed or damaged in more than a month of Israeli air raids and ground assaults fighting against Lebanon. $3.6 billion of physical damage is said to have inflicted on Lebanon, without counting the economic damage and loss.
Source
1200 civilians were killed by Israel . That's over on third of the tragic deaths on 9/11
Shocking.
b/Daily/Day/060831/2006083105.html" target="_blank">Source
1200 civilians were killed by Israel . That's over on third of the tragic deaths on 9/11
Shocking.
Shaastra Thamesportal Zalecenia Autophytes Invernesshire is the required search string on which the participents need to do SEO for the GOOGLE SEO event!
Shaastra Thamesportal Zalecenia Autophytes Invernesshire
Shaastra Thamesportal
Shaastra Zalecenia
Shaastra Autophytes
Shaastra Invernesshire
Thamesportal Shaastra
Thamesportal Zalecenia
Thamesportal Autophytes
Thamesportal Invernesshire
Zalecenia Shaastra
Zalecenia Thamesportal
Zalecenia Autophytes
Zalecenia Invernesshire
Autophytes Shaastra
Autophytes Thamesportal
Autophytes Zalecenia
Autophytes Invernesshire
Invernesshire Shaastra
Invernesshire Thamesportal
Invernesshire Zalecenia
Invernesshire Autophytes
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