Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Oct 16 09 07:31 GMT |

Previous session overview The yen weakened against the euro and dollar in Asia Friday as firm Asian equity markets and commodity prices prompted speculators to dump the safe-haven Japanese currency in favor of higher-risk units. The euro rose to JPY136.03 during the morning session, its highest level since August 24, after closing at JPY135.51 in New York late Thursday. As of 0600 GMT, the single currency stood at JPY135.71. Meanwhile, the dollar rose to JPY90.99, its peak since September 25, helped by recent rises in yields on U.S. Treasuries. At 0600 GMT, the greenback traded at JPY90.96. The euro dollar pair fell recording a low of USD1.4914 and a high of USD1.4967, having the union currency trading around USD1.4925. Yesterday the pair extended its gains against the green back breaching the USD1.4960 levels then getting back to the USD1.4925 levels. Regarding the GBPUSD, it is consolidating between USD1.6400 and USD1.6310 recording a low of USD1.6319 and a high of USD1.6398, having the royal pound trading around USD1.6335. The pair extended its gains yesterday as it rallied from the USD1.6000 levels to the USD1.6330 levels. The Australian dollar was mostly unchanged late Friday, after retreating from an earlier fresh 14-month high. Traders said buying of the Australian dollar against the yen provided the early catalyst for gains, while others cited a front page article in The Australian newspaper on the growing potential for parity with the U.S. dollar. Market expectation The euro shows some vulnerability Friday, with some profit-taking seeming likely going into the European session, followed by fresh buying perhaps next week. Traders said the euro may rise further against the yen and the dollar if U.S. economic data and corporate earnings come in stronger than expected, increasing risk appetite for high-yielding currencies. The single currency's next upside targets are at USD1.5000 and JPY136.50, they said. Players' attention will now turn to U.S. industrial production data due at 1315 GMT to gauge whether the U.S. economy is on its way to recovery. August's University of Michigan consumer confidence index due at 1355 GMT and Bank of America's earnings will also be studied by the market, traders said. European stock markets are expected to open higher Friday, with investors generally bullish ahead of more corporate earnings figures which, so far, have mostly surprised to the upside and painted a brighter picture of the global economy. In Australia, the minutes from the RBA's last policy meeting due Tuesday are likely to further reinforce expectations for more rate hikes. 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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Have Earnings Expectations Finally Set The Bar Too High For Further USD Selling?

Daily Forex Fundamentals | Written by AC-Markets | Oct 16 09 09:39 GMT |

News and Events: Yesterday's Goldman's earnings should have hit the ball out of the park, with an impressive EPS of $5.25 vs. expectations of $4.18. Yet the USD failed to sell off in the manner we saw after JPMorgan's numbers on Wednesday, and most major currencies actually lost ground against the USD immediately after the numbers. This may be the first indication that investor expectations have finally grown unrealistically high; an upside surprise is no longer enough to sate expectations, and remaining corporates will need to produce exceptional upside surprises to satisfy the market. Earnings are likely to represent the biggest focus for markets today as the timetable continues with General Electric, Merrill Lynch, Bank of America, and CIT Group Inc. Considering the precarious position CIT Group has found itself in for the last few months - balancing debt restructuring with the possibility of filing for bankruptcy protection - we feel that today's report will be unlikely to carry the baton of impressive figures forward and could trigger a sharp correction in the USD. So far today, the DXY has managed to gradually recover somewhat to 75.60 (from its 75.22 lows post FOMC), and gold is moderating around the $1047-1053 levels for the time being. It seems that the aggressive USD sell-offs that have characterized the week my be finally experiencing some exhaustion, and with US data not presenting obvious directional bias to the USD anymore, expect positioning and technicals to dominate trading. That being said, the US calendar today will present TIC Flow data, Industrial Production (Sep) and U.Mich Consumer Confidence (Oct). The other major data to come in the session will be Canadian CPI (0.1% expected, 0.0% prior), but we feel that even though expectations are modest, positioning and central bank rhetoric is likely to prevent further dramatic pushes towards parity. This morning's first main data release has been Swiss Retail Sales (Aug) which printed a extremely disappointing -1.0% YoY vs. +0.8% expected (1.0% prior); counter intuitively USDCHF sold off on the release but looking at the price action earlier in the morning, it seems there was a large spike about an hour before the release and the moves on the official release may have simply represented profit-taking Today Key Issues: 09:00 EUR Trade balance, € bn (sa) Aug exp: 4.9 prev: 6.8 11:00 CAD CPI, % m/m (y/y) Sep exp: 0.1 (-0.9) prev: 0.0 (-0.8) 11:00 CAD Bank of Canada core CPI, % m/m (y/y) Sep exp: 0.2 (1.4) prev: 0.1 (1.6) 13:00 USD Net long-term TIC flows, $ bn Aug exp: 30.0 prev: 15.3 13:15 USD Industrial production, % m/m Sep exp: 0.2 prev: 0.8 13:15 USD Capacity utilization, % Sep exp: 69.8 prev: 69.6 13:55 USD University of Michigan consumer sentiment, index Oct exp: 73.3 prev: 73.5 The Risk Today: EurUsd After EUR bulls took the pair through the major resistance at 1.4950, resistance at 1.4967 (level we highlighted yesterday) has capped the pair this morning, with the pair rangebound off intraday support at 1.4891. The trend remains bullish, and beyond 1.4967 and next major target is at the heady heights of 1.5346. GbpUsd We mentioned yesterday some upcoming resistance for GBPUSD at 1.6272 and although there was a 50 pip downmove after the pair's first visit, the level remained under attack all day and finally broke through overnight, moving swiftly to the upper end of the resistance zone at 1.6381. Just as with EURUSD and USDCHF, expect some consolidation between these levels as the market eagerly anticipates the mother of all global corporate earnings, General Electric, due out today before the US market open. UsdJpy We spoke yesterday about a new short term uptrend developing in USDJPY and no sooner had we mentioned the possibilty of a small trading range between the trend lines had the pair kicked into second gear and the uptrend players were out in force, breaking the steep 10 week downtrend in the process. So, looking at the bigger picture today to find the next level for short interest, it is clear to see the medium term trend is still down. There is a likelihood of some fresh USDJPY selling at the upper channel which now lies in the vicinity of resistance at 92.50 / 93.10. Intraday players may want to look at 91.80 for a brief pullback and short term longs playing the uptrend can look at 89.50/70 UsdChf Pretty much an inverse picture of EURUSD in the last 24 hours with new ground being covered to the downside before consolidation back to the breakdown level at 1.0186. The 2 week downtrend channel comes in just above at 1.0210 and more notable short term resistance at 1.0250. EURUSD GBPUSD USDJPY USDCHF 1.5346 1.6468 93.10 1.0360 1.5000 1.6400 92.50 1.0240 1.4967 1.6381 91.60 1.0210 1.4905 1.6340 91.25 1.0180 1.4876 1.6272 88.59 1.0037 1.4820 1.6127 88.00 1.0010 1.4720 1.5724 87.15 0.9930 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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The South Korean Central Bank May Start Considering Raising Rates

Daily Forex Fundamentals | Written by ecPulse.com | Oct 16 09 08:48 GMT |

The South Korean central bank may consider raising rates in the up coming months after the bank maintained it at record low for a long period at 2.00% in order to give the needed support to the economy. But for while now the economic conditions in South Korea began stabilizing as government spending throughout the 76 trillion won continues to sustain domestic consumption and companies access to liquidity, managing to avoid the deterioration in several important sectors in the economy. With the big recovery seen by the Chinese economy, demand on the South Korean exports starting improving, which helped the economy avoid falling into recession during the first quarter of this year when it recorded a growth rate by 0.1%. while in the second quarter it recorded a growth rate by2.6%, the fastest growth rate in six years. South Korea's central bank governor said that the bank might start raising rates faster than usual, as the bank used to increase rates only by 25 basis points. He also noted that the bank will adjust its outlook on the economy before making any new decisions on the amount of increase in interest rates. There were also some remarks made by the Minister of Finance, through which he pointed out that the South Korean economy will strengthen even more by next year, supported by the rising global demand. For now, the economy is still facing many economic challenges, which might increase the uncertainties regarding the future of the economy. Yet with the positive pattern seen in global demand, exports are expected to moderate, being able to able to support the South Korean economy again. As a result confidence in the country increased, especially with the continued support fr5om the government stimulus plans and the reductions in interest rates, that led to the recovery in the stock markets. The Kospi index rose more than 47% during this year, after increased expectations that the South Korean economy was able to overcome the global economic crisis. The government now expects in 2009 a contraction less than 1.0%, compared with the previous expectations of -1.5%. Yet the central bank expects the economy to shrink this year by 1.6%, and grow by 3 to 4% in 2010. 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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Stevens Heralds Largest Interest-Rate Rise Since 2000

By Jacob Greber

Oct. 16 (Bloomberg) -- Australian central bank Governor Glenn Stevens’s view that he can’t be “too timid” in raising borrowing costs is stoking speculation the benchmark interest rate will be increased next month by the most in a decade.

Experience “counsels against” an approach where policy makers who cut rates rapidly in response to a threat become “too timid to lessen that stimulus in a timely way when the threat has passed,” Stevens said in Perth yesterday.

The comments pushed Australia’s currency to a 14-month high and prompted investors to raise bets policy makers will increase the overnight cash rate target on Nov. 3 by half a percentage point to 3.75 percent. Stevens became the first Group of 20 central banker to increase borrowing costs when he unexpectedly boosted the rate last week by a quarter point.

“Stevens has put 50 basis-point moves on the table,” said Matthew Johnson, an interest-rate strategist at UBS AG in Sydney. “The safest time to raise rates quickly is when you know they are at the wrong level, and this is the first time a recession has ended with so little spare capacity.

“It’s not going to be long before the economy is running at full pelt again.”

Investors are certain Stevens will raise rates at least another quarter point next month as consumer confidence rises and unemployment falls, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange. Chances of a half-point increase next month rose to 40 percent from 10 percent prior to Stevens’s speech and 2 percent on Oct. 14, the futures showed at 3:34 p.m. today.

Currency Rises

The Australian dollar traded at 92.25 U.S. cents, close to the highest since August 2008, at 3:47 p.m. in Sydney. The two- year government bond yield jumped to 4.83 percent at 3:49 p.m. today from 4.63 percent before yesterday’s speech.

“I’ve said it consistently, interest rates will go up because they’ve been brought to emergency lows,” Prime Minister Kevin Rudd told Melbourne radio station 3AW today. “I don’t see any point whatsoever in trying to be cute with people about that.”

Stevens slashed borrowing costs by a record 4.25 percentage points between September 2008 and April to cushion the nation’s economy against the global financial crisis. His cuts included 1 percentage point reductions in October, December and February, the biggest moves since 1992.

‘Too Timid’

“If we were prepared to cut rates rapidly, to a very low level, in response to a threat but then were too timid to lessen that stimulus in a timely way when the threat had passed, we would have a bias in our monetary policy framework,” Stevens said. “Experience here and elsewhere counsels against that approach.”

“The governor has made it clear he’s keen to get rates back to normal quickly,” said RBS Group Australia Ltd. Chief Economist Kieran Davies, who is tipping a half-point increase next month. The last time Australian policy makers raised borrowing costs by that much was in February 2000.

Four of 22 economists surveyed by Bloomberg today tipped a half-point increase, 17 expect a quarter-point move and one predicts no change.

Australia is only the second country after Israel to raise borrowing costs since the height of the global financial crisis. Israel isn’t a member of the G-20. U.S. Federal Reserve Chairman Ben S. Bernanke said last week he and his colleagues at the Fed “believe that accommodative policies will likely be warranted for an extended period.”

Other Asian central banks may follow Stevens in raising rates.

‘Tightening Wave’

“The region could be at the leading edge of the monetary tightening wave, though we believe the pace will be measured and modest,” Lee Heng Guie, chief economist at CIMB Investment Bank Bhd. in Kuala Lumpur, part of Malaysia’s second-largest banking group, said yesterday in a note to clients. “India and Korea will probably be the first among the Asian central banks to raise rates in the first half of 2010.”

Evidence is mounting that Australia’s economy, which skirted the global recession, is strengthening. Recent reports show consumer confidence rose this month to the highest level in more than two years, the jobless rate unexpectedly fell to 5.7 percent in September from 5.8 percent in August, the first drop in five months, and retail sales gained.

Gross domestic product rose 1 percent in the first half of this year as consumers increased spending after the government distributed more than A$20 billion ($18 billion) in cash to households. The government is spending another A$22 billion on roads, railways and schools.

“The period of greatest weakness in the Australian economy is probably past,” Stevens said yesterday. “Barring another serious international setback, the economy is likely to continue on a path of gradual expansion during 2010.”

To contact the reporter for this story: Jacob Greber in Perth at jgreber@bloomberg.net

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Oct 16 09 08:59 GMT |

EUR/USD Current level-1.4939 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4134 and 1.3523. The consolidation below 1.4967 is still underway and is expected to target 1.4842 again and probably even 1.4812 important support area. The bias on the larger frames continues to be positive for 1.5104 with support at 1.4812 and risk limit below 1.4681. Resistance Support intraday intraweek intraday intraweek 1.4967 1.5104 1.4842 1.4680 1.5104 1.6040 1.4812 1.4444 USD/JPY Current level - 90.93 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84. As expected, the pair broke through 89.90 and 90.40 resistance and is in a clear uptrend targeting 92.10 area. Intraday bias is positive with support around 90.45 and crucial level at 90.19. Resistance Support intraday intraweek intraday intraweek 91.60 92.40 90.45 88.01 92.10 97.79 89.90 83.53 GBP/USD Current level- 1.6279 The pair is in a downtrend after peaking at 1.7042. Trading is situated between the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. With the recent peak at 1.6398 probably the uptrend is losing some momentum and a break below 1.6250 support area will signal a larger corrective pattern towards 1.6120 main support. Intraday bias is negative with resistance at 1.6320 and crucial level at 1.6360. Nearest support comes at 1.6250 Resistance Support intraday intraweek intraday intraweek 1.6320 1.6468 1.6250 1.5706 1.6360 1.7042 1.6130 1.5352 DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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Bank of Korea Says Rate Increases Can Be More Than ‘Baby Step’

By Seyoon Kim

Oct. 16 (Bloomberg) -- Bank of Korea Governor Lee Seong Tae said any future increase in the benchmark interest rate can be bigger than the bank’s usual 25 basis points, indicating he may raise rates at a faster pace in the coming months.

“It’s difficult to say the increase will be by 0.25 percentage point each time” as was the case in the past, Lee told lawmakers yesterday at the annual audit of the central bank in Seoul. “The central bank will review economic conditions” before deciding how much it will raise rates, he said. “I think it’ll be different from the usual baby step.”

The central bank last week kept the benchmark interest rate unchanged at a record-low 2 percent and signaled it may leave borrowing costs on hold as home loans slow. Lee’s comment came after the bank said earlier yesterday it plans to maintain an “accommodative” monetary policy as it gauges the nation’s jobs market and the global recovery.

The bank cut the benchmark interest rate by 3.25 percentage points from October to February, the most aggressive easing since it began setting a policy rate a decade ago. The government also increased spending this year to help cushion the economy from the global recession.

“If we divide and raise rates by a small amount, it will take too much time while at the same time, if we do it in a short time, it may be too big a shock,” Lee said yesterday.

When asked whether his comments referred to possible rate increases of more than half a percentage point at one time, Lee said it will be “difficult” to do that.

Loans Surge

Low interest rates have spurred consumer borrowing, with bank lending to households expanding for a seventh straight month in August before falling in September. Loans to households climbed 3 trillion won ($2.6 billion) to 405.1 trillion won in August and fell 1 trillion won in September.

Lee in September indicated the bank may act to stem rising property prices and mortgage lending, triggering speculation that interest rates would increase. A slowdown in property price increases and the appreciation of the won prompted the bank to leave rates unchanged last week, Lee said yesterday. The currency has gained more than 9 percent against the dollar in the past three months.

Still, Lee said earlier yesterday the reduction in borrowing costs to 2 percent was designed to counter an emergency and would be “too low” for a normal slowdown.

“The remaining issue is whether we adjust rates after seeing clear signs of an economic recovery from the crisis, or whether we can adjust rates once we judge that we’ve exited a severe crisis,” Lee told lawmakers.

Double Dip

He ruled out the possibility of the economy facing a so- called double-dip recession.

South Korea’s economy expanded 2.6 percent in the second quarter, the fastest pace in almost six years, and the benchmark Kospi stock index has risen more than 47 percent this year on expectations of an economic recovery. Exports fell at the slowest pace in 11 months in September while manufacturers’ confidence climbed to the highest level in two years.

Both Lee and Finance Minister Yoon Jeung Hyun said that gross domestic product will probably shrink by less than 1 percent in 2009. That compares with an earlier government estimate of a 1.5 percent contraction this year and the central bank’s forecast of a 1.6 percent decline. Lee expects the economy to expand about 3 percent to 4 percent in 2010.

BNP Paribas SA said in a report earlier this month that the central bank will probably raise rates this year.

“A move as early as November or certainly by December looks likely,” Richard Iley, Hong Kong-based chief economist at BNP, wrote in a note. “At 2 percent, policy rates are set for an emergency that has now passed and are unnecessarily fuelling incipient asset-price bubbles.”

The central bank said yesterday it will “closely monitor” asset prices, capital flows in the financial market and the foreign-currency liquidity status.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

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Japan’s 2010 Budget Requests Rise to Record 95 Trillion Yen

By Keiko Ujikane

Oct. 16 (Bloomberg) -- Japan’s ministries and agencies asked to spend a record 95.04 trillion yen ($1.04 trillion) next fiscal year, Vice Finance Minister Yoshihiko Noda said.

The requests are 7.4 percent higher than this year’s initial budget of 88.5 trillion yen, according to a statement released by the Finance Ministry in Tokyo today. The previous record request was 89 trillion yen in fiscal 2004.

The increase suggests it may be hard for the Democratic Party of Japan to fulfill its election pledges without worsening a public debt that is already the world’s largest. Prime Minister Yukio Hatoyama had asked ministers to keep their requests below the current year’s appropriation.

“The figure shows it’s easy to spend but it’s tough to cut back,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “If this goes on, the DPJ may become perceived to be a regime with a lax fiscal policy.”

The DPJ, which won power in August, has pledged to pay for its promises by cutting what it terms wasteful spending, shrinking the public service and tapping money from special accounts managed by bureaucrats. The party has said it needs to find 7.1 trillion yen next fiscal year to fund pledges ranging from handouts for childcare to lowering school tuition costs.

The former administration led by the Liberal Democratic Party’s Taro Aso said in August that its budget requests for next year would total 92.1 trillion yen, including 52.7 trillion yen in general expenditure, a ceiling that Aso’s Cabinet set in July.

Abandoned Ceiling

The DPJ-led government abandoned the ceiling and asked ministries to review their budget requests. The government plans to compile next year’s budget by the end of December.

Economists and investors have questioned whether the DPJ’s funding plan is realistic, given tax revenue is falling and welfare costs are increasing as the population ages.

“The budget request figure is disappointing as people expected the DPJ would drastically cut wasteful spending,” said Susumu Kato, chief economist at Calyon Securities in Tokyo. “There will be little choice but to sell more bonds,” especially when tax revenue is falling, he said.

Hatoyama said on Oct. 14 that the government may need to consider issuing more bonds as it assesses a possible decline in tax revenue. Finance Minister Hirohisa Fujii has said Japan should try to keep debt sales below this year’s record 44.1 trillion yen.

Tax receipts for next fiscal year may fall below 40 trillion yen, the Mainichi newspaper said on Oct. 6, without citing anyone. Tax revenue for the current year may fall short by about 6 trillion yen from the government’s estimate of 46 trillion yen because of worsening corporate profits, the paper said.

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

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Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Oct 16 09 08:44 GMT |

Good morning from Hamburg and welcome to our last Daily FX Report of this week. Today, we would like to report about the GBP and some interesting data from the U.K. However, we wish you a successful trading day and a beautiful weekend. Markets review The GBP climbed the most in more than eight months versus the EUR and reached 0.9186 on speculation that policy makers will reduce their bond buying program as the economy shows signs of recovering from the recession. Also the GBP/USD jumped to 1.6344. This was the biggest three day gain in more than two months. The GBP dropped 7.2 % versus the EUR since June 2008 as the central bank increased its asset purchase program and the Bank of England Governor Mervyn King said that the GBP`s weakening is helpful for the economy. Yesterday the number of people in the U.K. without a job benefits increased by 20,800 in September, less than the forecast, a report showed. The GBP relative strength index climbed to more than 43 above the important 30 threshold. In the U.S. the former Federal Reserve Chairmen Alan Greenspan said that he's not overly concerned about the recent weakening USD, while warning of long term costs to the country and its currency from the rising national debt Technical analysis EUR/CHF Since the middle of September, the EUR has been trading in a bullish trend against the CHF. During the last four days, the currency pair has started a downward movement but at its support line according its Pivot point, it recovered and the prices climbed again. Furthermore, a crossing MACD through the signal line from below may indicate a changing trend. Next resistance Pivot Point is at 1.5233 GBP/AUD During the middle of September, the GBP/AUD has been trading in a bearish trend channel. For a few days, the GBP touched its support line at 1.7380 and recovered to the upper trend channel line. The last two times as the currency pair reached the upper trend line, the prices rebounded. Also the RSI could support a continuing bearish trend for the GBP/AUD Pivot Points - Daily FX Support and Resistance Levels Daily Calendar & Key FX Events Varengold Bank IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.

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Europe Exports Drop 5.8% as Region Struggles to Exit Recession

By Simone Meier

Oct. 16 (Bloomberg) -- European exports declined the most in seven months in August as the region struggled to emerge from the deepest recession since World War II.

Exports from the 16-nation euro region fell a seasonally adjusted 5.8 percent from July, when they increased 4.7 percent, the European Union’s statistics office in Luxembourg said today. That was the biggest decline since January. Imports fell 1.3 percent in August and the trade surplus shrank to 1 billion euros ($1.5 billion) from 6 billion euros in the previous month.

Governments around the world have spent $2 trillion to fight the recession and European exporters from luxury-goods maker Hermes International SCA to car manufacturer Bayerische Motoren Werke AG have reported increasing orders. The euro’s 13 percent gain against the dollar in the past six months may be hindering the recovery by making European goods less competitive abroad.

“Export activity will continue to gather steam over the coming months,” Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt, said before the data were published. “But if the dynamic weakens and the euro remains strong, the economy may take a damper.”

Europe’s economy may expand 0.2 percent in the third quarter and 0.1 percent in the fourth, after contracting in five straight quarters, the European Commission forecast last month. In the three months through June, the region’s gross domestic product fell 0.2 percent as Germany and France emerged from the recession.

Largest Market

Exports to the U.K., the largest market for euro-area goods, fell 26 percent in the first seven months of 2009 from a year earlier, while shipments to China, the fastest-growing major economy, declined 4 percent, today’s report showed. Exports to the U.S., the world’s biggest economy, dropped 20 percent. The detailed country data are published with a one- month lag.

The European Central Bank has cut its key interest rate to a record low of 1 percent and started buying covered bonds to stimulate bank lending and boost investments and consumption. ECB President Jean-Claude Trichet said on Oct. 9 that it is “not the time to exit yet” with the economy expected to show a “rather uneven” recovery.

The euro was down 0.3 percent against the dollar today as the U.S. currency rose from a 14-month low against its European counterpart. The euro traded at $1.4893 at 9:52 a.m. in London, still up more than 10 percent in the past 12 months.

Mobile Phones

Nokia Oyj, the world’s biggest maker of mobile phones, yesterday posted its first net loss since the company began reporting quarterly in 1996, hurt by costs related to a joint venture with Siemens AG and weaker demand. Dublin-based C&C Group Plc, the maker of Magners cider, on Oct. 8 reported a drop in first-half profit and said trading conditions have become “more challenging.”

“Exports are likely to have to be the engine of growth again,” said Colin Ellis, an economist at Daiwa Securities SMBC Europe Ltd. in London. “But given the expected sluggish recovery in world demand and the headache of the rising euro that engine won’t be firing on all cylinders. The risk of a double dip in the euro-area economy is still lurking in the shadows.”

There are signs of a global recovery. Confidence in the world economy rose for a third month in October, a Bloomberg survey of users on six continents showed yesterday. In the U.S., the world’s largest economy, service industries expanded last month for the first time in a year. China’s manufacturing grew at the fastest pace in 17 months in September.

‘Slightly Positive’

Hermes Chief Executive Officer Patrick Thomas said on Oct. 8 that luxury-goods brand sales are “booming” in China and elsewhere in Asia, while the U.S. market has turned “slightly positive.” Munich-based BMW posted its first monthly sales increase this year in September.

“In the last three or four months, things have been significantly better than the first part of the year,” Francesco Trapani, chief executive officer of Rome-based Bulgari SpA, the world’s third-largest jeweler, said on Oct. 9. He said demand for watches has shown signs of improvement over the past months.

To contact the reporter on this story: Simone Meier in Dublin at smeier@bloombert.net.

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Oil Reaches 12-Month High Above $78 After Gasoline Supply Falls

By Grant Smith and Yee Kai Pin

Oct. 16 (Bloomberg) -- Crude oil was little changed after rising to a one-year high above $78 a barrel, helped by a larger drop in U.S. gasoline stockpiles than analysts had forecast.

Oil was headed for its biggest weekly gain in almost two months after the Department of Energy said U.S. inventories of motor fuel fell by 5.23 million barrels last week, almost five times the decline analysts forecast and the biggest drop in a year. The main rebel group in Nigeria said it resumed “hostilities” on oil facilities after a cease-fire lapsed.

Crude oil for November delivery traded for $77.43 a barrel, 15 cents lower in electronic trading on the New York Mercantile Exchange as of 10:20 a.m. London time. Earlier it climbed to $78.17 barrel, the highest intraday price since Oct. 15, 2008.

“We’ve broken this year’s high on improved sentiment after the drawdown in gasoline inventories,” said Eliane Tanner, a commodity strategist at Credit Suisse Group AG in Zurich. “But inventories did not decrease due to rising demand, which is still weak, so the risk is we revert to a $68-$75 range.”

Futures are poised to gain 8.6 percent this week, the biggest increase since the five trading days ended Aug. 21, amid signs of a recovery in global energy demand. U.S. gasoline inventories fell to 209.2 million barrels in the week to Oct. 9, a four-week low, the Energy Department said yesterday. Distillate fuel stockpiles also dropped more than forecast.

The supply reduction “completely reverses the cumulative effect of the previous two weeks of softer data,” Barclays Capital analysts led by Paul Horsnell said in a report. “The transition to a $70-to-$80 range is now in full cry.”

Refinery Runs

U.S. refiners reduced processing even as imports decreased, according to the Energy Department. Operating rates averaged 80.9 percent of capacity, down 4.1 percentage points from the previous week to the lowest since mid-April.

Refiners often idle plants in October for repairs and upgrades as gasoline demand eases and before heating-oil consumption picks up with the Northern Hemisphere winter.

“The market now will swing toward looking at the refinery runs as an indicator of demand,” said Mark Pervan, a senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “It’s at a fairly critically low level. We need to see that turn around because we can’t blame it all on the seasonal slowdown.”

Oil’s rise this week to new highs for the year was supported by a weak U.S. dollar, which attracts investors seeking to hedge against inflation. The U.S. currency fell as low as $1.4967 per euro, the weakest rate since Aug. 13, 2008.

Nigerian Hostilities

In Nigeria, The Movement for the Emancipation of the Niger Delta, which seeks more local control of the region’s oil wealth, started attacking at midnight, spokesman Jomo Gbomo said in an e-mailed statement. He didn’t elaborate.

Rebel attacks on oil infrastructure have curbed Nigeria’s exports by more than 20 percent since 2006. The country, Africa’s most populous nation and a member of the Organization of Petroleum Exporting Countries, is the fifth-largest crude oil supplier to the U.S.

Oil analysts and traders were split over whether oil prices will rise or fall next week. Twelve of 31 respondents in a Bloomberg News survey, or 39 percent, said futures will drop through Oct. 23. Another 12 predicted an increase.

Brent crude oil for December settlement fell as much as 56 cents, or 0.7 percent, to $75.67 a barrel on the London-based ICE Futures Europe exchange. The contract was at $75.79 a barrel at 9:55 a.m. in London. November futures expired yesterday at $74.45 a barrel.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net

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Coal India Increases Fuel Prices by Average 11%, Hindu Reports

By Gaurav Singh

Oct. 16 (Bloomberg) -- Coal India Ltd. raised prices of the fuel by an average of 11 percent, the Hindu newspaper reported, citing Chairman Partha S. Bhattacharyya.

The price increase, effective today, will help the state- owned company increase revenue by 25 billion rupees ($541 million) in the rest of the year through March 31, according to the report.

Bhattacharyya didn’t respond to calls on his mobile phone.

To contact the reporter on this story: Gaurav Singh in New Delhi at gsingh31@bloomberg.net.



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Greenspan Says Ruble Too Oil-Tied for Reserve Status, RIA Says

By Alex Nicholson

Oct. 16 (Bloomberg) -- Alan Greenspan said the ruble’s value is too linked to oil for it to become a reserve currency, RIA Novosti reported.

The Russian currency is at least a decade away from becoming a reserve currency because the country’s infrastructure is undeveloped, and the economy too dependent on raw materials, the former U.S. Federal Reserve chairman told the Russian news service.

President Dmitry Medvedev has urged the introduction of regional reserve currencies, including the ruble, and a supranational currency to stabilize the global economy by reducing its reliance on the dollar. Russia’s proposals for a G- 20 meeting in April included creating a supranational currency.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.



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Pound Set for Biggest Weekly Gain Since June on Recovery Signs

By Lukanyo Mnyanda

Oct. 16 (Bloomberg) -- The pound strengthened against the euro and headed for its biggest weekly gain in more than four months on speculation the economy is showing sufficient signs of recovery for policy makers to pause asset purchases.

Sterling also traded near a two-week high against the dollar as the FTSE 100 Index of stocks headed for a second week of gains. Data next week may show the U.K. economy emerged from recession in the third quarter and retail sales rose in September, according to Bloomberg surveys of economists.

“If we see more encouraging data, sterling can benefit further,” said Roberto Mialich, a senior global currency strategist in Milan at UniCredit SpA. “We don’t think more quantitative easing is a done deal.”

The U.K. currency strengthened 0.5 percent to 91.38 pence per euro as of 9:15 a.m. in London, adding to a 1.7 percent gain yesterday. Sterling advanced 1.7 percent since Oct. 9, set for its biggest weekly rise since the period through June 12. That pushed its gain in the past week to 2.9 percent.

Policy makers are unlikely to stop purchases and would rather pause and give themselves the option of “doing more later,” the Financial Times cited Bank of England Markets Director Paul Fisher yesterday as saying.

The short-sterling interest-rate futures contract expiring in March 2010 increased 4 basis point to 0.88 percent, signaling some investors are adding to bets policy makers will increase interest rates. The rate has risen from 0.78 percent on Sept. 28, the lowest level this year.

The Bank of England’s main interest rate is at 0.5 percent, an all-time low. The central bank is buying 175 billion pounds ($285 billion) of assets in an attempt to further depress borrowing costs.

To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net



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Analysts Are Split on Direction of Oil Prices, Survey Shows

By Blake Ellis

Oct. 16 (Bloomberg) -- Analysts surveyed by Bloomberg News were split over whether crude oil prices will rise or fall next week amid above-average inventories and prices that are the highest in a year.

Twelve of 31 analysts, or 39 percent, said futures will drop through Oct. 23. Another 12 respondents predicted that oil will rise. Seven said futures will be little changed. Last week, 38 percent of analysts said prices would fall.

“The bulls are saying it doesn’t matter about current supplies, that demand is going to go up,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Bears are saying that we have a glut of supplies and these prices are unsustainable.”

Crude oil stockpiles rose 334,000 barrels to 337.8 million last week, according to a U.S. Energy Department report yesterday. The gain left inventories 9.6 percent higher than the five-year average for the period. Fuel demand rose 1.1 percent to an average of 18.9 million barrels a day.

Crude oil for November delivery rose $5.81, or 8.1 percent, to $77.58 a barrel so far this week on the New York Mercantile Exchange. Yesterday’s settlement was the highest since Oct. 14, 2008. Futures are up 74 percent this year.

The oil survey has correctly predicted the direction of futures 47 percent of the time since its start in April 2004.

     Bloomberg’s survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:

                   RISE      NEUTRAL    FALL
                    12         7         12

To contact the reporter on this story: Blake Ellis in New York at bellis9@bloomberg.net

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HSBC’s King Says Pound Crisis Always a Risk for U.K.

By Jennifer Ryan

Oct. 16 (Bloomberg) -- Britain faces the danger of a currency crisis after policy makers allowed the pound to become “seriously undermined,” HSBC Holdings Plc Chief Economist Stephen King said.

“There’s always a risk of a sterling crisis, particularly about where we are currently,” King said in an interview at an HSBC conference in London yesterday. “It clearly is already a currency that’s been seriously undermined.”

Since the start of 2008, Britain’s swelling government debt has prompted the pound to drop about 17 percent against the dollar and more than 20 percent against the euro. Sterling touched a four-month low against the dollar in September after Bank of England Governor Mervyn King said that the currency’s decline was “helpful” in rebalancing the economy.

The pound is “extremely weak,” HSBC’s King said. “Part of this is the benign neglect on behalf of policy makers who were quite happy in a sense to see sterling falling. The problem with admitting that you’re happy about it is that a small fall can turn into a very large fall, so yeah, there’s definitely a danger there.”

Paul Fisher, the bank’s markets director and its former head of foreign exchange, said in an interview published in the Financial Times yesterday that the bank’s comments on sterling have been backward looking, and policy makers try not to comment on future currency movements.

Currency Forecasts

HSBC’s King said the pound and the dollar may stay “weak” for the next 12 months. The U.K. currency strengthened against the euro today and headed for its biggest weekly gain in more than four months. Against the dollar, it traded close to a two- week high. The pound was at $1.6343 and 91.29 pence per euro as of 9:34 a.m. in London.

“Investors are becoming more and more concerned about the fact that these countries have big budget deficits, have rapidly rising government debt-to-GDP ratios, have extremely loose monetary policy,” he said. “The risk for the next year or so is that the dollar and sterling remain extremely weak and possibly get even weaker, particularly against the emerging currencies but possibly also the yen and the euro.”

The bank said at its October decision it would finish spending all 175 billion pounds ($286 billion) allotted to its bond purchase program by its next meeting, and kept the key interest rate at a record low of 0.5 percent.

‘Panic’ Risk

HSBC’s King said the central bank should signal at its next policy meeting in November an intention to continue its bond- purchase program, even if it doesn’t announce an increase in the program’s size. An announcement to end the purchases could spark a “panic” among investors, he said.

“If you’re in a situation whereby you ended the process and stopped doing any more and the market started to panic as a result of that, you could get a sort of unintended adverse consequence whether it would be a spike up in bond yields or whatever that might undermine the performance of the economy more broadly,” he said. “I personally would like them to have a signal that policy remains loose for quite a long time.”

The bank’s previous signals that it may consider ending the program sparked losses in government bond markets. The yield on the 10-year gilt rose to the highest level in almost six weeks July 23 after Bank of England policy maker Andrew Sentance said the bank may pause the bond program if necessary.

Monetary policy may stay looser “than would otherwise be the case” if the U.K. government opts to tighten fiscal policy, King said.

“Monetary and fiscal policy in a sense have become one and the same thing,” King said. “The distinction that one used to have doesn’t really exist any more because they are sort of combined together. The sequencing of how you exit from the current position is very, very important and I personally prefer more action on fiscal policy on monetary policy.”

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net



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Dollar Ends 4-Day Slide as U.S. Recovery Belies Currency’s Drop

By Bo Nielsen and Ron Harui

Oct. 16 (Bloomberg) -- The dollar snapped a four-day losing streak against the euro, rising from a 14-month low, as some investors bet that the currency’s decline was overstated given signs of a U.S. economic recovery.

The Dollar Index pared a second straight weekly drop amid speculation a report today will show industrial production rose for a third month and after European Central Bank President Jean-Claude Trichet said U.S. support for a strong dollar is “extremely important.” The pound headed for its biggest weekly gains versus the euro and the dollar in at least four months on speculation the Bank of England will stop buying bonds.

“The U.S. dollar is trading better on better news now,” said Adam Cole, head of global currency strategy at RBC Capital Markets in London. “At the same time we have ECB speakers stepping up their concern on the dollar’s weakness and that could likely stop the drop in euro-dollar.”

The dollar strengthened to $1.4892 per euro as of 10 a.m. in London, from $1.4947 in New York yesterday, when it depreciated to $1.4968, the weakest level since Aug. 13, 2008. The U.S. currency also advanced to 91.26 yen, from 90.55 yen. The euro rose to 135.90 yen from 135.35.

The Federal Reserve may say today that output at U.S. factories, mines and utilities climbed 0.2 percent in September, following increases of 0.8 percent and 1 percent in August and July, according to the median forecast of 77 economists surveyed by Bloomberg News. Another report may show consumer sentiment this month eased off the highest level in more than a year.

Pound’s Rally

The pound advanced for a fourth day against the dollar, heading for its biggest weekly gain in four months, after the Financial Times yesterday cited Bank of England Markets Director Paul Fisher as saying policy makers would be more likely to suspend asset purchases, giving themselves the option of “doing more later.” Rising asset prices and improved confidence may signal the program is working, central bank Deputy Governor Charles Bean said this week.

“If the pound can bounce, then we must be wary that the dollar can also do so,” Greg Gibbs, a currency strategist in Sydney at Royal Bank of Scotland Group Plc, wrote today in a report. “The dollar has become oversold. The bounce in the former increases the risk of a broad bounce in the dollar, even if it may only be a short-term reprieve.”

The U.K. currency climbed to $1.6367, from $1.6268 yesterday, on course for its biggest weekly advance since June 12. It also strengthened to 91.01 pence per euro, from 91.86.

Dollar Index

The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six major U.S. trading partners, climbed 0.2 percent to 75.652, a three-day high.

The index was still on course for a second weekly drop, extending this year’s decline to 7 percent.

“It is extremely important that the U.S. authorities, including the Treasury, the Secretary of the Treasury and the chairman of the Fed, would pursue policies that take into account the fact that a strong dollar is in the interest of the U.S.,” Trichet said at an event in Frankfurt yesterday. “Excess volatility is an enemy from the standpoint of the stability and prosperity of the global economy.”

The yen headed for a second weekly loss versus the euro and was the worst performer among the 16 most-traded currencies in the last five days as some investors doubted the Japanese government will support a stronger currency.

Policy ‘Shift’

Finance Minister Hirohisa Fujii said in Osaka yesterday governments are responsible for ensuring the stability of their currencies, which “need to reflect the strength” of economies.

“The shift in Japanese currency policy has broken the relationship between the yen and risk, but the boost to sentiment already looks to be fading,” Todd Elmer, a currency strategist at Citigroup Inc. in New York, wrote in a note yesterday. “The erosion of support from official rhetoric on the exchange rate should leave the yen more vulnerable to negative underlying fundamentals and a potential acceleration in capital outflows.”

The Japanese currency dropped to 84.09 per Australian dollar from 83.36. It earlier touched 84.22, the weakest level since October 2008.

The dollar reversed losses against the euro after the European currency’s 14-day stochastic oscillator rose to 91.9 today from 69.1 a week earlier, above the 80 threshold that signals the euro may have risen too quickly and is poised to weaken.

ECB Measures

“Technical indicators show the dollar was being oversold,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “Investors are adjusting their positions, buying back the currency.”

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

The euro still headed for a second weekly gain against the dollar amid speculation European Central Bank officials will today signal a withdrawal of unconventional policy measures intended to combat the recession. ECB council member George Provopoulos said the bank would quickly drop exceptional measures if they compromised price stability.

“Any non-standard measure that may pose a threat to price stability will be promptly withdrawn,” Provopoulos, who is also Governor of the Bank of Greece, said in a speech in Athens today. “If no such risk exists, a measure can be maintained in case of significant financial-market tensions.”

“ECB officials are starting to signal exit strategies as stocks gain and corporate earnings improve,” said Takeshi Tokita, vice president of foreign-exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. “The market is taking that as a positive sign, benefiting higher-yielding currencies such as the euro.”

To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net

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Emerging-Market Currencies May Become Volatile, Meirelles Says

By Fabiola Moura

Oct. 16 (Bloomberg) -- Emerging-market currencies that have been appreciating as economies recover from a global recession may become volatile as markets overprice assets, Brazilian central bank President Henrique Meirelles said.

Brazil’s real is outperforming the world’s 16 major currencies this year with a 36 percent gain against the dollar, followed by the South African rand’s 28 percent rise. All but four of 26 developing-nation currencies tracked by Bloomberg have strengthened against the greenback in 2009.

Central banks need to “alert investors and markets of the risks of exaggeration in the formation of prices, which can lead to future corrections and create unnecessary volatility,” Meirelles said in an interview late yesterday in New York.

Brazil’s gross domestic product increased 1.9 percent in the second quarter from the previous three months, the biggest gain in four years, and Finance Minister Guido Mantega last week said the economy will expand as much as 5 percent next year. Developing nations are helping the world recover from its deepest recession since the 1930s, Meirelles said.

“The emerging economies in general are getting out of this crisis stronger and faster than mature economies,” Meirelles said. “All that said, in moments of recovery, there is always the risk of excess of euphoria and excesses of pricing of certain assets and I think everybody needs to be aware of it.”

‘Overvalued’ Real

The Brazilian real is among “the most overvalued currencies” in the world, Thomas Stolper, a currency strategist at Goldman Sachs Group Inc., said yesterday on a call with clients. Meirelles declined to comment on the currency, which was little changed at 1.7010 per dollar yesterday in New York, after earlier in the day touching a one-year high of 1.6978.

Mantega said Oct. 8 that policy makers were “aggressively” buying dollars, using intervention to help counter appreciation that may hurt the nation’s exports.

Policy makers have “done a monumental effort” to limit gains in the local currency, Reginaldo Galhardo, foreign exchange manager at Treviso Corretora de Cambio, said in an interview from Sao Paulo. “Now investors wonder if the central bank will use some other kind of weapon.”

To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net

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Greenwich Jewelry Turns to Cash as Gold Reaches $1,000 an Ounce

By Tom Moroney and Brian K. Sullivan

Oct. 16 (Bloomberg) -- The people of Greenwich, Connecticut, the hedge-fund capital of the U.S., know a golden opportunity when they see one.

With the price of gold futures reaching a record $1,072 an ounce this week, they’re carting watches, bracelets, rings and necklaces to a Hyatt Regency hotel off Interstate 95. There, representatives of Cash for Gold are writing checks for the precious metal.

“Once the price of gold went over $1,000, I knew it was the time to do it,” said Joy Kruger, a real estate agent who sold her unwanted jewelry yesterday for $2,700.

Greenwich and other well-to-do towns are the best places for mining used gold, said Anthony Holdampf, president of Westport, Connecticut-based Cash for Gold. While the company has licenses to operate in 31 communities in Connecticut, California, New Jersey and Florida, it’s narrowing its focus to the wealthiest ones and has set up camp in Greenwich for more than a year.

“They show up dressed very fancy, maybe wearing their Rolexes,” Holdampf said. Affluent sellers have “twice as much gold as anyone else, and plenty of gold they could get rid of.”

Greenwich, 27 miles (43 kilometers) northeast of New York City, has a population of 60,000 and median household income of $117,857, according to U.S. Census data. That compares with $50,007 nationally.

Cash for Gold buys gold for about 60 percent to 90 percent of the price on the Comex division of the New York Mercantile Exchange, depending on the purity, Holdampf said. He does business under different names in various locations, and isn’t connected to the company called Cash4Gold that runs national television ads.

Gold futures in New York have closed at more than $1,000 an ounce every day since Sept. 30. Today, the price was $1,053.

Church Fundraisers

Churches are taking advantage of gold’s rise, too. Holdampf will organize and run a gold trade-in and give the church 20 percent of what he pays sellers. He has done events at four Connecticut churches, as well as St Vincent’s College in Bridgeport.

St. Ann Roman Catholic Church in Bridgeport held a gold fundraiser in June with Holdampf.

“This hugely successful event netted our parish $5,050 for which I am profoundly grateful,” the Reverend Peter Towsley, the pastor, wrote in a letter posted on the company’s Web site. Towsley couldn’t be reached for comment yesterday.

Holdampf said he was unprepared for the response at his first cash-for-gold event in Greenwich. In four days, 160 people sold him a total of $97,000 of gold, a record that hasn’t been topped in neighboring towns including Darien, Westport and New Canaan, which are known collectively as the Gold Coast for their wealth and proximity to the shoreline.

Five-Day Stay

The success of that event led him to schedule five-day weeks in Greenwich through the end of the year. On average, 25 to 30 people show up each day with about $500 of gold each.

Marlene Coelho, 55, a security officer from Stamford, cashed in some jewelry for $203 yesterday.

“I’m going to deposit it,” she said. “I need the money in the bank.”

Jill Kalman, 47, of Norwalk, walked in with baubles including a locket from her college days and a ring of her father’s.

“I’m trying to fund a dream,” the communications consultant said of her plan to find voiceover work. “I wanted to be the next Meredith Viera, but I am getting a little long in the tooth.”

Morton R. Shapiro, 72, of Stamford and his wife, Joyce, brought $225 of jewelry in disrepair. Shapiro said he has followed the gold market his entire life and thinks the price will continue heading up. He counsels against selling items with sentimental value.

Some Crying

“I’ve seen people cry,” although sellers usually don’t bring family heirlooms, Holdampf said. “It’s more like the $2,000 bracelet that’s never worn and in a safety-deposit box somewhere.”

Jewelers scratch each piece with a testing stone and use acid tests to determine whether the item is gold and of what quality. The gold is sold to a refiner who melts it into blocks for sale, said Costell Trandu of Cash for Gold.

Peter Suchy of Suchy Jewelers in Stamford said customers would be better off bringing their precious metals to a local business like his. He said having a long-term relationship means he can give them better advice on what to sell and when.

“We are here to provide a service to the community, and we’re staying here,” Suchy said.

Holdampf said he sees his work as a service for “super- wealthy” people who might be embarrassed to take their gold to a pawn shop.

“Times are hard and everybody is affected, not just the middle class,” Holdampf said.

He said Newton, Massachusetts, may be next: median household income, $104,014.

To contact the reporters on this story: Tom Moroney at tmorrone@bloomberg.net; Brian K. Sullivan in Boston at bsullivan10@bloomberg.net

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India’s Steel Consumption Rises on Auto, Home Demand

By Debarati Roy

Oct. 16 (Bloomberg) -- India’s steel consumption gained 5.7 percent in the financial first half, spurred by demand from carmakers, appliance manufacturers and builders of rural homes.

Consumption rose to 26.49 million metric tons in the six months ended Sept. 30 from a year earlier, steel secretary Pramod Rastogi said today in a phone interview from New Delhi. Production rose 2 percent to 28.49 million tons, he said.

Increasing demand for automobiles, refrigerators and air conditioners and rising farm income are boosting sales in the world’s second fastest-growing major economy. India’s industrial production for the period April to August rose 5.8 percent from a year earlier.

Uttam Galva Steels Ltd., the Indian venture of ArcelorMittal, plans to increase production by 25 percent in the next financial year to meet domestic demand, Director Ankit Miglani said on Oct. 14. Annual demand in India for galvanized steel, used to make roofs and automobiles, is growing as much as 19 percent, he said.

“Rural demand has remained firm over the past several months,” Miglani said in the Oct. 14 interview. “From roofs to furniture to cars, the use of steel has increased.”

Steel imports rose 1 percent to 3.22 million tons in the first half, while exports slumped 43.6 percent to 1.34 million tons, Rastogi said.

The World Steel Association, comprising about 180 steelmakers, said on Oct. 12 the emerging economies of China and India will rebound faster than developed nations.

India’s steel demand may gain as much as 10 percent this fiscal year, almost double the pace previously estimated, as the government spends more on infrastructure, Rastogi said in June.

“As the monsoon fades in India, demand will grow and we will be able to attain our 10 percent growth target,” he said today.

To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net

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U.S. Criticizes China for Lack of Yuan ‘Flexibility’

By Rebecca Christie

Oct. 16 (Bloomberg) -- The U.S. Treasury Department criticized China for the “lack of flexibility” of the yuan and a buildup of foreign-exchange reserves while stopping short of branding the nation a manipulator of its currency.

“The recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances,” the Treasury said in its semiannual report to Congress on the currency policies, using another name for the yuan.

The report released yesterday, which found that no major U.S. trading partner illegally manipulated its currency in the first half of 2009, comes after Group of 20 leaders adopted a “framework” for sustaining global growth and reducing lopsided flows of trade and investment. The framework could see China boosting domestic demand, the U.S. saving more and Europe increasing investment.

“Both the rigidity of the renminbi and the reacceleration of reserve accumulation are serious concerns which should be corrected to help ensure a stronger, more balanced global economy consistent with the G-20 framework,” the report said. “The Treasury remains of the view that the renminbi is undervalued.”

A Chinese central bank spokesman declined to comment today. No comment was immediately available from China’s Foreign Ministry.

‘Structural Imbalances’

The American Chamber of Commerce in China said today that both the U.S. and Chinese economies have “structural imbalances,” which President Barack Obama should discuss when visiting China next month. The yuan’s value is “not a major cause of the U.S. trade deficit with China,” the chamber said in an e-mailed statement.

The yuan traded at 6.8273 against the dollar as of 2:40 p.m. in Shanghai from 6.8287 yesterday. Yuan forwards headed today for the biggest weekly gain in more than six months on speculation the central bank will allow appreciation as exports and inflation pick up. Policy makers halted gains versus the dollar in July last year.

China’s foreign-exchange reserves, the world’s biggest, surged in the third quarter as an economic recovery attracted speculative capital and a weak dollar boosted valuations of its yen and euro assets.

The holdings climbed about $141 billion to a record $2.273 trillion, the People’s Bank of China said this week. That was less than the unprecedented $178 billion gain in the second quarter.

‘Greater Flexibility’

The Obama administration wants China to “pursue policies that permit greater flexibility of the exchange rate and lead to more sustainable and balanced economic growth,” the report said. The U.S. will continue to push China to allow the yuan to appreciate in two-way meetings and through meetings of officials from the Group of 20 nations.

Peoples Bank of China officials have called this year for an alternative to the dollar as a global reserve currency. At the same time, the issue hasn’t been a central point of debate at recent international summits like a meeting of Group of 20 leaders in Pittsburgh last month.

Geithner this year has reiterated the U.S. commitment to a “strong dollar,” and a “special responsibility” to make sure the currency maintains its leading role in the global financial system.

Less ‘Strident’

“Both the U.S. and China have backed away from their more strident foreign-exchange positions,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.

“The U.S. is no longer using nearly every international forum to push for Chinese reforms,” he said. “For its part, China has not pressed with the PBOC musings about the need to replace the dollar.”

Under a 1988 law, the Treasury is required to report to Congress twice a year on international economic conditions and exchange-rate policies. The Treasury is required to enter direct talks with a country deemed to be manipulating its currency, and also seek redress through the International Monetary Fund. The last time a country was branded as a manipulator was China, in 1994.

Yesterday’s report also said that “there are clear signs that the economy is stabilizing” and notes improvement in financial markets and economic growth. Still, “the global economic recovery remains incomplete,” it said.

To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net

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