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China's yuan rises as talks begin
Bundles of yuan notes
The US has long urged Beijing to let its currency strengthen
China's yuan is at its strongest level against the dollar since the country scrapped its peg to the US currency in July 2005.
The yuan rose to a high of 6.8918 per dollar - a gain of 20% since it ditched the fixed exchange rate.
The rise comes as US Treasury Secretary Henry Paulson prepares to meet with Chinese officials. China's currency policy has dominated previous meetings.
Analysts say China is letting its currency appreciate to cool inflation.
Many Asian countries are allowing their currencies to strengthen to counter the soaring cost of fuel and food.
Exchange rate reform
Trade and energy are expected to be the main talking points as high-level delegations from the US and China convene for two days of discussions in Maryland.
Mr Paulson instigated the regular talks, known as the Strategic Economic Dialogue, to tackle trade and currency issues when he joined the Bush administration in 2006.
The US has long urged China to move more quickly on yuan appreciation and Mr Paulson has said that exchange rate reform is critical to China's social stability.
The US also believes that Beijing uses regulations to favour domestic companies over foreign rivals and that Beijing does too little to address the theft of copyrights and patents held by Western companies
However, with the US economy still reeling from the sub-prime mortgage meltdown and resulting credit crunch, it is easier for China to reject such criticism.
Chinese officials have promoted their own more assertive style of economic management and regulation and chided the US for allowing the dollar to slide.
Business deals
China's commerce minister Chen Deming, who is taking part in the talks, said US and Chinese companies have signed business deals worth more than $8bn.
The agreements cover 35 deals in sectors ranging from the car industry to telecommunications.
In one deal, US car giant General Motors said it had signed a pact worth a $1bn.
It is not clear whether the next US administration will continue the talks.
Taken from :
http://news.bbc.co.uk
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Tuesday, June 17, 2008
Oil ends lower after reaching record level near $140
By Myra P. Saefong & Polya Lesova, MarketWatch
Last update: 4:36 p.m. EDT June 16, 2008
SAN FRANCISCO (MarketWatch) -- Crude-oil futures closed modestly lower Monday, marking a steep decline from the session's record high near $140 a barrel as traders weighed support from the temporary shutdown of an oil platform in the North Sea and weakness in the U.S. dollar against pressure from reports that Saudi Arabia plans to raise its output next month.
Crude for July delivery hit a record high of $139.89 a barrel in electronic trading on Globex. The July contract, which expires on Friday, closed 25 cents lower at $134.61 a barrel in regular trading on the New York Mercantile Exchange.
Prices continued to fall in electronic trading late Monday afternoon. July crude was trading below $134 on Globex as of 4:30 p.m. Eastern time.
Options on the contract expire on Tuesday, adding to the market volatility. Oil futures earlier Monday hit an intraday low of $132.84 a barrel in electronic trading. Last week, crude futures posted a weekly loss of 2.7%.
Part of the retreat in oil prices was "likely realization" that the StatoilHydro ASA, fire was a "relatively easy-to-repair electrical problem," said James Williams, an economist at WTRG Economics, in emailed comments. "This market always overreacts to the smallest piece of bad news."
Norwegian oil company StatoilHydro said Sunday that it shut down oil production at a North Sea platform after a fire broke out. The company said that the fire was quickly extinguished on the Oseberg A platform and no one was injured during the incident.
Chart of STO
StatoilHydro didn't say specifically what caused the fire, but said it occurred in a high voltage room. The company said that total oil production shut down due to the incident amounted to 150,000 barrels per day.
The company has since said that production on the Brage and Veslefrikk fields have been resumed. Oil from those fields was transported via the Oseberg field center.
Saudi Arabia may raise output: reports
Meanwhile, reports Monday suggested that Saudi Arabia, the world's leading oil exporter, is planning to raise oil output.
The New York Times reported Saturday, citing analysts and oil traders briefed by Saudi officials, that the kingdom plans to increase its production next month by about 500,000 barrels a day. That would bring Saudi output to 10 million barrels a day, which would be its highest ever if it is sustained, the Times reported.
Separately, the United Nations said Sunday that Saudi Arabia will increase its output by 200,000 barrels a day next month, the BBC reported. The news came after a meeting between U.N. Secretary General Ban Ki-Moon and Saudi Oil Minister Ali al-Naimi, the BBC reported.
Reuters reported that Saudi Arabia plans to lift its output to 9.7 million barrels per day in July. The news agency cited Sunday's comments from Ki-Moon, following a meeting with Saudi Oil Minister Ali al-Naimi. His comments were quoted in the Abu Dhabi-based The National newspaper, Reuters said.
"Officially, it seems the Saudis have not made a decision on the final number," said Edward Meir, an analyst at MF Global, in a research note Monday.
Reports of a Saudi output increase of 200,000 barrels per day effective in July is "not enough to move markets," said WTRG's Williams. "This is probably not the final move."
"The Saudis, fearing a price collapse, have taken a gradual approach to the problem," he said. "It is increasingly evident that a dramatic move is necessary."
And there are several moves the Saudis could make at the planned meeting on June 22 between oil producers and consumers, he said.
They could "direct intervention in the futures market shorting large volumes of oil," said Williams. They could also "increase production by another 500,000 barrels per day over the 200,000 barrels per day already announced."
Taking that strategy would likely prove that the Saudis can produce that volume of oil and the oil would show up in the Energy Department's weekly supply data and probably influence prices, he said. Also, the oil shipped could be lower quality heavy sour oil since the Energy Department does not distinguish between grades, he said.
The rally seen earlier in Monday's session was driven by headlines, said Darin Newsom, DTN senior analyst.
"The underlying fundamentals don't support the market ... so once the buying loses momentum, the market has to fall back to try to find commercial support," he said in emailed comments.
Meanwhile, "the weakness of the dollar continues to provide support to commodities in general," he said.
On the currency markets Monday, the dollar traded mostly lower. The euro changed hands at $1.5476 against the dollar, up from around $1.5379 at the end of U.S trading on Friday. The dollar index , which tracks the performance of the greenback against a basket of other major currencies, was at 73.634 after a high of 74.18. See Currencies.
Weakness in the greenback typically boosts dollar-denominated commodities such as crude oil and gold.
Video: How Investors Should Act in This Market
Liz Ann Sonders, Chief Investment Strategist for Charles Schwab, does not expect a recovery in the market soon and advises against making decisions on short-term forecasts. (June 16)
"We also cannot look over the fact that China, for the first time, has become a net importer of gasoline," Zachary Oxman, a senior trader at Wisdom Financial, said in emailed comments. "Add that to a weak dollar and a huge rally again in commodities and you have crude pushing towards $150, which I think we will see inside of one month if this trend continues."
China's May gasoline imports rose to a record 338,572 tons, making the country a net importer for the first time on record, according to media reports.
Gasoline records continue
U.S. retail prices for regular gasoline climbed to another record Monday of $4.08 a gallon, according to AAA's Daily Fuel Gauge Report. It's up 35.6% from a year ago.
But July reformulated gasoline closed down 2.21 cents at $3.4379 a gallon after climbing as high as $3.53 earlier, while July heating oil fell 1.26 cents to end at $3.8274 a gallon.
Natural-gas futures were the lone winner among the energy futures Monday. July natural gas futures gained 30.3 cents to close at $12.933 per million British thermal units.
"Last week's surprisingly low injections -- 80 billion cubic feet against expectations of 94 BCF -- has heightened concern about rebuilding [supply] for winter," said Michael Fitzpatrick, an analyst at MF Global, in a note to clients. "The two major worries that are foremost in participants' minds are a hot summer and storm activity."
Rounding out Monday's trading, energy equities climbed. The Philadelphia Oil Service Index closed up 0.8% at 341.24. See Energy Stocks.
Prices for gold futures rallied to touch a high of $897 an ounce. See Metals Stocks. End of Story
Myra P. Saefong is a reporter for MarketWatch in San Francisco.
Polya Lesova is a MarketWatch reporter based in New York.
taken from :
http://www.marketwatch.com
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Last update: 4:36 p.m. EDT June 16, 2008
SAN FRANCISCO (MarketWatch) -- Crude-oil futures closed modestly lower Monday, marking a steep decline from the session's record high near $140 a barrel as traders weighed support from the temporary shutdown of an oil platform in the North Sea and weakness in the U.S. dollar against pressure from reports that Saudi Arabia plans to raise its output next month.
Crude for July delivery hit a record high of $139.89 a barrel in electronic trading on Globex. The July contract, which expires on Friday, closed 25 cents lower at $134.61 a barrel in regular trading on the New York Mercantile Exchange.
Prices continued to fall in electronic trading late Monday afternoon. July crude was trading below $134 on Globex as of 4:30 p.m. Eastern time.
Options on the contract expire on Tuesday, adding to the market volatility. Oil futures earlier Monday hit an intraday low of $132.84 a barrel in electronic trading. Last week, crude futures posted a weekly loss of 2.7%.
Part of the retreat in oil prices was "likely realization" that the StatoilHydro ASA, fire was a "relatively easy-to-repair electrical problem," said James Williams, an economist at WTRG Economics, in emailed comments. "This market always overreacts to the smallest piece of bad news."
Norwegian oil company StatoilHydro said Sunday that it shut down oil production at a North Sea platform after a fire broke out. The company said that the fire was quickly extinguished on the Oseberg A platform and no one was injured during the incident.
Chart of STO
StatoilHydro didn't say specifically what caused the fire, but said it occurred in a high voltage room. The company said that total oil production shut down due to the incident amounted to 150,000 barrels per day.
The company has since said that production on the Brage and Veslefrikk fields have been resumed. Oil from those fields was transported via the Oseberg field center.
Saudi Arabia may raise output: reports
Meanwhile, reports Monday suggested that Saudi Arabia, the world's leading oil exporter, is planning to raise oil output.
The New York Times reported Saturday, citing analysts and oil traders briefed by Saudi officials, that the kingdom plans to increase its production next month by about 500,000 barrels a day. That would bring Saudi output to 10 million barrels a day, which would be its highest ever if it is sustained, the Times reported.
Separately, the United Nations said Sunday that Saudi Arabia will increase its output by 200,000 barrels a day next month, the BBC reported. The news came after a meeting between U.N. Secretary General Ban Ki-Moon and Saudi Oil Minister Ali al-Naimi, the BBC reported.
Reuters reported that Saudi Arabia plans to lift its output to 9.7 million barrels per day in July. The news agency cited Sunday's comments from Ki-Moon, following a meeting with Saudi Oil Minister Ali al-Naimi. His comments were quoted in the Abu Dhabi-based The National newspaper, Reuters said.
"Officially, it seems the Saudis have not made a decision on the final number," said Edward Meir, an analyst at MF Global, in a research note Monday.
Reports of a Saudi output increase of 200,000 barrels per day effective in July is "not enough to move markets," said WTRG's Williams. "This is probably not the final move."
"The Saudis, fearing a price collapse, have taken a gradual approach to the problem," he said. "It is increasingly evident that a dramatic move is necessary."
And there are several moves the Saudis could make at the planned meeting on June 22 between oil producers and consumers, he said.
They could "direct intervention in the futures market shorting large volumes of oil," said Williams. They could also "increase production by another 500,000 barrels per day over the 200,000 barrels per day already announced."
Taking that strategy would likely prove that the Saudis can produce that volume of oil and the oil would show up in the Energy Department's weekly supply data and probably influence prices, he said. Also, the oil shipped could be lower quality heavy sour oil since the Energy Department does not distinguish between grades, he said.
The rally seen earlier in Monday's session was driven by headlines, said Darin Newsom, DTN senior analyst.
"The underlying fundamentals don't support the market ... so once the buying loses momentum, the market has to fall back to try to find commercial support," he said in emailed comments.
Meanwhile, "the weakness of the dollar continues to provide support to commodities in general," he said.
On the currency markets Monday, the dollar traded mostly lower. The euro changed hands at $1.5476 against the dollar, up from around $1.5379 at the end of U.S trading on Friday. The dollar index , which tracks the performance of the greenback against a basket of other major currencies, was at 73.634 after a high of 74.18. See Currencies.
Weakness in the greenback typically boosts dollar-denominated commodities such as crude oil and gold.
Video: How Investors Should Act in This Market
Liz Ann Sonders, Chief Investment Strategist for Charles Schwab, does not expect a recovery in the market soon and advises against making decisions on short-term forecasts. (June 16)
"We also cannot look over the fact that China, for the first time, has become a net importer of gasoline," Zachary Oxman, a senior trader at Wisdom Financial, said in emailed comments. "Add that to a weak dollar and a huge rally again in commodities and you have crude pushing towards $150, which I think we will see inside of one month if this trend continues."
China's May gasoline imports rose to a record 338,572 tons, making the country a net importer for the first time on record, according to media reports.
Gasoline records continue
U.S. retail prices for regular gasoline climbed to another record Monday of $4.08 a gallon, according to AAA's Daily Fuel Gauge Report. It's up 35.6% from a year ago.
But July reformulated gasoline closed down 2.21 cents at $3.4379 a gallon after climbing as high as $3.53 earlier, while July heating oil fell 1.26 cents to end at $3.8274 a gallon.
Natural-gas futures were the lone winner among the energy futures Monday. July natural gas futures gained 30.3 cents to close at $12.933 per million British thermal units.
"Last week's surprisingly low injections -- 80 billion cubic feet against expectations of 94 BCF -- has heightened concern about rebuilding [supply] for winter," said Michael Fitzpatrick, an analyst at MF Global, in a note to clients. "The two major worries that are foremost in participants' minds are a hot summer and storm activity."
Rounding out Monday's trading, energy equities climbed. The Philadelphia Oil Service Index closed up 0.8% at 341.24. See Energy Stocks.
Prices for gold futures rallied to touch a high of $897 an ounce. See Metals Stocks. End of Story
Myra P. Saefong is a reporter for MarketWatch in San Francisco.
Polya Lesova is a MarketWatch reporter based in New York.
taken from :
http://www.marketwatch.com
Read more...
USD Supported by Rate Hike Expectations
by Korman Tam
The greenback maintained its buoyant tone against the majors at the start of the week, rallying to a fresh 3 ½-month high versus the yen at 108.56 and 1.5348 against the euro. Despite US Treasury Secretary Hank Paulson continuing to talk up the dollar at the meeting, there was no official mention of currencies in the communiqué from the G8 Finance Ministers meeting. Further, there was also no discussion of possible coordinated intervention to prop up the dollar. The primary issue of concern at the meeting was tackling sharp rises in global inflation, particularly rapid increases in the prices for commodities and oil. Nonetheless, the dollar managed to shrug off the lack of mention at the meeting and continues to hold onto its gains.
Economic data released earlier in the session saw the June NY Fed manufacturing survey contract by more than anticipated at minus 8.68, versus expectations for an improvement to minus 2 from minus 3.23 in May. Meanwhile, the April TICS data revealed net capital inflows increasing to $60.6 billion, a sharp reversal from net sales of $48.2 billion in the previous month. The NAHB housing market index fell to 18 in June, down slightly from a reading of 19 in May.
The coming week will see several key economic reports from the US including May PPI, Q1 current account balance, May housing starts, industrial production, capacity utilization, June Philadelphia Fed manufacturing survey, and May leading economic indicators. Inflation is seen creeping higher with PPI expected to edge up to 0.8% in May from .2% a month earlier, while the excluding food and energy PPI is expected to ease to 0.2% from 0.4%. Housing starts are expected to remain weak, at 980k in May and down from 1.03million units from April.
Richmond Fed President Lacker chimed in on the chorus of recent hawkish comments suggesting the next move will be a hike in interest rates. Lacker said the balance of risks has evolved from earlier in the year and the FOMC will need to adjust rates accordingly. He also said that the dollar impact on potential inflation is a prominent risk that the Fed has in mind. Lacker added that while inflation has been unacceptably high, it has not resulted in higher expectations. Nonetheless, he said the Fed must not be complacent on inflation and the central bank must act forcefully if expectations erode. In the near-term, the dollar will continue to be supported by heightened expectations that the Fed may begin tightening policy as early as September of this year.
Taken from:
http://www.forexnews.com
Read more...
The greenback maintained its buoyant tone against the majors at the start of the week, rallying to a fresh 3 ½-month high versus the yen at 108.56 and 1.5348 against the euro. Despite US Treasury Secretary Hank Paulson continuing to talk up the dollar at the meeting, there was no official mention of currencies in the communiqué from the G8 Finance Ministers meeting. Further, there was also no discussion of possible coordinated intervention to prop up the dollar. The primary issue of concern at the meeting was tackling sharp rises in global inflation, particularly rapid increases in the prices for commodities and oil. Nonetheless, the dollar managed to shrug off the lack of mention at the meeting and continues to hold onto its gains.
Economic data released earlier in the session saw the June NY Fed manufacturing survey contract by more than anticipated at minus 8.68, versus expectations for an improvement to minus 2 from minus 3.23 in May. Meanwhile, the April TICS data revealed net capital inflows increasing to $60.6 billion, a sharp reversal from net sales of $48.2 billion in the previous month. The NAHB housing market index fell to 18 in June, down slightly from a reading of 19 in May.
The coming week will see several key economic reports from the US including May PPI, Q1 current account balance, May housing starts, industrial production, capacity utilization, June Philadelphia Fed manufacturing survey, and May leading economic indicators. Inflation is seen creeping higher with PPI expected to edge up to 0.8% in May from .2% a month earlier, while the excluding food and energy PPI is expected to ease to 0.2% from 0.4%. Housing starts are expected to remain weak, at 980k in May and down from 1.03million units from April.
Richmond Fed President Lacker chimed in on the chorus of recent hawkish comments suggesting the next move will be a hike in interest rates. Lacker said the balance of risks has evolved from earlier in the year and the FOMC will need to adjust rates accordingly. He also said that the dollar impact on potential inflation is a prominent risk that the Fed has in mind. Lacker added that while inflation has been unacceptably high, it has not resulted in higher expectations. Nonetheless, he said the Fed must not be complacent on inflation and the central bank must act forcefully if expectations erode. In the near-term, the dollar will continue to be supported by heightened expectations that the Fed may begin tightening policy as early as September of this year.
Taken from:
http://www.forexnews.com
Read more...
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