Rupee, Won, Lira Rally Dies as Inflation Hits Emerging Markets

By Lukanyo Mnyanda and Lester Pimentel

July 21 (Bloomberg) -- The five-year rally in emerging- market currencies is coming to an end as central banks from South Korea to Turkey struggle to contain inflation, say DWS Investments and Morgan Stanley.

The 26 developing-country currencies tracked by Bloomberg returned an average 0.96 percent in the past three months, down from 1.63 percent in the first quarter, 8.2 percent for all of 2007, and 30 percent annually since 2003. For the first time in seven years, investors are less bullish on emerging-market stocks than on U.S. equities, a Merrill Lynch & Co. survey showed last week.

Confidence in the Indian rupee is weakening after inflation accelerated at the fastest pace in 13 years, stoked by soaring food and energy prices. South Korea's won will drop this year by the most since 2000, while Turkey's lira will reverse its biggest gain since at least 1972, the median estimates of strategists surveyed by Bloomberg show.

``There are some countries that suffer from weak institutions, where central banks have not been proactively fighting inflation and sentiment has deteriorated,'' said Nicolas Schlotthauer, a fund manager in Frankfurt at DWS Investments, which oversees about $400 billion. Schlotthauer said he expects the Indonesian rupiah and the Philippine and Colombian pesos to underperform emerging-market assets.

Food and energy prices account for more than 40 percent of inflation in India, Thailand and Turkey, compared with about 25 percent in the U.S., according to Morgan Stanley. Inflation exceeds targets in at least 19 emerging economies.

Slovakia to Brazil

The developing-economy currencies tracked by Bloomberg strengthened an average 32 percent in the past five years, led by gains of 94 percent in Slovakia's koruna and 93 percent in Poland's zloty as those nations forged closer ties with the European Union. In Latin America, Brazil's real has surged 80 percent while the Colombian peso has climbed 62 percent since 2002 amid a boom in commodities.

Slovakia will adopt the euro next year, while the zloty will depreciate to 3.33 against the dollar by year-end from 3.22, according the median estimate of strategists surveyed by Bloomberg. In South America, the real will weaken to 1.70 by the start of 2009 from 1.59 and the peso will decline to 1,888 from 1,805, the surveys show.

Emerging-market and high-yield bonds are poised to fall this year for first time since 1999, a Merrill Lynch index shows. Investors prefer U.S. equities over developing economies' stock markets for the first time since 2001, according to Merrill's July survey of money managers who oversee $610 billion. A net 4 percent of investors said they were ``overweight'' emerging markets, down from 25 percent in June.

`More Challenging'

``It's going to be a more challenging environment for emerging markets as you're going to see less portfolio flows,'' said Koon Chow, a Europe, Middle East and Africa foreign-exchange strategist at Barclays Plc in London. ``People are focusing more on the domestic fundamentals like fiscal and monetary policy credibility. In the past, there was less differentiation.''

Fitch Ratings cut the credit outlooks in the past month on South Africa and India, whose currencies gained 74 percent and 18 percent in the five years through 2007. The South African rand slumped 11 percent this year and the rupee 9 percent as investors bet rate increases won't contain inflation and the countries struggled to boost growth and pull millions of people out of poverty.

Shortcomings `Exposed'

The World Bank estimates that about half of India's 1.1 billion population survives on less than $2 a day, while 23 percent of South Africa's workforce is unemployed, the highest rate among the 61 economies monitored by Bloomberg. That limits the ability of their central banks to fight inflation through higher borrowing costs.

India's rupee will weaken 8 percent, its worst year in a decade, while the South African rand will lose 22 percent, its worst performance since 2001, the Bloomberg surveys show.

``The shock of higher food and energy costs has exposed the major shortcomings of emerging economies in controlling inflation,'' said Stephen Jen, chief currency strategist at Morgan Stanley in London and a former Federal Reserve economist. ``I'm not sure emerging markets will respond to inflation shocks.''

Betting against currencies of emerging markets is risky because the oil and food producers among them benefit from higher prices, and those that are able to tackle inflation will attract investment, said Peter Eerdmans, head of emerging-market bonds at Investec Asset Management in London. Crude oil almost doubled in the past year, reaching a record $147.27 a barrel on July 11.

Energy Producers

``The beauty with our universe is that it's so diverse and there are so many stories to play,'' said Eerdmans, whose firm has $60 billion in assets. ``A lot of the bad news has started to come into the price and we see tactical opportunities.''

Eerdmans said Investec has ``long positions'' in the currencies of Nigeria, Malaysia and Russia, which are benefiting from higher oil prices and foreign direct investment, allowing them to fight inflation through currency appreciation. A long position is a bet that an asset will increase in price.

The Malaysian ringgit, which gained 6.11 percent in 2007, is up 0.24 percent this year to 3.2425, and will likely end the year little changed at 3.18, according to a Bloomberg survey of strategists. A separate poll shows the ruble weakening to 23.51 from 23.22.

For Mark Rall, senior fund manager overseeing $900 million in emerging-market debt at Union Bancaire Privee in Zurich, energy exporters including Russia and Brazil are attractive. Countries with growing current-account deficits, such as South Africa and Turkey, should be avoided, he said.

Wider Deficits

The Turkish lira will fall 12 percent, reversing a 17 percent advance during 2007, according to analysts' forecasts compiled by Bloomberg. Korea's won is likely to fall 0.6 percent.

Turkey's current-account deficit may swell to a ``worrying'' $50 billion by year-end, Moody's Investors Service said July 9. South Africa's deficit will probably remain ``large and persistent'' as the country will have to rely on foreign capital to boost investment, Finance Minister Trevor Manuel wrote in the country's Star newspaper July 14. The shortfall reached a 26-year high of 9 percent of gross domestic product in the first quarter.

``You have to analyze policy behavior as those that are doing the right things will do better,'' Rall said.

The reluctance of central banks in emerging markets to raise rates amid faster inflation will also hurt local-currency denominated bonds, said Edwin Gutierrez, who manages $5.5 billion in emerging-market debt in London for Aberdeen Asset Management Plc.

``Inflation is what keeps me up at night,'' said Gutierrez said. ``It's the biggest challenge going forward in emerging markets.''

To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Lester Pimentel in New York at lpimentel1@bloomberg.net



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Korea Starts Asia's First Hog Contract Amid Concern Over Volume

By Sungwoo Park

July 21 (Bloomberg) -- South Korea, Asia's fourth-biggest economy, introduced trading of lean hog futures today amid concern that the first contract for the commodity in Asia may fail to attract investor interest.

Hogs will also be the first agriculture-linked contract offered by Korea Exchange Inc. The bourse, operator of the nation's equities and futures markets, lists stock-based contracts and in 1999 introduced a little-traded gold contract.

``We are a bit skeptical if trading will go okay with enough liquidity because the number of players is limited,'' C.H. Lee, team leader of retail sales at Woori Futures Co. in Seoul, said before trading began. ``You can secure liquidity when even ordinary individuals participate, but they don't seem to be interested and only some livestock people are.''

Pork is Korea's second-largest agricultural product by value after rice and the contract offered swine producers and processors a way to manage price risk, the exchange said June 29. Pork-related futures trade in the U.S. and Germany, it said.

Lean hogs for August delivery traded at 3,920 won per kilogram at 11.30 a.m. in Seoul after opening at 3,950 won, according to the exchange. Sixty-six contracts were traded.

``Listing lean hog futures can extend derivatives to general products and make a contribution to the development of capital markets by providing a proper hedging tool for industries other than the financials,'' the bourse said.

South Korean pork output was valued at 3.6 trillion won ($3.5 billion) in 2006, the exchange said.

Volume Challenge

``I don't think it's going to be a big player,'' Lawrence Kane, a market adviser at Stewart-Peterson Group, said on July 17 from Peoria, Illinois. ``Their biggest challenge is to create volume over the next couple of years.''

Hog futures volume averages about 29,000 contracts a day on the Chicago Mercantile Exchange, the Korean bourse said.

Korean pork prices fluctuated by 27.2 percent last year, compared with 23.1 percent for the Kospi 200 Index and 0.5 percent for 3-year government bonds, it said. Hog futures prices will be based on average prices of the meat traded in 11 local markets, it said.

``The question is whether they can attract many of the farmers'' to use the contract and increase liquidity, Chris Yoo, a manager at global commodities with Samsung Futures Inc. in Seoul. ``Pork farmers look at pig hips, not PC monitors for future prices.''

Korean Doubts

Overseas investors and market analysts expressed doubts about initial contract volumes.

``If you'd have said China, I would think that would be a little more of interest, but Korea,'' David Bauer, President of Brite Futures Inc. in Milwaukee, said on July 17.

South Korea, which is about 78 percent self-sufficient in pork, consumes 870,000 metric tons of the meat a year, or 18 kilograms per person, the Korean bourse said.

``The outlook is not all that pessimistic because hogs are the single-biggest commodity in Korea in terms of the number of market participants, and there's a need out there for hedging against price fluctuations,'' Samsung's Yoo said.

Korean hog futures will be settled in cash, with each contract equal to 1,000 kilograms, the Korean exchange said. Trading will be from 10:15 a.m. to 3:15 p.m. local time, it said.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Molly Seltzer in Chicago at Mseltzer3@bloomberg.net



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Corn, Soybeans Decline on Favorable U.S. Crops Weather Prospect

By Jae Hur and Sungwoo Park

July 21 (Bloomberg) -- Corn and soybeans dropped to their lowest in more than a month on speculation warm and wet Midwest weather will improve the U.S. crops' prospect and declining oil costs may cut demand for biofuel, easing inflation concern.

Corn lost 11 percent last week, the most since July 1996, while soybeans declined 9.3 percent last week, the most since mid-March. Wheat fell to the lowest since June 6. Oil also lost 11 percent last week, the most since Dec. 2004 on signs of slowing global economic growth and faltering U.S. fuel demand.

With crude oil surging to an all time-high above $145 a barrel, prices for corn, soybeans, wheat and rice reached records this year, spurring riots from Haiti to Egypt and Cameroon and producing countries, including China and Egypt, to curb exports to safeguard domestic supplies and cool inflation.

Corn has been pressured lower from ``the combination of improved Midwest weather in addition to heavy spillover pressure from the sharp break in crude prices,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail.

Corn for December delivery fell as much as 2.2 percent to $6.15 a bushel, the lowest since June 5, in after-hours trading on the Chicago Board of Trade and traded at $6.215 a bushel at 1:34 p.m. Singapore time.

Futures declined 22 percent from a record $7.9925 on June 27. The price is still up 76 percent in the past year on increasing global demand to feed livestock and biofuel.

Soybeans

Soybeans for November delivery dropped as much as 18 cents, or 1.2 percent, to $14.30 a bushel, the lowest since June 10, and traded at $14.39 as of 1:43 p.m. Singapore time. Futures have plunged 8 percent since reaching a record $16.3675 on July 3. The price is still up 76 percent in the past year on rising demand.

Soybeans were under pressure from corn's drop, slumping crude oil and the Argentine Senate's rejection last week of the export tax legislation which will have the effect of reducing demand for U.S. exports, Hassall said.

Crude oil rose today from a six-week low set July 18, with the contract for August delivery gaining as much as 1 percent to $130.13 a barrel.

Recent losses in grains coupled with the drops in oil prices will ``definitely go some way to easing central bankers' concerns over inflationary pressures, although it would be premature to call an end to the commodities bull market,'' Hassall said.

Australia

Wheat for September delivery dropped as much as 2.2 percent to $7.8625 a bushel and traded at $7.9650 by 1:51 p.m. Singapore time. Prices have fallen 41 percent from a record $13.495 on Feb. 27 as higher prices spurred farmers to plant more.

Parts of Western Australia state, the nation's biggest wheat grower, may get more rainfall this week, a forecaster said. Rain is critical in coming months to bolster crop yields in Australia, forecast to be the third-largest wheat exporter.

The southwest of Western Australia may get 20-50 millimeters of rainfall in the next eight days with precipitation heavier near the coast, said David Jones, head of climate analysis with the Bureau of Meteorology. It will be mostly dry in other grain growing areas, he said.

``The extent of the West Australian crop largely determines how much wheat we have to export,'' from Australia, Richard Koch, managing director of Perth-based forecaster ProFarmer Australia, said in an interview with Bloomberg Television today.

To contact the reporters responsible for this story: Jae Hur in Singapore at jhur1@bloomberg.net; Sungwoo Park at spark47@bloomberg.net



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Aluminum Rises From One-Month Low in Asia After Crude Oil Gains

By Li Xiaowei

July 21 (Bloomberg) -- Aluminum rose from a one-month low in Asia after crude oil rebounded, renewing concerns of higher production costs for the energy-intensive metal.

Energy accounts for around 40 percent of aluminum's production costs. Crude oil gained from a six-week low in New York on speculation diplomatic tensions with Iran may escalate after the world's fourth-largest oil producer resisted United Nations demands that it suspend nuclear research.

Aluminum ``is moving in line with crude oil,'' Zeng Chao, an analyst at Everbright Futures Co., said in an e-mailed report today. Still, signs of ample supplies may offset expectations of higher costs, Zeng said.

Aluminum for delivery in three months on the London Metal Exchange rose as much as 0.6 percent to $3,049.75 a metric ton and traded at $3,046 at 10:31 a.m. in Shanghai. The metal dropped to $3,020 on July 18, the lowest in a month, after crude oil fell and inventories increased.

October-delivery aluminum on the Shanghai Futures Exchange declined 0.7 percent to 19,130 yuan ($2,803) a ton.

Aluminum stockpiles monitored by the London exchange jumped to the highest since May 2004 on July 18. China, the world's largest producer, made 1.15 million tons of the metal in June.

Among other LME-traded metals, copper rose 0.4 percent $8,115 a ton, zinc was up 0.8 percent at $1,834, lead, nickel and tin were untraded in Asia after settling at $1,970, $20,400 and $23,425 on July 18.

To contact the reporter for this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net

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Daily Forex Analysis

Daily Forex Technicals | Written by FOREXYARD | Jul 21 08 07:42 GMT |

Headlines USD Continues To Be Under Pressure Economic News USD When glancing back at a weekly chart several months from now, one will look at the change in the market last week and consider it a normal one. The greenback ended the trading week last week virtually unchanged against its major rivals from the levels it began the week with. A closer look into last week's trading however will show a much different picture. The greenback saw record lows against the EUR crossing 1.6035 before regaining nearly 200 pips to close the week. The same was the case for the USD/JPY shooting back up to over 106 after flirting with 103.80, as the GBP also added to the volatile conditions. The market fluctuations seen last week were caused by a host of key events, most notably the sudden drop in Oil prices that occurred mid week. As late as Tuesday afternoon Light Sweet Crude Oil was selling at $146 barrel and the EUR/USD pair had broken record highs above 1.60. By the end of Tuesday, Oil prices had dropped by as much as $10/barrel and EUR/USD was back trading near 1.58. Testimony from Federal Reserve Chairman Ben Bernanke in front of the Senate Banking Committee and a simultaneous economic speech by President George W. Bush drove Crude Oil prices down and sent the dollar on a bullish path that carried on until the end of the week. When it was all said and done by Friday's closing the USD had regained ground from the week before and Crude Oil had shed nearly $20 off of its peak price. This week should be equally intriguing as investors juggle whether the US is really out of the "recession" it has been suffering lately. As has been the case before, bullish runs by the dollar sometimes extend themselves beyond what fundamental and technical data would allow, mostly on default investor speculation that the dollar will always recover. With news from the housing and credit markets still disappointing it is hard to logically defend the positive movement in the dollar. This week the dollar is absent from any relevant market making news until Thursday and Friday when we can expect the Unemployment Claims, Existing Home Sales, Durable Goods Orders and New Home Sales. These events will almost certainly contribute to volatility in the market as any positive figure should spark even more market wide speculation on the dollar. The dollar will be absent from the news today and won't appear until tomorrow when we will await the words of Treasury Secretary Henry Paulson and Federal Reserve Bank of Philadelphia President Charles Plosser. Today, the US will produce a single calendar event, the Leading Index. Expect the markets to be calm today as the soft news day will likely provide little market movement. EUR The Euro is beginning to feel the effects of breaking record highs versus its major currency rivals and then losing them back hard and fast. The 15 Nation currency set highs against the USD and JPY this week to no avail as shortly after setting the marks it lost over 200 and 400 points respectively before range trading for the rest of the week. The big problem in the Euro-Zone is that to add to already poor consumer confidence numbers, exports, manufacturing and production are all taking a hit. The cost of parts and labor has risen dramatically in comparison to other export heavy nations like the US and Japan largely due to the inflated currency in the EZ. The ZEW Economic Sentiment and German ZEW Economic Sentiment numbers both showed that the rise in interest rates and the high cost of the EUR have severely hurt the most economically sound nations in the EZ, and in turn affected the EZ as a whole in the same way. Most of the movement against the USD and JPY last week which brought about these records was due more to negative info from the US and global stock markets as opposed to real Euro generated movement. This week, news from the EZ could contribute even more to a bearish move in the EUR as the week will be highlighted by French Consumer Spending, German Ifo Business Expectations Index and Manufacturing PMI. Germany and France will also release some important material all of which is forecasted to disappoint the Euro yet again. Today the EUR is absent from the economic docket, as investors will look toward the equities market and the price of Crude Oil as indication to the direction of the European currency. JPY The Japanese look to be stuck in a precarious position lately, as poor local economic data has added more concern to the already fragile inflationary issues in the country. Still, the JPY was up within its crosses in response mostly to the rise in US stocks over the last half of last week. The JPY experienced strong volatility during the week as Crude Oil price movement drove the stock markets mad. The Asian currency saw 200+ point swings against the USD and the EUR last week, en route to closing the trading session within single digits of the week before. Last week the release of the Bank of Japan's meeting minutes showed that the country faces a risky downside to growth even more now than that of inflationary concerns. This week the Japanese will provide several indicators to the economic calendar which will likely contribute to some JPY volatility. The Tokyo Core CPI, National Core CPI and CSPI are all expected to see small gains, and alongside any bearish USD or EUR news could prove key in adding much needed points to the JPY. Today, the Japanese observe Marine Day and local markets will be closed. Keep close eye on USD/JPY, EUR/JPY and GBP/JPY as three pairs which will see movement this week. Crude Oil Crude oil rose from a six-week low in New York as a storm headed toward Mexico and tensions with Iran threatened to escalate after the world's fourth-largest oil producer resisted demands to suspend nuclear research. The Crude for August delivery rose as much as 1%, to $130.13 a barrel on the New York Exchange after earlier hitting the low of $129.70 during the Asian session. Prices have plunged more than $17, or 12%, from the record $147.27 a barrel reached on July 11. While signs of weakness in the U.S. economy played a role, the pace of the decline may reflect investor concern at Petroleos Mexicanos offering oil ``several years'' into the future at current prices. Rising demand outside Europe and the U.S. and the threat of supply disruption from hurricanes will probably keep oil prices in triple-figures for the foreseeable future. Technical News EUR/USD The trendless tight range the pair has been going through continues with no hint of a distinct direction. After range trading for most of the day yesterday, the pair now seems to be consolidating around the 1.5850 as the volatility is beginning to decrease. Indicators are giving mixed signals although there is still a lot of positive momentum. Traders should wait for a clear signal on the hourly level before entering the market today. GBP/USD Bollinger bands are widened indicating increased volatility. Both the hourlies and the dailies support a bearish signal. This pair is still within a steady downward channel which is evident from the 4 H chart. Going short still seems to be the preferable strategy. USD/JPY The pair is still traded within the bullish channel as the direction is currently unclear. No significant breach has been made in either direction, yet there is a bearish hint in the form of a cross on the 4 hour Slow Stochastic. The hourly chart's Bollinger Bands are tightening which indicates that the break is near. Going short with tight stops might be smart today. USD/CHF The range trading continues without a distinct breaking direction. The daily chart is giving mixed signals and is mostly floating in neutral territory. The hourlies are showing moderate bearish momentum. It appears that going short with very tight stops might be a good decision today. The Wild Card CHF/JPY The pair has been trying to massively correct the intensive bullish move, and is now trading around 104.50. The sharp bearish channel is in a high spot at the moment and together with a strong bearish cross on the slow stochastic. This represents for forex investors a very good potential for a short position. Indicators Date Time (GMT) Country Event Period Previous Forecast Importance 2008-07-21 01:30:00 AUD PPI q/q 1.9% 1.6% ***** 2008-07-21 01:30:00 AUD New Motor Vehicle Sales m/m 1.5% * *** 2008-07-21 03:00:00 NZD Credit Card Spending y/y 5.9% * * 2008-07-21 07:15:00 CHF PPI m/m 1.2% * *** 2008-07-21 14:00:00 USD Leading Index m/m 0.1% -0.1% ** 2008-07-21 23:50:00 JPY All Industries Activity Index m/m 0.8% * * FOREXYARD

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Gold Rises in Asia With Oil; Concerns Persist on U.S. Economy

By Feiwen Rong

July 21 (Bloomberg) -- Gold rose in Asia as oil's climb from six-week low renewed inflation concerns and signs of weakness in the U.S. economy prompted investors to buy the metal as an investment haven.

Crude oil rose on speculation diplomatic tensions with Iran may escalate after the world's fourth-largest oil producer resisted United Nations' demands that it suspend nuclear research. A Conference Board report today will probably show an index of leading economic indicators in the U.S., the world's largest economy, fell for the first time in five months.

``Investors' risk aversion may increase again, which is supportive for gold,'' Peter Fertig, consultant for Dresdner Kleinwort, said in a report on July 18. A recovery in oil prices may also assist gold, he said.

Bullion for immediate delivery rose 0.7 percent to $961.43 an ounce at 3:34 p.m. in Singapore. It fell 1 percent last week, the first decline since the week ended June 13. Silver advanced 0.6 percent to $18.2350 an ounce.

The Conference Board's June index probably fell 0.1 percent, according to a Bloomberg survey of 50 economists. A decline signals growth may slow during the next three to six months. Reports later in the week may also show U.S. home sales fell in June as the nation's housing slump heads into its third year.

Gold May Rally

Gold may rise this week as credit-market losses by financial firms spur demand for the precious metal as an alternative investment, according to a survey by Bloomberg News.

Fourteen of 25 traders, investors and analysts surveyed from Mumbai to Chicago on July 17 and July 18 advised buying gold. Six said to sell, and five were neutral.

Still, some of factors that have driven investor interest such as high oil prices, inflation concerns, weakness in equity markets and a volatile dollar could ``turn around somewhat'' by the end of 2008 or in the first half of 2009, David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd., said today in an interview with Bloomberg Television.

``We expect the U.S. dollar to recover ground over the course of 2009 and as that occurs, we expect investor interest in gold to wane and gold prices to fall back certainly below $900 an ounce,'' Moore said.

Gold for August delivery rose 0.4 percent to $962.10 an ounce in after-hours electronic trading on Comex at 3:38 p.m. in Hong Kong, while gold for December delivery traded in Shanghai rose 0.3 percent to 211.94 yuan a gram ($965 an ounce).

Platinum for immediate delivery also rose today after tumbling 8.9 percent last week, the biggest weekly fall since the week ended March 21.

``Platinum has taken quite a beating,'' Adrian Koh, a gold dealer at Phillip Futures Pte. said today by phone from Singapore. ``We are currently nearing key support levels around $1,800 an ounce and these regions should hold well for the time being.''

Platinum gained 0.6 percent to trade at $1,864.25 an ounce at 3:41 p.m. in Singapore while palladium rose 0.8 percent to $420 an ounce.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net



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Brasil Telecom, Net Servicos and Telecom: Latin Equity Preview

By Paulo Winterstein and William Freebairn

July 21 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.

The MSCI index of Latin American shares fell 0.3 percent to 4,324.22 on July 18. In Brazil, preferred shares are the most commonly traded class of stock.

Brazil

Net Servicos de Comunicacao SA (NETC4 BS): Brazil's biggest cable-TV company said July 18 that second-quarter profit dropped 12 percent to 28 million reais ($17.6 million) as sales rose 27 percent from the year-earlier period to 891 million reais. Revenue was more than the 875 million reais median of nine estimates compiled by Bloomberg. Net fell 0.6 percent to 20.49 reais.

SLC Agricola SA (SLCE3 BS): The Porto Alegre, Brazil-based agricultural company increased its estimates for the total area it will plant through 2010 by as much as 21 percent. SLC plans to plant 220,000 hectares (544,000 acres) with cotton and grains in the 2008-2009 season, up 14 percent from the previous estimate of 193,000 hectares, the company said July 18 in a regulatory filing. In the 2009-2010 planting season, it may cultivate 270,000 hectares, 21 percent more than its November 2007 estimate of 223,000 hectares. SLC rose 0.7 percent to 29.20 reais.

Tele Norte Leste Participacoes SA (TNLP4 BS) and Brasil Telecom Participacoes SA (BRTP4 BS): Tele Norte parent Telemar Participacoes SA, Brazil's largest telephone company, said it needs to raise 3 billion reais more to pay for the acquisition of Brasil Telecom Participacoes SA. The company may raise the funds through an international bond sale or loans with foreign banks, Rio de Janeiro-based Telemar said July 18 in an e-mail statement. Tele Norte dropped 3.1 percent to 36.25 reais. Brasil Telecom fell 0.6 percent to 24.70 reais.

Mexico

Grupo Televisa SAB (TLEVICPO MM): Bank of Nova Scotia will revise its financial projections for Mexico's biggest broadcaster after second-quarter results this week. Televisa's ``new projects have put pressure on'' costs and cash flow, analyst Raul Ochoa wrote in a research report e-mailed July 18. Televisa fell 0.3 percent to 48.24 pesos.

To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.

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Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Jul 21 08 07:38 GMT |

Good morning from wonderful, but again very rainy and grey Hamburg. The weather hasn't taken the best start to the new week. It is rainy, grey and very cloudy in Hamburg. But we hope your trading week starts more exciting. All the best, and many profits for your trading this week. Markets review The USD was a bit stronger on Monday in the Asian trading session, holding last week's rally on improved sentiment over the US financial system, though dealers were wary of earnings reports from regional banks this week. The USD sat at 72.247 against a basket of currencies, slightly up from last week. The EUR/USD opened around 1.5830, down from 1.5843 late on Friday in New York, but soon recovered to 1.5860. The EUR/USD is down from a record high of 1.6038, hit earlier last week as a result of Citi and JPMorgan beating low expectations, while financial stocks rallied hard. After Bank of England policy maker David Blanchflower warned that the British economy is heading into recession, and interest rates should fall to 'well below' current 5 %, GBP came under pressure. GBP/USD eased to 1.9934, from 1.9978 late on Friday. The AUD/USD rose 0.4 % this morning to 0.9748, after data showed producer prices rising at a slower than expected pace, though it quickly regained ground on improved appetite for higher yielding currencies. AUD/JPY hit an eight month high of 104.14, as rising regional stock markets encouraged carry trades. Technical analysis AUD/JPY The movement we see in AUD/JPY is very rare in volatile market phases like these. Since middle of May, there has been a very strong bullish development. A small recovery in June stopped around 101. This mark could work as support from here on, and with a break through, this level could come up with bearish potential in this market. At the moment, everything indicates an ongoing bullish market development. GBP/JPY The strong bullish market trend in the GBP/JPY went from May to June. In the second third of June, it started a sideways trend channel with no clear movements in any direction. It followed with a break through the support around 210, and it rebounded quickly to 213.83. If the market doesn't come back through its old resistance around 212.5, the market could keep on growing. 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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Wachovia, WaMu Struggle to Match Citigroup, JPMorgan Results

By Ari Levy

July 21 (Bloomberg) -- Investors who plowed money into Wachovia Corp. and Washington Mutual Inc. last week after competitors posted better-than-expected quarters may find out tomorrow if that was a good idea when the two lenders report their own results.

Wachovia and Washington Mutual may have combined second- quarter losses of $3.8 billion, according to analysts surveyed by Bloomberg. Wachovia, the nation's fourth-biggest bank by assets, and Washington Mutual, the largest saving and loan, rank among the top providers of ``option-ARM'' and subprime mortgages that now have some of the highest default rates.

``These are certainly troubled companies that aren't going to improve anytime soon,'' said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $65 billion. ``I still would need to see the banking sector as a whole show some sort of fundamental improvement'' along with better housing data, he said.

The Standard & Poor's 500 Financials Index jumped 11 percent last week, its biggest gain since March, as Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. posted results that topped analysts' estimates.

Washington Mutual, based in Seattle, climbed 20 percent last week and is down 86 percent over the past year. Wachovia, based in Charlotte, North Carolina, gained 12 percent, for its first weekly advance in more than two months.

Financial institutions worldwide have racked up $447 billion in credit losses and writedowns amid the worst housing crisis since the Great Depression. They've been forced to raise $331 billion in capital.

Wachovia's Bad Loans

Wachovia, which reports before the New York Stock Exchange opens tomorrow, has said it may post a loss of $2.6 billion or more.

During the previous quarter, bad loans in California led to the bank's first loss since 2001 and eventually cost Kennedy Thompson his job as chief executive officer. Former Treasury Undersecretary Robert Steel took over as CEO this month and must deal with the fallout from Wachovia's $24 billion purchase of Golden West Financial Corp. in 2006.

Washington Mutual, known as WaMu, is likely to report its third straight loss, which may total $1.23 billion, the average of three analysts surveyed by Bloomberg. The announcement may also be CEO Kerry Killinger's first opportunity to address shareholders since he was stripped of the chairman's position last month.

California Market

The bank has been burned by foreclosures in California, home to half of its loans. At the end of the first quarter, WaMu had $15 billion of subprime loans on its balance sheet as well as $40 billion of hybrid adjustable-rate mortgages, $56 billion of option-ARMs and $63 billion of home-equity loans and lines of credit, according to Credit Suisse analyst Moshe Orenbuch.

``Credit performance of all these asset types continues to deteriorate,'' Orenbuch, who rates the shares ``neutral,'' wrote in a July 15 report. He increased his loss estimate for the quarter to 90 cents a share from 70 cents. ``While others have also experienced deterioration in these asset classes, WaMu has significant concentrations.''

Wachovia spokeswoman Christy Phillips Brown declined to comment for this story. WaMu spokesman Derek Aney didn't return calls.

Following Wells Fargo and JPMorgan, Citigroup beat analysts' estimates on July 18, reporting a smaller-than-expected loss on fewer mortgage-bond writedowns. Citigroup, the biggest U.S. bank by assets, gained 20 percent for the week, paring its decline for the past year to 63 percent.

``I'm pretty encouraged by the results generally for the financial industry,'' Jason Price, research director at Haverford Investments, said in an interview with Bloomberg Television. ``We're getting a continuing trend here.''

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net



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Never Have So Many Short Sellers Made So Much Money With Stocks

By Alexis Xydias

July 21 (Bloomberg) -- Investors worldwide are betting more than $1 trillion on a collapse in stock prices.

Managers from William Ackman to Jim Rogers made a total of at least $1.4 billion in July with wagers against U.S. mortgage financiers Fannie Mae and Freddie Mac, according to data compiled by Bloomberg. Harbinger Capital Partners staked $665 million that U.K. mortgage lender HBOS Plc would drop and Sao Paulo-based hedge-fund manager Francisco Meirelles de Andrade's short selling of Cia. Vale do Rio Doce is also paying off.

More than $1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007, data compiled by Spitalfields Advisors, the London-based firm specializing in securities lending, show. Almost all of that is being used to speculate that shares will fall, according to James Angel, a finance professor at Georgetown University who studies short selling. The global economic slowdown, $447 billion in bank losses and an explosion of funds that can profit from stock declines spurred the increase in short selling, helping send 22 of 23 countries in the MSCI World Index into bear markets.

``It's a huge amount of money,'' said Peter Hahn, a London- based research fellow for Cass Business School and a former managing director at Citigroup Inc. ``Shorts have come a long way. They are getting into the mainstream, and long holders need to understand the shorts are not evil.''

$11 Trillion

While U.S. and U.K. regulators tighten rules on short sellers amid concern they're accelerating more than $11 trillion in global stock losses this year, countries from Indonesia to India are opening up to the practice, which involves borrowing stock to sell it on the expectation it can be purchased at a lower price before paying back the loan.

Assets at so-called 130/30 and 120/20 funds, or those that are allowed to both hold stocks and short them, may climb to $2 trillion by 2010 from $140 billion in 2007, according to a study last year by Westborough, Massachusetts-based Tabb Group. Spitalfields estimates these funds may borrow an additional $600 billion by 2010.

Spitalfields was founded by Mark Faulkner and Bill Cuthbert in 2004 after careers in securities lending and investment banking at firms including New York-based Goldman Sachs Group Inc. and Frankfurt-based Deutsche Bank AG, respectively.

Short selling on the New York Stock Exchange rose to 4.6 percent of total shares last month, the highest since at least 1931, according to data compiled by Bespoke Investment Group LLC, the Harrison, New York-based firm that manages money for wealthy investors and provides financial research to institutions.

Wipe Out Shareholders

Short selling of Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, which own or guarantee about half of the $12 trillion of U.S. mortgages, surged before the shares plunged this month on concern they will require a bailout that would wipe out shareholders.

Fannie Mae tumbled 64 percent from the end of June, when so- called short interest stood at 138.7 million shares, through July 15, according to data compiled by Bloomberg and the NYSE. Freddie Mac sank 68 percent from the end of June through July 15 after short interest reached almost 83 million on June 30, the highest since at least 1991.

Even after a 90 percent rebound by Fannie Mae and a 75 percent surge by Freddie Mac in the final three days of trading last week, that would have left the shorts with a combined profit, excluding costs, of at least $1.4 billion from June 30 through July 15, the data show.

Survival of the Fittest

Ackman, 42, who oversees $6 billion at Pershing Square Capital Management LP in New York, said on July 15 he had short positions in both Fannie Mae and Freddie Mac. Rogers, 65, said on July 14 that he hadn't covered his short positions in Fannie Mae and would increase his bet if the shares were to rally.

``Short sellers are a very important part of the ecosystem of our financial markets,'' said Angel, a professor at Georgetown's McDonough School of Business in Washington. ``The same way that lions go after a herd, they go after the weaker animals. The shorts will pick on a company where there's a legitimate controversy over its valuation.''

European short sellers have also profited during the sell- off. The Euro Stoxx 50 Short Index rose 29 percent in the first half of 2008, the best performance since at least 1992. The Euro Stoxx 50 tumbled 24 percent in the period, its worst ever start to a year.

`Market for Speculators'

A slump in British banks helped spur the U.K. Financial Services Authority to impose rules on June 20 requiring firms to disclose short positions in companies that sell shares in rights offerings, when those positions exceed 0.25 percent of the company's stock. The FSA cited short bets on June 13 for ``severe volatility in the shares of companies conducting rights issues.''

Harbinger Capital, the New York-based hedge fund run by Philip Falcone, the former head of high-yield trading at Barclays Capital, disclosed a short position of 3.29 percent in HBOS as of June 20. Edinburgh-based HBOS has slumped 62 percent this year.

``The market is becoming a market for speculators rather than a market for investors,'' said Roger Lawson, London-based director at the U.K. Shareholders' Association. ``These guys are making fat profits out of these market maneuvers. It should be restricted to a very limited level of market cap, otherwise it becomes market manipulation.''

The U.S. Securities and Exchange Commission last week limited so-called naked short sales of Fannie Mae, Freddie Mac and brokerages. In such a strategy, speculators sell shares they haven't secured first. The decision comes amid an investigation of whether trading abuses contributed to the collapse of Bear Stearns Cos. in March.

`Send a Message'

James Chanos, president of Kynikos Associates Ltd., says the new rules won't deter most short sellers from making legitimate bets against companies.

``The SEC is trying to send a message -- I am again not quite sure what the message is,'' Chanos, a short seller and one of the first investors to raise questions about Enron Corp.'s accounting, said on Bloomberg Television from London. ``I am just not sure that this was an issue at all for the equity prices of these companies.''

The SEC's move ``squeezed'' some short sellers, forcing them to close positions they shorted earlier by buying the shares, Bespoke data show. Among Standard & Poor's 1500 companies, those with the highest short interest gained the most, rising 15.1 percent on July 16 and July 17, according to the firm's data.

So-called short covering also helped financial stocks in the S&P 500 surge 12 percent on July 16, the biggest-ever gain.

While regulators in the U.K. and U.S. move to limit some types of shorting, the practice is increasing elsewhere. India's capital markets watchdog said in December it would lift a six- year ban on short selling. Indonesia followed last month, allowing the practice for the first time.

Shorting Brazil

In Brazil, equities on loan in June jumped 22 percent from a month earlier to a record $23.3 billion, according to the Brazilian Clearing and Depository Corp. Shorting increased after the Bovespa Index climbed to an all-time high on May 20.

Francisco Meirelles de Andrade, a hedge-fund manager at Nest Investimentos Ltda., is shorting Rio de Janeiro-based Vale, the world's biggest iron-ore producer, which tumbled 6.5 percent last week after its share sale raised less than some analysts expected. His Nest Fund Ltd. Class Long Short Equities fund returned 30 percent in the 12 months through April.

``Short selling helps markets become more efficient,'' said Dallas-based David Tice, 53, founder and manager of the Prudent Bear Fund. ``Short selling is here to stay.''

To contact the reporter on this story: Alexis Xydias in London at at axydias@bloomberg.net.



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European Stocks Fall, Led by HBOS, RBS; U.S. Index Futures Drop

By Sarah Jones

July 21 (Bloomberg) -- European stocks fell for the first time in four days after HBOS Plc said shareholders agreed to buy only 8.3 percent of its rights offer. U.S. index futures declined, while Asian shares rose.

HBOS, the U.K.'s biggest mortgage lender, dropped the most in a month. Royal Bank of Scotland Group Plc and Societe Generale SA also declined. Roche Holding AG dropped on plans to buy the rest of Genentech Inc. for $43.7 billion.

Europe's Dow Jones Stoxx 600 Index lost 0.7 percent to 278.85 at 8:05 a.m. in London, while futures on the Standard & Poor's 500 Index fell 0.2 percent. The MSCI Asia-Pacific excluding Japn Index increased 3.3 percent.

``The market is difficult,'' said Virginie Robert, a managing director in Paris at Raymond James Asset Management International, which oversees $35 billion worldwide. ``Banks haven't resolved all of their problems.''

Stocks in the U.S. and Europe rallied last week, their first weekly gains since May, after earnings from Citigroup Inc., JPMorgan Chase & Co. and Nokia Oyj beat analysts' estimates and regulators stepped up efforts to buoy the biggest mortgage financiers in the U.S. The steepest weekly drop in oil prices in more than three years buoyed shares of General Motors Corp., Volkswagen AG and Ryanair Holdings Plc.

About $13 trillion has been wiped off the value of global equities since October as financial companies notched up more than $447 billion in credit-related losses. Banks worldwide have raised more than $331 billion to offset losses stemming from the financial market turmoil and slowdown in lending.

Short Sellers

Investors worldwide are betting more than $1 trillion that stock prices will collapse. Managers from William Ackman to Jim Rogers made a total of at least $1.4 billion in July with wagers against U.S. mortgage financiers Fannie Mae and Freddie Mac, according to data compiled by Bloomberg.

HBOS declined 6 percent to 265 pence after shareholders bought 124 million shares at 275 pence apiece, leaving underwriters with unsold shares in the 4 billion-pound ($8 billion) rights offer.

Morgan Stanley and Dresdner Kleinwort Ltd. will seek buyers for the remaining 1.38 billion shares until 4:30 p.m. on July 22, HBOS said.

The Sunday Times said the mortgage lender's offering is expected to be one of the most ``disastrous'' in corporate history, without citing anyone.

Royal Bank of Scotland, Britain's second-largest lender, dropped 1.2 percent to 195.3 pence. Societe Generale of France fell 1.8 percent to 55.75 euros.

Roche, Inmarsat

Roche dropped 2.5 percent to 175.2 francs after Switzerland's largest drugmaker offered to buy the rest of Genentech to gain the largest U.S. maker of cancer medicines. Genentech investors would get $89 a share, 8.8 percent more than the July 18 closing price, Roche said today.

Inmarsat Plc declined 12 percent to 453 pence after the U.K. satellite company that provides communications services said talks with Harbinger Capital Partners about a potential takeover have ended.

The discussions focused on the regulatory process surrounding a possible offer, the company said today in a Regulatory News Service statement. Harbinger didn't make an offer for the company or indicate a potential offer price, and Inmarsat's board ``has therefore concluded that there is no merit in continuing discussions at this time,'' according to the statement.

Wolters Kluwer NV dropped 3.7 percent to 14 euros after Europe's largest tax and legal publisher cut its full-year forecast for sales growth because of market conditions.

The forecast for organic sales growth, which excludes currency swings, acquisitions and disposals, was lowered to 3 percent from 4 percent.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.



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Germany Stocks Update: DAX Index Falls 14.06 to 6,368.59

By Daniel Hauck

July 21 (Bloomberg) -- Germany's benchmark stock index, the DAX Index, fell 0.22 percent at 9:05 a.m.

The index of 30 companies traded on the Frankfurt Stock Exchange fell 14.06 to 6,368.59. Among the stocks in the index, 9 rose, 20 fell and 1 was unchanged.

Declines in the DAX were led by Siemens Ag, Allianz Se and Muenchener Rueckversicherungs Ag. About 2.50 million shares traded in the DAX.



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French Stocks: Alstom, Legrand, M6, Natixis, Schneider Electric

By Adria Cimino

July 21 (Bloomberg) -- France's CAC 40 Index declined 26.99, or 0.6 percent, to 4,272.37 at 9:09 a.m. in Paris, after climbing 4.9 percent last week. The SBF 120 Index also lost 0.6 percent.

The following stocks rose or fell in Paris. Stock symbols are in parentheses.

Alstom SA (ALO FP) added 88 cents, or 1.2 percent, to 72.51 euros, extending last week's 12 percent gain. Deutsche bank raised its recommendation on shares of the world's third-largest power plant maker to ``buy'' from ``hold.''

Jeanjean SA (JEAN FP) climbed 21 cents, or 1.5 percent, to 14 euros, the highest level in two weeks. The bottler and distributor of wines to supermarkets and restaurants said second-quarter sales rose 18 percent to 45.9 million euros ($72.8 million). Sales at its Bordeaux unit may be ``close to'' 20 million for the full year, more than the 15 million euros forecast, the company also said.

Legrand SA (LR FP) sank 1.01 euros, or 6.1 percent, to 15.44, after rising 15 percent last week. Deutsche Bank cut its recommendation on the world's largest maker of electrical switches and plugs to ``sell'' from ``hold.''

M6-Metropole Television SA (MMT FP) retreated 14 cents, or 1 percent, to 14.38 euros after gaining for the past three trading sessions. Societe Generale cut its recommendation on shares of France's second-largest commercial television company to ``hold'' from ``buy.''

Les Nouveaux Constructeurs SA (LNC FP) jumped 16 cents, or 5.2 percent, to 3.26 euros after sliding 10 percent last week. The French real-estate developer said Premier Investissement, its majority shareholder, has boosted its share to 73.77 percent of the capital and 83.53 percent of voting rights.

Natixis SA (KN FP) slipped 12 cents, or 2.1 percent, to 5.65 euros after gaining the past two trading sessions. The French bank that plans to increase capital by 3.7 billion euros had its debt rating and financial-strength outlook reduced by Moody's Investors Service.

Schneider Electric SA (SU FP), the world's biggest maker of circuit breakers, added 1.20 euros, or 1.8 percent, to 69.21, rising for a fourth day. The company is ``confident'' it will reach its 2008 profit targets, La Tribune reported, citing Eric Pilaud, the company's head of strategy.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.



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Hong Kong Stocks Climb; Banks Gain, Emperor Watch Advances

By Hanny Wan

July 21 (Bloomberg) -- Hong Kong's benchmark stock index jumped the most in four months, led by financial shares, after Citigroup Inc. posted a smaller loss than analysts estimated and oil had the largest weekly drop in more than three years.

HSBC Holdings Plc, Europe's biggest bank, climbed the most in four months. Industrial & Commercial Bank of China Ltd., the nation's biggest lender, advanced to a six-week high after the country's commercial banks lowered their average bad loan ratio.

China Petroleum & Chemical Corp., Asia's biggest oil refiner, surged to a one-month high on speculation lower crude oil costs will boost profit from making gasoline and diesel. Emperor Watch & Jewellery Ltd., a Hong Kong-based retailer, soared as much as 42 percent on its debut.

``We are seeing a short-term recovery in market sentiment as better newsflow comes out, helping to calm people down a bit,'' said Jacky Choi, a fund manager at Value Partners Ltd., which manages about $6 billion.

The Hang Seng Index added 724.15, or 3.3 percent, to 22,598.34 at 2:58 p.m. local time, its biggest surge since March 25. A gauge tracking financial shares accounted for 52 percent of the Hang Seng's advance today.

The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, gained 3.6 percent to 12,564.49.

The Hang Seng Index has lost 19 percent this year after raw- material prices soared and the world's largest banks and securities firms reported more than $447 billion of writedowns and credit losses.

Bad-loan Ratio

HSBC rose 4.2 percent to HK$125, its largest jump since March 25. The bank has held talks with China Investment Corp. to attract investment from the Chinese sovereign fund, The Sunday Telegraph reported, without saying how it obtained the information.

ICBC climbed 3.1 percent to HK$5.72, headed for its highest close since June 6. China Construction Bank Corp., the nation's second-biggest, advanced 4 percent to HK$6.74.

Citigroup Inc., the biggest U.S. bank by assets, reported a second-quarter net loss of $2.5 billion on July 18, lower than the $3.67 billion loss predicted by analysts.

China's commercial banks have reduced their average bad-loan ratio to 6.1 percent as of June 30 as the industry enhances risk controls, the China Banking Regulatory Commission said yesterday. The bad-loan ratio at those banks was 6.3 percent at the end of March.

Oil Slumps

Sinopec, as China Petroleum is known, surged 4.9 percent to HK$7.86, set for its highest close since June 23. Sinopec may increase the annual capacity of its Maoming refinery by 48 percent to 20 million metric tons by 2012, said Cai Zhan, the plant's spokesman.

Cathay Pacific Airways Ltd., Hong Kong's largest airline, advanced 1.6 percent to HK$15.38, set for its highest close since June 23. The company said on July 2 that its earnings this year will be ``disappointing'' as the price of fuel trades near a record high. China Eastern Airlines Corp., the country's third- largest airline, rose 6.9 percent to HK$2.49, its biggest jump since May 2.

Crude oil futures tumbled 11 percent last week, the most in more than three years. The contract was recently at $129.87 in after-hours trading. The price of jet fuel, a product of crude oil, dropped 4.8 percent last week.

Emperor Watch soared 13 percent to 48.5 Hong Kong cents, after surging as much as 42 percent. The company raised HK$547.5 million ($70 million) of net proceeds from an initial public offer by selling 1.35 billion shares at 43 Hong Kong cents each, the company said on July 16.

Properties Rise

Sun Hung Kai Properties Ltd., Hong Kong's No. 1 property developer by market value, climbed 6.9 percent to HK$119.50. Hang Lung Properties Ltd., a Hong Kong-based developer which also invests in mainland China, rose 4.4 percent to HK$26.30. Sino Land Co., a Hong Kong-based developer, added 5.5 percent to HK$15.46.

All but two stocks on the 43-member Hang Seng Index advanced. July futures climbed 2.9 percent to 22,607.

The following stocks rose or fell. Stock symbols are in brackets after company names.

China Telecom Corp. (728 HK) advanced 14 cents, or 3.3 percent, to HK$4.40, its biggest jump since July 9. The nation's No. 1 fixed-line phone company added a record number of high- speed Internet users last month, helping the company counter a loss in telephone subscribers. China Telecom said it gained 890,000 broadband customers for a total of 40 million at the end of June.

Lee & Man Paper Manufacturing Ltd. (2314 HK) rose 19 cents, or 2 percent, to HK$9.87. Asia's second-largest containerboard maker forecast demand for paper products will rise as much as 8 percent this year, easing oversupply concerns.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net



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Lehman Cuts 2008 Global Equity Target, Says Stocks May Rebound

By Patrick Rial

July 21 (Bloomberg) -- Lehman Brothers Holdings Inc. slashed its global equities forecast for 2008, saying that a target set in December was too optimistic while keeping a recommendation to buy stocks that it considers cheap.

The FTSE World Index target for the year-end was cut 13 percent to 362 by Ian Scott, the broker's London-based global strategist. That means equities are set to rise 16 percent from current levels.

``We have to accept that the year-end targets we established back in December are now unlikely to be met,'' the strategist wrote in a note to clients dated today. ``With stocks valued the way they are, it might not take much of an improvement in oil price, interest rate expectations, earnings, or the assessment of risk to bring forth a strong recovery.''

Scott cut his forecast for Asian equities excluding Japan the most, lowering his target by 22 percent, leaving room for a 26 percent gain by the end of 2008, he said. Estimates for the U.S. and Europe excluding the U.K. had the smallest reductions at 11 percent.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net



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Asian Stocks Gain on Outlook for Earnings; Banks Lead Advance

By Chen Shiyin and Shani Raja

July 21 (Bloomberg) -- Asian stocks rallied the most in four months, led by financial companies and raw-material producers, on speculation profits can withstand a global economic slowdown.

HSBC Holdings Plc jumped in Hong Kong after a newspaper reported the bank held talks with China's sovereign wealth fund to attract investment and Citigroup Inc., the biggest U.S. bank, reported a smaller-than-estimated loss. Kasikornbank Pcl, Thailand's No. 2 bank, rose after profit beat analyst estimates. Flight Centre Ltd., Australia's largest travel agency, surged after saying earnings rose 40 percent.

``The financial sector was a big drag on the market, and there's relief that there's some good news,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion.

Japan is shut for a holiday today. The MSCI Asia-Pacific excluding Japan Index added 3.3 percent to 420.75 as of 2:42 p.m. in Hong Kong, poised for the biggest gain since March 25. All 10 of the index's industry groups rose, with financial companies comprising 41 percent of the advance.

The index has lost 21 percent this year as raw-material prices soared and the world's largest banks and securities firms reported more than $447 billion of writedowns and credit losses.

South Korea's Kospi index rose 3.5 percent, Asia's largest advance. The S&P/ASX 200 Index rallied 3.5 percent in Australia, where a report today showed the producer price index grew at a slower pace in the second quarter. Benchmark indexes rose elsewhere in the region, except Malaysia and Pakistan.

`Various Opportunities'

Fortescue Metals Group Ltd. surged the most in six months after saying a Western Australian iron-ore project may be expanded on demand from China.

Standard & Poor's 500 Index futures rose 0.2 percent today. U.S. stocks climbed on July 18, after Citigroup, the biggest U.S. bank by assets, reported a loss of 49 cents a share from continuing operations. That was less than the 60-cent loss estimated on average in a Bloomberg survey.

HSBC, Europe's largest bank, rose 4.3 percent to HK$125.20 in Hong Kong, the biggest gain since March 25. The Sunday Telegraph reported Chairman Stephen Green has met officials from the Chinese sovereign fund several times in recent months for discussions. Spokespeople at CIC and HSBC declined to comment.

``We're looking at equity stake investments globally and are considering various opportunities in different countries,'' Wu Xieling, a Beijing-based spokeswoman at CIC, said in a phone interview today.

Banks Advance

The stock also gained after Citigroup joined JPMorgan Chase & Co., the third-biggest U.S. bank by assets, and Wells Fargo & Co., the No. 1 lender on the U.S. West Coast, in reporting results that topped analyst estimates last week. Financial companies in the Standard & Poor's 500 Index climbed more than 11 percent last week.

National Australia Bank Ltd., the country's largest bank, added 4.9 percent to A$28.32, set for the highest since June 11. Kookmin, South Korea's biggest bank, rallied 7.2 percent to 56,700 won.

Kasikornbank added 3.9 percent to 66 baht after profit rose 4.4 percent in the second quarter, boosted by demand for loans and gains in foreign exchange trading. Citigroup Inc. raised its rating on the shares to ``buy'' from ``sell'' today.

Flight Centre surged 12 percent to A$17.65, the most since Oct. 25, 2006, after saying pretax profit rose 40 percent in the year ended June 30, 2008. It reiterated an earlier forecast for pretax earnings to climb 10 percent to 15 percent in the 12 months to June 30, 2009.

Fortescue, Airlines

Fortescue, seeking to be Australia's third-largest iron ore producer, jumped 12 percent to A$9.13, poised for its largest gain since Jan. 23. Chief Executive Officer Andrew Forrest said the company's Pilbara project in Western Australia may be expanded threefold.

BHP Billiton Ltd., the world's largest mining company, rose 4.2 percent to A$38.20. The shares plunged 9.2 percent last week, the most in four months. Rio Tinto Group, the third-biggest, gained 2.6 percent to A$118.49.

Korean Air Lines Co., the country's largest airline, jumped 3.7 percent to 44,850 won, a three-week high. Qantas Airways Ltd., Australia's No. 1 carrier, added 3 percent to A$3.40, while Singapore Airlines Ltd. gained 2.6 percent to S$15.56.

Jet-fuel prices fell last week to a three-week low of $166.15 a barrel in Singapore, almost $16 below its July 3 record, following the drop in crude oil. Crude oil in New York fell 0.3 percent to $128.88 on July 18, rounding off an 11 percent weekly retreat that was the largest drop in more than three years. Futures were at $129.78 today.

Palm Oil

``If oil prices continue to go down, economic activity will pick up and corporate earnings will improve,'' said Kim Jun Ki, who helps manage the equivalent of $1.1 billion at Hanwha Investment Trust Management Co. in Seoul.

Palm oil prices fell 1.3 percent on July 18, their third straight day of losses, as the drop in crude oil damped the outlook for biofuel demand.

IOI Corp., Malaysia's second-biggest palm oil producer, dropped 2.7 percent to 5.45 ringgit, on course for its lowest close since Sept. 10. Smaller Kuala Lumpur Kepong Bhd. plunged 4.4 percent to 13.20 ringgit.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.



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China Stocks Rise on Report Share Sales to Slow; Ping An Gains

By Zhang Shidong

July 21 (Bloomberg) -- China's stocks rose to a one-week high after the China Securities Journal reported that regulators may slow approvals for stock sales as part of measures to ensure ``stable and healthy'' markets.

Ping An Insurance (Group) Co., the country's second-largest insurer, and China Merchants Bank Co. led the advance.

``The market received a lift from the market talk about the regulator, which triggered some buying,'' said Zheng Tuo, who manages the equivalent of $790 million at Bank of Communications Schroders Fund Management Co. in Shanghai. ``But the effect of that will fade. It's still the fundamentals that determine the market's direction.''

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose 95.59, or 3.4 percent, to 2,911.05 at the close, the highest since July 14. All of the measure's 10 industry groups rose.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net



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Australian Stocks Rise the Most in Four Months; Banks Climb

By Shani Raja

July 21 (Bloomberg) -- Australian stocks rallied the most in almost four months, led by banks, on signs the fastest inflation in 17 years is easing after prices paid to the country's producers grew slower than economists forecast.

National Australia Bank and Commonwealth Bank of Australia, the country's two biggest, jumped on speculation the central bank will keep interest-rate increases on hold and after Citigroup Inc. reported a smaller-than-estimated loss. Fortescue Metals Group Ltd. climbed after saying an iron-ore project in Western Australia may be expanded on demand from China.

``The financial sector was a big drag on the market, and there's relief that there's some good news,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``We had a pretty good week in the U.S., and the Reserve Bank of Australia is starting to ease pressure on interest rates.''

The S&P/ASX 200 Index climbed 171.40, or 3.5 percent, to 5,011.80 at the close in Sydney, the most since March 25. Financial stocks accounted for 42 percent of the advance. The broader All Ordinaries Index added 3.3 percent to 5,075.40.

An index of producer prices advanced 1 percent after rising 1.9 percent in the first quarter, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg survey of economists was for a 1.6 percent increase.

Slower price gains give the central bank scope to leave borrowing costs unchanged this year, after raising the benchmark interest rate to a 12-year high in March. Reserve Bank of Australia Governor Glenn Stevens said last week inflation will moderate as the $1 trillion economy cools.

Project Expansion

National Australia Bank gained 4.9 percent to A$28.32, the largest advance since May 12. Commonwealth Bank rose 3.7 percent to A$43.35.

Citigroup, the biggest U.S. bank by assets, on July 18 reported a loss of 49 cents a share from continuing operations. That was less than the 60-cent loss estimated on average in a Bloomberg survey. Citigroup joins JPMorgan Chase & Co., the third-biggest U.S. bank by assets, and Wells Fargo & Co., the No. 1 lender on the U.S. West Coast, in reporting results that topped analyst estimates last week.

Fortescue Metals rose A$1.01, or 12 percent, to A$9.13, the most since Jan. 23. The company, seeking to be Australia's third- largest iron ore producer, said its Pilbara project in Western Australia may be expanded threefold.

The following stocks rose or fell. Stock symbols are in brackets after company names.

Platinum Asset Management Ltd. (PTM AU), the Australian fund manager controlled by billionaire Kerr Neilson, slumped 15 cents, or 5.2 percent, to A$2.75, the lowest in almost a week. Platinum said June 18 that broker earnings-per-share forecasts of 22.1 cents were ``optimistic.''

Primary Health Care Ltd. (PRY AU) gained 25 cents, or 5.3 percent, to A$5, the highest close since July 3. Sanofi-Aventis SA, France's largest drugmaker, agreed to pay A$560 million ($544 million) in cash for Primary Health Care Ltd.'s consumer unit.

Sundance Resources Ltd. (SDL AU), seeking to build a $3.3 billion iron ore project in Cameroon, soared 9.5 cents, or 43 percent, to 31.5 cents, the biggest gainer on the S&P/ASX 200 Index. The company announced a potential mineral resource of 1.2 billion tons at the Mbarga deposit at Sundance's 90 percent owned Mbalam iron-ore project.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.



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Faber Says Global Economy at `Tail End' of Growth

By Shani Raja

July 21 (Bloomberg) -- Marc Faber, who told investors to bail out of U.S. stocks before 1987's so-called Black Monday crash, said the global economy is at the ``tail end'' of its growth.

Oil prices may fall to $100 a barrel though demand in Asia will rise, Faber, who publishes the Gloom, Boom & Doom Report, said at an investment forum in Sydney today. The investor said he's favoring real-estate investments in India and Cambodia.

``What you've had since 2001 is a global synchronized boom,'' Faber said. ``In the history of capitalism this is most unusual. When it comes to an end it should affect all countries.''

Stock indexes worldwide have tumbled this year, erasing almost $12 trillion in value, as financial institutions piled up more than $400 billion in losses from credit investments, and investors braced for a U.S. economic recession amid soaring fuel and food prices.

U.S. economic growth faces ``significant downside risks,'' Federal Reserve Chairman Ben S. Bernanke said July 15. Those comments contributed to crude oil in New York falling more than a 10th from its record high of $147.27 on July 11.

Faber told the forum today that he prefers holding physical commodities rather than shares or futures.

Oil, corn, soybeans and wheat have surged to records this year, amid rising incomes in emerging markets. Macquarie Group Ltd., Australia's biggest investment bank, said earlier this month that global demand for food will continue to drive a rally in soft commodities.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.



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Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Jul 21 08 04:54 GMT |

Iran stalemate continues, Blanchflower beats up the GBP Forex: Currency trading was quiet as Japanese traders celebrated a public holiday, with thin conditions leading to exaggerated price action. The USD seems to be stabilizing somewhat after JPMorgan and Citi's earnings, but this week brings reports from WaMu and Wachovia, two institutions that have been burned by their significant subprime exposure. 'Given that few of the major currencies seem attractive to investors at the present time, a sad-sack performance is appropriate,' said David Watt at RBC Dominion Securities. The GBP took a beating in Asia after the Bank of England's Blanchflower said that he would like to see interest rates 'well below' their current level. Blanchflower, widely regarded as the most dovish member of the MPC, said the U.K. economy is probably already in a recession and is likely to contract for three to four quarters. 'It's not too late to stop it, but we have to act right now. Monetary policy has been far too tight for too long. We can't just sit and do nothing as we have done for too long,' he added. The GBP is also being dragged down by the worsening outlook for the housing market, with the U.K. Royal Institute of Chartered Surveyors projecting that house prices may slump a further 20% over the next two years. AUD/JPY rose to near an 8-1/2 month high of 104.19 in the early Asian session on Monday, while EUR/JPY moved to a weekly high of 169.51. Australian producer price inflation softer than expected during Q2: (AU Q2 PPI QOQ: 1.0% V 1.6% expected, 1.9% prior; YOY: 4.7% V 5.3% expected, 4.8% prior) The currency market showed little reaction to the report, with most investors waiting for the CPI report due later this week. Analysts said that it was a mixed report, with big price increases at the early stages of production but less at the final stage. 'It seems like costs are not being passed down the chain of production as much as we thought,' said Brian Redican at Macquarie. Several commentators have pointed out that there is a weak correlation between Australia's PPI and CPI data, but the data adds weight to the view that the market might be overestimating the upcoming CPI release. U.S. Treasury Secretary Paulson sought to reassure the public on Sunday, saying that the U.S. banking system is sound, while also bracing people for more troubled times ahead. 'I think it's going to be months that we're working our way through this period - clearly months,' he said. Paulson said the number of troubled banks will increase. 'Of course the list is going to grow longer given the stresses we have in the marketplace, given the housing correction. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation,' he said. Equities: At 23:58 EDT the S&P/ASX200 index is +3.09%, South Korea's KOSPI is +3.41%, Hong Kong's Hang Seng index is +3.25% and the Shanghai composite index is +1.58%. The S&P500 futures contract gained +0.09% since Friday's close, last trading at 1,261.50. The S&P/ASX200 rallied strongly in the Asian morning, with miners leading the charge, but the benchmark index stalled at the psychologically important 5,000 level. Australian banks are also trading higher, boosted by Citigroup's better than expected earnings report and press speculation that the government may place limits on short-selling. Airlines and financials lifted the Kospi, while financials added to most of the upside in Shanghai. HSBC, listed in Hong Kong, traded sharply higher on press reports that the bank is talking to China's sovereign wealth fund about an investment in the U.K. banking sector. Japanese markets were closed for a public holiday. Commodities: Nymex crude oil prices gained +0.68% between 18:00 EDT and 23:54 EDT, last trading at $129.75/bbl. Iranian negotiators had shown little flexibility in a meeting with world powers over the weekend, provoking threats of a fresh round of sanctions. Iran is now facing a two-week deadline to give a final answer to world powers seeking a breakthrough in the nuclear crisis, and the stalemate is expected to provide support to oil prices over the coming week. Spot gold gained +0.17%, last trading at $959.60/oz, as the metal tracks the oil price gains and a softening USD. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Citigroup Earnings Aid Dollar

Daily Forex Fundamentals | Written by Easy Forex | Jul 21 08 01:20 GMT |

U.S. Dollar Trading (USD) had a relatively quiet trading day with little economic data out, equities and commodities directed the market. Citigroup’s earning came in better than expected leading to an overall buoyant mood on the equities markets and dollar. Cooling Middle Eastern tensions allowed Oil to slip again slightly, also helping dollar sentiment. In the U.S. share markets, the NASDAQ was down 29 points (1.28%) and the Dow Jones was up 49 points (0.44%). Crude Oil closed down $0.41 ending the New York session at $128.88 per barrel. Looking ahead, June National Activity Index is released along with the June Leading indicators seen at -0.1%. The Euro (EUR) traded at day highs after June German PPI came in stronger at 0.9% vs. expectations of 0.7%. The Euro was unable to hold these gains in the face of general USD strength but regained the 169 level on the EUR/JPY. Overall the EUR/USD traded with a low of 1.5807 and a high of 1.5886 before closing the day at 1.5845 in the New York session. The Japanese Yen (JPY) lost ground against most currencies as investors sought to take advantage of renewed risk appetite as US banks reported better than expected results. Overall the USDJPY traded with a low of 105.97 and a high of 106.94 before closing the day around 106.91 in the New York session. Looking ahead, Public holiday in Japan Today. The Sterling (GBP) traded in a slightly offered tone due to Dollar strength and rumors of a relaxing of Government Public debt guidelines. Strong buying of GBP/JPY supported. Overall the GBP/USD traded with a low of 1.9909 and a high of 2.0020 before closing the day at 1.9985 in the New York session. The Australian Dollar (AUD) lost ground as Gold and Oil continued to retrace gains but was supported buy continued demand for the high yielder especially against the JPY. Overall the AUD/USD traded with a low of 0.9702 and a high of 0.9739 before closing the day at 0.9705. Looking ahead, 2nd Quarter PPI is seen at 1.6% slightly lower than 1.9% in the first Quarter. Gold (XAU) gave up more of its recent gains on the back on reduced fear in the markets especially as the major US investment banks reported better than forecast 2nd Quarter earnings. Overall trading with a low of USD$950.30 and high of USD$964.50 ending the New York session at USD$955 an ounce. 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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FX Overnight Briefing "Financial News - US & Far East"

Financial News - US & Far East

Daily Forex Fundamentals | Written by Jyske Bank | Jul 21 08 04:03 GMT |

Most U.S. stocks declined FED's Stern said FED can not wait Paulson: Economy to take time BOE's Blanchflower: U.K. economy 'going into recession' Today's Main Events USD Leading Indicators American Time Zone: Most U.S. stocks declined Most U.S. stocks fell, led by technology shares, as disappointing results at Google Inc. and Microsoft Corp. overshadowed Citigroup Inc.'s smaller-than-estimated loss, extending the yearlong earnings slump. Google posted the steepest drop since the most-used Internet search engine went public in 2004 and Microsoft declined the most in two years after their profit reports raised concern the slowing economy has reduced demand for computer-related products. Citigroup surged the most in the Dow Jones Industrial Average. Schlumberger Ltd. led a rally in energy shares as record oil boosted earnings. FED's Stern said FED can not wait Most currencies traded in a narrow range in the US market on a day with no economic events at all and few news. Minneapolis FED President Gary Stern said in an interview with Bloomberg that FED can not wait until financial and housing market stabilize before raising interest rates. Besides that he expressed a minor concern of the prospects for inflation. US short term interest rates fell on the hawkish comments from Stern, driving up the chances for rate hikes later this year. Far East Time Zone: Paulson: Economy to take time The U.S. economy needs months to recover from its slowdown, but the banking system remains sound despite a home mortgage crisis that could cause more problems, Treasury Secretary Henry Paulson said. Paulson also said on Sunday morning news programs he was optimistic Congress would approve the Bush administration's request for authority to shore up the troubled mortgage giants Fannie Mae and Freddie Mac. The treasury secretary has been trying to reassure nervous financial markets and is scheduled to deliver an important speech on markets and the economy in New York on Tuesday. High energy prices would prolong the slowdown, but the key to recovery was stabilizing the housing market, Paulson said. He added that U.S. banking problems were manageable despite this month's highly publicized failure of mortgage lender IndyMac bank. The July 11th takeover of the bank by Federal regulators marked the third-largest bank failure in U.S. history. The lines of frustrated depositors outside its doors provided a stark illustration of the U.S. home financing crisis. Australia producer prices up Australian producer prices rose by much less than expected last quarter, helped by a drop in import costs for some goods which may lessen the risk of a high reading for consumer prices this week. Domestic prices at the final stage of production climbed 1.4 % in the quarter, while import prices fell 1.0 %. The increases were driven by rises in the cost of construction, fuel and energy. BOE's Blanchflower: UK economy 'going in to recession' The British economy is heading into recession and interest rates should fall to "well below" their current 5 %, Bank of England policymaker David Blanchflower was quoted as saying in a newspaper interview. The arch-dove was quoted as saying in Monday's edition of the Guardian newspaper that the economy would probably shrink for as much as a year and policy-makers had to act now to bring down borrowing costs. The Bank of England has held interest rates at 5 % for the last three months after cutting them in April despite signs of a sharply slowing economy because inflation has nearly doubled the central bank's 2 % target. Blanchflower was the lone voice calling for a cut in interest rates in May and June. Minutes of this month's meeting will be published on Wednesday, but Blanchflower looks sure to have repeated his call for lower rates Jyske Markets - FX Research http://www.jyskebank.dk/finansnyt The analysis is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor for transactions made on the basis of the information or the estimates of the analysis. The estimates and recommendation of the analysis may be changed without notice. The analysis is for personal use of Jyske Bank's customers and may not be copied.

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Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | Jul 21 08 03:31 GMT |

EURUSD Outlook The EURUSD made no significant movement on Friday. The pair opened and closed around 1.5850 key level (1.5856 and 1.5847). In the nearest term, the bias is still on the bullish side. Initial resistance is seen at 1.5905. Any consistent move below 1.5850 could trigger further downside correction and retest 1.5780 area once again. EURUSD Daily Supports and Resistances: S1= 1.5807 S2= 1.5767 S3= 1.5727 R1= 1.5887 R2= 1.5927 R3= 1.5967 GBPUSD Outlook The GBPUSD made indecisive movement on Friday by open and closed at the same price (1.9984). It seems that the downside correction is very limited at this time. Today we have about 30 pips gap on the Asian market opening (1.9951). My model remains mixed with downside bias. Immediate resistance is seen at 1.9990. Initial support at 1.9905. CCI in neutral area on daily chart. GBPUSD Daily Supports and Resistances: S1= 1.9927 S2= 1.9871 S3= 1.9837 R1= 2.0017 R2= 2.0051 R3= 2.0107 USDJPY Outlook The USDJPY continued it's bullish momentum on Friday. The pair topped at 106.98 and closed at 106.95. However, my hourly bullish channel has been violated this morning in Asian session, so we might see a downside correction towards 106.30. We seem to have important resistance at 107.30. CCI in neutral area on daily chart. USDJPY Daily Supports and Resistances: S1= 106.28 S2= 105.62 S3= 105.27 R1= 107.29 R2= 107.64 R3= 108.30 USDCHF Outlook The USDCHF topped at 1.0250 and closed at 1.0227 on Friday. We seem to have good resistance in 1.0250-60 area in this correctional upside movement that could trigger the pair to back in it's downside major trend. My model is short, targeting 1.0130. CCI in neutral area on daily chart. USDCHF Daily Supports and Resistances: S1= 1.0182 S2= 1.0138 S3= 1.0104 R1= 1.0260 R2= 1.0294 R3= 1.0338 FX Instructor LLC www.fxinstructor.com The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

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