Artanbiz Finance Blog

Euro climbs vs dollar after ECP credit

2010-06-12T18:26:00.005-04:00

11 Jun 2010, 1326 hrs IST,AGENCIES
BERLIN: The euro has clawed back against the dollar after the European Central Bank made more credit available amid persistent worries about European debt. The 16-nation currency traded at $1.2103 early Friday, up from the $1.2095 it bought in New York overnight. On Thursday the ECB left its interest rate untouched at one percent, but said it would offer banks limited three-month loans to encourage lending. Fears of a freeze in bank lending have driven investors to seek the perceived safety of the dollar.

In other currencies, the British pound rose to $1.4722 from $1.4702 overnight, while the dollar climbed to 91.57 Japanese yen from 91.20 yen.

World stocks, oil rise; dollar falls broadly...

2009-09-22T22:13:00.002-04:00

22 Sep 2009, 1706 hrs IST, AGENCIES

LONDON: World stocks and oil climbed on Tuesday ahead of the Federal Reserve's two-day policy meeting, while investors' search for higher returns pushed the dollar down to a one-year low against the euro. European equities and U.S. stock futures followed Asia markets higher, while safe-haven U.S. and German government bond prices and the low-yielding dollar all retreated. The latest leg of the rally in risk assets, which helped world stocks recoup more than half of last year's losses, stemmed from repeated pledges by G20 policymakers to keep emergency economic support in place. The G20 summit in Pittsburgh on Thursday and Friday is expected to underline that commitment while the Fed's Open Market Committee is expected to do likewise when its latest meeting ends on Wednesday. "The fundamental position for all equity markets has just been improving and we know that the central banks, particularly the UK and, importantly, the Federal Reserve, are committed to keep intrest rates low for a long period of time," said Mike Lenhoff, chief strategist at Brewin Dolphin. MSCI world equity index rose 0.9 percent, closing in on last week's 11-month high. The index has risen over 27 percent since January. The FTSEurofirst 300 index rose more than 1 percent while emerging stocks rose 0.9 percent. U.S. stock futures were up 0.7 percent. The dollar fell as low as $1.4821 per euro, while the New Zealand dollar -- often seen as a bellwether of global risk appetite -- surged to a 13-month high above $0.7230. Energy stocks advanced as crude oil gained 1.6 percent to $70.87 a barrel, bouncing back after its 3 percent decline on Monday. The Fed is expected to keep its benchmark Fed Fund rate unchanged at 0.25 percent. Investors are looking for signs of how quickly it might remove its extraordinary programmes to revive lending and economic activity. DOLLAR WARY OF G20 Although trading volumes in Asia were capped by public holidays in Japan, G20 discussions on plans to rebalance the world economy were read by traders as dollar negative there and this sentiment spilled over to Europe. A document outlining the U.S. position ahead of the summit said exporters, which include China, Germany and Japan, should consume more, while debtors like the United States ought to boost savings. "Without greater confidence that the U.S. recovery is robust, any pro-cyclical support for the dollar may be delayed," Simona Paravani, global investment strategist at HSBC Global Asset Management, said in a note to clients. "The Federal Reserve is likely to err on the side of caution and keep rates low for longer than current forward money market rates suggest, another factor that counterbalances support from the recently more positive economic picture. We retain our neutral view on the dollar." Government debt markets were weighed down by a fresh wave of new debt sales this week. A substantial $112 billion in two-year, five-year and seven year U.S. notes is due to come on stream this week, with a record $43 billion two-year bond sale on Tuesday.

Wall Street resumes rise recovery optimism...

2009-09-22T20:55:00.002-04:00

23 Sep 2009, 0601 hrs IST, AGENCIES

NEW YORK: US shares climbed Tuesday to fresh 2009 highs on economic recovery optimism and company earnings prospects as the Federal Reserve's policymakers met to review steps aimed at restoring growth. The Dow Jones Industrial Average rose 51.01 points (0.52 percent) to 9,829.87 in final trades. The tech-heavy Nasdaq composite rose 8.26 points (0.39 percent) to 2,146.30 while the broad-market Standard & Poor's 500 index added 7.00 points (0.66 percent) to 1,071.66. "Wall Street appears to have shaken off Monday's blues in favor of a more upbeat outlook on the economy," said Joseph Hargett of Schaeffer's Investment Research. The added confidence, he said, had pressured the US dollar lower, pushing greenback-priced commodities such as oil and gold higher. "The dollar's continued weakness is boosting commodity prices that are denominated in the US currency, helping the major markets rebound from yesterday's modest declines," analysts at Charles Schwab & Co said in a note to clients. The greenback fell to a one-year low against the euro to below the 1.48 level Tuesday as many investors sold the safe-haven dollar to put their money in relatively risky stock and other investments on the back of growing economic optimism, dealers said. Upbeat company earnings reports also helped lift sentiment in early Wall Street action, they said. The two-day Federal Open Market Committee meeting began in Washington Tuesday and a summit of the Group of 20 developing and developed nations convenes in the US city of Pittsburgh, Pennsylvania, on Thursday. The Fed is widely expected to leave unchanged its near-zero base interest rate but may make minor changes to the array of liquidity programs to keep credit flowing as the economy struggles to emerge from recession. G20 leaders are expected to discuss ways to unwind their unprecedented support to fight the global economic crisis although they remain cautious for fear of jeopardizing a return to growth.

World markets get another lift from US earnings

2009-07-22T19:58:00.001-04:00

21 Jul 2009, 2137 hrs IST, AGENCIES

LONDON: European stocks
closed higher on Tuesday after more strong US corporate earnings and indications from US Federal Reserve chairman Ben Bernanke that borrowing costs will remain at record lows for some time to come. But ongoing unease about whether U.S. markets could break through recent highs capped gains on Wall Street. In Europe, the FTSE 100 index of leading British shares closed up 37.55 points, or 0.9 percent, at 4,481.17 while Germany's DAX rose 63.82 points, or 1.3 percent, to 5,093.97. The CAC-40 in France was 31.95 points, or 1 percent, higher at 3,302.89. On Wall Street, the Dow Jones industrial average was up 36.36 points, or 0.4 percent, at 8,884.41 around midday New York time, while the broader Standard & Poor's 500 index was rose a minuscule 0.12 point to 951.25. More upbeat earnings reports from a number of big-name companies on Tuesday added to investors' recent optimism, which has helped stocks around the world rally for the last seven sessions. Analysts noted markets around the world are approaching levels that could trigger a bout of profit-taking. Coca-Cola Co., the world's largest beverage maker, said its earnings jumped by 43 percent in the second quarter even though sales fell, while chemical maker DuPont Co. and drug company Merck & Co. reported better than expected results despite drops in their quarterly profit. Since last Monday, most of the world's major indexes have jumped around 8 percent amid hopes that the negative impact on earnings from the recession and the financial crisis has diminished.

Wall Street sinks on mixed earnings reports

2009-07-22T19:30:00.003-04:00

22 Jul 2009, 1946 hrs IST, AGENCIES

NEW YORK: US stocks fell on Wednesday as the market sized up a mixed batch of earnings reports and traders banked profits from the recent robust Wall Street rally. The Dow Jones Industrial Average dropped 21.53 points (0.24 per cent) to 8,894.41 in opening trades. The technology-heavy Nasdaq shed 4.39 points (0.23 per cent) to 1,911.81 and the broad Standard & Poor's 500 index pulled back 4.90 points (0.51 per cent) to 949.68. "Traders are taking the opportunity to books some profits from the steep rally seen on Wall Street recently, which is overshadowing better-than-expected profit reports from Apple, Boeing, and Pfizer," Charles Schwab & Co. analysts said in a client note. The action came after stocks rose Tuesday as the market weighed improved earnings reports and Federal Reserve chairman Ben Bernanke's economic update to Congress. The Dow rose 0.77 per cent, its seventh straight session of gains, the Nasdaq added 0.36 per cent, its 10th consecutive increase, and the S&P 500 advanced 0.36 per cent. Patrick O'Hare of Briefing.com said that Wednesday's trading could in part be chalked up "to an underlying sense that the latest rally effort is hitting an exhaustion phase where it is now being concluded that the better-than-expected earnings results have been priced into stocks." "In many cases, the pricing activity got carried away," he said. "It is only natural that some of the excessive enthusiasm gets unwound as the market starts to pay closer attention to the overall quality of earnings being reported as opposed simply to the quality of the headline trumpeting positive earnings surprises."

Wall Street higher as recovery hopes grow

2009-06-10T18:09:00.003-04:00

10 Jun 2009, 1942 hrs IST, AFP
NEW YORK: Wall Street opened higher Wednesday after upbeat comments from key retailer Home Depot and strong demand for commodities bolstered confidence that the economy is poised to rebound from its slump. In early action, the Dow Jones Industrial Average climbed 71.26 points (0.81 per cent) to 8,834.32 after a mixed session a day earlier. The Nasdaq composite added 12.47 points (0.67 per cent) to 1,872.60 while the Standard & Poor's 500 broad-market index rose 7.34 points (0.78 per cent) to 949.77. Analysts said Wall Street took a cue from overseas markets, after upbeat comments about the Chinese economy that fueled gained in commodities. In the US, key home improvement retailer Home Depot's increased guidance boosted hopes that housing and the overall economy were improving. Stocks are nicely higher in morning action, buoyed by solid advances in the overseas markets and following updated guidance from Home Depot -- the Dow member and world's largest home improvement retailer," said analysts at Charles Schwab & Co. in a note to clients. "Commodity-related stocks are leading the charge, led by energy issues amid the continued strength in curde oil prices. " "Adding to the positive atmosphere were two reports from Chinese papers, which predicted that the country's industrial production and retail sales reports should come in better than expected later in the week," said Joseph Hargett at Schaeffer's Investment Research.

US stocks open higher as report says job losses slow

2009-05-06T15:04:00.001-04:00

6 May 2009, 1911 hrs IST, AGENCIES

NEW YORK: Stock are higher in early trading following data indicating job losses are slowing. A big improvement on Wednesday in the ADP National Employment Report is buoying the mood on Wall Street and easing worries that banks will need to raise more capital than previously thought. The ADP National Employment Report, an unofficial gauge that stock trades have been increasingly monitoring, said private sector employment fell by 491,000 in April. That's much better than ADP's report last month that said 708,000 jobs were lost in March. In the early going, the Dow Jones industrials are up 90 at 8,500, their highest level since January. The Standard & Poor's 500 index is up 10 at 914, and the Nasdaq composite index is up 15 at 1,769.

US stocks open higher on G20 optimism

2009-04-02T15:37:00.003-04:00

2 Apr 2009, 1920 hrs IST, AGENCIES
NEW YORK: US stocks opened higher on Thursday on confidence that a Group of 20 summit of developing and developed nations will make some headway in dealing with the global financial and economic crisis. The Dow Jones Industrial Average rose 154.12 points (1.99 percent) in the first trades to 7,915.72, setting the stage for what could be a third consecutive Wall Street rally this week. The tech-heavy Nasdaq composite added 28.20 points (1.82 percent) to 1,579.80 while the broad-market Standard & Poor's 500 index climbed 18.39 points (2.27 percent) to 829.47. Traders said the market was boosted by what was being seen as a more optimistic scenario emerging from the G20 summit in London, while reminding however that market rebounds had been typically volatile. "Early reports from the G20 meeting focused on dissension and difficulties in global coordination for dealing with economic issues," analysts at Briefing.com said in a note to clients.

"The reports now stress words like 'headway' and 'progress' on issues such as providing more liquidity to the IMF and regulation of hedge funds. "Whether any resulting pronouncements will result in stronger global economies can be questioned, but the markets are encouraged that nations are at least attempting to coordinate actions," the note said. After sharp differences over how to restore confidence, G20 summit officials have agreed that the International Monetary Fund could get up to 500 billion dollars in extra funding and a tax-haven blacklist could be drawn up as part of financial reforms. British Prime Minister Gordon Brown said in his opening speech to the summit that there was a "very high degree of consensus."

2009 among worst years for equities

2009-04-02T15:13:00.002-04:00

Hindustan Times,Mumbai, April 01, 2009

Weak GLOBAL markets, heavy selling by foreign institutional investors (FIIs), slowdown in the domestic economy and a tight monetary policy in the first half of 2008-09 have worked towards making 2009 the second worst year for Indian equities in three decades. In 2009, the 30-share sensitive index, Sensex, fell 36 per cent. The index recorded its worst fall in 1993 when it crashed 47 per cent, according to a report by Motilal Oswal Financial Services Ltd (MOFSL). The index, however, recovered 66 per cent in 1994. Another highlight of 2009 has been a 27 per cent depreciation of rupee’s value against the US dollar.

The report said the company expects oil refining and marketing companies to report profits due to the issuance of oil bonds. The company predicts most sectors to report either a decline or single-digit growth in earnings, with just 3 out of 16 sectors reporting double-digit earnings growth.

The report also said that the estimated real GDP growth of 6.7 per cent in 2008-09 is led by a strong domestic consumption. Sectors that had reported significant drops in business momentum in the third quarter of 2008-09, have witnessed strong recovery in the fourth quarter.

Wall Street shrugs off January job losses of 598K

2009-02-07T11:42:00.001-05:00

7 Feb 2009, 0320 hrs IST, AGENCIES

NEW YORK: Wall Street has had another big rally as investors bet the government will take some big steps to help the economy.
Investors are awaiting a Senate vote on its version of an economic stimulus plan that would include a mix of spending and tax cuts. A vote on the bill, which stands at $937 billion, could come late Friday. Financial stocks led the market higher as investors also awaited the government's latest revisions to its lifeline for banks. Treasury Secretary Timothy Geithner is expected to announce them on Monday. The Dow Jones industrials rose 217 to 8,280, bringing their two-day advance to more than 220. The Standard & Poor's 500 index is up 22 at 868, and theNasdaq composite is up 45 at 1,591. Advancing stocks were ahead of losers by 5 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares.

Hopes of stimulus plan push US stocks higher

2009-02-07T11:35:00.002-05:00

6 Feb 2009, 2130 hrs IST, PTI

NEW YORK: The Wall Street soared in the first hour of trading, as the gloomy job data spurred hopes of the Federal government speeding up the stimulus package. Dow Jones Industrial Average climbed over 137 points, setting the pace for the other two benchmark indices -- Nasdaq Compositee and S&P 500. In another sign of the worsening labour market, the unemployment numbers for the month of January reached 5,98,000 while the jobless rate touched 7.6 per cent. Dow jumped 137.79 points or 1.71 per cent to 8,200.86 points. Nasdaq Composite grew 1.63 per cent to 1,570.97 points and S&P 500 rose 1.38 per cent to 857.53 points. The more than 800-billion dollar plan mooted by President Barack Obama is to come up in the Senate for discussion. The package aimed at kick starting the nation's recession-hit economy has been approved by the House of Representatives. As the hopes of stimulus gained momentum,shares of financial institutions -- Bank of America, Citigroup and JPMorgan -- surged in the early morning session. Bank of America skyrocketed nearly 17 per cent to 5.65 dollars while the scrip of Citi went up 6.23 per cent to 3.75 dollars. JPMorgan too was trading higher at 26.22 dollars.

Euro falls against dollar to $1.2718

2009-02-02T14:15:00.001-05:00

2 Feb 2009, 1420 hrs IST, AGENCIES

FRANKFURT: The Euro fell against the dollar Monday as investors expected the European Central Bank to hold interest rates steady this week. The 16-nation euro fell to $1.2718 in European morning trading, down from $1.2794 late Friday in New York. The British pound also fell to $1.4307 from $1.4456 Friday. ``The new month has got under way with both the pound and euro slipping amid mounting speculation as to how the respective rate verdicts from central banks will influence values later in the week,'' currency analyst James Hughes wrote in a research note. ECB President Jean-Claude Trichet has indicated the bank will likely hold rates steady at 2 percent at Thursday's meeting. ''Our next important rendezvous will be in March, even if we are not precommitted,'' he said at the bank's January meeting . The dollar will likely gain against other currencies as a ``safe-haven'' as world economies continue into recession, analysts said. Lower interest rates can also drive investors from a currency as they move funds where they earn better returns. The dollar was slightly lower against the Japanese yen Monday, at 89.34 compared with 89.88 yen late Friday in New York.

Treasurer says Australia will fall into deficit

2009-02-01T21:25:00.001-05:00

2 Feb 2009, 0700 hrs IST, AP

CANBERRA: Australia's government plans to break an election campaign pledge by spending its budget into a deficit this year because of the global recession, Treasurer Wayne Swan said on Monday. Swan met his Cabinet colleagues on Monday to discuss a second multibillion-dollar stimulus package aimed at curbing the economic decline. No details were immediately announced. The government has already injected 36 billion Australian dollars ($23 billion) into the economy since September, including cash bonuses in welfare checks, funds for residential mortgage backed securities, car industry assistance plus infrastructure projects. Swan had previously forecast a slim surplus this year despite the massive injection. But the worsening economic climate has eroded that. ``Certainly it means that the budget is going into temporary deficit and because of the size of this global recession and the size of the demand shock which is being transmitted to the Australian economy, it does have a fairly dramatic impact on the budget bottom line,'' Swan told Australian Broadcasting Corp. radio. ``We plan to return the budget to surplus when global conditions normalize,'' he added. Prime Minister Kevin Rudd's center-left Labour Party was elected in 2007 on a promise to maintain surpluses in the nation's annual budgets. The preceding center-right government had delivered 10 surpluses in 12 annual budgets. Late last year, the International Monetary Fund predicted Australia would be one of the few developed countries to avoid recession in 2009. But on Saturday, the IMF told Australian officials the country's economy was likely to contract by 0.2 percent, delivering Australia's first recession since 1991. Rudd responded by accusing unregulated free market economics of ``turbo charging greed.''

Dollar up, gold falls in morning trading

2009-01-30T14:23:00.000-05:00

30 Jan 2009, 1757 hrs IST, AGENCIES

LONDON: The US dollar was mostly higher against other major currencies in European trading Friday morning. Gold fell. The euro traded at $1.2820, down from $1.2964 late Thursday in New York. Other dollar rates: 89.66 Japanese yen, down from 89.85. 1.1597 Swiss francs, up from 1.1519. 1.2327 Canadian dollars, up from 1.2213 The British pound was quoted at $1.4310 down from $1.4317. Gold traded in London at $918.50 per troy ounce, down from $892.25 late Thursday.

Wall Street swings lower on GDP contraction

2009-01-30T14:19:00.001-05:00

30 Jan 2009, 2225 hrs IST, AGENCIES

NEW YORK: US stocks swung lower on Friday, wiping out opening gains as investors digested government data showing the economy shrank less than expected in the 2008 fourth quarter.

The Dow Jones Industrial Average slid 70.33 points (0.86 percent) to 8,078.68 at 1603 GMT and the tech-rich Nasdaq fell 11.56 points (0.77 percent) to 1,496.28. The broad-market Standard & Poor's 500 index retreated 8.02 points (0.95 percent) to 837.12. Wall Street dived Thursday as investors booked profits amid a series of weak data and poor corporate earnings. The Dow slid 2.70 percent and the Nasdaq 3.24 percent. Stocks had opened with modest gains after the Commerce Department reported that gross domestic product (GDP) contracted at a 3.8 percent pace in the 2008 fourth quarter. It was the sharpest quarterly decline since 1982 but far less than the consensus forecast of a 5.5 percent annualized drop. The estimate of fourth-quarter GDP suggests "that the difficult recession the US economy is experiencing may not be as severe as some analysts had been anticipating," said analysts at Charles Schwab & Co. But some analysts pointed to grim data lurking beneath the headline figure. "The headline on this GDP report is not as bad as feared, but the breakdown doesn't provide much encouragement," said Patrick O'Hare at Briefing.com. Sal Guatieri, senior economist at BMO Capital Markets, said the figure was "very much an illusion" created by an unexpected increase in business inventories. He predicted the 2009 first quarter could contract more sharply. Christina Romer, chair of President Barack Obama's Council of Economic Advisors, warned the recession had spread to all sectors of the economy and highlights the need for a quick stimulus plan. "This widespread decline emphasizes that the problems that began in our housing and financial sector have spread to nearly all areas of the economy," Romer said in a statement. "Immediate action to support both the financial sector and overall demand is essential." Among stocks in focus, Exxon Mobil, the Dow's biggest component, rose 1.21 percent to 77.93 dollars. The oil and gas giant posted a 2008 net profit of 45.22 billion dollars, the largest annual profit ever declared by any publicly listed company in the world, despite a 33 percent fourth-quarter profit plunge amid falling oil prices. Exxon rival Chevron climbed 1.13 percent to 71.42 after reporting 2008 net profit up 28 percent from the prior year. Procter & Gamble fell 3.95 percent to 55.92. The consumer products maker announced in-line quarterly earnings but warned of tough conditions ahead. Amazon vaulted 18.20 percent higher to 59.10. The online retailer reported after Thursday's market close fourth-quarter earnings that beat estimates. Bonds fell back. The yield on the 10-year US Treasury bond edged up to 2.819 percent from 2.815 percent Thursday and that on the 30-year bond rose to 3.575 percent from 3.559 percent. Bond yields and prices move in opposite directions.

Dollar gains as UK enters recession, earnings fall

2009-01-23T21:44:00.002-05:00

24 Jan 2009, 0228 hrs IST, AP

NEW YORK: The dollar notched a new 23 1/2-year high against the pound and gained on the euro, but slipped versus the yen as a British recession was confirmed and more blue chips posted declining profits. The 16-nation euro fell to $1.2974 in late trading on Friday from $1.3021 late on Thursday. The British pound traded at $1.3768, having rallied moderately after earlier sinking to a 23 1/2-year low of $1.3501 after the British government confirmed a second consecutive quarter of economic contraction. Thursday, the pound was worth $1.3876. A standard definition of recession is two quarters of shrinking economic activity. Analysts see more interest-rate cuts coming from the Bank of England, which could help support the dollar. Cutting rates theoretically gives a boost to economic activity, but can undermine acurrency as investors transfer funds elsewhere for better returns. Meanwhile, the dollar slipped to 88.76 Japanese yen from 89.09 yen late on Thursday. The U.S., Japan and Germany, Europe's biggest economy, are already officially in recession. In the U.S., market sentiment was poor as a string of brand-name corporations reported shrinking profits. General Electric Co., one of the world's largest companies, said Friday it had a 46 percent drop in profit and forecast a difficult year. It was forced to defend its top-notch ``AAA''credit rating to investors worried about the vulnerabilities of its financing unit and slowing orders in its industrial segment. Earnings at a diverse selection of companies - motorcycle-maker Harley-Davidson Inc., office-equipment company Xerox Corp. and oilfield services provider Schlumberger Ltd. - also sank. Companies overseas are taking a hit as well. South Korea's Samsung Electronics posted its first-ever quarterly loss on Friday. In other New York trading, the dollar rose to 1.1568 Swiss francs from 1.1541 francs late Thursday, but dropped to 1.2340 Canadian dollars from 1.2532.

Dollar's rise shrinks forex kitty by $2.6 bn to $252 bn

2009-01-23T20:13:00.002-05:00

Mumbai: The greenback’s rise against other currencies has resulted in the country’s forex shrinking in dollar terms. The fall in the value of non-dollar investments, including euro and the pound, has resulted in forex reserves coming down by $2.6 billion to $252 billion. Last week, the dollar appreciated sharply against other currencies as funds sought out safe havens in the wake of uncertainty in the stock markets. Forex reserves have three constituents — foreign currency assets, gold and reserves with IMF. While foreign currency assets dipped $2,570 million, reserves with IMF dipped $11 million, taking the total dip in reserves during the week to $2,581 million. The value of gold in reserves, however, remained unchanged during the week. Analysts said the decline was not on account of dollars going out of the country as RBI has not intervened significantly in the currency markets during the week. In the other developments, the Centre still resorted to ways and means advances (WMA) — a temporary overdraft to meet revenue mismatches. The Centre’s outstanding WMA with the central bank amounted to Rs 9,263 crore as on January 16, down by Rs 6,391 crore over the previous week’s levels. While the outstanding WMA by state governments amounted to Rs 400 crore, down Rs 55 crore over the previous week’s levels. Reliance on the central bank, to meet its day-to-day administrative expenditure, reflects the poor state of the fisc. This is largely because the government has announced a series of expenditure programmes and tax sops to revive the economy’s growth pace. This in turn has strained the government finances.

US stocks open lower on disappointing retail sales

2009-01-14T10:57:00.004-05:00

14 Jan 2009, 2020 hrs IST, AGENCIES
Wall Street's anxiety about the US economy and the health of the banking industry is sending stocks down sharply in early trading.
The Commerce Department has reported that retail sales fell twice as much as expected during December. Investors were already well aware that consumers have curtailed their spending, but the data still came as an unpleasant surprise. And Citigroup Inc.'s announcement of a deal to give up control of its brokerage to Morgan Stanley for $2.7 billion is a reminder of the cash shortages facing some banks. The Dow Jones industrial average is down 154 at the 8,294 level. All the major indexes are down more than 1.5 percent.

Dollar mostly down, gold up in morning trading

2009-01-14T10:50:00.003-05:00

14 Jan 2009, 1920 hrs IST, AGENCIES
The US dollar was mostly lower against other major currencies in European trading on Wednesday morning. Gold rose The euro traded at $1.3231, up from $1.3177 late Tuesday in New York. Other dollar rates: 89.44 Japanese yen, up from 89.13, 1.1167 Swiss francs, down from 1.1197, 1.2203 Canadian dollars, down from 1.2267. The British pound was quoted at $1.4543, up from $1.4493. Gold traded in London at $827.25 per troy ounce, up from $826.50 late Tuesday.

US stocks rises, Dow up 2.93 percent

2009-01-04T15:17:00.002-05:00

3 Jan 2009, 0251 hrs IST, AGENCIES

NEW YORK: US stocks rallied on Friday in the first trades of 2009, as investors pinned their hopes on a better year after a horrendous 2008 that slashed up to 40 percent off the major indexes. Building on modest opening gains in thin trade, the Dow Jones Industrial Average surged 257.58 points (2.93 percent) to 9,033.97 at the market close and the tech-studded Nasdaq leapt 55.18 points (3.50 percent) to 1,632.21. The broad-market Standard & Poor's 500 index advanced 27.97 points (3.10 percent) to 931.22, according to preliminary closing figures. "Hope for much better returns in 2009 has permeated the marketplace," said Patrick O'Hare, an analyst at Briefing.com. "Unless there is a sea-change in sentiment over the course of the next two trading sessions, it looks as if we'll be able to say there was indeed a Santa Claus rally."

World economy to slow further on credit crisis: BOJ's Kamezaki

2008-12-25T12:48:00.002-05:00

Takamatsu (Japan), December 25, 2008

The global economy could slow further as the ongoing financial turmoil is expected to increasingly affect the real economy, Bank of Japan Policy Board member Hidetoshi Kamezaki said today. While the credit crisis will bring about "strong downward pressures, every region (of the world) is likely to face a deterioration (in its economy), further slowing down the pace of growth," Kamezaki told a meeting of local business leaders in Kagawa Prefecture.

The member of the central bank's interest rate setting panel also said the Japanese economy has seen weakening exports lead to a negative spiral that has adversely impacted the nation's industrial output, employment and individual consumption. On prices, Kamezaki said the country's consumer prices, which earlier this year shot up on rising crude oil prices, will continue to slacken their upward pace.

US Dollar Slump Continues in the Aftermath of Tuesday's Aggressive Fed Rate Cut - More Losses to Come?

2008-12-18T00:51:00.004-05:00

Wed, 17 Dec 2008 16:54:01 -0500
By Terri Belkas, Currency Strategist strategist@dailyfx.com

The US dollar index broke straight through the support we noted yesterday at the 50 percent retracement level of 71.31 - 88.40 at 79.85, and extended its losses for the sixth day in a row. The Federal Reserve’s aggressive reduction in the fed funds rate to a record low range of 0.0 percent - 0.25 percent has had a major impact on the greenback, especially as the central bank has essentially indicated that they are shifting their focus away from the economy and on to the financial markets.

Euro, Swiss Franc Surge to Record Highs Against British Pound British Pound the Only Major Currency Weaker Than the Dollar as BOE Minutes Signals More Rate Cuts Japanese Yen Intervention Risks Rise as Rally Accelerates, Commodities Brush Off OPEC Output Cut US Dollar Slump Continues in the Aftermath of Tuesday’s Aggressive Fed Rate Cut - More Losses to Come?The US dollar index broke straight through the support we noted yesterday at the 50 percent retracement level of 71.31 - 88.40 at 79.85, and extended its losses for the sixth day in a row. The Federal Reserve’s aggressive reduction in the fed funds rate to a record low range of 0.0 percent - 0.25 percent has had a major impact on the greenback, especially as the central bank has essentially indicated that they are shifting their focus away from the economy and on to the financial markets. Indeed, from a monetary policy perspective, there isn’t much more that the Fed can do for growth so they may as well direct their efforts toward providing liquidity. The Fed has already announced plans to buy “large quantities of agency debt and mortgage-backed securities” and “stands ready to expand its purchases…as conditions warrant.” The new twist though, is that the Fed is ready to evaluate the possible benefits of purchasing longer-term Treasuries, aka pursue quantitative easing. Simply put, this is a different method by which to bring down interest rates, and it is the potential of such a result that is helping to drive the greenback lower. There won’t be much in the way of key US economic data through the end of the week, and for that matter, through the next two weeks. Given the lower volumes typical of this time of year, it seems like the countdown to 2009 could be quite volatile and punctuated by extensive declines in the US dollar.

BNP Paribas may lose 350 millions euro in Madoff scandal

2008-12-14T15:11:00.003-05:00

15 Dec 2008, 0116 hrs IST, AFP
PARIS: French bank BNP Paribas said on Sunday it could lose up to 350 million euros (470 million dollars) in the scandal surrounding New York investment manager Bernard Madoff. BNP Paribas said in a statement that it had no direct investment with Madoff's company but "it does have risk exposure to these funds through its trading business and collateralized lending to funds of hedge funds. "If, as a result of the alleged fraud, the value of the assets of these hedge funds is nil, BNP Paribas' loss could amount to around 350 million euros." Madoff is alleged to have lost up to 50 billion dollars through a pyramid trading scheme which collapsed because of the financial crisis.

Dollar hits 13-yr low vs yen as autos bailout fails

2008-12-14T11:56:00.000-05:00

12 Dec 2008, 1013 hrs IST, REUTERS

TOKYO: The dollar hit a 13-year low against the yen on Friday after the US Senate failed to agree on a bailout for US automakers.
The US Senate failed on Thursday night to reach a last-ditch compromise to bail out US automakers, effectively killing any chance of congressional action this year. The $14 billion legislation officially died in the Senate late on Thursday after supporters failed to get enough support in a procedural vote. "It has become really severe for the prospect of the bailout plan," said Mitsuru Sahara, senior manager at Bank of Tokyo-Mitsuibishi UFJ. Traders said there were fewer market participants, making market swings larger, pushing the dollar below 89.00 yen for the first time in 13 years. The dollar fell as low as 88.40 yen, the lowest since 1995. The Eurodeclined 0.4 per cent to $1.3313.

Auto bailout talks collapse over union wages

2008-12-11T22:54:00.001-05:00

12 Dec 2008, 0903 hrs IST, AP

WASHINGTON: A $14-billion emergency bailout for US automakers collapsed in the Senate Thursday night after the United Auto Workers union refused to accede to Republican demands for swift wage cuts. Senate Majority Leader Harry Reid said he was "terribly disappointed'' about the demise of an emerging bipartisan deal to rescue the Big Three. He spoke shortly after Republicans left a closed-door meeting where they balked at giving the automakers federal aid unless their powerful union agreed to slash wages next year to bring them into line with those of Japanese carmakers. Republican Sen. George V. Voinovich, a strong bailout supporter, said the UAW was willing to make the cuts, but not until 2011. Reid was working to set a swift test vote on the measure Thursday night, but it was just a formality. The bill was virtually certain to fail to reach the 60-vote threshold it would need to clear to advance. Reid called the bill's collapse "a loss for the country,'' adding "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight.'' The implosion followed an unprecedented marathon set of talks in Washington among labor, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.

Tokyo stocks open 1.39 per cent lower

2008-12-11T22:46:00.001-05:00

12 Dec 2008, 0854 hrs IST, AGENCIES
TOKYO: Japanese share prices opened lower Friday with the benchmark Nikkei-225 index falling 121.43 points, or 1.39 per cent, to 8,599.12 in the first minute of trading.

Nikkei down 0.2 pc after rally, US auto bailout eyed

2008-12-10T21:08:00.001-05:00

11 Dec 2008, 0621 hrs IST, REUTERS
TOKYO: Japan's Nikkei average fell 0.2 percent on Thursday after a rally the previous day and on uncertainty over quick approval for U.S. auto rescue plans, pressuring recent gainers such as Advantest Corp.
The benchmark Nikkei slipped 17.98 points to 8,642.26, after ending up over 3 percent the previous day to book its highest close since Nov. 12. The broader Topix dipped 0.07 percent to 833.96.

Euro dips against dollar

2008-12-10T21:03:00.001-05:00

9 Dec 2008, 1823 hrs IST, AGENCIES

LONDON: The European single currency dipped against the dollar on Tuesday as the foreign exchange market set aside an encouraging survey on German investor confidence to focus on recession worries. The yen meanwhile rose against the dollar, despite grim data showing that Japan was even deeper in recession than previously feared. In late morning London trade, the European single currency fell to $1.2875 from $ 1.2952 in New York late on Monday. Against the Japanese currency, the dollar dipped to 92.45 yen from 92.77 yen on Monday. Germany's closely-watched ZEW survey of investor confidence showed a surprise rise for December on Tuesday, even as markets fretted over how long the country's recession might last. "The latest German data have brought some respite from the recent run of terrible news, with ZEW investor sentiment recovering a little," said Capital Economics analyst Jennifer McKeown. "Unfortunately, though, the economy still looks set to deteriorate more sharply than is currently anticipated next year." The ZEW economic research institute said its investor sentiment index rose to minus 45.2 points in December from minus 53.5 points in November, coming in better than expected. Analysts had forecast a drop to minus 55 points. "What's more, the fact that the index remains deeply in negative territory shows that far more investors expect the German economy to deteriorate further over the next six months than think that conditions will improve," McKeown added. The euro had shot higher on Monday despite news of a sharp drop in German industrial output in October that raised expectations of further, hefty interest rate cuts by the European Central Bank. Traditionally, lower intrest rate make a currency less attractive to investors even though they can help to boost economic growth. Dealers said the Japanese currency was buoyed by the repatriation of overseas earnings and capital by companies and investors. Trader took in their stride official data showing Japan's economy contracted 0.5 per cent in the third quarter, more than initially thought. "The dollar will probably find it hard to gain ground versus the yen given anticipated repatriation by Japanese investors," Tetsuhisa Hayashi, head of foreign exchange dealing at Bank of Tokyo-Mitsubishi UFJ, said. In London trade on Tuesday, the euro changed hands at 1.2875 dollars against 1.2952 dollars late on Monday, at 118.95 yen (120.16), 0.8698 pounds (0.8689) and 1.5582 Swiss francs (1.5593). The dollar stood at 92.45 yen (92.77) and 1.2111 Swiss francs (1.2037). The pound was at $1.4792 (1.4902). On the London Bullion Market, the price of gold rose to $774.43 an ounce from $767.25 late on Monday.

Dollar mixed before latest economic data

2008-12-09T01:41:00.001-05:00

8 Dec 2008, 1800 hrs IST, AGENCIES

LONDON: The dollar was mixed on Monday ahead of a raft of economic data due this week that is expected to reflect a worsening recession in the United States. In morning London trade, the European single currency rose to $1.2880 from $1.2717 late in New York on Friday. The $ climbed to 93.27 yen from 92.77 yen. Upcoming US data this week will include retail sales, consumer sentiment and inflation, which together should give fresh clues on the state of US consumption that accounts for three-quarters of the economy, dealers said. The foreign exchange market meanwhile digested Friday's extremely poor US jobs report which showed the US economy shed 533,000 jobs in November, the highest monthly figure in 34 years and much worse than the 325,000 forecast to take the unemployment rate to a 15-year high of 6.7 per cent. "As traders continue to assess the implications of that huge non-farm payroll reading on Friday, currency markets remain volatile but the dollar is unsurprisingly on the back foot," said CMC Markets analyst James Hughes. "With US automakers and government sponsored stimulus packages likely to be in focus in the near term, it's arguably difficult to see where the next round of dollar support will be coming from," Hughes said. The $ has risen against major currencies in recent weeks, with the exception of the yen, because many investors see the US currency as a haven amid a worsening global economic crisis. More weak data due now could limit the dollar's rise, dealers said. "The greenback's appreciation over the last six months may have left the currency in overbought territory and these retreats aren't really that surprising at all," said Hughes of CMC Markets. "The US November jobs report which revealed the biggest decline in payrolls since 1974 helped to paint a clearer picture of just how bad the recession in the US is turning out to be and this picture looks particularly grim," said Calyon analyst Mitul Kotecha. "Given the limited reaction to the jobs data it is difficult to see markets becoming too excited with the data on tap this week. "Nonetheless, there are a few US releases towards the end of the week that could still provoke some reaction," Kotecha said. Investors were also watching developments in a possible government bailout of the crumbling US auto industry and hoping for a massive stimulus plan from President-elect Barack Obama when he takes office next month." In London trade on Monday, the euro changed hands at 1.2880 dollars against 1.2717 dollars late on Friday, at 120.25 yen (118.05), 0.8613 pounds (0.8659) and 1.5608 Swiss francs (1.5515). The dollar stood at 93.27 yen (92.77) and 1.2113 Swiss francs (1.2202). The pound was at $ 1.4970(1.4677). On the London Bullion
Market, the price of gold rose to 772.47 dollars an ounce from 749 dollars late on Friday.

US Recession Deepening, How Long Can Dollar Strength Hold Up?

2008-12-09T01:35:00.001-05:00

Saturday, 06 December 2008 03:58:09 GMT

Written by John Kicklighter, Currency Strategist
It’s difficult to assign the US dollar a bullish fundamental bias considering the acceleration of the economy’s recession and the fact that American markets are the epicenter to a global financial crisis; but regular economics do not apply in times like these. In normal market conditions, expected returns hang in a delicate balance with a general tolerance for risk.

It’s difficult to assign the US dollar a bullish fundamental bias considering the acceleration of the economy’s recession and the fact that American markets are the epicenter to a global financial crisis; but regular economics do not apply in times like these. In normal market conditions, expected returns hang in a delicate balance with a general tolerance for risk. When yield income – valued through assets in a specific country – drops relative to its international equals, that currency depreciates against its counterparts. This sums up capital flows, carry interest and fundamental speculation in interest rates. However, the setting for the markets is clearly far from normal – just look at the advance in the US dollar last week immediately following the report of a 533,000-person drop in national payrolls. Normal market theory has been thrown out the window as investors are no longer concerned about the potential for return. With volatility holding at levels many times greater than what it was just a year or two ago and global economies sliding into a grim recession, large investors and fund managers are merely looking for a place that their accounts won’t shrink. With time we have seen that that place is US Treasuries. Surely, the market must be desperate for a safe haven with three-month T-bills yielding little more than one basis point and two-year T-notes are paying out 0.9 percent per year. In fact, the entire yield curve is at record lows.
How long can a market go against such a basic law of market theory? That depends on speculators. As long risk sentiment holds as the dominant trend across all asset classes and all markets, caution will keep capital flowing towards safe havens. However, that is not to say that the US will always be the currency that panicked traders will turn to. Massive bailout efforts, rate cuts and stimulus packages have offered a sense of stability for the world’s largest economy; but this combined endeavor cannot prevent a recession or even a natural bear market. And, when financial conditions worsen and the economy continues its slide, policy makers will find they have few options left to curb the pain on a national level. Since US officials have been the most aggressive in their efforts, they could reach their limit first; and then the sanctity of US government debt will come into question. There are other countries that are less liquid but are experiencing better stability. As the global recession and financial crisis deepen, these alternatives will grow more and more appealing.
Characteristic of a primary fundamental theme, a shift in this market driver will not change over night - but will happen gradually. The calendar for the week ahead will help steer the bigger trend. Dollar traders have no doubt already priced in a recession; but how severe and lengthy of a contraction have they accounted for? A few growth-related indicators will test this. Pending home sales will gauge the ongoing housing market recession while the trade balance will reveal how effective a cheaper dollar is at drawing less international demand. The consumer will be the more important focus with retail sales for November accounting for the build up in spending trends into the holiday season while consumer sentiment will guide speculation for it going forward. Also thematic is inflation. Though factory and import-level price gauges are usually second tier readings, an expected plunge in annual readings would spell deflation which the Fed has little to no chance at fighting. This will be important considering the FOMC will decide rates on the following Tuesday. - JK

CURRENCY MARKET REPORT

2008-12-04T19:44:00.002-05:00

Dated 4th Dec 2008, Madan Sharma,

Summary: - Mr. Obama’s selection of an economic team reflects in some ways what might be expected to come. Most in the team are strong dollar policy supporters. The team is very experienced and qualified to handle the recession at hand. Two situations happening in different times are never an exact repeat and the second time around more tools are always available for handling the crisis. In my opinion with the new initiatives proposed or being considered will comfortably stir the US economy back to a growth path, however the time frame cannot be guessed. Technically speaking I see no sign of a USD reversal for now. USD will remain strong for now. With new measures being proposed other then only fiscal measures, I am once again optimistic on the US economy.

Many parallels are being drawn between 1929 and now, and also between the recession in Japan in the 1990’s & now. However these are not identical situations and tools are available to handle the current recession
With the new measures proposed like to embark on an ambitious infrastructure and reconstruction plan is a very good sign and will considerably boost the economy.
Tomorrow being the first Friday of the month we have unemployment and Non Farm Payrolls data. First inflationary data of the month.

Today’s BOE meeting is expected to cut UK interest rates further. The ECB is also expected to bring interest rates lower. Hence the USD is likely to remain strong.
Gold: Gold is holding pretty well. It’s still around its highs of 2008. Gold remains bullish.
Oil: Will drop further and is likely to come down to 30 USD a barrel.
GBP: - Is the weakest among all currencies and is likely to drop to 1.4 and then to 1.3 against the USD. If some concrete measures are not announced to revive the economy we might even see the GBP going lower then 1.3
JPY: - remains strong but one need to be careful once it reaches 90 levels as it might bounce to around 95.
USD/PLN: Likely to go to 3.20/3.30 for now.

Yen rises on economic worries, ECB and BoE eyed

2008-12-04T00:41:00.004-05:00

4 Dec 2008, 0706 hrs IST, REUTERS

TOKYO: The yen and the dollar rose against other major currencies on Thursday, recovering from losses made after a late rally in U.S. stocks the
previous day. Worries about a steeper global economic downturn remained strong after a slew of dismal data around the world, and kept demand intact for the low-yielding yen and the safe-haven greenback, traders said. The Euro and the British pound stayed vulnerable before interest rate decisions by the central banks in the euro zone and Britain later in the day. Expectations are high that they will ease monetary policy aggressively to boost deteriorating economies and counter the threat of deflation. "Having seen weak economic numbers coming one after another, it's difficult for market sentiment to improve dramatically," a senior trader at a major Japanese bank said. Japanese capital spending fell in the third quarter from a year earlier, pointing to a downward revision in the country's third-quarter growth numbers due next week. The euro was down 0.2 percent from late New York trade at $1.2690. The European Central Bank is seeing cutting rates on Thursday by at least 50 basis points to 2.75 percent, but many economists are expecting a 75 basis point cut. Sterling edged down 0.1 percent to $1.4770, having pared some losses made after data showing that Britain's service sector shrank faster than expected in November. The news boosted expectations that the Bank of England may slash rates by at least a full percentage point from 3.0 percent later in the day to shore up the domestic economy. Traders said the euro and the pound could fall after expected large interest rate cuts due to their diminishing higher-yielding appeal. But they may rebound quickly soon after because investors now reward currencies of countries that have been acting proactively to save the economy from a deep recession, traders said. The dollar edged down 0.1 percent to 93.17 yen, above a five-week low of 92.53 yen hit the previous session. The New Zealand dollar was steady after the country's central bank cut interest rates by a record 150 basis points to 5.0 percent, as expected. The kiwi was nearly flat at $0.5328, having trimming losses made after the rate decision.

US Dollar Bound to See Weak ISM, NFP Results - What Impact Will They Have?

2008-11-30T21:50:00.003-05:00

Written by Terri Belkas, Currency Strategist

The US dollar generally ended the week lower across the majors, but lacked the momentum to yield the breakouts expected amidst the low volume trading typical of US market holidays.

Fundamental Outlook for US Dollar: Bearish
The US dollar generally ended the week lower across the majors, but lacked the momentum to yield the breakouts expected amidst the low volume trading typical of US market holidays. On Friday during the European trading session, the greenback jumped but lackluster price action during the US session left the major currency pairs within well-defined ranges. In fact, EUR/USD has held firmly between 1.2425 and 1.3075 since late October, GBP/USD has not been able to break above 1.55 since falling below on November 11, and the USD/JPY remains below falling trendline resistance that has held since mid-October.
Looking ahead to this week, event risk will pick up quite a bit for the greenback. On Monday, ISM Manufacturing is forecasted to slip to a fresh 16-year low of 37.5 from 38.9, and would also mark the fourth straight month that the index held below 50, signaling a contraction in business activity. Manufacturers are facing increasingly rocky times in light of slowdowns in the US and abroad, which is impacting both domestic and foreign demand. On Wednesday, ISM Non-Manufacturing is forecasted to drop to a new record low of 42.0 from 44.4, which will only add to speculation that Q4 GDP will be just as disappointing as the Q3 results, if not more. Last, but not least, US non-farm payrolls on Friday are sure to garner significant attention from the media and traders alike as they are forecasted to fall negative for the 11th straight month and by the most since September 2001. Furthermore, the unemployment rate is anticipated to rise to 6.8 percent - the highest since August 1993 - from already lofty levels of 6.5 percent.
It is rather obvious that the markets are expecting a round of pretty disappointing releases, but the big question is: how will the US dollar respond? Last week, the US dollar generally responded to fundamentals reports by falling when data suggested the Federal Reserve would cut rates further. This differs from previous weeks when the greenback responded solely to risk trends, as the currency would rise during times of risk aversion and stock market declines and vice versa. As a result, gauging the impact of risk sentiment on the forex markets will be important at the start of next week since it may determine whether the US dollar will break higher or fall for a deeper retracement. – TB

US Dollar May Finally See Breakouts During Volatile, Holiday Week

2008-11-23T01:19:00.002-05:00

Written by John Kicklighter, Currency Strategist

Saturday, 22 November 2008 03:21:43 GMT

The US dollar is at a crossroads this week. On the one hand, congestion has been the rule of thumb for much of the currency market. On the other, fundamentals and underlying volatility suggest stability is waning. With a concentrated shot of event risk, growing threats to the credit and financial markets, and the unusual trading conditions expected to come along with the holiday, the chances for a breakout are intensified. First and foremost, it is important to consider what influence the US market holiday (Thanksgiving) will have on price action. One thing is for certain, liquidity will thin out as US banks and exchanges will be close on Thursday, and speculative interest from the country will be depressed through the entire week. Beyond this fact, we can have one of two reactions from the FX market. Either the drop in volume will maintain trends of congestion or its will leverage already extraordinary levels of volatility and potential incite breakouts.
Whichever outcome the market is destined for will likely depend on the influence of broad risk sentiment trends have over FX. We saw a temporary jump in risk aversion this past week, brought on by another series of indicators and reports that suggests the financial crisis could easily take a nasty turn for the worst in the very near futures. In fact, bond default risk hit a new record high, the benchmark Dow 30 tumbled to a new six-and-a-half year low and the dollar and Japanese yen found their way to new highs. And, while some of these moves have since retraced, the symbolic push has already been made. Looking ahead, the most immediate concern regarding the health of the markets is that the three major US auto manufacturers are on the brink of collapse. While we have already seen a few financial institutions go bankrupt, the failure of these American staples would signal the credit crisis has indeed made the jump from Wall Street to Main Street; and further that the second round effects of the crunch will be far more pervasive. Considering officials seem to already be reaching the limitations of the current TARP program (in addition to monetary policy and providing liquidity), a new intensity could spell disaster.
Aside from the constant ebb and flow of risk sentiment, the dollar may also take its cues from the economic calendar. While much of the data scheduled would be considered second tier at this point; the intensified scrutiny over the severity of the oncoming recession will refocus fundamental traders’ interests. The foreshortened trading week concentrates all the data into three days. The greatest threat of event risk lies with the first revision to third quarter GDP. While this is a second reading, there is the probability for a significant change to the headline gauge and component figures. Personal consumption will be particularly important as the failure of this vital sector could extend and intensify the economy’s slump. Further gauging the health of the consumer, personal income, spending and confidence readings will refine expectations of whether they will help or hinder the much-anticipated recovery. - JK
Visit our recently updated EUR/USD Currency Room for more resources dedicated to the US Dollar.

Asian stocks sink as layoffs add to global gloom

2008-11-18T10:20:00.002-05:00

Asian stocks sink as layoffs add to global gloom
18 Nov 2008, 1835 hrs IST, AP

HONG KONG: Asian stock markets sank on Tuesday after Wall Street retreated and global financial firms announced another round of massive layoffs,
adding to gloom about the world economy. European markets traded lower. Tokyo's Nikkei 225 stock average fell 194.17 points or 2.3% to 8,328.41, a day after confirmation Japan, the world's second largest economy, had slipped into a recession.

Hong Kong's Hang Seng Index shed 4.5% to 13,131.23. Investors were discomforted by news the financial sector, still struggling more than a year after the subprime crisis erupted in the US and spread to Europe, continues to hemorrhage thousands of jobs. Citigroup Inc. announced overnight nearly 53,000 layoffs in the coming quarters amid massive losses from deteriorating debt tied to bad mortgages. HSBC Holdings PLC, Europe's largest bank by market value, said it plans to cut 500 jobs in Asia due to the global economic slump. "The entire world seems to be sinking into recession," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. Everyday there are corporate layoffs and economic bad news. Slowly but surely they are losing hope in markets." The Shanghai Composite index slid 6.3 per cent after advancing four straight days. Australia's main index declined 3.6 per cent and South Korea's Kospi fell 3.9 per cent. Benchmarks in Britain, Germany and France were lower in early trading.

US Producer Prices Fall by Most on Record, US Dollar Slips at Open

2008-11-18T10:09:00.002-05:00

Tuesday, 18 November 2008 12:42:22 GMT

Written by Terri Belkas, Currency Strategist

The US dollar initially slipped on the release of the US Producer Price Index this morning, but how the greenback reacts throughout the day should be interesting as this report tells two different stories about the inflation picture in the US.
The headline reading plummeted by the most on record during the month of October, which helped to drag the annual rate to a one-year low of 5.2 percent from 8.7 percent. The bulk of the declines were in crude goods, as the energy component tumbled 24.9 percent while foods slumped 11.1 percent. This is similar to the US import price readings we saw late last week. However, the Federal Reserve may find it somewhat disconcerting that the Producer Price Index excluding food and energy actually rose 0.4 percent during the month and pushed the annual rate to a nearly 20 year high of 4.4 percent from 4.0 percent. While the Fed is likely to keep its focus trained on the downside risks to growth, this rise in costs for less volatile goods at the factory gate may make the central bank nervous. Following the release, US stock market futures have started to turn down a bit, suggesting risk aversion may not be quick to fade.

G20 Speeches Fail To Convince Asian Investors

2008-11-17T16:52:00.000-05:00

G20 Speeches Fail To Convince Asian Investors
Forbes.com staff, 11.17.08, 11:59 AM EST

Markets in Hong Kong and South Korea give up gains; Japan manages to hang on to its pared gain, while Australia loses heavily on weak resources.

The G20 countries offered more platitudes than plans at a weekend summit, leading to choppy trading and not much conviction across Asia. Stocks recovered opening losses and then pared or canceled out morning gains, as some investors interpreted data out of Japan and Hong Kong indicative of recession as reason to withdraw, while others picked for bargains among blue chips.
In a turnaround from last week's dismal performance, Japan's Nikkei 225 rose by 0.7% Monday, to 8,522.58 points, and the broader Topix expanded by 0.4%, to 850.49, after the G20, a grouping bringing together developed and major emerging market nations, called Saturday for more progress in global trade talks by the end of 2008 and further stimulus measures and rate cuts by individual governments. They also set a deadline for more concrete proposals by their second summit, in April. Investors looked past data showing that Japan unexpectedly slipped into a recession in the third quarter. The economy shrank by 0.4%, whereas analysts had expected a marginal expansion.

Why did the USD become so strong so fast?

2008-11-16T23:45:00.001-05:00

30th October 2008

US Dollar

In my previous reports I have mentioned time and again that I expect EURO/USD to reach 1.75 by December 2008. Then in July and onwards the rise of the USD was much stronger then I anticipated (though I correctly pointed out the strengthening of the USD before the Euros Fall in July), and hence I felt that 1.75 will not be achievable in December 2008, but rather in Jan or Feb 2009.

I feel the best approach would be if I provide scenarios:

Scenario 1: Euro falls to 1.1800 in November 2008.
Scenario 2: Euro falls to 1.2300 in November 2008.
Scenario 3: Euro does not come down to 1.2300 again but keeps drifting higher.

As of now Probabilities of the above scenarios is:
Scenario 1: 80%
Scenario 2: 20%
Scenario 3: 5%

The above probabilities have to be revised each week, as new data becomes available.

One must make a distinction between the real economy and the paper economy or asset based economy. For example when you have a house which is worth 200,000 USD and then its value falls to 50,000 USD, You still have your house and that is real. The paper value has come down. The value could come down due to collapse of the property prices or due to loss of value of the currency in which the property is priced. In US the paper economy will collapse but real economy will continue though slowly.
There are various assets in the world, stocks, mutual funds, property, bonds, T-Bills, gold, silver, Soft commodities and oil. The paper value of all these assets is coming down. Eventually investment grade assets will come down in value, like stocks, bonds, etc and will take long time (4-7 years) to go up. Real assets (particularly those that are life essential (like food and safe haven) will go up in value. Real assets include agricultural commodities and gold and silver.

Why did the USD become so strong so fast?

Money is being pulled out of emerging markets, because of which currencies of those emerging markets are getting weaker and USD is getting stronger. Example India.
There is a general flight to cash during market liquidations and the USD assumes status of safe haven currency. Gold, Oil, stocks, everything is being sold. This is called deleveraging of markets.
Cash hoarding – as businesses cant rollover credit and a general tendency now to hold money.
Year End is also approaching so closing of books is to be done.
Certain market manipulation can’t be ruled out. Of course Central Banks call it supporting the system.

Madan Sharma

2008-11-16T02:20:00.000-05:00

USD/CHF – The CHF traded in a relatively tight range.
USD/CHF – 1.1768 – 1.1657 (Sell )

GBP/USD - had a rather wild session on Friday starting the Asian session around the 1.5620 level before dropping to a low of 1.5535 and then powering to an o/n high of 1.5880 during the NY session on the back of a worst than expected US jobs data before ending in NY below the 1.5700 handle.

On GBP/USD we can see some strong movement today as we are waiting for PPI (OCT) from UK. Down side move has two level 1.568 (70.0%) and 1.5576 (78.6%).
GBP has done his 70% retracemnet for his last up side move from 1.3682 (2001) to 2.1160 (2007), next level is 1.5282 (78.6%).

GBP/USD – 1.5576 – 1.6094 1st level, 2nd level is 1.6094 (Buy )

Euro Forecast Remains Dim on Euro Zone Recession Concerns

2008-11-16T02:19:00.000-05:00

Euro forecasts against the US Dollar took a turn for the worse on the week, as generally dismal European economic data and further losses in the US Dow Jones Industrials Average led to similar Euro/US Dollar weakness. Official confirmation that the German economy entered a technical recession through the third quarter suggested that the broader Euro Zone finds itself in a similarly weak position—forcing further deterioration in euro fundamental forecasts. Whether or not the Euro may recover against the stubbornly resurgent US Dollar will largely depend on whether global financial market conditions will improve through upcoming trade. The Euro and US Dollar find themselves inextricably linked to broader developments in risky asset classes.

US Dollar Strength May Be Tempered By Near-Term Resistance

2008-11-16T02:11:00.000-05:00

For weeks we’ve been discussing how risk appetite, or the lack of it, has been driving price action throughout the forex markets to the benefit of the lowest yielding major currencies: the US dollar and Japanese yen. The strength of the greenback has been all the more surprising given the dismal status of the US economy, but since the currency has managed to hold on to its status as a “safe haven” asset, fundamentals frankly do not matter at this juncture.

globeandmail.com: Leaders gird for battle over global financial crisis

2008-11-16T01:48:00.000-05:00

'We want to change the rules of the game in the financial world,' French President Nicolas Sarkozy vowed as the Group of 20 industrialized and emerging economies began its two-day summit with dinner at the White House.
'There is a need for urgency,' added British Prime Minister Gordon Brown, who is calling for a 'college of supervisors' to oversee the world's 30 largest banks.
The summit was optimistically conceived as a latter-day Bretton Woods, the 1944 wartime gathering of dozens of countries that produced much of the architecture of the modern financial system.