Economic Calendar

Thursday, April 30, 2009

Central Bankers Speak, but Nobody Cares

Daily Forex Fundamentals | Written by Interactive Brokers | Apr 30 09 15:05 GMT |

On this final day of April a surge in global equity prices is set to deliver the best monthly performance for the S&P 500 index in close to a decade. At play would appear to be a bear market for pessimism, enthusiasm for a post stress test solution for the financial sector, whose ailing companies could bolster capital through switching equity classes from preferred to common and a reduction in various measures of contraction. Investors are running away with the premise that all that glitters really must be gold, but are failing to heed the words of various central bank warnings whose interpretation of events is more evenly balanced. The ongoing desire to bear risk is detracting from the appeal of the Japanese yen in early going.

In its semi-annual economic assessment the Bank of Japan noted the severity of the previous six months activity. The bank warned that the months ahead are not likely to show a major change. Any improvement in conditions would be mild. Meanwhile Governor Shirakawa added to the debate on the prevailing deflationary conditions depressing the economy, while playing down the likelihood of a deflationary spiral looking forward. The BOJ assessment showed continuing difficulties for customers wanting credit, which the bank noted to be something of a sore point.

The report coincided with the first improvement in industrial orders in six months. Industrial production for April grew at a 1.6% pace. Such has been the pace of export-led decline resulting in a rise in inventories that the simple need for new goods has been long absent. The data would appear to corroborate the inventory closeout sale evident in this week's U.S. GDP report in which inventories accounted for a 2.2% drag in the 6.1% overall contraction of economic growth. Investors' optimism after the report was predicated on the hope that signs of improving demand will lead to positive growth by the third quarter.

Dealers' net reaction to the words of BOJ Governor Japanese and the industrial output improvement on the yen put more stock on the April output data. Japanese yen crosses lost out with the dollar once again fast approaching ¥100 having risen today to ¥98.50. The euro rallied to ¥130.18 while the British pound rose to ¥145.13. The words of the Governor were relegated to those of a sour-puss.

Looking at the statement from the FOMC after yesterday's meeting, we note a similar notion that we're a long way off being back to normal. The statement noted the similar improvement in the pace of the contraction and noted that consumption remained constrained by ongoing job losses, reduced housing wealth and tight credit. We see none of these factors shifting materially in the next several months.

Eurozone unemployment rose further for the month of March. The rate surged from 8.5 to 8.9%. Meanwhile the pace of price increase across the Eurozone in April matched the record low recorded last month when prices rose at a 0.6% year-over-year pace. ECB member Weber made a similar overture to those of other central bankers when he warned against reading too much into recent positive sentiment indicators. While on the one hand the pace of decline would ameliorate on the other he predicts a recovery will not happen until 2010. Meanwhile member Stark declared his lack of envy for the zero interest rate policy of some fellow central banks operating under different circumstances. He stopped short of stating precisely how far rates could fall in the Eurozone, but noted the need to let past measured flourish first. In addition he said that the time to announce ‘non-standard' measures would be at the ECB May 7 meeting. Such measures, however, should be implemented only when monetary policy has reached its floor.

All in all, we can see a variety of central bankers raising somewhat of a red flag as investors rejoice. There seems to be a difference in interpretation of what constitutes good news and what's just less bad news. The euro has given back some of its earlier strength versus the dollar and is currently trading at around $1.3225 after an overnight burst of optimism collapsed from $1.3388.

Andrew Wilkinson
Senior Market Analyst

Interactive Brokers

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Central Bankers Speak, but Nobody Cares

Daily Forex Fundamentals | Written by Interactive Brokers | Apr 30 09 15:05 GMT |

On this final day of April a surge in global equity prices is set to deliver the best monthly performance for the S&P 500 index in close to a decade. At play would appear to be a bear market for pessimism, enthusiasm for a post stress test solution for the financial sector, whose ailing companies could bolster capital through switching equity classes from preferred to common and a reduction in various measures of contraction. Investors are running away with the premise that all that glitters really must be gold, but are failing to heed the words of various central bank warnings whose interpretation of events is more evenly balanced. The ongoing desire to bear risk is detracting from the appeal of the Japanese yen in early going.

In its semi-annual economic assessment the Bank of Japan noted the severity of the previous six months activity. The bank warned that the months ahead are not likely to show a major change. Any improvement in conditions would be mild. Meanwhile Governor Shirakawa added to the debate on the prevailing deflationary conditions depressing the economy, while playing down the likelihood of a deflationary spiral looking forward. The BOJ assessment showed continuing difficulties for customers wanting credit, which the bank noted to be something of a sore point.

The report coincided with the first improvement in industrial orders in six months. Industrial production for April grew at a 1.6% pace. Such has been the pace of export-led decline resulting in a rise in inventories that the simple need for new goods has been long absent. The data would appear to corroborate the inventory closeout sale evident in this week's U.S. GDP report in which inventories accounted for a 2.2% drag in the 6.1% overall contraction of economic growth. Investors' optimism after the report was predicated on the hope that signs of improving demand will lead to positive growth by the third quarter.

Dealers' net reaction to the words of BOJ Governor Japanese and the industrial output improvement on the yen put more stock on the April output data. Japanese yen crosses lost out with the dollar once again fast approaching ¥100 having risen today to ¥98.50. The euro rallied to ¥130.18 while the British pound rose to ¥145.13. The words of the Governor were relegated to those of a sour-puss.

Looking at the statement from the FOMC after yesterday's meeting, we note a similar notion that we're a long way off being back to normal. The statement noted the similar improvement in the pace of the contraction and noted that consumption remained constrained by ongoing job losses, reduced housing wealth and tight credit. We see none of these factors shifting materially in the next several months.

Eurozone unemployment rose further for the month of March. The rate surged from 8.5 to 8.9%. Meanwhile the pace of price increase across the Eurozone in April matched the record low recorded last month when prices rose at a 0.6% year-over-year pace. ECB member Weber made a similar overture to those of other central bankers when he warned against reading too much into recent positive sentiment indicators. While on the one hand the pace of decline would ameliorate on the other he predicts a recovery will not happen until 2010. Meanwhile member Stark declared his lack of envy for the zero interest rate policy of some fellow central banks operating under different circumstances. He stopped short of stating precisely how far rates could fall in the Eurozone, but noted the need to let past measured flourish first. In addition he said that the time to announce ‘non-standard' measures would be at the ECB May 7 meeting. Such measures, however, should be implemented only when monetary policy has reached its floor.

All in all, we can see a variety of central bankers raising somewhat of a red flag as investors rejoice. There seems to be a difference in interpretation of what constitutes good news and what's just less bad news. The euro has given back some of its earlier strength versus the dollar and is currently trading at around $1.3225 after an overnight burst of optimism collapsed from $1.3388.

Andrew Wilkinson
Senior Market Analyst

Interactive Brokers

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Daily Technical Strategist

Daily Forex Technicals | Written by FXTechstrategy | Apr 30 09 12:20 GMT |

Today's Focus: EURUSD & USDCAD

  • EURUSD:Seen Testing Its Declining Channel Top
  • USDCAD: Threats Remain To The Downside

EURUSD

Price follow through on Wednesday saw the pair hitting the top of its declining channel top before closing at 1.3280.That resistance level is now expected to turn EUR back down. This view is supportive of the pair's declines activated at the 1.3738 level, its Mar 23'09 high. However, if a break and close above there(channel top) occurs,wecould see its recovery continuation towards the 1.3443 level which is the location of its daily 200 emawith a break of there triggering further upside towards its April 06'09 high at 1.3580. Supports are located at the 1.3113 level, its Mar 30'09 low and the 1.3097/93 area, its Feb 09'09 high/.50 Ret (1.2456-1.3738 rally) ahead of the 1.2991 level, its Feb 23'09 high with a clearance of the latter paving the way for a decline towards its Mar 16'09 low at 1.2833.Below there will open the door for further decline towards the 1.2456 level, its Mar 04'09 high enroute to its 2008 low at 1.2330. On the whole, with the pair holding within its declining channel, continuation of its weakness triggered at the 1.3738 level is likely.

Support Comments
1.3320 Falling channel top
1.3443 Daily 200 ema.
1.3580 April 06'09 high

Resistance Comments
1.3113 Mar 30'09 low
1.3097/93 Feb 09'09 high/.50 Ret(1.2456-1.3738 rally)
1.2991 Feb 23'09 high

USDCAD

As a challenge on the 1.1995/82 zone, its April 16'09 low/daily 200 emawas seen on Wednesday and a continuation of that weakness saw the pair weakening in early trading today, risk of a decline towards the 1.1771 level, its Jan 07'09 low is now shaping up. This view is consistent with its declines triggered off the 1.3064 level in early Mar'09.Next support lies at the 1.1464 level, its Nov 05'09 low. Additional evidence is being provided by its daily momentum indicators which are bearish and trending lower. On the upside, initial resistance lies at the 1.1995/82 zone ahead of the 1.2192 level, its Mar 19'09 low followed by the 1.2335 level, its daily 50 emabefore the 1.2506 level and then the 1.2712 level, its April 01'09 high. We retain our short term bearishness on the pair.Onthe whole, USDCAD has resume its weakness off the 1.3064 having taken out the 1.1981/95 area.

Support Comments
1.1771 Jan 07'09 low
1.1464 Nov 05'09 low.
1.1304 Oct 14'09 low

Resistance Comments
1.1981/95 April 16'09 low/daily 200 ema
1.2071 April 24'09 low
1.2192 Mar 19'09 high

Mohammed Isah
Market Analyst
www.fxtechstrategy.com

This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report


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UK: Is The Housing Sector Really Bottoming Out?

Daily Forex Fundamentals | Written by ecPulse.com | Apr 30 09 10:18 GMT |

Today in the United Kingdom we saw that after house prices were starting to show some recovery as they rose in March yet declined in April based on readings from the residential property market while Gfk NOP reported that consumer confidence spiked in April.

Nationwide Building Society released its house prices seasonally adjusted for the month of April coming in at -0.4% higher than the projected reading of -1.2% yet worse than the prior reading of 0.9%. On the year the index rose to -15.0% from the previous -15.7% while it was anticipated to come in at -15.8 percent.

The monthly decline jolted some of the hopes that were in the market that the housing sector is bottoming yet the annual increase is supporting the fact that Britons are starting to take advantage of the downfall prices as they begin to buy homes.

There are other factors that are pressuring the housing market like the worst financial crisis since the Great Depression which resulted in a rigid lending system causing banks to hog all the cash therefore not lending to Britons which means that home seekers struggle to gain access of loans.

Also it is not just the considerable strain in the banking system but also the with unemployment rates at 6.7% the highest since Prime Minister Gordon Brown has been given the power to become the new elected government. The mounting of job losses is weighing on the housing sector because Britons do not have enough cash to make such a huge purchase.

The government has already exhausted all measures as they continue to inject cash in the economy as a way to fight the worst economic growth since World War II while the Bank of England reduced their interest rates to 0.50% the lowest since the bank's creation in 1694 along with quantitative easing as they buy gilts with newly printed money.

In other news, the Gfk NOP released its survey regarding consumer confidence showing that it rose to the highest level since April 2008; the index showed that confidence climbed to -27 in April from the prior -30. Gfk also released its index of consumers' outlook of the economy rising to -15 from -31.

The rise in the index shows that Britons are gaining some optimism that the pace of the global recession is easing which means that a recovery will happen yet on the long run they are still optimistic because as we know that main sectors that fuel economic growth are still contracting.

From the tumbling sectors, resulted in the gross domestic product (GDP) reading for the first three months of this year to contract by 1.9% to mark the worst quarter since 1979.

The softening of the job market, falling home values and the worst credit crunch since the early 1930's are all factors that are pushing the United Kingdom towards a long and painful recession.

Turning to the stock market we see that it is trading in the green as investors are optimistic that global downturn is coming to an end. The FTSE-100 index as of 10:02 GMT gained 79.89 points or 1.91% to 4,269.48 points.

Ecpulse

disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk





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European Market Update

Daily Forex Fundamentals | Written by Trade The News | Apr 30 09 09:59 GMT |

Euro-Zone Unemployment at 2 1/2 year high; Capital rotation continues into stocks from Bonds as 'Green Shoots' speculation rises

ECONOMIC DATA

(GE) German ILO Unemployment Rate. 7.6% v 7.5%e

(SA) South Africa March M3 Money Supply Y/Y: 10.6% v 12.4%e

(UK) Nationwide House Prices M/M: -0.4% v -1.2%e; Y/Y: -15.0% v -15.8%e

(FR) French Producer Prices M/M: -0.4% v -0.4%e; Y/Y: -5.5% v -5.3%e

(SP) Spain Apr CPI EU Harmonized Y/Y: -0.1% v -0.1%e

(HU) Hungarian Feb Final Trade Balance: €310.7M v €279.2M prior

(SA) South African March PPI M/M: 0.1% v 0.4%e; Y/Y: 5.3% v 5.6%e

(SP) Spain Feb Current Account: -€10.2B v -€6.6B prior

(RU) Russia Central Bank Gold/FX Reserves W/W: $380.6B v $384.8B prior

(DE) Denmark Unemployment Rate: 2.9% v 2.7%e

(GE) German April Unemployment Change: 58K v 65Ke; Unemployment Rate: 8.3% v 8.2%e

(UK) UK Year-Ahead Apr CPI Expectations 1.8% v 1.8% prior month -YouGov

(IT) Italian Feb Large Company Employment Rate: -1.0% v -0.7% prior

(NO) Norwegian March Retail Sales M/M: -0.5% v 0.3%e; Y/Y: 1.9% v -0.6%e
(NO) Norwegian April Unemployment Rate: 2.8% v 2.9%e

(IT) Italian April Prelim CPI M/M: % v 0.2%e; Y/Y: % v 1.1%e;
(IT) Italian Apr CPI- EU Harmonized M/M: 0.6% v 0.5%e; Y/Y: 1.1% v 1.1%e

(EU) Euro-Zone Apr CPI Estimate Y/Y: 0.6% v 0.7%e
(EU) Euro-zone Mar Unemployment Rate: 8.9% v 8.7%e; Highest since Nov 2005

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

In equities: Earning dominated the European morning and premarket session. With numbers out of large cap firms including Lufthansa [LHA.GE] and Renault [RNO.FR] after the close yesterday and BASF [BAS.GE] Standard Life [SL.UK] British Sky Broadcasting [BSY.UK] Technip [TEC.FR] MAN Ag [MAN.GE] and Erste Bank [EBS.AS] all reporting in the European morning. Strength from the US session bleed into Asia and transferred into Europe. Earnings coming in broadly above reduced consensus estimates added further lightness. Despite a rise in the WHO pandemic alert level and the WSJ noting an imminent bankruptcy filing at Chrysler, confidence appears to be continuing to return to equity markets. On the open, equities gapped up from Wednesdays closing highs with the DAX30 printing it 2009 session highs. Looking at sector performance, materials, led by BASF moved sharply higher along with auto names (following earnings out of Renault and MAN-which were better than peers Volvo and Scania) and financials (following upgrades out of RBS on most UK names). Markets continued their upward momentum until 3:55EST at which time the Germany April unemployment number was leaked (as usual), the figure of 58K was lower than expected but the overall unemployment rate came in higher than expected at 8.3%. By 5:30EST, markets had shaken unemployment figures for both Germany and the Euro-zone pushing off to session highs near the +2% mark across the European bourses.

*Reminder: EuroNext and Deutsche Bourse will not hold equity trading tomorrow, May1 due to May Day Holiday. The London Stock Exchange will be open and trading, but will be closed Monday, May 4, due to May Day Bank Holiday.

In company specific news: BASF [BAS.GE] Reports Q1 Net €375M v €174.5Me. Rev €12.2B v €12.4Be, to cut at least 2.000 jobs (about 2.1% of workforce) in 2009. In 2009, despite the acquisitions of Ciba Holding AG and Revus Energy ASA, BASF expects a decline in sales compared with 2008 and an even greater decline in income from operations, which will be negatively impacted by integration costs. ||Ericsson [ERICB.SW] Reports Q1 Net SEK1.72B v SEK2.03Be, Rev SEK49.6B v SEK50.94Be, Q1 Gross Margin 36.3% v 35.2% q/q, Q1 Networks sales SEK33.5B v 45.8B q/q. || BG [BG.UK] Reports Q1 Net income £706M v £612Me, Rev £3.1B v £3.08Be, Reaffirms prior outlook remains unchanged. || British Sky Broadcasting [BSY.UK] Reports 9-month Op Profit £589M v £521M y/y, Rev £3.96B v £3.71B y/y, Op Margin 14.9% v 14.1% y/y. || Technip [TEC.FR] Reports Q1 Net €99M v €78Me, Rev €1.57B v €1.57Be, Guides FY Rev €6.1B - €6.4B v €6.2Be , Reports Q1 EBITA €191M v €174.0Me. || Renault [RNO.FR] Reports Q1 R€7.08B v €7.7Be; reiterates global market sales target of 55M units in 2009, Q1 sales down 31% y/y, Q1 new vehicle inventories -35.4%. || Man Ag [MAN.GE] Reports Q1 Net income €181M v €69.7Me, Op profit €100M, Rev €2.56B v €2.45Be. Q1 Total orders €2.3B, -53% y/y, Q1 Commercial €1.4B, -61% y/y. Does not expect economic situation to improve in near term. || Lufthansa [LHA.GE] Reports Q1 net loss -€44M v loss -€176.6Me , R€5.0B v €5.00Be; Affirms outlook . Expects FY revenue to decline and reasonable drop in operating results. || Aker Solutions [AKSO.NO] Reports Q1 Net NOK603M v NOK581.3Me, EBITDA NOK1.1B v NOK1.08Be Rev NOK14.9B v NOK13.86Be; Maintain FY09 outlook, Q1 order intake at NOk10.7B. ||

Speakers: ECB's Nowotny commented that the global macro economic framework would emerge from financial and economic crisis a changed entity. He reiterated the central bank view that economic growth would return in 2010. Lastly, that high uncertainty over economy calls for 'steady hand' policy. He also commented that there were signs of 'Green Shoots' taking root inside the European economy || BOJ's Gov Shirakawa commented that the central bank's Board fully discussed deflation risk at today's policy meeting. He noted that the BOJ would not rule out any policy steps. He did not believe Japanese deflation risk was high and stated that there was a slim risk of any deflationary spiral. Bond buying was part of BOJ's monetary policy and should not be used to fund government spending. Bond buying for Gov't spending could damage credibility and in turn affect bond yields. He did comment that the global economy might not recover as prior cycles and that lower growth potential had no impact on short term monetary policy. || BoJ cut its economic outlook to -3.1% for 2009 from its January estimate of -2.0% || UK Trade Minister also observed that signs that the global economy was stabilizing || German Fin Ministry commented that the Govt was likely to seek extra budget in 2009 and that its credit needs exceed €50B. Fin Min Steinbrueck commented that would present any supplementary budget request after new tax revenues estimates are released in May.

In Currencies: Month end saw the USD and JPY currencies remain on the defensive as rising risk appetite continues. This has translated into stronger European and commodity-related currencies. The week saw a plethora of comments from both government and central bank officials that signs of economic stabilization seem to be taking root. Such comments again echoed in the session by ECB's Nowotny and UK Trade Minister Davies. Basic metals and higher oil prices aiding the CAD and AUD sentiment. EUR/USD probed towards the 1.34 handle after igniting some upside technical momentum on Wednesday. However, however giddy the prospects for potential growth is hampered by rising unemployment. The EUR/USD retracing towards the lower portion of the 1.33 neighbor hood following the Euro-Zone March unemployment rising towards it highest level since Nov 2005 and concerns over a supplementary German budget. Dealers noting that 1.3260 is the short term pivot point support in the pair || Norwegian Central Bank commented that it would not purchase currencies in May for its oil sovereign wealth fund || USD/CNY pair, the USD retraced its 2009 gains against the CNY during the month of April. The pair at 6.8170 level.

In Fixed Income: With investors appetite for riskier assets on the rise government bond markets have suffered this morning. Gilt markets absorbed £1.1B in 2022 linker supply but despite a strong auction, covered 2.08 times, UK debt has underperformed its peers. Treasuries have held up the best ahead of the NY Fed's coupon purchases, however the yield on the 10y Note is firmly above the 3.00% level with traders looking at 3.30% as the next level of support. The Long Bond smoked yesterday after the treasury increased its issuance schedule, is also being sold in European hours, with the yield now above 4.05%

In Energy: Russian Dep Min Sechin commented that the Ukraine needs to purchase and store at least 19B CM of natural gas to ensure transit pipeline to Europe

NOTES

World Health Organization (WHO) confirms Phase 5 level of 6 in total; verge of the first influenza pandemic since 1968

GM's bond holders plan to reject company's debt exchange offer and would present an alternative offer on Thursday

Traders noting tat $1.0B inflow into Taiwan stocks today, which is the 4th highest daily equity inflow on record. Money coming back to work.

German DAX Index briefly went into positive territory YTD

Lots of official talk of 'Green Shoots' taking roots in economy; but unemployment continues to rise.

Market conditions thinning out ahead of Japan's Golden Week and Europe's May Day holidays

Looking Ahead: Big US Corp earnings day. Some of the more notable names prior to the NYSE open include: Astrazeneca [AZN]; Cardnial Health [CAH]; Comcast [CMCSA]; Coviden [COV]; Dominion [D]; Dow Chemical [DOW]; General Motors [GM]; Kellogg [K]; KBR [KBR]; Motorola [MOT]; Mylan Labs [MYL]; NRG Energy [NRG]; Proter & Gamble [PG]; Shire [SHPGY]; Safeway [SWY]; Travelers [TRV] Viacom [VIA.B]; Exxon Mobil [XOM]

8:00 (SA) South African March Trade Balance: -ZAR3.6B expected v ZAR0.6B prior

8:30 (CA) Canadian Feb GDP M/M: -0.1% expected v -0.7% prior

8:30 (CA) Canadian March Industrial Product Price M/M: 0.5% expected v 0.4% prior

8:30 (CA) Industrial Product Price M/M: 0.5% expected v 0.4% prior, Raw Material Price Index M/M: 2.0% expected v 1.7% prior

8:30 (US) March Personal Income (last -0.2%), March Personal Spending (last 0.2%),

8:30 (US) March PCE Deflator y/y (last 1.0%), March PCE Core (last m/m 0.2%, y/y 1.8%),

8:30 (US) Initial Jobless Claims (last 640K), Continuing Claims (last 6.137M)

9:45 (US) April Chicago Purchasing Manager Index (last 31.4)

10:00 (US) April NAPM-Milwaukee (last 30)

10:30 (US) Natural Gas Inventories

11:00 (US) NY Fed to repurchase 08/15/2019 - 02/15/2026 T-Notes

Trade The News Staff
Trade The News, Inc.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Apr 30 09 08:20 GMT |

CHF

The pre-planned break-out variant for sales has been implemented with the overlap of minimal anticipated target. OsMA trend indicator marks the Low of current week by formation of topping bullish signals with further relative strengthening of bull's resistance and gives grounds to suppose the extension of rate correction period but with preservation of the priority of bear's direction for planning of trade operations for today. On the assumption of it as well as of existent bullish cycle according to OsMA trend indicator we can assume probability of rate achievement of 1,1370/90 nearest resistance levels where it recommended to evaluate development of the activity of both parties in accordance with the charts of a shorter time interval. As for the short-term sales, on condition of the formation of topping signals, the targets will be 1,1300/20 and (or) further break-out variant below 1,1280 with the targets of 1,1220/40, 1,1160/80, 1,1100/20 . The alternative for buyers will be above 1,1440 with the targets of 1,1480/1,1500, 1,1540/60.

GBP

The pre-planned test of key supports for the implementation of pre-planned long positions has not been confirmed, but the estimated rate growth has not clarified the choice of planning priorities for today. On the assumption of it and taking into consideration signs of rate overbought we can assume probability of today's rate resumption to the nearest supports of 1,4740/60,where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for the short-term buying positions on condition of the formation of topping signals the targets will be 1,4800/20, 1,4860/80 and (or) further break-out variant up to 1,4940/60, 1,5000/20, 1,5080/1,5120. The alternative for sales will be below 1,4680 with the targets of 1,4620/40, 1,4560/80, 1,4500/20.

JPY

The pre-planned break-out variant for buyers has been implemented but damaging the achievement of anticipated targets. OsMA trend indicator marks relative growth of bear's activity after the break of key resistance range levels and does not clarify the choice of planning priorities for today. That is why, on the assumption of the suppositions concerning rate range movement outlooks as well as of the existent cycle of bear's activity we can assume probability of rate resumption to 96,80/97,00 the nearest supports, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for the short-term buying positions on condition of the formation of topping signals the targets will be 97,40/60, 98,00/20 and (or) further break-out variant to 98,60/80, 99,20/40.The alternative for sales will be below 96,40 with the targets 95,80/96,00, 95,20/40, 94,40/60.

EUR

The estimated test of key supports for the implementation of pre-planned long positions has not been confirmed, and the upside of current week displayed signs of rate overbought as a negative factor for waiting an immediate further rate growth. For the present, considering the weakness of bear's resistance reaction and on the assumption of the chosen strategy we have grounds to suppose the preservation of the priority of bull's direction in planning of trade operations for today. On the assumption of it as well as of the existent cycle of bear's activity we can assume probability of achievement of 1,3220/40 nearest supports, where it is recommended to evaluate development of activity of both parties in accordance with the charts of a shorter time interval. As for the short-term buying positions, on condition of the formation of topping signals, the targets will be 1,3280/1,3300, 1,3340/60, 1,3400/20 and (or) further break-out variant up to 1,3460/80, 1,3540/60, 1,3680/1,3720. The alternative for sales will be below 1,3160 with the targets of 1,3100/20, 1,3040/60, 1,2960/80.

FOREX Ltd
www.forexltd.co.uk


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Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Apr 30 09 05:36 GMT |

With the surge in US equities carrying over into Asian trading and a sudden burst of optimism over the US economic outlook, the yen crosses came roaring back as risk was back in the marketplace despite the looming specter of the flu pandemic. However, late in Asia, the news leaked that American automaker Chrysler’s talks with the Treasury Department in order to avoid bankruptcy had broken down, thus sending traders scampering to buy Dollars and Yen. USD/JPY opened near the 97.60 area and climbed to 97.85 highs on the weaker Yen, however, as the Chrysler story was leaked, the Yen strengthened, dropping USD/JPY to lows in the 97.15 ballpark before leveling out near 97.30. Using the EUR/JPY pair as an example of the crosses, it had similar moves, hitting early session highs of 130.27 early, and then collapsing to 128.93 lows on the back of the news. All yen crosses followed the same pattern today. Of note is that the Bank of Japan kept its key interest rate unchanged as expected at 0.10% with little to no market reaction. Going forward, the action in Asia will be subdued as many traders in Japan go on holiday for Golden Week. Japanese markets will be closed from Monday to Wednesday next week. In Europe, the single currency gained some early real estate on Dollar weakness, climbing from early lows of 1.2350ish to just under 1.3340 highs before the subsequent drop to the 1.3270 arena. Down under, in New Zealand, the NZD/USD fell a big figure from near .5734 to 0.5634 as the RBNZ cut its interest rate by 50 basis points as expected, to a record low of 2.50% and commented that rates will remain low until 2010 to fight off recession

Upcoming Economic Data Releases (London Session):

4/30/2009 6:45 FR Producer Prices (MoM) MAR -0.60% -0.40%
4/30/2009 6:45 FR Producer Prices (YoY) MAR -4.50% -5.30%
4/30/2009 7:30 EC ECB's Nowotny Speaks at Briefing in Vienna 30-Apr

4/30/2009 7:55 GE Unemployment Change (000's) APR 69K 65K
4/30/2009 7:55 GE Unemployment Rate (s.a) APR 8.10% 8.20%
4/30/2009 9:00 EC Euro-Zone CPI Estimate (YoY) APR 0.60% 0.70%
4/30/2009 9:00 EC Euro-Zone Unemployment Rate MAR 8.50% 8.70%

Forex.com
http://www.forex.com

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.


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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by ecPulse.com | Apr 30 09 05:41 GMT |

EURO

The Euro versus Dollar pair was able to reach the key resistance for the downside channel at 1.3320 before reversing to the downside as expected. The intraday trend is now to the downside affected by the above mentioned resistance level where we expect the pair is to correct to the downside towards 1.3120 - 1.3110 for today. This decline remains as far as 1.3320 remains intact

The trading range for today is among the key support at 1.2800 and the key resistance at 1.3580

The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120

Support: 1.3205, 1.3120, 1.3050, 1.2990, 1.2955
Resistance: 1.3320, 1.3340, 1.3395, 1.3450, 1.3525

Recommendation: According to our analysis, sell the pair below 1.3255 with targets at 1.3120 and stop loss with four hour closing above 1.3340

GBP

After mixed trading in the markets yesterday, the Cable versus the Dollar reached the resistance at 1.4845 after breaching the 1.4705 level before correcting to the downside to reach our targets at 1.4755 - 1.4705 to gather bullish momentum in an attempt to breach the resistance level at 1.4930. This incline remains as far as 1.4690 remains intact where a breach of this level will take the pair to 1.4590.

The trading range for today is among the key support at 1.4240 and the key resistance at 1.5400

The general trend is to the downside as far as 1.5270 remains intact with targets at 1.3400

Support: 1.4755, 1.4705, 1.4655, 1.4590, 1.4530
Resistance: 1.4845, 1.4930, 1.4960, 1.5030, 1.5070

Recommendation: According to our analysis, buy the pair above 1.4755 with targets at 1.4845 and 1.4930 and stop loss with four hour closing below 1.4655

JPY

The USD/JPY pair reached the key resistance for the descending channel yesterday at 97.60 where it gave a false breakout of the level before declining once again from 97.45 level to currently target the support level at 95.40. The short term targets are at 94.00 as far as 97.45 remains intact.

The trading range for today is among the key support at 94.00 and the key resistance at 99.60

The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60

Support: 96.95, 96.35, 95.90, 95.45, 95.20
Resistance: 97.45, 97.70, 98.15, 98.75, 99.40

Recommendation: According to our analysis, sell the pair below 97.45 with targets at 95.45 and stop loss with four hour closing above 98.15

CHF

After breaching the key support at 1.1355, the Dollar versus Swissy declined to reach 1.1300 several times as it was pressured to the upside to retest the above mentioned level yet a close below it helps us keep our outlook to the downside on the intraday and short terms. Targets for today are at 1.1165 yet we may witness an upside correction towards 1.1410 - 1.1440 to gather bearish momentum. However, a close above 1.1355 may invalidate our expectations for a decline especially if the pair was able to breach the 1.1460 level to the upside.

The trading range for today is among the key support at 1.0975 and the key resistance at 1.1800

The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245

Support: 1.1355, 1.1305, 1.1240, 1.1205, 1.1165
Resistance: 1.1410, 1.1460, 1.1520, 1.1585, 1.1645

Recommendation: According to our analysis, sell the pair below 1.1355 with targets at 1.1240 and 1.1165 and stop loss with four hour closing above 1.1460

CAD

The Dollar versus Loonie pair was able to complete yesterday's targets at 1.1955 before rebounding to the upside which may take the pair to levels between 1.2050 - 1.2070 in an attempt to retest the latter level and gather enough bearish momentum to support the short term trend to the downside targeting 1.1640. This decline remains as far as 1.2070 remains intact

The trading range for today is among the key support at 1.1640 and the key resistance at 1.2505

The general trend is to the upside as far as 1.1780 remains intact with targets at 1.3400

Support: 1.1900, 1.1875, 1.1810, 1.1785, 1.1755
Resistance: 1.2050, 1.2070, 1.2100, 1.2150, 1.2225

Recommendation: According to our analysis, sell the pair below 1.2050 with targets at 1.1955 and 1.1875 and stop loss with a four hour closing above 1.2150

Ecpulse

disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk





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Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | Apr 30 09 04:18 GMT |

EUR/USD

Today's support: - 1.3273 and 1.3208(main), where correction is possible. Break would give 1.3177, where correction also may be. Then follows 1.3144. Break of the latter would result in 1.1312. If a strong impulse, we would see 1.3078. Continuation will give 1.3046 and 1.3018.

Today's resistance: - 1.3368 and 1.3403(main). Break would give 1.3440, where a correction is possible. Then goes 1.3467. Break of the latter would result in 1.3500. If a strong impulse, we'd see 1.3532. Continuation will give 1.3570 and 1.3596.

USD/JPY

Today's support: - 96.67, 96.53 and 96.30(main). Break would bring 96.01, where correction is possible. Then 95.86, where a correction may also happen. Break of the latter will give 95.64. If a strong impulse, we would see 95.40. Continuation would give 95.18.

Today's resistance: - 98.13(main), where a correction may happen. Break would bring 98.44, where also a correction may be. Then 98.57. If a strong impulse, we would see 98.78. Continuation will give 99.00.

DOW JONES INDEX

Today's support: - 8088.80, 8046.37, 8010.50 and 7987.50(main), where a delay and correction may happen. Break of the latter will give 7959.37, where correction also can be. Then follows 7922.80. Be there a strong impulse, we would see 7900.20. Continuation will bring 7871.40.

Today's resistance: - 8280.00(main), where a delay and correction may happen. Break would bring 8303.90, where a correction may happen. Then follows 8336.20, where a delay and correction could also be. Be there a strong impulse, we'd see 8370.00. Continuation would bring 8398.62

FXtechtrade
http://www.fxtechtrade.com

Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.





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South Korean Manufacturers’ Confidence Rises to 7-Month High

By Shinhye Kang

April 30 (Bloomberg) -- South Korean manufacturers’ confidence rose to the highest level in seven months, adding to signs that the economy’s slowdown may be abating.

An index measuring expectations for May advanced to 71 from 60 in April, according to a survey of 1,412 manufacturers released by the Bank of Korea in Seoul today. The index reached 44 in January, the lowest since the series began in 1991. A score of less than 100 means pessimists outnumber optimists.

Across Asia, there is mounting evidence that government spending packages and interest-rate cuts are buoying domestic demand, while a pickup in China is beginning to stoke exports. South Korea’s economy expanded 0.1 percent in the first quarter, following a 5.1 percent contraction in the previous three months.

Sentiment among Korean consumers for April climbed to the highest in at least nine months, the central bank said this week. The Kospi stock index has gained 19 percent this year after falling 41 percent in 2008.

An index measuring the outlook for exports rose to 78 from 70 and a gauge for domestic sales increased to 77 from 64, today’s report showed.

Goldman Sachs Group Inc., UBS AG, Deutsche Bank AG and Citigroup Inc. have all raised their 2009 gross domestic product forecasts for South Korea since the central bank released first- quarter figures on April 24.

An index of non-manufacturing companies’ expectations advanced to 74 from 63 in the previous month. The Bank of Korea polled the manufacturers and 717 non-manufacturers between April 15 and April 22.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.





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Singapore Employers Fire Record Number of Workers

By Shamim Adam

April 30 (Bloomberg) -- Singapore employers fired a record number of workers last quarter as the nation’s deepest recession since independence in 1965 forced manufacturers to cut output.

The Southeast Asian nation’s seasonally adjusted unemployment rate rose to 3.2 percent from a revised 2.5 percent in the previous quarter, the Ministry of Manpower said today. Employers retrenched 10,800 workers, and another 1,800 were released from their contracts early, bringing total job cuts to 12,600.

The worst global recession since World War II has battered trade-dependent Singapore, where the government says gross domestic product may shrink as much as 9 percent this year. Prime Minister Lee Hsien Loong’s efforts to prevent job losses by handing out cash haven’t stopped companies such as music- player maker Creative Technology Ltd. from firing workers.

“Falling external demand has severely affected the manufacturing sector,” the report said. Employment declined “as the economy continued to worsen.”

Singapore will make a “slow and gradual” climb out of the current recession, and the island’s economy won’t experience a “decisive rebound” this year, the Monetary Authority of Singapore said yesterday.

The jobless rate was the highest in more than three years, and in line with the median forecast in a Bloomberg News survey of nine economists. The manufacturing industry lost 19,900 jobs, while service industries added 10,300 new positions last quarter, the report showed.

Construction companies hired 8,500 new workers, resulting in a total net job loss of 1,000 jobs in the first three months of 2009, the report said.

About 13,920 workers were retrenched last year in Singapore, the most since 2003, while another 2,970 people were released before their contracts ended, the most since 1998.

In the aftermath of the Asian financial crisis in 1998, about 30,000 workers were retrenched in Singapore, and some 26,000 people lost their jobs in the 2001 recession.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net





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Bank of Japan May Cut Economic Forecasts, Keep Rate at 0.1%

By Keiko Ujikane

April 30 (Bloomberg) -- The Bank of Japan will probably cut its economic and price forecasts and keep the benchmark interest rate at 0.1 percent at a policy meeting today.

The world’s second-largest economy will contract 4.2 percent in the year to March 2010, more than twice the pace the central bank projected three months ago, according to the median estimate of 16 economists surveyed by Bloomberg News.

Japan is heading for its worst recession since World War II as a collapse in demand from abroad spreads to the nation’s businesses and consumers. Still, the Bank of Japan will probably resist adding to its program of buying corporate and government debt at today’s meeting, said Yasuhide Yajima.

“Without doubt, Japan’s deterioration will force the central bank to downgrade its outlook,” said Yajima, senior economist at NLI Research Institute Ltd. in Tokyo. “The BOJ probably wants to examine the impact of its measures on the economy and markets at this point.”

Governor Masaaki Shirakawa and his policy board will leave the overnight lending rate at 0.1 percent before releasing the outlook report, according to 15 of the 16 economists. One predicted a cut to a range of zero to 0.1 percent.

The central bank will probably announce the rate decision by early afternoon in Tokyo before publishing the outlook at 3 p.m. The board releases its twice-yearly outlook in April and October and reviews it each January and July.

Consumer prices excluding fresh food will tumble 1.3 percent this fiscal year, economists said, sharper than the 1.1 percent decline that the policy board predicted in January.

Asset Purchases

Since cutting the key rate in December, the bank has been buying corporate debt and stocks to channel cash to companies struggling to raise funds amid the recession. It has also increased its monthly purchases of government bonds.

The government cut its economic forecasts this week, predicting a 3.3 percent contraction in the current fiscal year amid record declines in exports and corporate spending.

Confidence at large manufacturers fell to a record low in March, the central bank’s Tankan survey showed this month. Managers said they have too many workers and spare capacity, signaling more cuts in jobs and capital investment are likely.

Teijin Ltd., a carbon-fiber maker, said this week that it will eliminate 2,500 jobs, slash capital spending by half and lower executives’ salaries by 20 percent.

Japan’s unemployment rate probably climbed to a four-year high of 4.6 percent in March and household spending slumped for a 13th month, economists expect reports will show tomorrow.

Stimulus Plan

Prime Minister Taro Aso this month unveiled a record 15.4 trillion yen ($160 billion) stimulus package to support the economy amid faltering export demand. The plan prompted Nomura Securities Co., Morgan Stanley and Nikko Citigroup Ltd. to raise their GDP forecasts for the current fiscal year, while adding that the measures would only provide a temporary boost.

“It’ll take time before Japan gets out of the recession,” said Yasuhiro Onakado, chief economist at Daiwa SB Investments Ltd. in Tokyo. “Companies may cut workers and curb business investment, offsetting any positive effect from the stimulus.”

The economy shrank at an annual 12.1 percent pace in the last three months of 2008 and analysts expect a similar rate of contraction in the first quarter.

Still, recent reports indicate the worst of the slump may be over. Exports rose in March from February on a seasonally adjusted basis, the first month-on-month gain since May 2008. Confidence among merchants and consumers climbed in March.

The central bank’s likely forecast cut “is essentially just a number-crunching exercise to catch up with the slump in GDP in the last two quarters,” said Julian Jessop, chief international economist at Capital Economics Ltd. in London. “The real news is the recent stabilization in the monthly economic data, which bodes well for the prospects of an early recovery.”

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net Mayumi Otsuma in Tokyo at motsuma@bloomberg.net





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New Zealand Cuts Key Interest Rate to Record-Low 2.5%

By Tracy Withers

April 30 (Bloomberg) -- New Zealand’s central bank cut its benchmark interest rate by half a percentage point to a record 2.5 percent and said borrowing costs will stay low until late next year to help the economy recover from a recession.

“We expect to keep the cash rate at or below the current level through until the latter part of 2010,” Reserve Bank Governor Alan Bollard said in a statement in Wellington today. “The cash rate could still move modestly lower over the coming quarters.”

Bollard has cut the official cash rate by 5.75 points since July and Finance Minister Bill English lowered income taxes on April 1 to help New Zealand recover from its worst recession in more than three decades. New Zealand’s dollar and bond yields dropped as investors bet that borrowing costs will fall toward 2 percent later this year.

“The Reserve Bank has left the door open to further cuts, which will help reinforce the message that interest rates will remain low for an extended period of time,” said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. He expects a quarter-point cut at the next review on June 11.

New Zealand’s dollar slumped to 56.40 U.S. cents at 9:55 a.m. in Wellington from 57.31 cents immediately before the statement. The yield on a benchmark three-year government bond fell 29 basis points, or 0.29 percentage points, to 3.43 percent.

Swap Rates

New Zealand swap rates dropped by the most this month. The fixed payment made to receive two-year floating rates slid to 3.38 percent from 3.66 percent yesterday.

Eleven of 13 economists surveyed by Bloomberg News forecast today’s rate move. Two expected a quarter-point reduction.

Inflation is easing faster than expected and the economy remains weak, Bollard said.

“The main factors behind this are weaker global growth and an unwarranted tightening in financial conditions via both higher long-term interest rates and a stronger exchange rate than expected,” he said.

Central banks around the world have slashed interest rates amid a gloomy outlook for the global economy. The Reserve Bank of Australia unexpectedly cut its cash rate target to 3 percent this month. The European Central Bank’s benchmark is 1.25 percent and benchmarks in Japan and the U.S. are close to zero.

The International Monetary Fund said last week the global recession will be deeper and the recovery slower than previously forecast. The world economy will shrink 1.3 percent this year, the Washington-based IMF said on April 22.

Business Investment

New Zealand’s economy is in its sixth quarter of recession as the global downturn curbs exports and business investment, the central bank said today.

“While the New Zealand economy has not experienced the same extreme falls in economic activity as seen in a number of our trading partners, it remains weak,” Bollard said. “We consider it appropriate to provide further policy stimulus.”

Business confidence fell to a 35-year low in the first quarter, according to a survey by the New Zealand Institute of Economic Research Inc. Investment intentions were the worst since 1975 and the proportion of companies expecting to fire workers was the highest since 1991, the Wellington-based institute said on April 7.

The unemployment rate could rise to a 10-year high of 6.8 percent by early 2010, Bollard forecast last month. Some economists say the jobless rate could reach 8 percent, from 4.7 percent in the fourth quarter of last year.

Ports of Auckland Ltd., the nation’s largest port operator, said last week it will fire 30 workers as global trade in containers declines.

OECD Survey

Newspaper publisher Fairfax Media Ltd. said it would cut 70 production staff. Inland Revenue may fire 250 workers after the government told the tax agency to review its budget as part of cost reductions across the state sector.

The Organization for Economic Cooperation and Development says there is room for Bollard to cut further, particularly as inflation eases. Consumer prices rose 3 percent in the year ended March 31, slowing from 3.4 percent in the year to December, according to government figures released on April 17.

“The Reserve Bank still has room to go further in responding to deteriorating economic conditions,” the OECD said in its economic survey of New Zealand released on April 16.

Lower borrowing costs and the fiscal stimulus will support the economy “and eventually see activity trough and pick up thereafter,” Bollard said today. Still, “the scale of the global financial crisis and domestic adjustments under way are such that it is likely to be some time before economic activity returns to robust and healthy levels.”

Today’s statement contained no new economic forecasts. In March, the central bank predicted the economy would rebound strongly next year. More recent forecasts from the IMF and OECD forecast growth of just 0.5 percent in 2010.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.





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Japan’s Factory Output Rises at Twice Predicted Pace

By Jason Clenfield

April 30 (Bloomberg) -- Japan’s industrial output rose for the first time in six months and at twice the pace predicted by economists, indicating the economy may resume expanding as soon as this quarter.

Factory production climbed 1.6 percent in March from February, when it dropped 9.4 percent, the Trade Ministry said today in Tokyo. Companies plan to increase output in April and May to replenish inventories that fell 3.3 percent last month.

Stocks rose on speculation that the worst of the recession may be over as U.S. consumers increase spending and stimulus packages in Japan and abroad take effect. Still, the slump that started with a collapse in exports may spread to households as companies cut jobs and wages.

“Judging from today’s output number alone, we can assume Japan’s economy will show a pretty solid expansion in the second quarter, though it would be a rebound from a very low level,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “It’s still too early to predict that Japan’s economy will return to a sustainable growth path.”

The Nikkei 225 Stock Average rose 4 percent in morning trading in Tokyo, taking its gains to 25 percent since the gauge reached a 26-year low on March 10. The yen traded at 97.75 per dollar from 97.53 before the report.

Production Forecasts

The median estimate of 33 economists surveyed by Bloomberg News was for production to gain 0.8 percent. Companies forecast output will increase 4.3 percent in April and 6.1 percent in May. The Trade Ministry said output is “stagnant” as opposed to “falling sharply” previously.

“The production figures are the light at the end of the tunnel,” said Soichi Okuda, chief economist at Sumitomo Research Institute in Tokyo. “But the economy is at a low level and the strength of the recovery is weak.”

The economy shrank at an annual 12.1 percent pace in the last three months of 2008 and analysts expect a similar rate of contraction in the first quarter.

Reports show the slump is at least moderating. Exports rose last month from February and sentiment among consumers, merchants and small businesses advanced, while 25 trillion yen ($255 billion) in stimulus measures pledged by Prime Minister Taro Aso since September may support domestic spending. Honda Motor Co. said this week the U.S. market has hit bottom.

Consumer spending in the U.S., Japan’s biggest overseas customer, jumped the most in two years in the first quarter, according to gross domestic product figures released yesterday.

China’s Stimulus

In China, $585 billion in stimulus spending is starting to kick in: urban fixed-asset investment jumped 26.5 percent in the first two months of the year, bank lending quadrupled in February and vehicle sales rose 25 percent.

Even so, Japanese companies may fire more staff and keep cutting wages to protect profits, and that’s likely to depress household spending, said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “Consumer spending is what we need to closely monitor from now on,” she said.

Sharp Corp. and Mitsubishi Motors Corp. said sales will keep falling this fiscal year and only cost cuts will help them return to profitability.

Japan’s unemployment rate probably climbed to a four-year high of 4.6 percent in March and household spending slumped for a 13th month, economists expect reports will show tomorrow.

Replenishing Inventories

Some companies may have raised production to replenish inventories rather than to feed new demand. Manufacturers including Toyota Motor Corp. have cut stockpiles faster than sales have fallen, leaving room for a bounce in output that may be limited unless sales pick up.

“Exporters are rebuilding inventories on the basis of expectations for shipments,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “This is a little bit uncertain because if new orders remain at relatively low levels you’re not going to see a sharp rebound in production.”

The Bank of Japan later today will probably cut its economic forecast for the year that started April 1 from a 2 percent contraction predicted in January. Governor Masaaki Shirakawa said this month weakening spending by companies and consumers will impair growth this year even as declines in exports and production moderate.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net





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Euro Rises as Asian Stock Gains Spur Demand for Higher Yields

By Yasuhiko Seki and Ron Harui

April 30 (Bloomberg) -- The euro advanced for a third day against the dollar and the yen on speculation gains in Asian stocks spurred demand for higher-yielding assets.

The euro also climbed versus 13 of the 16 most-active currencies on prospects the European Central Bank will refrain from lowering interest rates to zero and buying bonds. The dollar weakened after U.S. President Barack Obama said he is “hopeful” that Chrysler LLC will come up with a solution that will let a merger with Fiat SpA proceed and keep the U.S. automaker in business.

“Stock gains mean that investor appetite for risk taking is solid,” said Osamu Takashima, chief currency analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest banking group. “The yen is prone to selling.”

The euro climbed to $1.3311 as of 9:52 a.m. in Tokyo from $1.3271 in New York yesterday. The 16-nation currency advanced to 130.23 yen from 129.61, after touching 130.24, the highest since April 17. The yen traded at 97.84 versus the dollar from 97.66 yesterday.

Japan’s Nikkei 225 Stock Average advanced 3.9 percent and the MSCI Asia-Pacific Index of regional shares rose 1.9 percent.

To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.





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Japan Stocks Rise on Factory Output, U.S. Spending; Honda Jumps

By Masaki Kondo

April 30 (Bloomberg) -- Japanese stocks surged after Japan’s factory output rose for the first time in six months and U.S. consumer spending increased the most in two years.

Sony Corp., which gets a quarter of its sales from the U.S., climbed 5.1 percent. Honda Motor Co., Japan’s No. 2 carmaker, leapt 6.4 percent after forecasting an operating profit this year. Fanuc Ltd., the nation’s top maker of industrial robots, surged 5.1 percent after reporting better-than-forecast earnings.

The Nikkei 225 Stock Average jumped 317.06, or 3.7 percent, to 8,810.83 as of 9:42 a.m. in Tokyo. The broader Topix index rose 25.86, or 3.2 percent, to 837.85, with all of its 33 industry groups gaining. Markets in Japan were closed yesterday for a national holiday.

“Various statistics are suggesting the global economy is bottoming out,” said Kenichi Hirano, general manager at Tachibana Securities Co. “Investors are assessing the situation with a greater deal of optimism.”

The Nikkei has risen 6.5 percent in April, adding to last month’s 8.8 percent gain, amid optimism the worst of the global recession is over. The European Commission yesterday said executive and consumer confidence in the region increased in April for the first time in 11 months.

Japan’s industrial production rose in March for the first time in six months, with a 1.6 percent gain from February, the Trade Ministry said today. Economists estimated output increased by 0.8 percent.

Weakening Yen

In New York, the Standard & Poor’s 500 Index climbed 2.2 percent after a government report showed consumer spending, which accounts for about 70 percent of the U.S. economy, climbed at a 2.2 percent annual pace last quarter, the most in two years.

Sony, the world’s No. 2 maker of consumer electronics, advanced 5.1 percent to 2,580 yen, while Toyota Motor Corp., the biggest automaker globally, added 4.9 percent to 3,840 yen. Honda surged 6.4 percent to 2,765 yen. Honda President Takeo Fukui said last week the U.S. car market has hit a bottom, and the automaker expects 10 billion yen in operating profit in the current fiscal year.

The yen weakened against the dollar to as much as 97.72 today from a one-month high of 95.63 on April 28. A weaker local currency boosts the value of repatriated overseas sales for Japanese businesses.

Fanuc surged 5.1 percent to 6,950 yen. Net income fell by almost a quarter to 97.2 billion yen ($995 million) last fiscal year, the company said on April 28, which was still higher than its forecast of 90.6 billion yen.

Nikkei futures expiring in June added 3.6 percent to 8,820 in Osaka and gained 2.1 percent to 8,820 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.





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Asian Stocks Rise as Japanese Production Fuels Growth Optimism

By Masaki Kondo

April 30 (Bloomberg) -- Asian stocks rose, with the regional benchmark index headed for its best month in 10 years, as better-than-expected Japanese production and U.S. consumer spending fueled optimism the global economy is recovering.

Canon Inc., which gets almost a third of its sales from the Americas, surged 5.6 percent in Tokyo. Honda Motor Co. leapt 5.8 percent, after forecasting a profit for the current year on optimism the U.S. car market may recover. BHP Billiton Ltd., the world’s largest mining company, gained 2.8 percent in Sydney after copper and oil climbed.

“Various statistics are suggesting the global economy is bottoming out,” said Kenichi Hirano, general manager at Tachibana Securities Co. “Investors are assessing the situation with a greater deal of optimism.”

The MSCI Asia Pacific Index climbed 1.8 percent to 89.65 as of 9:17 a.m. in Tokyo. The gauge has risen 11 percent in April, poised for the best monthly performance since March 1999, amid optimism the worst of the global recession is over.

The Nikkei 225 Stock Average surged 3.7 percent in Japan, where stock markets resumed trading after a holiday yesterday. Australia’s S&P/ASX 200 Index rose 2.1 percent. All markets open in Asia advanced.

Futures on the U.S. Standard & Poor’s 500 Index added 0.1 percent. The gauge climbed 2.2 percent yesterday as a government report showed consumer spending, which accounts for about 70 percent of the U.S. economy, grew at the fastest pace in two years last quarter.

Consumer Spending

The U.S. doesn’t need a second fiscal stimulus package, said former Federal Reserve Chairman Paul Volcker, one of President Barack Obama’s top economic advisers. The European Commission yesterday said executive and consumer confidence in the region rose in April for the first time in 11 months.

A Japanese government report showed today that the country’s industrial output rose for the first time in six months and at twice the pace predicted by economists, adding to evidence the worst of the recession may be over.

Canon, the world’s largest maker of digital cameras, jumped 5.6 percent to 2,935 yen. The stock also rose as the yen weakened against the dollar to as much as 97.78 from a one-month high of 95.63 on April 28. A weaker local currency boosts the value of repatriated overseas sales for Japanese businesses.

Honda, which sells about 42 percent of its cars in North America, climbed 5.8 percent to 2,750 yen. The company expects operating profit of 10 billion yen ($103 million) this fiscal year. Honda posted a loss for the three months ended last month, in part because of the stronger yen.

“Regardless of what automakers do, they can’t turn around until demand for cars recovers,” said Hirano of Tachibana Securities.

BHP rose 2.8 percent to A$33.17. Copper futures jumped 4.6 percent in New York yesterday, the biggest gain in three weeks, while crude oil advanced 2.1 percent.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.





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Wednesday, April 29, 2009

New Zealand Business Confidence Surges As Trade Deficit Narrows

Daily Forex Fundamentals | Written by ecPulse.com | Apr 29 09 07:05 GMT |

Another bright day for the Pacific Rim with not many fundamentals from the region as the main focus in markets and across the globe remain the Swine Flu where it has recently claimed more than 100 victims in New York. However today, our main focus will be on New Zealand as business confidence surged the most since 1993 whereas the annual trade deficit narrowed.

Kicking off with confidence, the biggest gain witnessed in 16 years in April was due to the aggressive round of rate cuts to help salvage the economy as it seems now businesses are finding hope in a possible recovery which may recover previous losses and encourage more spending and hence employment to rise to normal levels. Companies are now becoming more pessimistic about the outlook of the economy over the upcoming year as 3.8 percent of all companies surveyed expected a drop in sales and profits over the next 12 months leaving 96.2 percent with an optimistic vision. This was compared to March's 21.2 percent who felt the economy was to deteriorate further.

As the survey is conducted by the Australia and New Zealand national Bank Ltd., it is important to note that the bank said profits during the first half slumped 28 percent on bad debts which had doubled the amount. Net income fell to A$1.42 billion from a previous A$1.96 billion a year earlier during the six months ending March 31. The bank's weakening financing resulted in credit impairment to surge 98 percent during the period to reach A$1.44 billion. Due to that, the bank was forced to lower its dividends for the first time since the last recession that has hit Australia 18 years ago taking total dividends to 46 cents per share.

After the confidence data, the bank also revised growth rates higher to show that the economy is forecasted to contract 2 percent over the year compared to the previous forecast in March of a 3 percent contraction.

Regarding the trade balance, New Zealand's trade deficit narrowed in March to reach NZ$4.8 billion from NZ$5.16 billion as commodity prices eased and as exports were supported by aircraft sales. By the end of 2008, the trade deficit was 8.9 percent of GDP yet ANZ currently forecasts the gap to narrow to 5.8 percent by the end of 2009.

Exports inclined more than imports this month which helped narrow the gap with overseas shipments surging 18 percent to NZ$4.04 billion whereas imports were up 6.9 percent to NZ$3.72 percent.

Elsewhere in the region, South Korea also released its current account balance indicating that the surplus widened during March to reach $6.65 billion from a previous $3.56 billion as imports slumped further and the collapse in the export sector had slowed. The Bank of Korea said that this has helped stabilize the national currency as the surplus widened alongside cash flowing into their equity market.

Although the nation was impacted by the global recession, its forecast for the surplus shows that it may witness an $18 billion surplus by the end of 2009 as they believe that the contraction in the economy is gradually slowing. Overseas shipments were up 10.5 percent in March while industrial output rose 6.8 percent. The outlook for the economy is shaping up to be quite positive as recovery may be witnessed soon.

The Kospi Index rose 2.9 percent during the session snapping a three day loss as it trailed the MSCI Asia Pacific excluding Japan index which advanced 1.9 percent to reach 267.75 points as of 2:20 p.m. in Hong Kong after signs that earnings may be better than expected and the ease in commodity prices. The Taiex index in Taiwan was up 0.3 percent while Hang Seng Index of Hong Kong advanced 1.8 percent. The Nikkei Index was out today on holiday.

Despite the Japanese markets are out for holiday, the BoJ rate decision is on queue where expectations are for steady rates at 0.10 percent. Let's not forget that the Fed's precede them today as the FOMC rate decision is to be released later toady with market expectations to witness a cut to 0.13 percent taking the benchmark close to Japan.

With the ongoing weakness in the Japanese economy, the BoJ and the government are hoping that the record stimulus plan by Prime Minister Taro Aso is to help the economy limit the levels of deterioration as it is to shave of 1.9 percentage points to take forecasts to a 3.3 percent contraction

Ecpulse

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