Economic Calendar

Monday, May 4, 2009

Afternoon Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | May 04 09 15:02 GMT |

Previous session overview

The dollar is modestly higher against the European currencies but lower against the Australian and New Zealand dollars in light trading Monday New York morning.

Holidays in Japan and the U.K. and a scarcity of market-moving data have kept trading constrained in the overnight session and in early North American trading Monday.

The euro come under some selling pressure after Axel Weber, a member of the European Central Bank Governing Council, said German gross domestic product is unlikely to rise before the second half of 2010, as the country is mired in the sharpest recession since World War II.

Weak German retail sales data also weighed on the common currency, accentuating its consolidation after last week's gains.

The yen remains on the defensive and while the dollar has risen modestly this morning, it is still fairly near its recent lows against the European currencies.

The euro is at USD1.3232 from USD1.3261 late Friday. It is at JPY131.59 from JPY131.72. The dollar trades at JPY99.45 from JPY99.28. The dollar is at CHF1.1410 from CHF1.1369, while pound sterling is at USD1.4862 from USD1.4890.

Market expectation

EURUSD spiked to USD1.3325 area but remains shy of overnight highs at USD1.3347 seen in Asian trade. Thin conditions and firmer US stocks driving the pair higher.

USDJPY euro-yen continues to lift on improved risk-appetite but euro-dollar the pair taking the strain, leaving dollar-yen to meander in a narrow range near JPY99.50. Offers seen in place at JPY99.60 with stops said positioned above there.

EURJPY has rebounded JPY132.50 area after seeing early lows a big figure and more lower, the pair recovering on the back of firmer US stocks and a vigorous bounce in euro-dollar. Dip in the pair left intact earlier reported bids at JPY131.25 and rebound remains shy of know supply at JPY133.00, positioned above the overnight high of JPY132.85.

Currency traders are wary ahead of several key events later in the week, including meetings of the European Central Bank and the Bank of England, the release of government stress tests for U.S. banks, and nonfarm payrolls data for April for the U.S. on Friday.

Dukascopy Swiss FX Group

Legal disclaimer and risk disclosure

This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.





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China's Growth Outlook Helps Optimism But Event Risks Will Keep Sentiment Capped

Daily Forex Fundamentals | Written by AC-Markets | May 04 09 10:46 GMT |

News and Events:

The markets are off to a roaring start as strong numbers from China have helped buying in risk correlated assets. Risk appetite continues to be the main theme, equity markets in Asia and Europe resuming their rebound. China Purchasing Manager's Index (PMI), a major indicator of the manufacturing sector, climbed for the fifth consecutive month to 53.5% in April. With equity markets having had their best month in 22 years and swine flu exhibiting fatigue, markets seem to be fading the impending risk associated with the US Bank Stress tests and automotive sector by buying risky FX trades such as carry and EMs against the USD. We think this week will be critical test of risk sentiment and corresponding conviction of the traders.

The two main events will be the ECB meeting and then the US stress test result which both fall on Thursday. At the ECB rate decision, the central bank is universally expected to cut the refinancing rate by 25 basis points to 1.00%. However, it will be the potential package of unconventional measures that will hold the markets attention. Official's comments surrounding this strategy had deviated considerable, with some ECB Governing Council members expressing complete misgivings on the scheme. As a result, there is no market consensus on the size, scope, framework or timing of the package. We are in the corner that the ECB will outline a framework for QE involving outright asset purchases although the execution will start flexible. As a result, we believe the knee jerk reaction will be EUR weakness. The second key event will be the expected release of the individual results of the stress tests conducted on the 19 largest US banks. This capital assessment exercise was designed to evaluate expected revenue and loss under a base line and extreme scenario of macroeconomic forecasts for GDP, unemployment and house prices. A bank which 'failed' (unspecified capital adequacy level) the test would have 6 months to raise additional capital. If the 'leaked' reports are correct, up to 6 of the 19 banks will be found to have a probable capital short-fall, including Citibank and BofA.

Taking a back seat this week will be the BoE and RBA rate decisions. At the BoE rate announcement markets expect the central bank to hold its base rate, although there is a chance that the BoE will increasing the size of potential asset purchases, especially given the recent budget announcement. And the RBA is expected to keep the cash rate on hold at 3.0% while downgrading its forecasts in its quarterly Statement on Monetary Policy on Friday. Non-farm payrolls will close out the week.

Advanced Currency Markets - Forex Issues and Risks

Today Key Issues:

  • 00:00 EUR UK / Japan: Public holiday
  • 07:58 EUR Final Manufacturing PMI, index Apr 36.7 exp, 36.7P prior
  • 09:45 TRY European Commission releases Economic Forecasts
  • 14:00 USD CPI, % y/y Apr 6.9 exp, 7.9 prior
  • 14:00 USD Construction spending, % m/m (y/y) Mar -1.4 (-12.5) exp, -0.9 (-10.0) prior
  • 14:00 USD Pending home sales, %m/m (y/y) Mar 0.0 (-1.9) exp, 2.1 (-1.4) prior
  • 16:00 USD FRB of Kansas City President Hoenig (FOMC non-voter) speaks on the financial crisis
  • 18:00 FRB of Richmond President Lacker (FOMC voter) speaks on the economy

The Risk Today:

EurUsd Positive risk sentiment continues to drive the pair higher. However failure to close above channel resistance at 1.3340/60 points to a correct toward 1.3020 trend support.

GbpUsd Positive risk sentiment (USD selling) continues to drive Sterling higher against the dollar. Next resistance at 1.4981 (intra day high), a strong push past this level would target 1.5071 via the psychological 1.5000. On the downside 1.4888 is initial resistance, while 1.4787 (5 day ma) would mark a strong support.

UsdJpy Sharp recovery from 95.63 is now focused on the psychological 100 lvl. We expect a short period of consolidation above 90.0 then a continuation of bullish momentum and a test of resistance. A break would expose 100.43 Apr 14 high. Intra-day support at 97.75.

UsdChf Despite the frequent spikes under 1.1300 the pair has been unable to close below its 200 day MA (1.1379). However failure to move above yesterday 1.1433 session high and further consolidation around 1.1370 will be a bearish signal and preparation for a move towards 1.1160 horizontal support

EURUSD
GBPUSD
USDJPY
USDCHF
1.3455
1.5071
100.43
1.1545
1.3395
1.5000
100.00
1.1480
1.3360
1.4963
99.70
1.1430
1.3306
1.4908
98.41
1.1350
1.3190
1.4704
97.75
1.1270
1.3090
1.4675
97.15
1.1212
1.3050
1.4515
96.40
1.1160
S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

ACM FOREX

Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.


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European Market Update

Daily Forex Fundamentals | Written by Trade The News | May 04 09 10:14 GMT |

PMI data continue to recover from historic lows; EU revises Euro-area GDP forecasts lower

ECONOMIC DATA

(RU) Russia Apr PMI Manufacturing: 43.4 v 42.0 prior

(IN) India Apr PMI Manufacturing: 53.3 v 49.5 prior

Polish Apr PMI Manufacturing 42.1 v 42.2 prior

(GE) German Mar Retail Sales M/M: -1.0% v 0.2%e; Y/Y: -1.5% v -0.3%e

(SW) Swedbank Apr PMI Survey: 38.8 v 38.4e

(NO) Norway Apr PMI SA: v 39.5e

(SP) Spain Apr PMI Manufacturing: 34.6 v 32.9 prior

(SZ) Swiss Apr SVME PMI: 34.7 v 34.0e

(IT) Italian Apr PMI Manufacturing: 37.2 v 36.8e

(FR) French Apr Final PMI Manufacturing: 40.1 v 40.0 prior

(GE) German Apr Final PMI Manufacturing: 35.4 v 35.0 prior

(EU) Euro-zone Apr Final PMI Manufacturing: 36.8 v 36.7 prior

(IT) Italian Mar PPI M/M: -0.7% v -0.4%e; Y/Y: -4.6% v -4.3%e

(EU) May Sentix Investor Confidence: -34.3 v -28.0e

(HK) Hong Kong Mar Retail Sales - Value Y/Y: -7.7% v -5.6%E, Volume Y/Y: -9.3% v -6.8%E

(SA) South Africa Investec PMI: 35.6 v 36.0 prior

(SP) Spain Apr car registrations -46% y/y

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

In equities: European equity markets opened to the positive side on the back of continued risk appetite flowing out of Asia. The Australian ASX closed at a 6-month high while the Bombay Sensex-30 breached the 12,000 level for the first time since Oct 2008 in the European pre-market. As London holds its May Day Bank Holiday, equity trading for the day will be concentrated on the continent. News out of Fiat [F.IT], regarding its new operations with US based Chrysler and its hope to roll GM's OPEL [GM]into a new spun off Fiat/OPEL brand has rallied automotive names following the dismal (yet less dismal than expected) US April sales figures out last Friday. Rising PMI's in Europe and Asia have added further lightness to the equity buying and heavy manufacturing names, including ThyssenKrupp [TKA.GE], MAN [MAN.GE], and ArcelorMittal [MT.NV] are outperforming. Banks are trading higher, ignoring potentially damaging news out the FT that both Bank of America [BAC] and Citi [C] will need to raise approx $10B in new capital as a result of findings form the US Treasury's 'stress test.' Bank of America and Citi are both trading lower in Frankfurt trading. Trading patterns remained choppy but broadly positive as markets shrugged off lower than expected Italian PPI figures printing session highs just after 4:00EST. Gains were paired as the 4:00EST hr developed and volatility remained high. Gains were quickly recovered, however, as markets on mixed volume printed new session highs past 5:30EST. Official confirmation from the EU lower 2009 and 2010 GDP forecasts muted acceleration but gains remained held.

In individual stocks: In individual stocks: Bank of America [BAC] and Citi [C] may be planning to raise up to $10B each in response to stress test results - FT. Stress results suggest that both Citi and BAC need at least that much, while officials from these banks maintain they don't need additional capital and may dispute govt findings. FT report also noted that stress test results suggest Wells Fargo and PNC Financial Services may need additional capital. ||Barclays [BARC.UK], Barclays Capital, bolstered by Lehman acquisition seen as boosting firms Q1 operations -Times. Analysts looking for Q1 Net around £1.2B. Article states that banks investment bank arm has seen large gains in Q1, much of which coming from its Wall St ops from acquired Lehman assets. || RBS [RBS.UK] Finance Director, Guy Whittaker to resign - The Independent. Whittaker is expected to remain as finance director until a new person is hired, which could take as long as 6 months. || WPP[ WPP.UK] firm will cut additional 7,200 (approx 5% of workforce) positions in 2009 -Guardian. Cuts part of global target to bring staffing down to 106K by the end of 2009. Sees majority of cuts in N American and UK markets. ||EDF [EDF.FR] May seek to sell its regulated electricity distribution unit Dalkia in the UK - FT . || Solar World [SWV.GE] Reports Q1 Net €24M v €23.3Me, EBIT €39M v €40.9Me, Rev €176M v €196Me, Q1 EBIT margin 22.2% v 23.3% y/y. CEO: Performance in 2009 will be dependent on price products can bring, so far selling prices down approx 10% y/y. || TNT [TNT.NV] Reports Q1 Net €76M v €88Me, EBIT €163M v €153Me, Rev €2.44B v €2.50Be, Expects express sales to decline in 2009, Q1 Mail unit rev -2.2% y/y, Q1 Express unit rev -15.5% y/y, Q1 International & Domestic rev -13.8% y/y, Q1 Emerging platforms rev -6.4% y/y. ||

Speakers: (EU) EU Commission lowered its 2009 Euro Area GDP forecast to -4.0% from -1.9% prior; and cuts its 2010 GDP to -0.1%. The EU Commission raised its 2009 outlook for average budget deficits in the euro zone to 5.3% of GDP from the 4% prior || ECB's Weber commented that recovery in Germany could be slow and unlikely to see positive growth before H2 2010. Recent signs of hope are not a reliable indicator that the worst of the economic crisis is over. No signs of tentative improvement on German financial markets and a danger that additional bank sector losses would persist|| EU's Almunia commented that he saw positive signs about Euro-Zone economy recently but outlook remains 'gloomy. He stated that the economy was 'no longer in free fall' but the situation remained 'fragile'. Risks to growth scenario remain on the downside and were critical to have exit strategy on high public debt issuance|| Polish Central Banker Noga commented that he expected CPI to be within its target by Q1 2010. He stated that he was not surprised with Apr CPI estimate in which M/M: seen at 0.6% versus 0.7% prior, Y/Y seen at 3.9% compared to 3.6% prior. The Official release for inflation data is set for May 14th. ||Japan Fin Min Yosano reiterated the view that major gov'ts need to support demand via its monetary policy. He noted that an Asian recovery was the key to a global economic rebound. Developing nations in Asia to suffer 'spillover' effects from crisis and commented that the Asian Development Bank (ADB) needed to diversify its lending instruments

In Currencies: The absence of Japanese and the U.K. participants curtailed trading volumes on Monday. The EUR/USD stayed in a fairly tight 1.3270 to 1.3320 during the European morning but was ending the morning at the lower end of its range. A rising risk appetite was keeping both the USD and JPY softer with European and commodity-related currencies firmer but comments from the EU Commission regarding the growth outlook weighed against sentiment as the NY morning approached. The focus will eventually turn to the upcoming ECB meeting and the release of U.S. bank stress tests results.

Former MoF Official Sakakibara ('Mr Yen') amended his currency view a bit on the JPY. He now sees the JPY currency continuing its trend of weakness against USD possibly towards the 110 level. In early mar he saw 100 as the upper end in this pair. USD/JPY little changed from its opening level in Asia at 99.42. Asian nations announced that they would start a $120 billion foreign-currency reserve pool by year-end. Dealers noted that concept of these countries getting together and cooperating was more important then the size of the fund.

-In Fixed Income: With a natural bias towards being offered, German fixed income has held up surprisingly well in thin volumes this morning. With just under ninety thousand contracts traded, Bund futures are down just 3 ticks at 122.50 at the time of writing, despite strong equities and a gap to close on Treasuries. The Bund is trading just 3bps cheap to the 10y Note, which has stayed above 3.15% in throughout Asian and European hours, having traded 25pbs cheap just a week ago. With no supply and London closed for a bank holiday, next up the NY Fed will intervene in Treasury markets for the 14th time this year, looking to buy T-notes maturing between 2016 - 2019

||Reportedly Q1 US states and municipalities borrowings at $53.5B; Refinanced $31.0B to reduce interest payments and extend maturities

In Energy: Russia planning new floating 70MW nuclear reactors to provide power to Gazprom in remote oil exploration. Construction for platforms already underway and aimed at exploration in the Barents and Kara seas; submersible nuclear powered drilling rigs also rumored to be designed. Russia noted that the power stations would store own waste

NOTES

Setting up to be an active week on the data front with the RBA, BOE and ECB making policy decisions. The US bank stress tests are due on Thursday,

Chinese think tank, State Information Centre, China's Q2 GDP is seen at 7% v 6.1% in Q1

Emerging market PMIs manufacturing showing sign of growth (China and India) while European PMIs bounce off historic lows

Looking Ahead: US Earnings season continue with another heavy week of reports

7:00 (EU) ECB's Papademos

9:30 (BZ) Brazil Apr PMI Manufacturing: No expectations v 42.2 prior

11:00 (US) NY Fed to buyback Notes maturing between 02/29/2016 - 02/15/2019

Note that Japan is out until Thursday due to Golden Week holidays

Trade The News Staff
Trade The News, Inc.

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Currency Technical Report

Daily Forex Technicals | Written by FX Greece | May 04 09 11:20 GMT |

EUR/USD

Resistance: 1,3330-1,3340/ 1,3390-00/ 1,3725-30/ 1,3470/ 1,3510
Support : 1,3270/ 1,3220-30/ 1,3170-80/ 1,3140-50/ 1,3100/ 1,3050

Comment: Euro is moving again above 1,3300 area in the beginning of the week, testing 1,3340-50 resistance. According to our short term scenario in our last analysis, important resistance at 1,3400 should be reached and a false break of the downward channel is possible.

For this scenario to be valid, any upward reaction should be limited below 1,3340-50 and first support at 1,3270-80 and 1,3220 should be breached downwards. The short term reversal ranges are set at 1,3100 and a possible break could lead to our next targets at 1,3090-3110.

If support levels are confirmed and euro moves above 1,3400 area, a move towards our next targets at 1,3520 and 1,3580 or even higher, will be possible. In that case, the rise from March lows would be an upward wave in terms of the wider triangle formation (weekly chart). According to this theory, 5 waves should be formed and we are currently at the third. If this wave is not completed, next target will be at 1,3900 or even 1,4400. A downward move from these levels should form the fourth wave (wave d in the chart), then a rise as the fifth wave (wave e) and at last an sharp decline should be formed in the end of the year according to our long term scenario and the cycle theory…

STRATEGY

Our strategy remains the same 'We will use retracement towards 1,3330-40 for sell orders with stops above 1,3420. First target will be at 1,3190-00 followed by 1,3100 area.'
A clear break of 1,3420 may be used for buy orders and target at 1,3500-20 and 1,3580 area…

Today markets at UK and Japan are closed and high volatility is expected due to low liquidity. We should be cautious and keep our positions small…

FX Greece

DISCLAIMER

  1. The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market.
  2. We assume no responsibility for any kind of losses ,profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions.
  3. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action.
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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | May 04 09 11:08 GMT |

EUR/USD

Current level-1.3311

EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated between the 50- and 200-Day SMA, currently projected at 1.3064 and 1.3524.

The recent test of the 1.3396 resistance failed and the pair is in a corrective mode before next leg upwards for 1.3521. Intraday bias is negative, for 1.3167.

Resistance Support
intraday intraweek intraday intraweek
1.3396 1.3524 1.3265 1.2576
1.3524 1.3740 1.3167 1.2328

USD/JPY

Current level - 99.40

A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated between the 50- and 200-day SMA, currently projected at 94.12 and 99.36.

Intraday bias is still positive for 99.96 with a risk limit below 99.05, but we expect a reversal around current levels to trigger a sell-off towards 97.13

Resistance Support
intraday intraweek intraday intraweek
99.96 101.44 98.12 93.38
100.74 103.55 95.64 89.82

GBP/USD

Current level- 1.4940

The pair is in a broad corrective phase, after bottoming at 1.3506. Trading is situated between the 50- and 200-day SMA, currently projected at 1.4422 and 1.5896.

Recent high at 1.4980 is nothing less than a serial test of the 1.50+ resistance level, so even though there is an intraday setup for 1.4738, a break above the mentioned resistance seems inevitable.

Resistance Support
intraday intraweek intraday intraweek
1.4980 1.5065 1.4816 1.4398
1.5065 1.5727 1.4738 1.30+

DeltaStock Inc. - Online Forex & Securities Broker
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Positive End To The Week

Daily Forex Fundamentals | Written by Easy Forex | May 04 09 01:26 GMT |

U.S. Dollar Trading (USD) was once again at the mercy of the equity markets which managed to make small gains into the weekend and pressured the Dollar lower. ISM Manufacturing managed to jump to 40.1 in April vs. 36.3 previously. US Factory Orders fell -0.95 in March. Crude Oil was up $2.08 ending the New York session at $53.20 per barrel. In US share markets, the Nasdaq was up 2 points or 0.11% and the Dow Jones was up 44 points or 0.54%. Looking ahead, Pending Home Sales March forecast at 0% vs. 2.1% previously.

The Euro (EUR) managed small gains against the USD into the weekend. EUR/JPY provided much needed support to keep the Euro close to 1.3300. Volumes were lower than usual as most of Europe was away for May Day Holidays. Overall the EUR/USD traded with a low of 1.3228 and a high of 1.3329 before closing at 1.3265. Looking ahead, March German Retail Sales forecast at -0.1% vs. -0.2%.

The Japanese Yen (JPY) continued to weaken as the USD/JPY reclaimed the 99 level and most of the crosses led by GBP/JPY and AUD/JPY grinded higher. Optimism and weak Japanese data providing the motivation. Overall the USDJPY traded with a low of 98.73 and a high of 99.59 before closing the day around 99.36 in the New York session.

The Sterling (GBP) used better than expected data to surged back towards 1.5000 and helped the EUR/GBP back towards 0.8900. UK PMI Manufacturing jumped to 42.9 vs. 39.5 previously. Overall the GBP/USD traded with a low of 1.4735 and a high of 1.4935 before closing the day at 1.4915 in the New York session. Looking ahead, April Halifax House Prices forecast at -1% vs. -1.9% previously.

The Australian Dollar (AUD) traded back above 0.7300 as risk appetite pick up again. Strong Commodities and Economic data both added to buoyancy with the market now turning its attention to Tuesday’s RBA meeting. Overall the AUD/USD traded with a low of 0.7250 and a high of 0.7349 before closing the US session at 0.7305.

Gold (XAU) was quiet into the weekend with a small rally fading back to opening levels. Overall trading with a low of USD$880 and high of USD$890 before ending the New York session at USD$885 an ounce.

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Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | May 04 09 00:22 GMT |

News And Views

May Day rest. US equities opened around where they closed previously, and mounted a small rally, but failed to reach Thursday's peak. The S&P500 ended up only 0.5%, with banks losing ground by 2.4%. The banking sector was clouded by uncertainty, after US regulators said the eagerly awaited stress tests will be delayed to 7 May (after the markets close). Apparently there is debate over valuation methods. With European markets closed for the holiday, the US session was fairly subdued. WTO oil rose 4.1%, and copper gained 2.6%, partly on the better US ISM and consumer sentiment revision. The surge in the new orders component, relative to inventories, points to stronger ISM numbers ahead, in turn pointing to stronger PMI's - a positive for equities markets ahead; on the other hand, we have had so many positive data surprises recently that expectations may start to leapfrog reality, setting up for disappointments - a negative for equities markets and risk.

EUR tracked sideways, for no net change during the UK and US sessions, ending at around 1.3270. GBP was livelier, stronger PMI numbers helping boost the sterling from 1.48 to 1.4920.

AUD ranged sideways between 0.7250 and 0.7350; a Terry McCrann article was noted late Friday, saying the RBA would pause on Tuesday, already consensus.

A NZD short squeeze spiked the kiwi from 0.5660 to 0.5743, continuing a succession of lower peaks since Wednesday. Profit-taking saw AUD/NZD dribble lower to 1.2800.

US UoM consumer sentiment revised higher in April. The headline was revised up by 3.2 pts, reflecting a 1.7 pt revision to the current measure and a 5.2 pt revision to expectations. At the new higher level, the UoM April reading is the strongest since September last year (70.3), when Lehman Bros went under. Shorter term inflation expectations were revised lower but 5 yr expectations were nudged higher. The upswing in equities through to late April and very steady gasoline prices, seem to have been more dominant factors than the latest concerns about swine flu and the bankruptcy of Chrysler (which might impact more in the May data).

US factory ISM up from 36.3 to 40.1 in Apr. The ISM is now back above 40, its strongest result since 43.4 in September last year. That still means the industrial sector is contracting, but at a less steep pace than in Q4 and Q1. The surge in the orders component was particularly steep (though 47.2 still implies a decline). The ISM jobs measure improved somewhat too, which is a signal that the pace of job losses in the factory sector might be abating.

US factory orders down 0.9% in Mar. Continued softness in non-durable orders and an unrevised fall in the durables component delivered a broadly as expected moderate decline in total factory orders back in March. That is consistent with the industrial sector still contracting, but not as steeply as at the start of the year.

Japanese workers crunched; unemployment rate jumps to 4.8% but household spending holds the line. The export-led collapse in industrial production continues to radiate through Japan's through Japan's household sector. Unemployment jumped sharply in March, from 4.4% to 4.8%, well above market expectations of a more incremental increase to 4.50%. Household spending continues to contract sharply, albeit less sharply than had been feared for March - real spending slipped 0.4% in the month. There were more signs of slippage in consumer prices, with a flat outcome for Tokyo CPI ex-fresh food in April dragging the annual core inflation rate down to -0.6%yr.

UK PMI factory up from 39.5 to 42.9 in Apr. As with most factory PMIs from around the world (though not Australia's), the UK index was stronger in April, for the second month running, implying a slower pace of contraction in the industrial sector at the start of Q2, compared to earlier this year.

UK Mar lending update. The recent upswing in mortgage lending from economy-throttlingly low levels to merely extremely weak levels was sustained in March but not really built upon. The number of new loans rose slightly but the value of outstandings growth at £0.76bn was the second lowest on record (after £0.43bn in August last year), probably due to increased pay-down of debt. Consumer credit outstandings growth of just £130 million in recent months is running at about one tenth of the growth pace seen back in 2007, reflecting tighter lending standards, less spending and increased debt repayment.

Outlook

Price action since Thursday favours a test of 0.5620 during the next session, followed by 0.5450 later this week. Today's Q1 hourly earnings report will add colour to Thursday's important Q1 employment report.

Events Today

Country Release Last Forecast
NZ Q1 QES Private Sector Ord Time 0.80% 0.70%
Aus Apr TD-MI Inflation Gauge –0.1%

Apr ANZ Job Ads –8.5%

Q1 House Price Index –0.8% flat
US Mar Pending Home Sales 2.10% 1.50%

Mar Constructions Spending –0.9% –1.0%

Fedspeak: Hoenig

Eur Apr PMI Factory (F) 36.7 a 36.7

May Sentix Investor Confidence –35.3 –38.0

Spring EC Economic Forecasts –1.8% –4.0%
Ger Mar Retail Sales –0.2% –0.5%
UK Bank Holiday

Westpac Institutional Bank
http://www.wib.westpac.co.nz/

Disclaimer

All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.


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FX Technical Commentary

Daily Forex Technicals | Written by Easy Forex | May 04 09 01:29 GMT |

Euro 1.3275

Initial support at 1.3121 (Apr 29 low) followed by 1.2964 (Apr 28 low). Initial resistance is now located at 1.3392 (April 13 high) at followed by 1.3420 (Apr 7 high)

Yen 99.75

Initial support is located at 97.15 (Apr 30 low) followed by 96.39 (Apr 29 low). Initial resistance is now at 99.75 (Apr 17 high) followed by 100.43 (Apr 14 high).

Pound 1.4925

Initial support at 1.4704 (Apr 30 low) followed by 1.4609 (Apr 27 low). Initial resistance is now at 1.4947 (Apr 30 high) followed by 1.5068 (Apr 30 high).

Australian Dollar 0.7335

Initial support at 0.7049 (Apr 29 low) followed by the 0.6954 (Apr 20 low). Initial resistance is now at 0.7384 (Apr 30 high) followed by 0.7738 (Oct 6 high).

Gold 887

Initial support at 878 (Apr 21 low) followed by 864 (Apr 17 low). Initial resistance is now at 906 (Apr 28 high) followed by 918 (Apr 27 high).

Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.2964 1.3121 1.3275 1.3392 1.3420
USD/JPY 96.39 97.15 99.30 99.75 100.43
GBP/USD 1.4609 1.4704 1.4925 1.4947 1.5068
AUD/USD 0.6954 0.7049 0.7335 0.7384 0.7738
XAU/USD 864.00 878.00 887.00 906.00 918.00

Easy Forex
http://www.easy-forex.com

Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products


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New Zealand Firms Reduce Demand for Labor, Hours Fall

By Tracy Withers

May 4 (Bloomberg) -- New Zealand companies reduced demand for labor in the first quarter, adding to signs a deepening recession will cause unemployment to rise.

Paid hours fell 0.4 percent from the fourth quarter, when they dropped 1.4 percent, seasonally adjusted, Statistics New Zealand said in its quarterly employment survey published in Wellington today. Filled jobs declined 2.6 percent and number of full-time equivalent employees decreased 2 percent.

Companies are reducing overtime and firing workers as sales drop amid the worst recession in more than three decades. Fewer jobs and hours worked add to signs that household incomes will decline for much of the year and the economy won’t emerge from the recession until 2010.

“As sales slip, labor demand has suffered,” said Doug Steel, senior economist at Westpac Banking Corp. in Wellington. “Even if the economy shows some sort of mild growth later this year, unemployment will keep going up.”

Business confidence was at a 35-year low in the first quarter and 36 percent of companies expected to fire workers, the most since 1991, according to a New Zealand Institute of Economic Research Inc. survey published April 7. Forty two percent said it was easier to find skilled workers, reducing pressure on wages.

The average number of overtime hours worked fell 1.6 percent from the fourth quarter, today’s report showed. From a year earlier, overtime hours dropped 13 percent.

Full-time Work

The number of full-time equivalent employees fell to the lowest level since the third quarter of 2007 and filled jobs declined for a second quarter to a two-year low. The falls reflected a seasonal decline in education workers during the summer vacation, the statistics agency said. There were also fewer people employed in manufacturing, construction, accommodation and restaurants.

Average ordinary time hourly earnings for non-government workers rose 1.1 percent in the quarter, the agency said. That’s almost twice the 0.6 percent median increase expected in a Bloomberg News survey of seven economists.

The agency publishes its main wage inflation indicator, the labor cost index, on May 6, and reports on unemployment on May 7. The jobless rate probably rose to 5.3 percent from 4.7 percent in the fourth quarter, according to the median forecast in a Bloomberg survey of 13 economists.

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





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Turkey’s Inflation Rate May Fall to 38-Year Low: Week Ahead

By Steve Bryant

May 4 (Bloomberg) -- Turkey’s inflation rate may have fallen to 6.9 percent in April, matching the lowest in 38 years and raising the prospect of further cuts to the benchmark interest rate.

Inflation eased to 6.9 percent from 7.9 percent in March, according to the median estimate of 10 economists surveyed by Bloomberg. The statistics agency will announce the data at 5 p.m. in Ankara today. The rate equaled that of July 2007 and was the lowest since July 1970.

The central bank has shaved 7 percentage points from the benchmark rate in sixth months as it tries to limit an economic contraction the government forecasts at 3.6 percent this year. The benchmark rate is 9.75 percent, a record low, and the bank said on April 29 that “there will be no clear recovery in economic activity in the short term.”

“Inflation should be benign because demand is low, the lira is stable and wage pressure is declining,” said Yarkin Cebeci, an economist for JPMorgan Chase & Co. in Istanbul. “It all supports the dovish stance of the central bank.”

Turkey’s economy contracted 6.2 percent in the fourth quarter of 2008, the first decline in seven years. The bank next meets to set interest rates on May 14.

The statistics office will also release figures for industrial production in March on May 8. Output slumped 23.7 percent in February, the most since monthly records began in 1986.

The benchmark ISE National 100 Index gained 6.7 percent to 31,651.81 at close of trade on April 30 before a public holiday. The lira gained to 1.5990 per dollar at 5:06 p.m. on April 30 from 1.6087 a week earlier and the yield on the benchmark government bond tracked by ABN Amro rose to 12.25 percent from 12.23 percent a week earlier.

The following is a list of important events in Turkey next week:


Event                                                  Date
April inflation data May 4
March Industrial output May 8

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.





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Asia’s $120 Billion Reserve Fund to Boost Investor Confidence

By Shamim Adam and Jason Clenfield

May 4 (Bloomberg) -- Asian nations will set up a $120 billion foreign-currency reserve pool by year-end to help revive investor confidence as economies around the region falter amid the worst global recession since World War II.

The Association of Southeast Asian Nations, together with Japan, China and South Korea, will use the funds in times of turmoil. They will set up a surveillance unit that will identify risks to the region and provide oversight of the fund. Japan also offered $60 billion of yen-denominated swap facilities.

“It’s not so much the amounts of money being put in, but the concept of these countries getting together and cooperating,” Mark Mobius, who helps oversee $20 billion in emerging-market assets at Templeton Asset Management Ltd., said in an interview yesterday in Bali, Indonesia. “That’s a very positive development.”

The fund, known as the Chiang Mai Initiative, widens access to foreign-exchange reserves allowing nations such as Indonesia and Thailand, recipients of International Monetary Fund bailouts a decade ago, to defend their currencies. The 13 nations have accumulated more than $3.6 trillion of currency reserves since, with China owning more than half of the assets.

“The idea is for the Asean plus three countries to effectively look after ourselves with our own reserves,” Thai Finance Minister Korn Chatikavanij said yesterday in Bali, where the officials met.

$100 Billion Loans

The IMF arranged more than $100 billion of loans to Thailand, Indonesia and South Korea after their currencies collapsed during the 1997-1998 crisis. In return, governments were forced to cut spending, raise interest rates and sell state-owned companies.

In Thailand, former Prime Minister Thaksin Shinawatra asked his countrymen to fly the national flag on offices, homes and factories after making the last payment in 2003 of the $12.3 billion it drew. Indonesia repaid its debt in 2006, four years before schedule.

Following yesterday’s agreement, Japan will contribute $38.4 billion to the fund, while China and Hong Kong together will add another $38.4 billion to the pool. South Korea’s contribution will be $19.2 billion.

The Southeast Asian nations will contribute 20 percent of the total amount. Thailand, Indonesia, Malaysia and Singapore, the four biggest Southeast Asian economies, will contribute $4.77 billion each, and the Philippines will provide $3.68 billion.

Surveillance System

Under the Chiang Mai Initiative, Asian nations can borrow, without restrictions, 20 percent of an agreed swap amount. They can tap the 80 percent balance only after agreeing to IMF-style restrictions.

That may change as the surveillance system is developed, Korn said. The IMF, Asian Development Bank and the Asean Secretariat will be tapped initially for their expertise in such matters, finance ministers said.

“We feel that we ought to also develop a surveillance system and manage it ourselves as opposed to needing to rely on the surveillance system of institutions outside the region,” Korn said. “The idea is that as we increase our surveillance capacity, the de-linked portion increases.”

Nine of the region’s 10 currencies tracked by Bloomberg fell against the U.S. dollar in the first three months of the year. This quarter, eight have gained against their U.S. counterpart.

‘Real Traction’

“One of the beneficiaries of this crisis, if you want to call it that, has been the way it speeded up the regional market development,” said Gerard Lyons, London-based chief economist at Standard Chartered Bank, said in an interview in Bali. “The Chiang Mai Initiative has now started to get real traction.”

Countries such as Japan and China are doing more to help others navigate through the crisis. China last month announced plans to create a $10 billion investment cooperation fund and offer $15 billion in credit to its Southeast Asian neighbors.

Japan’s Finance Minister Kaoru Yosano yesterday said the country will offer $60 billion of yen-denominated swap facilities to help nations during a financial crisis. Asia’s biggest economy will also guarantee up to 500 billion yen ($5 billion) of yen-denominated bonds, or Samurai bonds, issued in Japanese markets by developing countries, he said.

“The entire world was hit by the crisis and it can only be addressed through international cooperation,” Yosano said. Cooperation is “the resource we achieved in the meeting.”

To contact the reporters on this story: Shamim Adam in Bali at sadam2@bloomberg.net; Jason Clenfield in Bali or jclenfield@bloomberg.net





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Bonds Show Lehman Fades In History as Spreads Narrow

By Dakin Campbell

May 4 (Bloomberg) -- From Frankfurt to London to New York to Tokyo, bond traders say the Lehman Brothers Holdings Inc. bankruptcy is fading into history as the cost of credit retreats throughout the Group of Seven industrialized nations.

The shock to financial markets from Lehman’s collapse in September sent the Standard & Poor’s 500 Index to its biggest annual decline since 1938, froze credit markets, drove Goldman Sachs Group Inc. to seek $5 billion from Warren Buffett and sparked a run on Treasuries that caused bill rates to fall below zero for the first time.

Now, the record pace of corporate bond sales, declining money market rates and a drop in mortgage costs all suggest the global economy is on the mend. In the government debt market, yields on 10-year notes exceed those of two-year securities by at least 1 percentage point in all the G-7 nations for the first time since before 1991, according to data compiled by Bloomberg. The so-called yield curve typically steepens when traders anticipate a recovery.

The gap “is likely to get steeper still,” said Paul McCulley, a managing director at Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s biggest bond fund. “When policy stimulation gets traction in the real economy,” investors will begin to anticipate higher yields, he wrote in a May 1 e-mail.

Keeping Rates Low

Central banks show no inclination of raising interest rates until the housing market recovers, restraining short-term bond yields. Federal Reserve policy makers said March 18 that they are prepared to keep benchmark rates “exceptionally low” for “an extended period.” Bank of Canada Governor Mark Carney said he intends to leave the central bank’s main rate at a record low 0.25 percent until the end of June 2010.

At the same time, the flood of money being pumped into the economy by policy makers, including $12.8 trillion in the U.S., will ward off deflation and cause longer-term yields to increase, traders say.

“Inflation threats are increasing the longer you pump cash into the system,” said David Keeble, head of fixed-income strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. Subsequent steepening “will be more of a sell-off from the longer-end of the curve,” he said.

The U.S. Treasury yield curve has widened to 2.26 percentage points from 1.25 percentage points in December. It averaged less than zero in 2006 as traders correctly anticipated that the economy would enter a recession, causing inflation, which erodes the value of fixed-rate securities, to slow.

Steepest Curves

Curves in the U.K. and Italy are near the steepest levels in about 17 years, at 2.47 percentage points, respectively. Canada’s curve is 2.10 points, the most since 2002.

The shift accelerated as Japan, U.K. and U.S. central bankers cut short-term interest rates to near zero and embraced so-called quantitative easing policies by buying debt assets to keep rates down after exhausting other tools.

Merrill Lynch & Co. indexes show sovereign debt issued by the G-7 has lost 1.07 percent this year, including reinvested interest, amid a surge in government borrowing to finance the rise in spending needed to prop up contracting economies. That compares with a return of 14 percent in 2008 for Treasuries, the best annual performance since gaining 18 percent in 1995, the indexes show.

Deflation Concern

Government coupon securities issued by the G-7 and maturing in five years or less gained 0.52 percent this year, compared to losses of 0.74 percent for securities maturing in five years or more, according to Merrill. Among the 26 largest sovereign debt markets, the U.S., U.K. and Canada lost the most in April, Bloomberg data shows.

Deflation was the concern last year as U.S. bond yields fell to historic lows, the Reuters/Jefferies CRB Index of commodities tumbled 36 percent and U.S. home prices plunged 19 percent, according to the S&P/Case-Shiller index. The consumer price index fell to minus 0.4 percent in March from a year before, the first annualized decline since 1955, the Labor Department said April 15.

The Fed’s preferred measure of inflation, which tracks consumer spending and excludes food and fuel costs, rose at a 1.5 percent annual pace last quarter, the Commerce Department said April 29, approaching the lower end of central bankers’ longer-term forecasts.

‘Not Enough’

The difference between yields on Treasury Inflation Protected Securities, or TIPS, due in 10 years and notes that aren’t indexed to inflation was 1.41 percentage points. The so- called breakeven rate, which reflects traders’ outlook for consumer prices over the life of the debt, was negative 0.08 percent Nov. 20. Among the G-7, U.K. 10-year gilts have the highest breakeven rate at 2.20 percentage points.

President Barack Obama signed a $787 billion, two-year economic stimulus plan in February. Prime Minister Taro Aso of Japan unveiled a 25,400 yen ($255 billion) plan to stimulate growth. Germany, France and Italy have pledged a combined 107 billion euros ($142 billion) and the U.K. has promised 25 billion pounds ($37 billion).

Even with those measures, the global economy will contract 1.3 percent this year, according to the International Monetary Fund. While the Federal Reserve’s Open Market Committee said April 29 that the contraction has slowed and the outlook “improved modestly,” the economy may suffer as job losses and restricted credit inhibit consumer spending.

“The stimulus is not enough,” said Kevin Gaynor, head of economics and interest-rate strategy at Royal Bank of Scotland Group Plc in London. “It’s more about absorbing cyclical damage and bailing out the banking sector rather than starting a path toward economic growth.”

Lending Again

Banks curtailed lending to each other in August 2007, when losses from subprime mortgages left the world’s largest financial institutions with securities and financial contracts they couldn’t value. Markets froze in the wake of New York-based Lehman’s bankruptcy on Sept. 15, as traders speculated that if the 158-year-old firm could fail, so could any company.

Now, lending has resumed. The London interbank offered rate for three-month dollar loans fell to 1.01 percent on May 1, the lowest since June 2003.

The TED spread measuring the difference between Libor and Treasury bill rates, which rose as high as 4.64 percentage points on Oct. 10, narrowed to 0.86 percentage point last week. The Libor-OIS premium that indicates banks’ reluctance to lend to each other fell to 0.79 percentage point last week, the lowest level since before Lehman’s collapse, from 3.64 percent on Oct. 10.

Bond Sales

Companies have sold about $477 billion of bonds this year in the U.S., compared with $354 billion during the same period of 2008, according to data compiled by Bloomberg. The extra yield investors demand to buy U.S. corporate debt instead of Treasuries narrowed to 6.4 percentage points on May 1 from 8.96 percentage points on Dec. 15, according to Merrill Lynch’s U.S. Corporate & High Yield Master Index.

Rates on 30-year fixed mortgages averaged 1.76 percentage points more than 10-year Treasuries last week, down from 3.07 points on Dec. 19, the highest level since 1986, according to Bloomberg data.

“There will be a recovery and our view is we want to be ready to play that recovery,” said Michael Atkin, who helps oversee $12 billion in fixed-income assets as head of sovereign research at Putnam Investments in Boston.

Bank Benefits

Steeper yield curves are increasing trading revenue at banks. New York-based Goldman, the most profitable Wall Street firm before it posted its first quarterly loss since going public in 1999, reported net income of $1.81 billion for the first quarter on April 13. A week earlier, San Francisco-based Wells Fargo & Co. posted record earnings.

During the recession of 1991, the U.S. yield curve steepened to as much as 2.19 percent from 0.85 percent even as the economy contracted. Growth resumed in 1992, and the curve peaked at 2.68 percentage points in July of that year. It widened to 2.74 percentage points in 2003, 10 months before Institute for Supply Management’s manufacturing survey posted its highest reading since 1984.

Calyon’s Keeble said he will recommend investors move to shorter-maturity debt. An investor buying $100 million of two- year notes betting on a steeper curve will earn $1.2 million if the gap widens by 30 basis points, according to data compiled by Bloomberg. The figure is weighted so the value of a basis point move in either note has an equal dollar impact.

Yield curves “will probably get steeper,” said David Rolley, who helps oversee $106 billion as co-head of global fixed-income in Boston for Loomis Sayles & Co. “Investors will price in the recovery before” central banks raise rates.

To contact the reporter on this story: Dakin Campbell in New York at dcampbell27@bloomberg.net





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Crude Oil Falls From Five-Week High on Rising Non-OPEC Output

By Gavin Evans

May 4 (Bloomberg) -- Crude oil fell from a five-week high in New York trading on speculation increased output by non-OPEC producers and weak demand may increase stockpiles.

Daily oil output in Russia, the world’s second-largest producer, gained about 49,000 barrels in April, the nation’s Energy Ministry said May 2. New York oil futures gained 3.2 percent last week as equity markets rallied and reports showed manufacturing improved in the U.S., Japan and China.

“Some of these leading indicators have been reasonably encouraging, but that inventory over-hang is going to do a lot to stifle any rallies,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney.

Crude oil for June delivery fell as much as 58 cents to $52.62 a barrel in after-hours electronic trading on the New York Mercantile Exchange and was at $52.83 at 9:53 a.m. in Sydney. The contract jumped 4.1 percent to $53.20 a barrel on May 1, the highest settlement since March 26, after the Reuters/University of Michigan U.S. consumer sentiment index rose for a second month and an index of manufacturing reached a seven-month high.

New York oil futures gained 5.8 percent in the past two weeks as rising global equity markets and improved industrial production in China and Japan bolstered investor confidence. Prices are up 19 percent this year.

Rising Stockpiles

Still, crude-oil supplies in the U.S., the world’s largest user of the commodity, rose for an eighth week to 374.7 million on April 24, the Energy Department reported last week. The gain left inventories at the highest level since September 1990 and 15 percent above the five-year average for the period.

Stockpiles rose even as April output from Alaska, the country’s second-largest producing state, fell 10.2 percent from a month earlier after a volcanic eruption. Production from Prudhoe Bay, the biggest U.S. oil field, fell 15 percent from March, a May 1 government report showed.

“It is difficult to see a sustained rally in oil given the inventory status,” Hassall said.

Brent crude oil for June settlement fell 24 cents, or 0.5 percent, to $52.61 a barrel on London’s ICE Futures Europe exchange today. Brent rose 4 percent to 52.85 a barrel on May 1 and is up 15 percent this year.

Prices have also gained as the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s oil, has reduced output in line with cuts agreed last year.

Daily exports from Iraq, the only OPEC nation not restricted by quota, increased by 5,000 barrels to 1.821 million last month, according to the state-run oil marketing company. Shipments may rise as much as 4 percent to 1.9 million this month, Falah Al-Amri, head of the agency, said yesterday.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net





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Yen Falls as Speculation Global Slump Easing Spurs Yield Demand

By Ron Harui

May 4 (Bloomberg) -- The yen fell for a fifth day against the euro, its longest losing streak in six weeks, and slid against Australia’s dollar as speculation the global recession is easing encouraged investors to buy higher-yielding assets.

The dollar traded near a three-week low against the euro before a German report today that may show retail sales in Europe’s largest economy rebounded in March, sapping demand for the greenback as a refuge from the worldwide slump. The yen declined for a fourth day versus South Korea’s won as Asian nations will create a $120 billion foreign-currency reserve pool by year end to bolster confidence.

“The market wants to put some of the risk trade on that they took off toward the end of last week,” said Greg Gibbs, a currency strategist at RBS Group Australia Ltd. in Sydney. “The market is seeing confidence in the global recovery and hence the dollar is trending lower.”

The yen dropped to 132.43 at 9:19 a.m. in Singapore from 131.54 in New York on May 1, after earlier falling to 132.45, the lowest since April 14. Japan’s currency fell to 99.33 per dollar from 99.11. The dollar traded at $1.3315 per euro from $1.3273 in New York on May 1. It reached $1.3386 on April 30, the weakest since April 13.

Japan’s currency dropped 1 percent to 12.81014 won from 12.94456 in New York on May 1. It earlier touched 12.78274 won, the lowest since Nov. 5. The yen declined 0.9 percent to 73.03 per Australia’s dollar and fell 0.9 percent to 57.04 against New Zealand’s dollar.

The volume of currency trading is likely to be less than normal because of Japan’s “Golden Week” holidays from today to May 6, Gibbs said.

German Retail Sales

The yen approached its lowest versus the euro in almost three weeks. Germany’s Federal Statistics Office in Wiesbaden may say today that retail sales, adjusted for inflation and seasonal swings, rose 0.2 percent in March from February when sales fell 0.2 percent, a Bloomberg survey of economists showed.

“Recent economic reports suggest the global recession is abating in intensity,” said John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney. “Improved investor risk-appetite may continue to weigh on the ‘safe haven’ yen.”

Europe’s economy may be moving past the worst of the recession, data last week indicated. Confidence in the euro area increased for the first time in 11 months in April, the European Commission said, while Germany’s Ifo business confidence index rebounded from a 26-year low.

The yen dropped versus all of the 16 most-active currencies as Asian equities and U.S. stock futures rose. The MSCI Asia- Pacific Index of regional shares Index climbed 0.6 percent and the Standard & Poor’s 500 Index futures advanced 0.5 percent.

Futures Traders

Futures traders pared their bets that the yen will decline against the dollar, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 4,579 on April 28, compared with net shorts of 13,695 a week earlier. The figures are sometimes used as a contrary indicator.

Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3 percent in Australia and 2.5 percent in New Zealand, making the South Pacific nations’ assets attractive to investors seeking higher returns.

The yen also fell as the Association of Southeast Asian Nations, together with Japan, China and South Korea, will use the $120 billion in funds in times of turmoil. They will set up a surveillance unit that will identify risks to the region and provide oversight of the fund. Japan also offered $60 billion of yen-denominated swap facilities.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net





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Gold May Be ‘Off to the Races’ Above $950: Technical Analysis

By Anthony DiPaola

May 3 (Bloomberg) -- Gold may be “off to the races” if prices break resistance levels at $950 to $960 an ounce, according to Jeffrey Rhodes, a Dubai-based trader with International Assets Holding Corp.

Prices may surpass $1,200 an ounce this year, more than the record $1,032.70 reached in March 2008, Rhodes said. Gold peaked at $1,006.29 this year on Feb. 20. Gold’s support level is at about $850 an ounce, he said. Support is where buy orders may be clustered and resistance is where there may be sell orders.

“A number that would get everyone very excited would be $1,005 an ounce,” Rhodes said in an interview April 27.

Gold for immediate delivery has advanced for eight consecutive years, the longest winning streak since at least 1948. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by gold, almost doubled in 12 months and overtook Switzerland as the world’s sixth-largest gold holding. Gold has gained 0.5 percent this year to $886.55 an ounce at the close of trading May 1.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.





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Asia Commodities Day Ahead: Dean Foods Planning Share Sale

May 4 (Bloomberg) -- Dean Foods Co. fell in New York trading after saying it plans to sell new shares and forecasting quarterly profit that trailed estimates. Corn, soybeans and wheat climbed. Smithfield Foods Inc. said Mexican authorities found no evidence that the company’s joint-venture farm in Veracruz state is linked to the outbreak of swine flu. Gold and platinum fell; silver and copper rose. Alcoa Inc. reached an agreement with unionized employees at the Becancour smelter in Quebec to reduce hours worked.

AGRICULTURAL COMMODITIES

Dean Foods Falls on Share-Sale Plan, Quarterly Profit Forecast

Dean Foods Co., the biggest U.S. dairy producer, fell the most in five months in New York trading after saying it plans to sell new shares and forecasting second-quarter profit that trailed analysts’ estimates. Dean Foods dropped $1.77, or 8.6 percent, to $18.93.

Smithfield Says No Link Found Between Mexican Farm, Virus

Smithfield Foods Inc., the world’s largest pork processor, said Mexican authorities found no evidence that the company’s joint-venture farm in Veracruz state is linked to the outbreak of swine flu.

Corn Rises to 16-Week High as Rains May Slow Midwest Planting

Corn rose to the highest price since January on speculation that wet, cool weather in the Midwest may delay planting and erode yield potential for crops in the U.S., the world’s biggest grower and exporter. Corn climbed 10.25 cents, or 2.5 percent, to $4.1375 a bushel in Chicago.

Soybeans Jump to Seven-Month High as U.S. Export Sales Improve

Soybeans rose to a seven-month high as declining South American output boosts demand for shrinking inventories in the U.S., the largest grower and shipper. Soybeans gained 36 cents, or 3.4 percent, to $10.91 a bushel in Chicago.

Wheat Jumps Most in Five Months; Russia, Ukraine Output May Ebb

Wheat jumped the most in five months on speculation that dry weather will curb yields from crops in Russia and Ukraine, where farmers plan to start harvesting next month. Wheat rose 33.5 cents to $5.70 a bushel in Chicago.

Hogs Jump on Speculation Pork Demand Will Rebound; Cattle Fall

Hog futures jumped the most in four weeks on speculation that demand for U.S. pork will rebound once the world’s consumers recognize that the swine-flu virus isn’t transmitted through the meat. Hogs rose 1.05 cents, or 1.6 percent, to 65.575 cents a pound in Chicago. In other livestock markets, cattle fell 0.4 cent, or 0.5 percent, to 82.1 cents a pound. Feeder cattle dropped 1.175 cents, or 1.2 percent, to 98.45 cents a pound.

INDUSTRIAL METALS, MINING

Alcoa’s Quebec Workers Agree to Reduce Working Hours

Alcoa Inc., the largest U.S. aluminum producer, reached an agreement with unionized employees at the Becancour smelter in Quebec to reduce hours worked in exchange for keeping all production lines running.

Copper Rises on Demand Outlook as China Manufacturing Expands

Copper rose to the highest price in more than a week after a report showed China’s manufacturing expanded for a second straight month, improving the demand outlook for metals. Copper gained 5.35 cents, or 2.6 percent, to $2.101 a pound in New York.

STEEL, IRON ORE & URANIUM

Cameco Net Falls as Spot-Uranium Buys Increase Costs

Cameco Corp., the world’s largest uranium producer, said first-quarter profit slid 38 percent because of higher expenses as the company increased speculative purchases of uranium on the spot market.

PRECIOUS METALS, GEMS

Gold Falls, Caps Biggest Weekly Drop in Month, as Equities Gain

Gold futures fell, capping the biggest weekly decline in a month, as rising equities reduced demand for the precious metal as an alternative investment. Gold dropped $3, or 0.3 percent, to $888.20 an ounce in New York. Silver gained 17.5 cents, or 1.4 percent, to $12.50 an ounce.

Platinum, Palladium Fall in N.Y. on Weaker Auto Demand Outlook

Platinum and palladium fell on speculation that demand for the metals used in catalytic converters for cars and trucks will weaken after some carmakers reported sales fell more than expected in April. Platinum declined $10.20, or 0.9 percent, to $1,096.40 an ounce in New York. Palladium slid $4.30, or 2 percent, to $213.90 an ounce.

SOFT COMMODITIES

Cotton Futures Jump to Six-Month High as Economic Woes Ease

Cotton prices surged to the highest since October on signs that consumer spending and demand for commodities may improve. Cotton rose 2.85 cents, or 5.2 percent, to 57.2 cents a pound in New York. Orange juice rose 1 cent, or 1.2 percent, to 84.25 cents a pound.

Sugar Prices Surge to Highest Since July 2006 on Supply Deficit

Sugar prices in New York surged to the highest since July 2006 on forecasts for a global supply deficit sparked by a record drop in output in India, the world’s second-largest producer. Raw sugar rose 0.69 cent, or 4.8 percent, to 15.05 cents a pound in New York. Cocoa fell $51, or 2.1 percent, to $2,324 a metric ton.

Coffee Prices Jump Most Since January as Inventories Decline

Coffee prices in New York jumped the most since January as inventory declines spurred speculation that supplies will trail demand. Arabica coffee added 4.5 cents, or 3.9 percent, to $1.204 a pound in New York.





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Chinalco's Wang Defends Terms of Rio Tinto Offer, FT Says

By Steven McPherson

May 4 (Bloomberg) -- Chinalco Overseas Holdings President Wang Wenfu defended his parent company's proposed $19.5 billion investment in Rio Tinto Group, the Financial Times reported. An increase in Rio's share price and rising commodities prices have undermined Aluminum Corp. of China's offer to buy $7.3 billion in Rio convertible bonds and invest $12.3 billion for minority stakes in Rio operations, the report said. Wang was quoted as saying in an interview with the Financial Times that the offer represents certainty, while market prices are volatile.





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