Daily Forex Technicals | Written by Easy Forex | Aug 06 08 02:10 GMT |
Euro 1.5475
Initial support at 1.5463 (Aug 5 low) followed by 1.5462 (76.4% retracement of 1.5284 to 1.6038). Initial resistance is now located 1.5578 (Aug 5 high) at followed by 1.5632 (Aug 4 high).
Yen 108.40
Initial support is located at 107.29 (Aug 1 low) followed by 106.58 (July 25 low). Initial resistance is now at 108.59 (Jun 16 high) followed by 108.61 (Feb 14 high).
Pound 1.9555
Initial support at 1.9525 (Aug 5 low) followed by 1.9410 (Jun 13 low). Initial resistance is now at 1.9625 (Aug 5 high) followed by 1.9762 (Aug 4 high).
Australian Dollar 0.9175
Initial support at 0.9091 (Apr 3 low) followed by 0.9032 (April 1 low). Initial resistance is now at 0.9301 (Aug 5 high) followed by 0.9347 (Aug 4 High).
Gold 878
Initial support at 874 (Jun 24 low) followed by 858 (Jun 12 low). Initial resistance is now at 894.6 (Aug 5 high) followed by 916.75 (Aug 1 high).
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.5462 1.5463 1.5475 1.5578 1.5632
USD/JPY 106.58 107.29 108.40 108.59 108.61
GBP/USD 1.9410 1.9525 1.9555 1.9625 1.9762
AUD/USD 0.9032 0.9091 0.9175 0.9301 0.9347
XAU/USD 858.00 874.50 878.00 894.60 916.75
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Wednesday, August 6, 2008
US And Australia Hold Rates, Greenback Gains On Oil
Daily Forex Fundamentals | Written by Easy Forex | Aug 06 08 02:09 GMT |
U.S. Dollar Trading (USD) gained all day as investors sold Oil, Gold and other commodities. Stronger than forecast Non Manufacturing ISM for July 49.5 (vs. 48.8 expected) and Oil below $120 a barrel sent equities off on an impressive rally. The Feds decisions to hold rates at 2.00% and tone down the accompanying statement halted the USD rally but added fuel to stocks. Dropped from the FED statement was the sentence downside risks seem to have diminished, but added was that inflation was a significant concern. In the U.S. share markets, the NASDAQ was up 64 points (2.81%) and the Dow Jones was up 331 points (2.94%). Crude Oil closed down $2.24 ending the New York session at $119.17 per barrel. Looking ahead, Weekly MBA Purchase index.
The Euro (EUR) punched through 1.5500 in early European trading as Oil fell below the key $120 per barrel level and European sales were negative at -0.6% in June. A brief rally after the FOMC held at 2.00% was quickly reversed with euro hovering at day lows for the remainder of the US session. Overall the EUR/USD traded with a low of 1.5446 and a high of 1.5578 before closing the day at 1.5469 in the New York session. Looking ahead, German Industrial Orders for June forecast 0.4% from -0.9% in May.
The Japanese Yen (JPY) made gains against most currencies except the USD as heavy selling of GBP/JPY, AUD/JPY and EUR/JPY supported the Yen. Better US data and Buoyant stocks help off the crosses off there lows and USD/JPY reclaim the 108 handle. Overall the USDJPY traded with a low of 107.68 and a high of 108.34 before closing the day around 108.18 in the New York session. Looking ahead, June leading indicators seen at -1.8.
The Sterling (GBP) fell in sympathy with the Euro in the face of broad based USD strength. June PMI services were slightly better than expected at 47.4 vs. forecasts of 46.7. June Industrial Production weakened -0.2%. Overall the GDP/USD traded with a low of 1.9524 and a high of 1.9611 before closing the day at 1.9555 in the New York session.
The Australian Dollar (AUD) continued to fall yesterday after the RBA held rates at 7.25% and released a dovish accompanying statement. The RBA opened the door to rate cuts with the comment ‘scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing’. AUD/JPY sales weighed and heavy falls in the CRB index (commodity index) hurt sentiment. Overall the AUD/USD traded with a low 0.9134 and a high of 0.9299 before closing the US session at 0.9155.
Gold (XAU) continued to fall as both Crude Oil dropped below the key $120 and the USD strengthened. Gold broke below $889 an ounce the 200 day moving average. Overall trading with a low of USD$873 and high of USD$894 ending the New York session at USD$875 an ounce.
Easy Forex
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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
Read more...
U.S. Dollar Trading (USD) gained all day as investors sold Oil, Gold and other commodities. Stronger than forecast Non Manufacturing ISM for July 49.5 (vs. 48.8 expected) and Oil below $120 a barrel sent equities off on an impressive rally. The Feds decisions to hold rates at 2.00% and tone down the accompanying statement halted the USD rally but added fuel to stocks. Dropped from the FED statement was the sentence downside risks seem to have diminished, but added was that inflation was a significant concern. In the U.S. share markets, the NASDAQ was up 64 points (2.81%) and the Dow Jones was up 331 points (2.94%). Crude Oil closed down $2.24 ending the New York session at $119.17 per barrel. Looking ahead, Weekly MBA Purchase index.
The Euro (EUR) punched through 1.5500 in early European trading as Oil fell below the key $120 per barrel level and European sales were negative at -0.6% in June. A brief rally after the FOMC held at 2.00% was quickly reversed with euro hovering at day lows for the remainder of the US session. Overall the EUR/USD traded with a low of 1.5446 and a high of 1.5578 before closing the day at 1.5469 in the New York session. Looking ahead, German Industrial Orders for June forecast 0.4% from -0.9% in May.
The Japanese Yen (JPY) made gains against most currencies except the USD as heavy selling of GBP/JPY, AUD/JPY and EUR/JPY supported the Yen. Better US data and Buoyant stocks help off the crosses off there lows and USD/JPY reclaim the 108 handle. Overall the USDJPY traded with a low of 107.68 and a high of 108.34 before closing the day around 108.18 in the New York session. Looking ahead, June leading indicators seen at -1.8.
The Sterling (GBP) fell in sympathy with the Euro in the face of broad based USD strength. June PMI services were slightly better than expected at 47.4 vs. forecasts of 46.7. June Industrial Production weakened -0.2%. Overall the GDP/USD traded with a low of 1.9524 and a high of 1.9611 before closing the day at 1.9555 in the New York session.
The Australian Dollar (AUD) continued to fall yesterday after the RBA held rates at 7.25% and released a dovish accompanying statement. The RBA opened the door to rate cuts with the comment ‘scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing’. AUD/JPY sales weighed and heavy falls in the CRB index (commodity index) hurt sentiment. Overall the AUD/USD traded with a low 0.9134 and a high of 0.9299 before closing the US session at 0.9155.
Gold (XAU) continued to fall as both Crude Oil dropped below the key $120 and the USD strengthened. Gold broke below $889 an ounce the 200 day moving average. Overall trading with a low of USD$873 and high of USD$894 ending the New York session at USD$875 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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Bank of Korea May Keep Rate at 5% as Economy Slows
By William Sim
Aug. 6 (Bloomberg) -- The Bank of Korea may keep interest rates unchanged tomorrow after the economy grew at the slowest pace in more than a year and oil retreated to a three-month low.
Governor Lee Seong Tae and his six colleagues will leave the seven-day repurchase rate at a seven-year high of 5 percent tomorrow, according to 13 of 19 economists surveyed by Bloomberg News. Six expect a quarter-point increase.
Lee must balance signs of a slowdown in domestic demand against his objective of controlling inflation that is running at the fastest pace in a decade. Ssangyong Motor Co. and Hyundai Motor Co. are among companies that have reported declining sales as Korean consumers rein in discretionary spending because of a surge in fuel and food costs.
``The central bank still faces a big dilemma between growth and inflation,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. ``A rate hike seems unlikely this year as oil prices fall and domestic demand weakens.''
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11.
The Federal Reserve yesterday kept its benchmark rate at 2 percent and signaled that weak employment and financial instability will delay any increase in borrowing costs. The European Central Bank and Bank of England, also beset by faster inflation and slower growth, are forecast by economists to stand pat this week.
The won rose 0.2 percent to 1,016.10 won versus the dollar at 9:30 a.m. in Seoul. The five-year government bond yield declined 5 basis points to 5.75 percent. The Kospi stock index climbed 2.2 percent to 1,568.66.
Economy Weakens
South Korea's economy grew 4.8 percent last quarter from a year earlier, the weakest pace in more than a year. Spending by households, which are burdened with record debt, fell 0.1 percent in the quarter, the first decline in four years.
Reports since the Bank of Korea's July meeting have provided more evidence of a slowdown. Households were at their most pessimistic in almost four years in June and manufacturers' confidence for August sank to the lowest in three years.
Factory output advanced 6.7 percent in June from a year earlier, the smallest gain in nine months. A leading index of economic indicators, a gauge of future business activity, rose 1.2 percent, the least in five years.
Ssangyong Motor, the South Korean unit of China's biggest automaker, reported that domestic sales slumped 67 percent in June from a year earlier. Local sales at Hyundai Motor, the nation's largest car producer, slipped 0.6 percent in the second quarter.
Increase Expected
Still, six of the 19 economists surveyed expect the Bank of Korea to raise interest rates tomorrow to keep inflation expectations in check.
Consumer prices in South Korea surged 5.9 percent in July from a year earlier. That was the ninth consecutive breach of the central bank's target of keeping inflation between 2.5 percent and 3.5 percent, on average, for the three years to 2009.
Policy makers in India, Indonesia, Taiwan, the Philippines and Thailand have all raised interest rates this year even as the Asian region faces fallout from a global slowdown.
``We expect one token rate hike in August as a reaction to the massive inflation pressure in July,'' said Chun Chong Woo, an economist at SC First Bank Korea Ltd. in Seoul. ``A further rate hike is unlikely as downside risks to the economy will be more severe going forward.''
Shipments to China, the Middle East and Latin America, buoyed in part by a weaker won, have helped South Korea weather the domestic slowdown and a U.S. economic slump. Exports surged 37.1 percent in July from a year earlier, the most in four years.
The won has fallen 8 percent this year against the dollar, helping Korea's exporters by making their products cheaper overseas.
The following table shows forecasts for tomorrow's decision, which is expected before 11 a.m. in Seoul, and for rates in the second half of this year and in the first half of 2009.
Read more...
Aug. 6 (Bloomberg) -- The Bank of Korea may keep interest rates unchanged tomorrow after the economy grew at the slowest pace in more than a year and oil retreated to a three-month low.
Governor Lee Seong Tae and his six colleagues will leave the seven-day repurchase rate at a seven-year high of 5 percent tomorrow, according to 13 of 19 economists surveyed by Bloomberg News. Six expect a quarter-point increase.
Lee must balance signs of a slowdown in domestic demand against his objective of controlling inflation that is running at the fastest pace in a decade. Ssangyong Motor Co. and Hyundai Motor Co. are among companies that have reported declining sales as Korean consumers rein in discretionary spending because of a surge in fuel and food costs.
``The central bank still faces a big dilemma between growth and inflation,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. ``A rate hike seems unlikely this year as oil prices fall and domestic demand weakens.''
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11.
The Federal Reserve yesterday kept its benchmark rate at 2 percent and signaled that weak employment and financial instability will delay any increase in borrowing costs. The European Central Bank and Bank of England, also beset by faster inflation and slower growth, are forecast by economists to stand pat this week.
The won rose 0.2 percent to 1,016.10 won versus the dollar at 9:30 a.m. in Seoul. The five-year government bond yield declined 5 basis points to 5.75 percent. The Kospi stock index climbed 2.2 percent to 1,568.66.
Economy Weakens
South Korea's economy grew 4.8 percent last quarter from a year earlier, the weakest pace in more than a year. Spending by households, which are burdened with record debt, fell 0.1 percent in the quarter, the first decline in four years.
Reports since the Bank of Korea's July meeting have provided more evidence of a slowdown. Households were at their most pessimistic in almost four years in June and manufacturers' confidence for August sank to the lowest in three years.
Factory output advanced 6.7 percent in June from a year earlier, the smallest gain in nine months. A leading index of economic indicators, a gauge of future business activity, rose 1.2 percent, the least in five years.
Ssangyong Motor, the South Korean unit of China's biggest automaker, reported that domestic sales slumped 67 percent in June from a year earlier. Local sales at Hyundai Motor, the nation's largest car producer, slipped 0.6 percent in the second quarter.
Increase Expected
Still, six of the 19 economists surveyed expect the Bank of Korea to raise interest rates tomorrow to keep inflation expectations in check.
Consumer prices in South Korea surged 5.9 percent in July from a year earlier. That was the ninth consecutive breach of the central bank's target of keeping inflation between 2.5 percent and 3.5 percent, on average, for the three years to 2009.
Policy makers in India, Indonesia, Taiwan, the Philippines and Thailand have all raised interest rates this year even as the Asian region faces fallout from a global slowdown.
``We expect one token rate hike in August as a reaction to the massive inflation pressure in July,'' said Chun Chong Woo, an economist at SC First Bank Korea Ltd. in Seoul. ``A further rate hike is unlikely as downside risks to the economy will be more severe going forward.''
Shipments to China, the Middle East and Latin America, buoyed in part by a weaker won, have helped South Korea weather the domestic slowdown and a U.S. economic slump. Exports surged 37.1 percent in July from a year earlier, the most in four years.
The won has fallen 8 percent this year against the dollar, helping Korea's exporters by making their products cheaper overseas.
The following table shows forecasts for tomorrow's decision, which is expected before 11 a.m. in Seoul, and for rates in the second half of this year and in the first half of 2009.
--------------------------------------------------------------To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net
August 2nd-Half 1st-Half
2008 2008 2009
--------------------------------------------------------------
Median Forecast 5.00% 5.25% 5.25%
% forecasts at Median 68% 37% 26%
High 5.25% 5.50% 5.75%
Low 5.00% 5.00% 4.25%
Forecasts 19 19 19
-------------------------------------------------------------
Action Economics 5.25% 5.50% 5.50%
Citibank 5.00% 5.25% 5.25%
Credit Suisse 5.00% 5.25% 5.25%
Daewoo Securities 5.25% 5.25% 4.75%
DBS Group 5.00% 5.00% 5.00%
Forecast Singapore Ltd. 5.00% 5.00% 4.25%
Good Morning Shinhan Securities 5.00% 5.00% 5.00%
Hana Daetoo Securities 5.00% 5.25% 5.25%
HSBC 5.00% 5.00% 5.25%
Hyundai Securities 5.00% 5.00% 4.50%
JPMorgan Chase 5.00% 5.00% 5.25%
Lehman Brothers 5.25% 5.25% 5.00%
Samsung Economic Research 5.00% 5.00% 5.00%
Samsung Securities 5.25% 5.50% 5.50%
SC First Bank Korea 5.25% 5.25% 4.75%
Shinhan Bank 5.00% 5.25% 5.00%
Taurus Investment Securities 5.00% 5.50% 5.50%
Thomson Reuters 5.25% 5.50% 5.50%
Woori Investment & Securities 5.00% 5.50% 5.50%
=============================================================
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USD Gains As Global Growth Falters
| Daily Forex Fundamentals Written by CMS Forex Aug 06 08 01:14 GMT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
USD Gains As Global Growth FaltersThe dollar gained as US stocks rose on falling oil prices and the Federal Reserve kept interest rates unchanged. The Fed is unlikely to change rates anytime soon and warned that several factors are expected to keep US economic growth on a slow pace. 'Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters,' the Federal Open Market Committee said in its statement accompanying the decision. Despite the gloomy statement, the dollar advanced as global economic slowdown is intensifying, diminishing the greenback's growth and interest rate disadvantage. The dollar block currencies fell on fears that the global economic slowdown is reducing commodity demand. Sterling declined as UK manufacturing output fell. The yen was little changed. The EUR/USD fell after the eurozone services sector fell to a 5-year low, while inflationary price pressures remained near record levels. The slumping European growth is undermining the case for the European Central Bank to raise interest rates again this year, despite strong inflationary pressures. The EUR/USD is likely to test the significant 1.54-support. We expect it to be broken, but timing is uncertain as the pair is oversold. We will sell the pair on strength.
Financial and Economic News and CommentsUS & Canada
Europe
Asia-Pacific
FX Strategy Update
Hans Nilsson ©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Forex Exchange Morning Report
Daily Forex Fundamentals | Written by Westpac Institutional Bank | Aug 06 08 01:20 GMT |
News And Views
Supported by strong gains on the DJIA (+300pts in late NY trade) and lower oil prices, USD rallied firmly in London/NY before easing back slightly on the somewhat dovish FOMC statement (downside risks to growth no longer 'diminished' and still only one dissenter (Fisher) despite inter-meeting hawkishness from Plosser and Stern). A stronger than expected July non-manufacturing ISM report also helped USD. The New Zealand dollar outperformed most majors, recovering from its London low of 0.7221 to ratchet back to 0.7260.
The Australian dollar extended its losses through London and NY trade in the wake of the RBA's clear signal of monetary easing ahead, grinding from 0.9220 to as low as 0.9133 in NY, with the dovish Fed providing only about a 20 tick pop higher (to 0.9160).
USD/JPY was under pressure in the London morning but picked up briskly from the 107.70 area to above 108.20 as equities extended their gains.
EUR/USD traded modestly lower overall, slipping below 1.5500 in London and staying there, with only a fleeting 15 pip squeeze higher to 1.5470/75 on the FOMC statement.
US Fed left its funds target unchanged at 2.0%. Once again, Richard Fisher of the Dallas Fed dissented in favour of an immediate rate hike. The statement noted that 'Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The 'risks' comment from the June 25 FOMC statement read thus: 'Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.' So this time around the Fed has dropped the reference to diminished downside risks to growth, in line with recent Bernanke testimony, and described inflation risks as significant rather than increased. Overall, that could be interpreted as a Fed that is a little further away from an eventual policy retightening now compared to June, but by fiddling with the inflation adjective the Fed has been careful not to be to clear-cut in its assessment of how the balance of risks might have shifted over the last six weeks.
US ISM non-manufacturing rises from 48.2 to 49.5 in July. The nonmanufacturing ISM revealed a smaller contraction in July activity, despite slightly weaker readings for activity and orders. These were offset by longer supplier delivery times and less weak jobs, the other two components of the composite index. The prices index was a little lower, perhaps reflecting the recent pull-back in energy prices. When combined with the previously released manufacturing survey, the 'whole economy' ISM was just south of neutral, consistent with the view that the US economy is stalled rather than slumping.
Euroland retail sales fell 0.6% in June, down for the fourth month in five, fully reversing their May gain and leaving in place a steep downtrend that means annual sales volume growth has slumped to -3.1% yr, the weakest since combined European data became available in the mid 1990s. This result suggests that household spending contracted in Q2, and increases the risk that Euroland GDP growth failed to grow at all in the second quarter (date due 14/8). Also the July services PMI was unrevised at 48.3.
The UK services sector continued to contract in July, despite a slight 0.3pt improvement in the headline services PMI to 47.4. The employment index showed renewed weakness which we expect to soon show up in the official labour force data. And new business fell to its lowest yet. Also, the industrial report for June revealed more bad news on activity, with manufacturing output dropping 0.5% again.
Outlook
We continue to like NZD lower multi week especially on a TWI basis. Our view is supported by RBNZ governor Bollard's reiteration this week that there is scope for further easing and NZ Treasury's apparent expectation of negative Q2 GDP.Westpac Institutional Bank
http://www.wib.westpac.co.nz/
Disclaimer
All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.
Read more...
News And Views
Supported by strong gains on the DJIA (+300pts in late NY trade) and lower oil prices, USD rallied firmly in London/NY before easing back slightly on the somewhat dovish FOMC statement (downside risks to growth no longer 'diminished' and still only one dissenter (Fisher) despite inter-meeting hawkishness from Plosser and Stern). A stronger than expected July non-manufacturing ISM report also helped USD. The New Zealand dollar outperformed most majors, recovering from its London low of 0.7221 to ratchet back to 0.7260.
The Australian dollar extended its losses through London and NY trade in the wake of the RBA's clear signal of monetary easing ahead, grinding from 0.9220 to as low as 0.9133 in NY, with the dovish Fed providing only about a 20 tick pop higher (to 0.9160).
USD/JPY was under pressure in the London morning but picked up briskly from the 107.70 area to above 108.20 as equities extended their gains.
EUR/USD traded modestly lower overall, slipping below 1.5500 in London and staying there, with only a fleeting 15 pip squeeze higher to 1.5470/75 on the FOMC statement.
US Fed left its funds target unchanged at 2.0%. Once again, Richard Fisher of the Dallas Fed dissented in favour of an immediate rate hike. The statement noted that 'Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The 'risks' comment from the June 25 FOMC statement read thus: 'Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.' So this time around the Fed has dropped the reference to diminished downside risks to growth, in line with recent Bernanke testimony, and described inflation risks as significant rather than increased. Overall, that could be interpreted as a Fed that is a little further away from an eventual policy retightening now compared to June, but by fiddling with the inflation adjective the Fed has been careful not to be to clear-cut in its assessment of how the balance of risks might have shifted over the last six weeks.
US ISM non-manufacturing rises from 48.2 to 49.5 in July. The nonmanufacturing ISM revealed a smaller contraction in July activity, despite slightly weaker readings for activity and orders. These were offset by longer supplier delivery times and less weak jobs, the other two components of the composite index. The prices index was a little lower, perhaps reflecting the recent pull-back in energy prices. When combined with the previously released manufacturing survey, the 'whole economy' ISM was just south of neutral, consistent with the view that the US economy is stalled rather than slumping.
Euroland retail sales fell 0.6% in June, down for the fourth month in five, fully reversing their May gain and leaving in place a steep downtrend that means annual sales volume growth has slumped to -3.1% yr, the weakest since combined European data became available in the mid 1990s. This result suggests that household spending contracted in Q2, and increases the risk that Euroland GDP growth failed to grow at all in the second quarter (date due 14/8). Also the July services PMI was unrevised at 48.3.
The UK services sector continued to contract in July, despite a slight 0.3pt improvement in the headline services PMI to 47.4. The employment index showed renewed weakness which we expect to soon show up in the official labour force data. And new business fell to its lowest yet. Also, the industrial report for June revealed more bad news on activity, with manufacturing output dropping 0.5% again.
Outlook
We continue to like NZD lower multi week especially on a TWI basis. Our view is supported by RBNZ governor Bollard's reiteration this week that there is scope for further easing and NZ Treasury's apparent expectation of negative Q2 GDP.Westpac Institutional Bank
http://www.wib.westpac.co.nz/
Disclaimer
All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.
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U.K. Consumer Confidence Drops Most Since 2004, Nationwide Says
By Svenja O'Donnell
Aug. 6 (Bloomberg) -- U.K. consumer confidence fell the most in at least four years in July after house prices slumped, unemployment rose and inflation accelerated, Nationwide Building Society said.
An index of sentiment, taken from the responses of 1,000 people from June 23 to July 20, declined 11 points to 51, the biggest drop since the survey began in May 2004, Britain's second- biggest mortgage lender said today in an e-mailed statement. The level is also the lowest since the series started.
``Talk of the increasing chances of a recession, more weakening in the housing market and the continuing rise of food and energy costs will have further dented confidence, as will reports of job losses,'' Fionnuala Earley, Nationwide's chief economist, said in the statement.
The British economy grew at the slowest pace in three years in the quarter through July, the National Institute of Economic & Social Research said in a report today. Bank of England policy makers will still avoid cutting the benchmark interest rate tomorrow to avert a recession as they battle the fastest inflation in at least 11 years, economists say.
Almost two-thirds of people said the current economic situation is bad, and 85 percent predicted it will be the same or worse in six months' time, Nationwide's survey showed.
Nationwide said last week that house prices dropped 8.1 percent in July from a year earlier, the biggest decline in almost two decades. Nationwide was the U.K. lender with the biggest outstanding mortgage balance in 2007 after HBOS Plc, according to data released last week by the Council of Mortgage Lenders.
Job Concern
Forty-two percent of people surveyed predicted there will be fewer jobs available in six months' time, Nationwide said. Claims for unemployment benefits increased 15,500 in June, the most since 1992, the Office for National Statistics said on July 16.
The number of U.K. workers placed in permanent jobs fell at the fastest rate since December 2001, according to a separate report today by the Recruitment and Employment Confederation and KPMG. The index of permanent placements fell to 44.1 in July, from 48.2 the previous month, they said in an e-mailed statement.
Economic growth slowed to 0.1 percent in the three months through July, the weakest pace since the quarter through May 2005, Niesr said in an estimate released today.
Inflation accelerated to 3.8 percent in June, the fastest in more than a decade and almost double the bank's 2 percent target. Oil rose above $147 a barrel for the first time last month, while corn and wheat prices climbed to the highest ever this year.
``With inflation far above target and rising there remains a case for an interest-rate increase, with interest rates to be held at a higher level until the inflation rates starts to turn down,'' Niesr said in a statement.
The central bank will keep its benchmark rate unchanged for a fourth month at 5 percent tomorrow, according to all 60 economists in a Bloomberg News survey.
To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.
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Aug. 6 (Bloomberg) -- U.K. consumer confidence fell the most in at least four years in July after house prices slumped, unemployment rose and inflation accelerated, Nationwide Building Society said.
An index of sentiment, taken from the responses of 1,000 people from June 23 to July 20, declined 11 points to 51, the biggest drop since the survey began in May 2004, Britain's second- biggest mortgage lender said today in an e-mailed statement. The level is also the lowest since the series started.
``Talk of the increasing chances of a recession, more weakening in the housing market and the continuing rise of food and energy costs will have further dented confidence, as will reports of job losses,'' Fionnuala Earley, Nationwide's chief economist, said in the statement.
The British economy grew at the slowest pace in three years in the quarter through July, the National Institute of Economic & Social Research said in a report today. Bank of England policy makers will still avoid cutting the benchmark interest rate tomorrow to avert a recession as they battle the fastest inflation in at least 11 years, economists say.
Almost two-thirds of people said the current economic situation is bad, and 85 percent predicted it will be the same or worse in six months' time, Nationwide's survey showed.
Nationwide said last week that house prices dropped 8.1 percent in July from a year earlier, the biggest decline in almost two decades. Nationwide was the U.K. lender with the biggest outstanding mortgage balance in 2007 after HBOS Plc, according to data released last week by the Council of Mortgage Lenders.
Job Concern
Forty-two percent of people surveyed predicted there will be fewer jobs available in six months' time, Nationwide said. Claims for unemployment benefits increased 15,500 in June, the most since 1992, the Office for National Statistics said on July 16.
The number of U.K. workers placed in permanent jobs fell at the fastest rate since December 2001, according to a separate report today by the Recruitment and Employment Confederation and KPMG. The index of permanent placements fell to 44.1 in July, from 48.2 the previous month, they said in an e-mailed statement.
Economic growth slowed to 0.1 percent in the three months through July, the weakest pace since the quarter through May 2005, Niesr said in an estimate released today.
Inflation accelerated to 3.8 percent in June, the fastest in more than a decade and almost double the bank's 2 percent target. Oil rose above $147 a barrel for the first time last month, while corn and wheat prices climbed to the highest ever this year.
``With inflation far above target and rising there remains a case for an interest-rate increase, with interest rates to be held at a higher level until the inflation rates starts to turn down,'' Niesr said in a statement.
The central bank will keep its benchmark rate unchanged for a fourth month at 5 percent tomorrow, according to all 60 economists in a Bloomberg News survey.
To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.
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Nazis, Debt Cloud Japanese Stagflation Debate: William Pesek
Commentary by William Pesek
More Photos/Details
Aug. 6 (Bloomberg) -- Japan's ``next'' prime minister, Taro Aso, has made a name for himself with unfortunate comments. His latest ones are real standouts.
Aso, the newly appointed Liberal Democratic Party secretary- general and the man widely touted as next prime minister, made remarks likening the main opposition to Nazis. Offended leaders of the Democratic Party of Japan are asking for a retraction.
Why does this matter to investors? At a time when Japan's economy risks stagflation, leaders are distracted by petty bickering, name-calling and score-settling. It's hardly good news for the remaining Japan bulls out there.
The irony is that the 67-year-old Aso, a former foreign minister, was tapped by Prime Minister Yasuo Fukuda to stabilize his government's support rate. Doing so is necessary if Fukuda is to win backing for economic-stimulus efforts to keep Japan's longest recovery since World War II from ending in recession.
You have to wonder how Fukuda, 72, is feeling about that decision just a few days after reshuffling his Cabinet.
For journalists who love gaffe-prone politicians, Aso is a dream. In 2001, he said he would like Japan to become a nation where ``rich Jews'' want to live. More recently, Aso made jokes about Alzheimer's disease. In 2006, Aso said Taiwan garnered benefits from Japan's colonization efforts. It achieved something remarkable: He brought Taiwan and China together on an issue. Both governments denounced the statement.
Immediate Problem
Aso is already taking some wind out of Fukuda's sails; his notoriety was supposed to help fill them. Investors hoping Japan would be immune to global credit-market woes are being forced to reconsider things, and politics are a key reason why.
The arm of government matters more in Asia's biggest economy than in most developed ones. While banks reduced bad debt and many companies restructured in the early 2000s amid deflation, politicians haven't done their part to boost Japan's competitiveness. As global growth wanes, that will become painfully clear to those betting on a resurgent Japan.
The real question is what latitude Japan has to cushion its economy from global events.
The nation remains reliant on ultra-low rates, massive government borrowings and exports. Waning global growth is making it more likely Japan will slide into recession, Aso said yesterday. Not a deep recession, perhaps, yet Kaoru Yosano's first act as new minister for economic and fiscal policy was to warn of a ``downturn.''
Diminishing Returns
After reshuffling his Cabinet last week, Fukuda is under pressure to help consumers as food and energy costs rise. With the Bank of Japan's benchmark rate at 0.5 percent, there's little ammunition on the monetary front. Fiscal options are limited, too; Japan has the largest public debt in the developed world.
Efforts to boost growth are suffering from a case of diminishing returns. They aren't instilling in executives or consumers a belief that growth will accelerate. It's also important to show investors that policy makers have a plan to improve competitiveness and deal with an aging population.
Given Japan's record, today's trends aren't conducive to the fiscal belt-tightening Fukuda's 11-month-old government pledged.
``Japan is facing risks from cost-push stagflation because of external factors,'' Finance Minister Bunmei Ibuki said yesterday. ``Overseas economies, especially the U.S., are facing a similar situation and I'm concerned that this will create difficulties for exporters.''
Budget Balancing
The government claims it hasn't yet decided to allocate funds for a stimulus package. With Ibuki saying it may be difficult to achieve the government's goal of balancing the budget by 2011, there can be little doubt one is in the works.
That's a short-term fix, though. Japan's finances aren't doing the nation's growth prospects any favors. Neither are politics. Expect infighting over Aso's Nazi comment to distract Fukuda's government indefinitely when it needs to be working with opposition leaders to stimulate the economy.
The thing is, Japan finally has the functioning two-party system for which many observers have long waited. The Democratic Party of Japan last year won control of parliament's upper house, offering Japan something closer to the democratic process its constitution intended. The result has been political paralysis.
Moody's Investors Service in June raised the country's sovereign long-term credit rating one notch to Aa3 from A1. Analysts at Moody's cited ``expectations of continued fiscal restraint and consolidation,'' and they may regret it. When it comes to making the most of an economic recovery, Japan's current crop of leaders deserves scant credit.
Opposition leaders have done little more than stand in the way of ideas put forth by the ruling Liberal Democratic Party. That's presumably what Aso meant by his ill-conceived Nazi comment -- that the party would govern in an authoritarian manner if it took power, firmly resisting change.
Aso forgets that his own party is as resistant to change as any. Six years after recovering from its bad-loan crisis, Japan still hasn't figured out how to grow without free money, massive debt sales and an undervalued currency. Here, less hyperbole about Nazis and more focus on debt and stagflation would help.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Read more...
More Photos/Details
Aug. 6 (Bloomberg) -- Japan's ``next'' prime minister, Taro Aso, has made a name for himself with unfortunate comments. His latest ones are real standouts.
Aso, the newly appointed Liberal Democratic Party secretary- general and the man widely touted as next prime minister, made remarks likening the main opposition to Nazis. Offended leaders of the Democratic Party of Japan are asking for a retraction.
Why does this matter to investors? At a time when Japan's economy risks stagflation, leaders are distracted by petty bickering, name-calling and score-settling. It's hardly good news for the remaining Japan bulls out there.
The irony is that the 67-year-old Aso, a former foreign minister, was tapped by Prime Minister Yasuo Fukuda to stabilize his government's support rate. Doing so is necessary if Fukuda is to win backing for economic-stimulus efforts to keep Japan's longest recovery since World War II from ending in recession.
You have to wonder how Fukuda, 72, is feeling about that decision just a few days after reshuffling his Cabinet.
For journalists who love gaffe-prone politicians, Aso is a dream. In 2001, he said he would like Japan to become a nation where ``rich Jews'' want to live. More recently, Aso made jokes about Alzheimer's disease. In 2006, Aso said Taiwan garnered benefits from Japan's colonization efforts. It achieved something remarkable: He brought Taiwan and China together on an issue. Both governments denounced the statement.
Immediate Problem
Aso is already taking some wind out of Fukuda's sails; his notoriety was supposed to help fill them. Investors hoping Japan would be immune to global credit-market woes are being forced to reconsider things, and politics are a key reason why.
The arm of government matters more in Asia's biggest economy than in most developed ones. While banks reduced bad debt and many companies restructured in the early 2000s amid deflation, politicians haven't done their part to boost Japan's competitiveness. As global growth wanes, that will become painfully clear to those betting on a resurgent Japan.
The real question is what latitude Japan has to cushion its economy from global events.
The nation remains reliant on ultra-low rates, massive government borrowings and exports. Waning global growth is making it more likely Japan will slide into recession, Aso said yesterday. Not a deep recession, perhaps, yet Kaoru Yosano's first act as new minister for economic and fiscal policy was to warn of a ``downturn.''
Diminishing Returns
After reshuffling his Cabinet last week, Fukuda is under pressure to help consumers as food and energy costs rise. With the Bank of Japan's benchmark rate at 0.5 percent, there's little ammunition on the monetary front. Fiscal options are limited, too; Japan has the largest public debt in the developed world.
Efforts to boost growth are suffering from a case of diminishing returns. They aren't instilling in executives or consumers a belief that growth will accelerate. It's also important to show investors that policy makers have a plan to improve competitiveness and deal with an aging population.
Given Japan's record, today's trends aren't conducive to the fiscal belt-tightening Fukuda's 11-month-old government pledged.
``Japan is facing risks from cost-push stagflation because of external factors,'' Finance Minister Bunmei Ibuki said yesterday. ``Overseas economies, especially the U.S., are facing a similar situation and I'm concerned that this will create difficulties for exporters.''
Budget Balancing
The government claims it hasn't yet decided to allocate funds for a stimulus package. With Ibuki saying it may be difficult to achieve the government's goal of balancing the budget by 2011, there can be little doubt one is in the works.
That's a short-term fix, though. Japan's finances aren't doing the nation's growth prospects any favors. Neither are politics. Expect infighting over Aso's Nazi comment to distract Fukuda's government indefinitely when it needs to be working with opposition leaders to stimulate the economy.
The thing is, Japan finally has the functioning two-party system for which many observers have long waited. The Democratic Party of Japan last year won control of parliament's upper house, offering Japan something closer to the democratic process its constitution intended. The result has been political paralysis.
Moody's Investors Service in June raised the country's sovereign long-term credit rating one notch to Aa3 from A1. Analysts at Moody's cited ``expectations of continued fiscal restraint and consolidation,'' and they may regret it. When it comes to making the most of an economic recovery, Japan's current crop of leaders deserves scant credit.
Opposition leaders have done little more than stand in the way of ideas put forth by the ruling Liberal Democratic Party. That's presumably what Aso meant by his ill-conceived Nazi comment -- that the party would govern in an authoritarian manner if it took power, firmly resisting change.
Aso forgets that his own party is as resistant to change as any. Six years after recovering from its bad-loan crisis, Japan still hasn't figured out how to grow without free money, massive debt sales and an undervalued currency. Here, less hyperbole about Nazis and more focus on debt and stagflation would help.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Read more...
WildHorse Agrees to Study Restarting Uranium Mining in Hungary
By Angela Macdonald-Smith
Aug. 6 (Bloomberg) -- WildHorse Energy Ltd., the Australian uranium explorer backed by Macquarie Bank Ltd., agreed to study the potential for restarting uranium mining in southern Hungary as demand for the metal from power producers increases.
Under an accord with state-owned Mecsekerc Zrt the partners will evaluate the Mecsek Hills project area by the end of September, Perth-based WildHorse said today in a statement to the Australian stock exchange. They will then do more detailed feasibility work before deciding whether to develop a mine.
A resurgence in interest in nuclear power because of rising fossil fuel costs and increased pressure to cut greenhouse gas emissions is boosting demand for uranium. About 46 million pounds of the radioactive metal was produced from the Mecsek Hills area before the closure of the mine in 1997.
The agreement ``is a significant step forward in our projects in Hungary,'' WildHorse Managing Director Richard Pearce said in the statement. ``This next phase of work will help determine the potential for future mining.''
WildHorse gained as much as 4 Australian cents, or 13 percent, to 34 cents in Sydney trading at 10:09 a.m. local time.
The number of nuclear power reactors may jump 30 percent by 2020, buoyed in particular by investments planned in India and China, the World Nuclear Association estimates.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Aug. 6 (Bloomberg) -- WildHorse Energy Ltd., the Australian uranium explorer backed by Macquarie Bank Ltd., agreed to study the potential for restarting uranium mining in southern Hungary as demand for the metal from power producers increases.
Under an accord with state-owned Mecsekerc Zrt the partners will evaluate the Mecsek Hills project area by the end of September, Perth-based WildHorse said today in a statement to the Australian stock exchange. They will then do more detailed feasibility work before deciding whether to develop a mine.
A resurgence in interest in nuclear power because of rising fossil fuel costs and increased pressure to cut greenhouse gas emissions is boosting demand for uranium. About 46 million pounds of the radioactive metal was produced from the Mecsek Hills area before the closure of the mine in 1997.
The agreement ``is a significant step forward in our projects in Hungary,'' WildHorse Managing Director Richard Pearce said in the statement. ``This next phase of work will help determine the potential for future mining.''
WildHorse gained as much as 4 Australian cents, or 13 percent, to 34 cents in Sydney trading at 10:09 a.m. local time.
The number of nuclear power reactors may jump 30 percent by 2020, buoyed in particular by investments planned in India and China, the World Nuclear Association estimates.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Newcrest Resumes Using Apache Gas as Supply Restarts
By Angela Macdonald-Smith
Aug. 6 (Bloomberg) -- Newcrest Mining Ltd., Australia's largest gold mining company, said it switched back to using gas from Apache Corp. at its Telfer mine in Western Australia after a two-month disruption due to a gas pipeline explosion.
As much as a half of Telfer's normal gas requirements will be available under the supply contract with Apache after the Houston-based company partially resumed supplies from the Varanus Island gas plant off Australia's northwest coast, Melbourne-based Newcrest said today in a statement to the Australian stock exchange.
Apache said Aug. 1 it would restart a third of production at Varanus Island this week after repairing part of the plant and pipeline systems damaged in the June 3 explosion and fire. The shutdown had cut gas supplies to Western Australia, generator of more than a third of the nation's exports, by about 30 percent.
``Telfer's remaining requirements are expected to be supplied by Apache around mid-August as it further increases its gas supplies,'' Newcrest said today in the statement.
Newcrest terminated part of its interim gas supply arrangements with the North West Shelf venture. It will continue to get some gas from the Woodside Petroleum Ltd.-operated venture until Apache resumes full supplies to Telfer later this month, the company said.
Apache's Australian unit said Aug. 1 it would resume supplies initially at 110 million cubic feet a day, to double later in August, then to reach full output of 330 million cubic feet a day by the end of the year.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- Newcrest Mining Ltd., Australia's largest gold mining company, said it switched back to using gas from Apache Corp. at its Telfer mine in Western Australia after a two-month disruption due to a gas pipeline explosion.
As much as a half of Telfer's normal gas requirements will be available under the supply contract with Apache after the Houston-based company partially resumed supplies from the Varanus Island gas plant off Australia's northwest coast, Melbourne-based Newcrest said today in a statement to the Australian stock exchange.
Apache said Aug. 1 it would restart a third of production at Varanus Island this week after repairing part of the plant and pipeline systems damaged in the June 3 explosion and fire. The shutdown had cut gas supplies to Western Australia, generator of more than a third of the nation's exports, by about 30 percent.
``Telfer's remaining requirements are expected to be supplied by Apache around mid-August as it further increases its gas supplies,'' Newcrest said today in the statement.
Newcrest terminated part of its interim gas supply arrangements with the North West Shelf venture. It will continue to get some gas from the Woodside Petroleum Ltd.-operated venture until Apache resumes full supplies to Telfer later this month, the company said.
Apache's Australian unit said Aug. 1 it would resume supplies initially at 110 million cubic feet a day, to double later in August, then to reach full output of 330 million cubic feet a day by the end of the year.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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International Power Profit Growth Faces Slowdown in Australia
By Paul Dobson
Aug. 6 (Bloomberg) -- International Power Plc, the U.K. utility with power stations in 20 countries, may face slower profit growth from Australia, its third-biggest source of revenue.
Electricity prices in Australia fell in the year ended June 30 because of milder temperatures, JPMorgan Chase & Co. said in an Aug. 4 report, citing data from the National Electricity Market. The start of carbon-dioxide emissions trading may add to costs and cut the value of the company's assets, Lakis Athanasiou, an analyst at Evolution Securities Ltd., said in a research note Aug. 1.
International Power, based in London, owns regulated and market-based projects in Europe, the U.S., Asia and Australia to benefit from areas where profit margins are the widest. Led by Chief Executive Officer Philip Cox, earnings growth slowed to 22 percent last year from 44 percent in 2006. Per-share profit in the first half probably increased 10 percent, according to the median estimate of five analysts surveyed by Bloomberg News.
``Australian power prices have fallen recently, which may dampen profit growth for the full year and beyond,'' Andrew Mead, a U.K.-based analyst at Goldman Sachs Group Inc., said in a note to investors July 30.
Earnings per share excluding one-time items probably rose to 14.8 pence from 13.4 pence a year earlier, according to the analyst estimates. That follows a drop in the first quarter of 2007 as a bush fire in Australia curbed output.
Gas-Fired Plants
International Power plans to build three natural-gas fired plants in New South Wales, and may participate in a sale of power assets by the state. The utility said in April that Australia, which accounted for 16 percent of its revenue last year, and Asia offer ``huge electricity demand growth.''
The Australian government plans to start a carbon emissions trading system July 1, 2010, to reduce greenhouse gas emissions blamed for global warming. The system may not hurt profits, according to Morgan Stanley analyst Bobby Chada.
``The Australian carbon issue is a risk for International Power, but one that can be offset,'' Chada wrote in a note to clients July 30. State aid to counter higher costs looks ``certain,'' while other expenses may be passed on, he said. Higher gas and coal prices in Australia may also boost earnings because the company fixed some fuel-supply costs under contracts.
Chada rates the stock ``overweight,'' saying higher U.K. power prices will lift profit and the company's ability to borrow will allow it to exploit opportunities for projects in all regions.
New Investment
International Power declined 9 percent in London trading this year to 413.75 pence, valuing the company at 6.2 billion pounds ($12.1 billion). The Dow Jones Europe Stoxx Utilities Index fell 20 percent over the same period.
``You want to be able to have good new investment opportunities and they've done that very successfully because they've got established positions in the countries where they operate,'' said Edward Collins, a London-based fund manager at New Star Asset Management Group Plc, who manages about 100 million pounds, including International Power shares.
The company said in 2007 that first-quarter profit fell after a fire stopped some electricity exports and forced purchases at higher prices. Earnings in Australia fell in the second quarter as output halts caused International Power to buy back power at prices boosted by drought.
Disruptions curbed electricity output from South Africa to China, highlighting a shortage of power generation throughout the world, Goldman Sachs analysts wrote in a note in April.
Plant Value
``Generation's becoming more valuable -- either they're running out, or replacement costs are going up,'' said Iain Turner, an analyst at Deutsche Bank AG in London, in a phone interview Aug. 4. ``If you've already got a power station built, its value goes up.''
Cox, 56, plans new facilities in Indonesia, Pakistan, Thailand and Vietnam, according to slides from a presentation in Melbourne on April 11, posted on the company's Web site. International Power is building a gas-fired plant in Portugal and plans another in the Netherlands with Rotterdam-based Eneco Holding NV. It may need to cut the size of a future plant in Botswana after the preferred contractor for the project declined to take on undisclosed risks.
International Power got funding for a power and water- desalination project in the United Arab Emirates in December and agreed to buy wind farms in Germany and Italy from Dublin-based Trinergy Ltd. in August. The company reached a 30-year accord this week on power sales for a coal-fired plant in Indonesia.
``It's operating in a lot of regions, it's well-placed'' said Angelos Anastasiou, an analyst at Pali International Ltd. in London, in a phone interview. ``The capacity is needed. The prospects are there. They can get the financing on a project-by- project basis, which they've shown on the deals to date.''
To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- International Power Plc, the U.K. utility with power stations in 20 countries, may face slower profit growth from Australia, its third-biggest source of revenue.
Electricity prices in Australia fell in the year ended June 30 because of milder temperatures, JPMorgan Chase & Co. said in an Aug. 4 report, citing data from the National Electricity Market. The start of carbon-dioxide emissions trading may add to costs and cut the value of the company's assets, Lakis Athanasiou, an analyst at Evolution Securities Ltd., said in a research note Aug. 1.
International Power, based in London, owns regulated and market-based projects in Europe, the U.S., Asia and Australia to benefit from areas where profit margins are the widest. Led by Chief Executive Officer Philip Cox, earnings growth slowed to 22 percent last year from 44 percent in 2006. Per-share profit in the first half probably increased 10 percent, according to the median estimate of five analysts surveyed by Bloomberg News.
``Australian power prices have fallen recently, which may dampen profit growth for the full year and beyond,'' Andrew Mead, a U.K.-based analyst at Goldman Sachs Group Inc., said in a note to investors July 30.
Earnings per share excluding one-time items probably rose to 14.8 pence from 13.4 pence a year earlier, according to the analyst estimates. That follows a drop in the first quarter of 2007 as a bush fire in Australia curbed output.
Gas-Fired Plants
International Power plans to build three natural-gas fired plants in New South Wales, and may participate in a sale of power assets by the state. The utility said in April that Australia, which accounted for 16 percent of its revenue last year, and Asia offer ``huge electricity demand growth.''
The Australian government plans to start a carbon emissions trading system July 1, 2010, to reduce greenhouse gas emissions blamed for global warming. The system may not hurt profits, according to Morgan Stanley analyst Bobby Chada.
``The Australian carbon issue is a risk for International Power, but one that can be offset,'' Chada wrote in a note to clients July 30. State aid to counter higher costs looks ``certain,'' while other expenses may be passed on, he said. Higher gas and coal prices in Australia may also boost earnings because the company fixed some fuel-supply costs under contracts.
Chada rates the stock ``overweight,'' saying higher U.K. power prices will lift profit and the company's ability to borrow will allow it to exploit opportunities for projects in all regions.
New Investment
International Power declined 9 percent in London trading this year to 413.75 pence, valuing the company at 6.2 billion pounds ($12.1 billion). The Dow Jones Europe Stoxx Utilities Index fell 20 percent over the same period.
``You want to be able to have good new investment opportunities and they've done that very successfully because they've got established positions in the countries where they operate,'' said Edward Collins, a London-based fund manager at New Star Asset Management Group Plc, who manages about 100 million pounds, including International Power shares.
The company said in 2007 that first-quarter profit fell after a fire stopped some electricity exports and forced purchases at higher prices. Earnings in Australia fell in the second quarter as output halts caused International Power to buy back power at prices boosted by drought.
Disruptions curbed electricity output from South Africa to China, highlighting a shortage of power generation throughout the world, Goldman Sachs analysts wrote in a note in April.
Plant Value
``Generation's becoming more valuable -- either they're running out, or replacement costs are going up,'' said Iain Turner, an analyst at Deutsche Bank AG in London, in a phone interview Aug. 4. ``If you've already got a power station built, its value goes up.''
Cox, 56, plans new facilities in Indonesia, Pakistan, Thailand and Vietnam, according to slides from a presentation in Melbourne on April 11, posted on the company's Web site. International Power is building a gas-fired plant in Portugal and plans another in the Netherlands with Rotterdam-based Eneco Holding NV. It may need to cut the size of a future plant in Botswana after the preferred contractor for the project declined to take on undisclosed risks.
International Power got funding for a power and water- desalination project in the United Arab Emirates in December and agreed to buy wind farms in Germany and Italy from Dublin-based Trinergy Ltd. in August. The company reached a 30-year accord this week on power sales for a coal-fired plant in Indonesia.
``It's operating in a lot of regions, it's well-placed'' said Angelos Anastasiou, an analyst at Pali International Ltd. in London, in a phone interview. ``The capacity is needed. The prospects are there. They can get the financing on a project-by- project basis, which they've shown on the deals to date.''
To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net
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Commodity Slump `Moves the Needle' on BHP Offer: Chart of Day
By Brett Foley
Aug. 6 (Bloomberg) -- Slumping commodity prices may be a boon for BHP Billiton's $134 billion hostile offer for Rio Tinto Group, the biggest mining takeover bid.
The S&P 500 Materials Index is within 1.7 percent of a bear market today. That may strengthen BHP's argument that its bid isn't too low, as Rio has claimed. Melbourne-based BHP, the world's biggest mining company by market value, says it can cut costs by combining the companies' headquarters and adjacent iron ore operations Western Australian.
The CHART OF THE DAY shows that Rio's stock trades in London at a discount of almost 10 percent to BHP's offer of 3.4 shares for each Rio share, plotted against the decline in the Materials Index. Rio last traded at a premium on April 6.
``You could argue that as commodity prices fall and margins come under pressure, the kicker you get from those synergies will become more attractive,'' says Simon Toyne, an analyst at Numis Securities in London. ``That could help move the needle a little bit more on the BHP offer.''
BHP Chief Executive Officer Marius Kloppers said he will deliver $3.7 billion in cost savings. Chairman Don Argus wrote last week to Rio shareholders for the first time, saying the offer would generate ``substantial, additional'' value for investors.
European Union antitrust regulators widened a probe of the BHP plan last month saying they have ``serious doubts'' about a combination that would control more than a third of the world's iron ore, the main ingredient in steel.
To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- Slumping commodity prices may be a boon for BHP Billiton's $134 billion hostile offer for Rio Tinto Group, the biggest mining takeover bid.
The S&P 500 Materials Index is within 1.7 percent of a bear market today. That may strengthen BHP's argument that its bid isn't too low, as Rio has claimed. Melbourne-based BHP, the world's biggest mining company by market value, says it can cut costs by combining the companies' headquarters and adjacent iron ore operations Western Australian.
The CHART OF THE DAY shows that Rio's stock trades in London at a discount of almost 10 percent to BHP's offer of 3.4 shares for each Rio share, plotted against the decline in the Materials Index. Rio last traded at a premium on April 6.
``You could argue that as commodity prices fall and margins come under pressure, the kicker you get from those synergies will become more attractive,'' says Simon Toyne, an analyst at Numis Securities in London. ``That could help move the needle a little bit more on the BHP offer.''
BHP Chief Executive Officer Marius Kloppers said he will deliver $3.7 billion in cost savings. Chairman Don Argus wrote last week to Rio shareholders for the first time, saying the offer would generate ``substantial, additional'' value for investors.
European Union antitrust regulators widened a probe of the BHP plan last month saying they have ``serious doubts'' about a combination that would control more than a third of the world's iron ore, the main ingredient in steel.
To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net
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Oil Extends Decline as Global Economy Slows, Storm Danger Eases
By Margot Habiby and Samantha Zee
Aug. 6 (Bloomberg) -- Crude oil fell for a third day, trading below $119 a barrel amid signs demand may be curtailed by slowdowns in the U.S. and European economies and as the storm Edouard was downgraded to a tropical depression over Texas.
Oil dropped to its lowest level since early May yesterday as the services sectors in the U.S. and U.K. contracted in July, and European retail sales fell the most in at least 13 years in June. Edouard made landfall on the Texas coast, idling 6 percent of U.S. Gulf of Mexico oil output as of yesterday morning.
``Demand numbers have been weak here for quite a period of time,'' said Roger Read, an analyst at Natixis Bleichroeder Inc. in Houston. Yesterday's numbers ``may confirm expectations, but they're not a shock to the system.''
Crude oil for September delivery fell 75 cents, or 0.6 percent, to $118.42 a barrel at 9:07 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, oil fell $2.24, or 1.8 percent, to settle at $119.17 a barrel in New York. Earlier, it touched $118, the lowest since May 5.
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.
U.S. Federal Reserve policy makers left interest rates unchanged yesterday and said inflation risks are a ``significant concern.''
Gasoline Falls
Gasoline for September delivery lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon on the Nymex yesterday, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the motor fuel.
Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17, as higher prices curbed demand.
U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, a MasterCard Inc. report yesterday showed. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second- biggest credit-card company, said in its weekly SpendingPulse report.
Service industries in the U.S. shrank in July for a second straight month, signaling the slowdown in growth broadened. U.K. services from banks to airlines also contracted in July, and factory production unexpectedly dropped for a fourth month in June, evidence the economy may be shrinking.
European Data
European retail sales dropped by the most in at least 13 years in June as a surge in oil and food costs left consumers with less money to spend on other goods.
``We were down big overnight, and it really started on the European soft market data on manufacturing,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``Retail sales were pretty lousy, leading everyone to surmise that the European economy isn't immune to the slowdown here in the U.S.''
Gold, platinum and wheat dropped on speculation slower growth will curb demand and as a stronger dollar dulled the appeal of commodities as an inflation hedge.
Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, and the storm was downgraded to a tropical depression, according to the National Hurricane Center.
Slowing Winds
The system's winds slowed from 65 miles (105 kilometers) per hour earlier in the day, and the storm was 35 miles north- northeast of Houston, the center said in an advisory on its Web site shortly before 4 p.m. local time.
The storm forced energy producers to idle 6 percent of oil output in the part of the Gulf under U.S. government jurisdiction, according to the Minerals Management Service, part of the Department of the Interior. Companies evacuated 154 production platforms and 9 rigs as a precaution.
``Very little oil production seems to have been shut in by Edouard,'' said Christopher Bellew, a senior broker at Bache Commodities Ltd. in London. ``Gasoline stocks are high enough to limit any crisis from refinery shutdowns, so the market's returning its attention to the weak demand picture.''
Hurricane forecasters from Colorado State University yesterday raised the number of Atlantic storms they expect this year to 17, including nine hurricanes, five of them major. The hurricane season, which runs through Nov. 30, should be ``much more active'' than those between 1950 and 2000, the report said.
Gasoline Stockpiles
U.S. gasoline stockpiles are 3 percent above their five- year seasonal norm at 213.6 million barrels, according to the Energy Department. The department will probably say gasoline supplies fell 1.5 million barrels last week in its weekly report today, a Bloomberg survey predicted.
Brent crude for September settlement fell $2.98, or 2.5 percent, to $117.70 a barrel on London's ICE Futures Europe exchange. The closing price was more than 20 percent below a record $147.50 a barrel reached July 11.
Kuwait ``isn't worried'' about the recent price decline and doesn't expect the Organization of Petroleum Exporting Countries to reduce production quotas when it meets next month, Oil Minister Mohammed al-Olaim said in an interview today.
OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.
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Aug. 6 (Bloomberg) -- Crude oil fell for a third day, trading below $119 a barrel amid signs demand may be curtailed by slowdowns in the U.S. and European economies and as the storm Edouard was downgraded to a tropical depression over Texas.
Oil dropped to its lowest level since early May yesterday as the services sectors in the U.S. and U.K. contracted in July, and European retail sales fell the most in at least 13 years in June. Edouard made landfall on the Texas coast, idling 6 percent of U.S. Gulf of Mexico oil output as of yesterday morning.
``Demand numbers have been weak here for quite a period of time,'' said Roger Read, an analyst at Natixis Bleichroeder Inc. in Houston. Yesterday's numbers ``may confirm expectations, but they're not a shock to the system.''
Crude oil for September delivery fell 75 cents, or 0.6 percent, to $118.42 a barrel at 9:07 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, oil fell $2.24, or 1.8 percent, to settle at $119.17 a barrel in New York. Earlier, it touched $118, the lowest since May 5.
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.
U.S. Federal Reserve policy makers left interest rates unchanged yesterday and said inflation risks are a ``significant concern.''
Gasoline Falls
Gasoline for September delivery lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon on the Nymex yesterday, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the motor fuel.
Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17, as higher prices curbed demand.
U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, a MasterCard Inc. report yesterday showed. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second- biggest credit-card company, said in its weekly SpendingPulse report.
Service industries in the U.S. shrank in July for a second straight month, signaling the slowdown in growth broadened. U.K. services from banks to airlines also contracted in July, and factory production unexpectedly dropped for a fourth month in June, evidence the economy may be shrinking.
European Data
European retail sales dropped by the most in at least 13 years in June as a surge in oil and food costs left consumers with less money to spend on other goods.
``We were down big overnight, and it really started on the European soft market data on manufacturing,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``Retail sales were pretty lousy, leading everyone to surmise that the European economy isn't immune to the slowdown here in the U.S.''
Gold, platinum and wheat dropped on speculation slower growth will curb demand and as a stronger dollar dulled the appeal of commodities as an inflation hedge.
Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, and the storm was downgraded to a tropical depression, according to the National Hurricane Center.
Slowing Winds
The system's winds slowed from 65 miles (105 kilometers) per hour earlier in the day, and the storm was 35 miles north- northeast of Houston, the center said in an advisory on its Web site shortly before 4 p.m. local time.
The storm forced energy producers to idle 6 percent of oil output in the part of the Gulf under U.S. government jurisdiction, according to the Minerals Management Service, part of the Department of the Interior. Companies evacuated 154 production platforms and 9 rigs as a precaution.
``Very little oil production seems to have been shut in by Edouard,'' said Christopher Bellew, a senior broker at Bache Commodities Ltd. in London. ``Gasoline stocks are high enough to limit any crisis from refinery shutdowns, so the market's returning its attention to the weak demand picture.''
Hurricane forecasters from Colorado State University yesterday raised the number of Atlantic storms they expect this year to 17, including nine hurricanes, five of them major. The hurricane season, which runs through Nov. 30, should be ``much more active'' than those between 1950 and 2000, the report said.
Gasoline Stockpiles
U.S. gasoline stockpiles are 3 percent above their five- year seasonal norm at 213.6 million barrels, according to the Energy Department. The department will probably say gasoline supplies fell 1.5 million barrels last week in its weekly report today, a Bloomberg survey predicted.
Brent crude for September settlement fell $2.98, or 2.5 percent, to $117.70 a barrel on London's ICE Futures Europe exchange. The closing price was more than 20 percent below a record $147.50 a barrel reached July 11.
Kuwait ``isn't worried'' about the recent price decline and doesn't expect the Organization of Petroleum Exporting Countries to reduce production quotas when it meets next month, Oil Minister Mohammed al-Olaim said in an interview today.
OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.
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Korean Won Gains, Ends 3-Day Loss, as Global Funds Buy Stocks
By Kim Kyoungwha and Judy Chen
Aug. 6 (Bloomberg) -- South Korea's won rose, snapping a three-day decline, as a gain in local shares driven by falling oil prices helped lure overseas investors to the nation's assets.
The won also climbed from a two-week low on speculation the foreign-exchange authorities will step into the market to help boost the local currency and reduce inflation caused by high import prices. Fund managers outside Korea bought more local shares than they sold for the first time in four days, according to data from the stock exchange.
``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank based in Seoul. ``The market seems to be in for a gain in the won.''
The currency rose 0.2 percent to 1,016.35 against the dollar as of 9:26 a.m. local time, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performer of the 10 most-active regional currencies outside of Japan.
The Kospi stock index jumped 2.2 percent as crude oil declined for a third day, trading below $119 a barrel in New York. Central banks intervene in currency markets by selling or buying foreign exchange.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
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Aug. 6 (Bloomberg) -- South Korea's won rose, snapping a three-day decline, as a gain in local shares driven by falling oil prices helped lure overseas investors to the nation's assets.
The won also climbed from a two-week low on speculation the foreign-exchange authorities will step into the market to help boost the local currency and reduce inflation caused by high import prices. Fund managers outside Korea bought more local shares than they sold for the first time in four days, according to data from the stock exchange.
``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank based in Seoul. ``The market seems to be in for a gain in the won.''
The currency rose 0.2 percent to 1,016.35 against the dollar as of 9:26 a.m. local time, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performer of the 10 most-active regional currencies outside of Japan.
The Kospi stock index jumped 2.2 percent as crude oil declined for a third day, trading below $119 a barrel in New York. Central banks intervene in currency markets by selling or buying foreign exchange.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
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Australian Dollar Falls to 4-Month Low as Yield Gap Shrinks
By Candice Zachariahs
Aug. 6 (Bloomberg) -- The Australian dollar dropped to its lowest in four months as the yield advantage of the nation's two-year bonds over Treasuries shrank to the lowest this year on bets the central bank will cut interest rates next month.
The currency fell for a seventh day, its longest losing streak in almost two years, as the prices of commodities the nation exports such as gold and oil slid. Traders are betting the Reserve Bank of Australia will lower rates for the first time in almost seven years at its September meeting after policy makers said yesterday there's scope to reduce borrowing costs.
``The Australian dollar is in a massive, massive negative channel at the moment, it's got no friends,'' said Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney. ``We've seen commodity prices go against it, interest-rate differentials go against it, the U.S. dollar is strengthening and oil prices are coming down.''
The Australian dollar dropped to 91.33 U.S. cents, the lowest since April 4, before trading at 91.63 cents at 8:59 a.m. in Sydney from 91.85 cents late in Asia yesterday. The currency bought 99.21 yen from 99.07 yesterday when it slid 1.8 percent.
The currency slipped as the difference in yield between two-year Australian and similar-maturity U.S. benchmark government debt narrowed to 3.39 percentage points, the lowest since Nov. 28.
Rate-Cut Bets
Traders are betting that the central bank will lower rates by almost one percentage point in the next 12 months according to a Credit Suisse Group index based on swaps trading. Central banks usually adjust rates in 25 basis point, or quarter- percentage point, increments. A rate cut at the next RBA meeting on Sept. 2 is certain, according to another Credit Suisse index.
Reserve Bank Governor Glenn Stevens said yesterday that inflation may slow, allowing for a ``less restrictive stance'' on interest rates.
Banks including UBS AG, the world's second-largest currency trader, and Australia & New Zealand Banking Group Ltd. have lowered their forecasts for the currency, while RBC Capital Markets and Commonwealth Bank of Australia said they will adjust their target for the Aussie, as the currency is known.
The Australian dollar weakened against 12 of the 16 most- traded currencies as the prices of gold and crude oil, the nation's third and fourth most-valuable raw material exports, slid. Gold dropped below $900 an ounce and crude oil fell below $120 a barrel for the first time in three months. Commodity exports contribute 17 percent to the nation's economy.
Australian two-year government bonds rose for an 11th day, pushing the yield down 3 basis points to 5.97 percent, the lowest since March 2007, according to data compiled by Bloomberg. The price of the 5.25 percent security maturing in August 2010 rose 0.061, or A$0.61 per A$1,000 face amount, to 98.654.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Aug. 6 (Bloomberg) -- The Australian dollar dropped to its lowest in four months as the yield advantage of the nation's two-year bonds over Treasuries shrank to the lowest this year on bets the central bank will cut interest rates next month.
The currency fell for a seventh day, its longest losing streak in almost two years, as the prices of commodities the nation exports such as gold and oil slid. Traders are betting the Reserve Bank of Australia will lower rates for the first time in almost seven years at its September meeting after policy makers said yesterday there's scope to reduce borrowing costs.
``The Australian dollar is in a massive, massive negative channel at the moment, it's got no friends,'' said Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney. ``We've seen commodity prices go against it, interest-rate differentials go against it, the U.S. dollar is strengthening and oil prices are coming down.''
The Australian dollar dropped to 91.33 U.S. cents, the lowest since April 4, before trading at 91.63 cents at 8:59 a.m. in Sydney from 91.85 cents late in Asia yesterday. The currency bought 99.21 yen from 99.07 yesterday when it slid 1.8 percent.
The currency slipped as the difference in yield between two-year Australian and similar-maturity U.S. benchmark government debt narrowed to 3.39 percentage points, the lowest since Nov. 28.
Rate-Cut Bets
Traders are betting that the central bank will lower rates by almost one percentage point in the next 12 months according to a Credit Suisse Group index based on swaps trading. Central banks usually adjust rates in 25 basis point, or quarter- percentage point, increments. A rate cut at the next RBA meeting on Sept. 2 is certain, according to another Credit Suisse index.
Reserve Bank Governor Glenn Stevens said yesterday that inflation may slow, allowing for a ``less restrictive stance'' on interest rates.
Banks including UBS AG, the world's second-largest currency trader, and Australia & New Zealand Banking Group Ltd. have lowered their forecasts for the currency, while RBC Capital Markets and Commonwealth Bank of Australia said they will adjust their target for the Aussie, as the currency is known.
The Australian dollar weakened against 12 of the 16 most- traded currencies as the prices of gold and crude oil, the nation's third and fourth most-valuable raw material exports, slid. Gold dropped below $900 an ounce and crude oil fell below $120 a barrel for the first time in three months. Commodity exports contribute 17 percent to the nation's economy.
Australian two-year government bonds rose for an 11th day, pushing the yield down 3 basis points to 5.97 percent, the lowest since March 2007, according to data compiled by Bloomberg. The price of the 5.25 percent security maturing in August 2010 rose 0.061, or A$0.61 per A$1,000 face amount, to 98.654.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Dollar Trades Near 7-Week High as Oil Falls to Lowest Since May
By Stanley White and Kosuke Goto
Aug. 6 (Bloomberg) -- The dollar traded near a seven-week high against the euro as the price of a barrel of oil tumbled to the lowest level in three months.
The U.S. currency was near its highest versus the yen in more than a month on optimism lower crude prices will bolster economic growth in the world's largest consumer of the fuel. The Federal Reserve left borrowing costs unchanged yesterday at 2 percent, saying ``downside risks'' to growth remain, while inflation is a ``significant concern.'' The Australian dollar declined to a four-month low as prices of commodities fell.
``The U.S. dollar should continue to be buoyed,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co. ``The fall in oil is a plus for the U.S. At the same time, it encourages the withdrawal of funds from the commodity currencies.''
The dollar traded at $1.5471 per euro at 10:11 a.m. in Tokyo from $1.5454 yesterday, when it touched $1.5447, the strongest level since June 16. The U.S. currency was at 108.47 yen, little changed from yesterday. It earlier rose to a seven- week high of 108.43. The euro traded at 167.81 yen from 167.42. The dollar may rise to $1.5435 versus the euro and 108.50 yen today, Soma forecast.
The Australian dollar dropped to 91.33 U.S. cents, the lowest since April 4, before trading at 91.84 cents from 91.85 cents late yesterday in Asia. Oil, Australia's fourth most- valuable commodity export, fell 82 cents to $118.35 a barrel. Gold, the country's third most-valuable export, fell below $900 an ounce for the first time since June.
Crude Oil
Oil's decline also pushed the dollar higher versus the euro. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. U.S. motorists drove less for a seventh consecutive month in May, pointing toward the first annual drop in road travel since 1980, the Federal Highway Administration said in a report last week.
``Falling oil prices are supporting the dollar,'' said Tetsuya Furukusa, chief manager at foreign-exchange margin trading department of Ueda Harlow Ltd., a holding company of Japan's largest currency broker. ``It reduces concern over the U.S. economy and hampers oil money flow from the Middle East into Europe, pushing down the euro against the dollar.''
The dollar may rise to $1.54 per euro today, he forecast.
Fed Futures
The Fed said yesterday financial markets remained ``under considerable stress,'' while the outlook for prices is ``highly uncertain.'' Dallas Fed President Richard Fisher dissented for a fifth time this year, preferring an increase.
U.S. stocks and the MSCI Asia-Pacific Index advanced for the first time in four days.
``With oil prices trading the way they are, and equity markets responding positively, I think the dollar is going to hold up pretty well this week,'' said Mike Moran, senior currency strategist at Standard Chartered Bank in New York.
The dollar may strengthen beyond $1.53 per euro this week, Moran said.
Traders yesterday pared bets the Fed will raise interest rates on Sept. 16. Futures on the Chicago Board of Trade showed a 27 percent chance the Fed would raise its target lending rate at least a quarter percentage point next month, down from 32 percent on Aug 4.
``They are clearly not signaling tightening,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar has already gained some ground. While commodities continue tanking, the rally can last a little bit longer here.''
The dollar fell to its all-time low of $1.6038 per euro on July 15 after Fed Chairman Ben S. Bernanke told the Senate Banking Committee that growth and inflation risks have both increased.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netKosuke Goto in Tokyo at kgoto2@bloomberg.net
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Aug. 6 (Bloomberg) -- The dollar traded near a seven-week high against the euro as the price of a barrel of oil tumbled to the lowest level in three months.
The U.S. currency was near its highest versus the yen in more than a month on optimism lower crude prices will bolster economic growth in the world's largest consumer of the fuel. The Federal Reserve left borrowing costs unchanged yesterday at 2 percent, saying ``downside risks'' to growth remain, while inflation is a ``significant concern.'' The Australian dollar declined to a four-month low as prices of commodities fell.
``The U.S. dollar should continue to be buoyed,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co. ``The fall in oil is a plus for the U.S. At the same time, it encourages the withdrawal of funds from the commodity currencies.''
The dollar traded at $1.5471 per euro at 10:11 a.m. in Tokyo from $1.5454 yesterday, when it touched $1.5447, the strongest level since June 16. The U.S. currency was at 108.47 yen, little changed from yesterday. It earlier rose to a seven- week high of 108.43. The euro traded at 167.81 yen from 167.42. The dollar may rise to $1.5435 versus the euro and 108.50 yen today, Soma forecast.
The Australian dollar dropped to 91.33 U.S. cents, the lowest since April 4, before trading at 91.84 cents from 91.85 cents late yesterday in Asia. Oil, Australia's fourth most- valuable commodity export, fell 82 cents to $118.35 a barrel. Gold, the country's third most-valuable export, fell below $900 an ounce for the first time since June.
Crude Oil
Oil's decline also pushed the dollar higher versus the euro. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. U.S. motorists drove less for a seventh consecutive month in May, pointing toward the first annual drop in road travel since 1980, the Federal Highway Administration said in a report last week.
``Falling oil prices are supporting the dollar,'' said Tetsuya Furukusa, chief manager at foreign-exchange margin trading department of Ueda Harlow Ltd., a holding company of Japan's largest currency broker. ``It reduces concern over the U.S. economy and hampers oil money flow from the Middle East into Europe, pushing down the euro against the dollar.''
The dollar may rise to $1.54 per euro today, he forecast.
Fed Futures
The Fed said yesterday financial markets remained ``under considerable stress,'' while the outlook for prices is ``highly uncertain.'' Dallas Fed President Richard Fisher dissented for a fifth time this year, preferring an increase.
U.S. stocks and the MSCI Asia-Pacific Index advanced for the first time in four days.
``With oil prices trading the way they are, and equity markets responding positively, I think the dollar is going to hold up pretty well this week,'' said Mike Moran, senior currency strategist at Standard Chartered Bank in New York.
The dollar may strengthen beyond $1.53 per euro this week, Moran said.
Traders yesterday pared bets the Fed will raise interest rates on Sept. 16. Futures on the Chicago Board of Trade showed a 27 percent chance the Fed would raise its target lending rate at least a quarter percentage point next month, down from 32 percent on Aug 4.
``They are clearly not signaling tightening,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar has already gained some ground. While commodities continue tanking, the rally can last a little bit longer here.''
The dollar fell to its all-time low of $1.6038 per euro on July 15 after Fed Chairman Ben S. Bernanke told the Senate Banking Committee that growth and inflation risks have both increased.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netKosuke Goto in Tokyo at kgoto2@bloomberg.net
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Asian Stocks Gain for First Time in Four Days on Lower Oil
By Chua Kong Ho
Aug. 6 (Bloomberg) -- Asian stocks rose for the first time in four days after oil fell to a three-month low and the Federal Reserve predicted inflation will ease through next year.
Toyota Motor Corp. and Korea Air Lines Co. climbed on speculation cheaper oil will spur demand and lower costs. Sony Corp. advanced after saying it will buy out Bertelsmann AG to gain full control of the world's second-largest record company. Commonwealth Bank of Australia led financial stocks higher.
The MSCI Asia-Pacific Index gained 1.3 percent to 128.80 as of 9:19 a.m. in Tokyo, snapping a three-day decline. About six stocks rose for each that declined, and nine of the index's 10 industry groups advanced.
Japan's Nikkei 225 Stock Average climbed 1.8 percent to 13,150.02. Australia's S&P/ASX 200 Index added 2.8 percent, the most in two weeks, and South Korea's Kospi Index rose 2.4 percent.
U.S. stocks rallied the most since April, sending the Standard & Poor's 500 Index to a 2.9 percent gain, as oil fell and the Fed predicted inflation will ease. S&P 500 index futures were little changed today.
Oil dropped $2.81 to $118.60 a barrel yesterday on speculation demand may be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net
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Aug. 6 (Bloomberg) -- Asian stocks rose for the first time in four days after oil fell to a three-month low and the Federal Reserve predicted inflation will ease through next year.
Toyota Motor Corp. and Korea Air Lines Co. climbed on speculation cheaper oil will spur demand and lower costs. Sony Corp. advanced after saying it will buy out Bertelsmann AG to gain full control of the world's second-largest record company. Commonwealth Bank of Australia led financial stocks higher.
The MSCI Asia-Pacific Index gained 1.3 percent to 128.80 as of 9:19 a.m. in Tokyo, snapping a three-day decline. About six stocks rose for each that declined, and nine of the index's 10 industry groups advanced.
Japan's Nikkei 225 Stock Average climbed 1.8 percent to 13,150.02. Australia's S&P/ASX 200 Index added 2.8 percent, the most in two weeks, and South Korea's Kospi Index rose 2.4 percent.
U.S. stocks rallied the most since April, sending the Standard & Poor's 500 Index to a 2.9 percent gain, as oil fell and the Fed predicted inflation will ease. S&P 500 index futures were little changed today.
Oil dropped $2.81 to $118.60 a barrel yesterday on speculation demand may be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net
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Australia Stocks: James Hardie, Just, Kagara, Newcrest, Santos
By Shani Raja
Aug. 6 (Bloomberg) -- The S&P/ASX 200 Index jumped 136.60 points, or 2.8 percent, to 4,957 at 10:25 a.m. in Sydney, the most since July 21. The broader All Ordinaries Index added 130.60, or 2.7 percent, to 5,012.60, while the futures index expiring in September gained 2 percent to 4,922.
U.S.-linked stocks: James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., rose 21 cents, or 4.5 percent, to A$4.85, extending yesterday's 1.3 percent advance. Westfield Group (WDC AU), which owns 59 shopping malls in the U.S., advanced 69 cents, or 4.3 percent, to A$16.80, the highest since July 24.
U.S. stocks rallied the most since April as oil retreated to a three-month low and the Federal Reserve predicted inflation will ease through next year. Sears Holdings Corp. jumped, sending the Standard & Poor's 500 Consumer Discretionary Index to its steepest advance in five years. The S&P 500 added 35.87, or 2.9 percent, to 1,284.88.
Asciano Ltd. (AIO AU), the Australian port and railroad operator fighting a bid from David Bonderman's TPG Capital, lost 21 cents, or 4.2 percent, to A$4.83, the most since July 8, after posting a net loss of A$182 million ($167 million) in the 17 months ended June 30.
Just Group Ltd. (JST AU) rallied 17 cents, or 5.1 percent, to A$3.49, partly reversing yesterday's 7.8 percent decline. Premier Investments Ltd., controlled by Australian billionaire Solomon Lew, increased its stake in Just Group to exceed 50 percent, ensuring support from the target's board for a A$774 million ($712 million) takeover bid.
Kagara Ltd. (KZL AU) added 16 cents, or 5.7 percent, to A$2.98. The Australian supplier to Korea Zinc Co. may increase copper production from its Australian mines by 34 percent in the year to June 30, 2009, and more than double zinc output within two years. Annual copper production will increase to as much as 40,000 tons from 26,329 tons now, Executive Chairman Kim Robinson said at a conference in Kalgoorlie, Western Australia.
Newcrest Mining Ltd. (NCM AU) slumped 81 cents, or 3.1 percent, to A$25.50, the lowest since September 2007. Gold fell below $900 an ounce for the first time since June in New York as the dollar's rebound and plunging energy costs reduced the appeal of the precious metal as a hedge against inflation.
Santos Ltd. (STO AU) dropped 33 cents, or 2 percent, to A$16.62, the lowest since April 30. Crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Aug. 6 (Bloomberg) -- The S&P/ASX 200 Index jumped 136.60 points, or 2.8 percent, to 4,957 at 10:25 a.m. in Sydney, the most since July 21. The broader All Ordinaries Index added 130.60, or 2.7 percent, to 5,012.60, while the futures index expiring in September gained 2 percent to 4,922.
U.S.-linked stocks: James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., rose 21 cents, or 4.5 percent, to A$4.85, extending yesterday's 1.3 percent advance. Westfield Group (WDC AU), which owns 59 shopping malls in the U.S., advanced 69 cents, or 4.3 percent, to A$16.80, the highest since July 24.
U.S. stocks rallied the most since April as oil retreated to a three-month low and the Federal Reserve predicted inflation will ease through next year. Sears Holdings Corp. jumped, sending the Standard & Poor's 500 Consumer Discretionary Index to its steepest advance in five years. The S&P 500 added 35.87, or 2.9 percent, to 1,284.88.
Asciano Ltd. (AIO AU), the Australian port and railroad operator fighting a bid from David Bonderman's TPG Capital, lost 21 cents, or 4.2 percent, to A$4.83, the most since July 8, after posting a net loss of A$182 million ($167 million) in the 17 months ended June 30.
Just Group Ltd. (JST AU) rallied 17 cents, or 5.1 percent, to A$3.49, partly reversing yesterday's 7.8 percent decline. Premier Investments Ltd., controlled by Australian billionaire Solomon Lew, increased its stake in Just Group to exceed 50 percent, ensuring support from the target's board for a A$774 million ($712 million) takeover bid.
Kagara Ltd. (KZL AU) added 16 cents, or 5.7 percent, to A$2.98. The Australian supplier to Korea Zinc Co. may increase copper production from its Australian mines by 34 percent in the year to June 30, 2009, and more than double zinc output within two years. Annual copper production will increase to as much as 40,000 tons from 26,329 tons now, Executive Chairman Kim Robinson said at a conference in Kalgoorlie, Western Australia.
Newcrest Mining Ltd. (NCM AU) slumped 81 cents, or 3.1 percent, to A$25.50, the lowest since September 2007. Gold fell below $900 an ounce for the first time since June in New York as the dollar's rebound and plunging energy costs reduced the appeal of the precious metal as a hedge against inflation.
Santos Ltd. (STO AU) dropped 33 cents, or 2 percent, to A$16.62, the lowest since April 30. Crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Japanese Stocks Advance After U.S. Inflation Concern Recedes
By Masaki Kondo
Aug. 6 (Bloomberg) -- Japan's stocks rose amid expectations inflation in the U.S. will abate, and Japanese makers of electronics and cars will weather a slowdown in the world's largest economy.
Honda Motor Corp., Japan's second-biggest automaker, rose 3.6 percent, while Matsushita Electric Industrial Co. rose 1.9 percent. Video game maker Konami Corp. was poised to advance after reporting its biggest quarterly profit gain in two years.
The Nikkei 225 Stock Average climbed 138.35, or 1.1 percent, to 13,053.01 as of 9:06 a.m. The broader Topix index rose 18.16, or 1.5 percent, to 1,265.87.
``Japanese stocks have been oversold and some technical indexes suggest there is a buying opportunity,'' Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo, said in an interview with Bloomberg Television.
The Federal Reserve said yesterday it ``expects inflation to moderate'' from later this year and left the benchmark interest rate unchanged. U.S. consumer prices surged 5 percent in the past year, the biggest jump since 1991 on rising fuel and food prices.
Crude oil, which lost 1.8 percent to $119.17 a barrel in New York yesterday, rose 65 percent in the year through yesterday, spurring Japan's consumer prices to climb at its fastest pace in a decade.
Konami reported a 66 percent jump in first-quarter operating profit yesterday as the release of the latest edition of its ``Metal Gear Solid'' video game series boosted sales. That's the biggest advance in quarterly operating profit since June 2006, according to data compiled by Bloomberg.
Nikkei futures expiring in September added 1.8 percent to 13,150 in Osaka and gained 1.6 percent to 13,135 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Aug. 6 (Bloomberg) -- Japan's stocks rose amid expectations inflation in the U.S. will abate, and Japanese makers of electronics and cars will weather a slowdown in the world's largest economy.
Honda Motor Corp., Japan's second-biggest automaker, rose 3.6 percent, while Matsushita Electric Industrial Co. rose 1.9 percent. Video game maker Konami Corp. was poised to advance after reporting its biggest quarterly profit gain in two years.
The Nikkei 225 Stock Average climbed 138.35, or 1.1 percent, to 13,053.01 as of 9:06 a.m. The broader Topix index rose 18.16, or 1.5 percent, to 1,265.87.
``Japanese stocks have been oversold and some technical indexes suggest there is a buying opportunity,'' Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo, said in an interview with Bloomberg Television.
The Federal Reserve said yesterday it ``expects inflation to moderate'' from later this year and left the benchmark interest rate unchanged. U.S. consumer prices surged 5 percent in the past year, the biggest jump since 1991 on rising fuel and food prices.
Crude oil, which lost 1.8 percent to $119.17 a barrel in New York yesterday, rose 65 percent in the year through yesterday, spurring Japan's consumer prices to climb at its fastest pace in a decade.
Konami reported a 66 percent jump in first-quarter operating profit yesterday as the release of the latest edition of its ``Metal Gear Solid'' video game series boosted sales. That's the biggest advance in quarterly operating profit since June 2006, according to data compiled by Bloomberg.
Nikkei futures expiring in September added 1.8 percent to 13,150 in Osaka and gained 1.6 percent to 13,135 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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New Zealand Currency Gains Versus Aussie Dollar on Rate Outlook
By Candice Zachariahs
Aug. 6 (Bloomberg) -- The New Zealand dollar rose to its highest in almost a month against the Australian currency after the Reserve Bank of Australia signaled yesterday it may begin to lower borrowing costs.
New Zealand's currency, called the kiwi, gained against the U.S. dollar after the Federal Reserve held interest rates steady today, retaining the attraction of the Pacific nation's higher- yielding assets. The currency also rose after a private report yesterday showed that prices of commodities the nation exports rose in July.
``The currency has been underpinned by solid interest to buy the kiwi against the Aussie,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``Over the past couple of days, we've seen an about-turn in Australian dollar sentiment.'' The Australian currency is often called the Aussie.
New Zealand's dollar gained 0.6 percent to NZ$1.2605 per Australian dollar at 8:58 a.m. in Wellington. It earlier touched NZ$1.2599, the strongest since July 10. The kiwi slid to a seven-year low against the Aussie in July, weakening to NZ$1.2969 on July 24.
The currency rose 0.4 percent to 72.67 U.S. cents, from 72.40 cents late in Asia yesterday. It bought 78.74 yen from 78.09.
The New Zealand dollar rose for the sixth day against the Australian currency after Reserve Bank of Australia Governor Glenn Stevens said yesterday that inflation may slow, allowing for a ``less restrictive stance'' on interest rates. Traders are betting that the RBA will reduce its benchmark rate by 91 basis points over the next 12 months according to a Credit Suisse Group index based on swaps trading yesterday.
Commodity Prices Rise
New Zealand's commodity export price index rose in July, led by beef, aluminum and lamb, ANZ National Bank Ltd. said yesterday. Prices rose from a year ago for eight of 13 commodities tracked by ANZ, including dairy products, which are a fifth of all exports, the bank said. Sales of commodities make up 70 percent of New Zealand's overseas shipments.
The kiwi has fallen 3.4 percent since the central bank lowered borrowing costs on July 24 and signaled further cuts were likely. A benchmark rate of 8 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, has made the country's assets popular with international investors seeking higher yields.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Aug. 6 (Bloomberg) -- The New Zealand dollar rose to its highest in almost a month against the Australian currency after the Reserve Bank of Australia signaled yesterday it may begin to lower borrowing costs.
New Zealand's currency, called the kiwi, gained against the U.S. dollar after the Federal Reserve held interest rates steady today, retaining the attraction of the Pacific nation's higher- yielding assets. The currency also rose after a private report yesterday showed that prices of commodities the nation exports rose in July.
``The currency has been underpinned by solid interest to buy the kiwi against the Aussie,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``Over the past couple of days, we've seen an about-turn in Australian dollar sentiment.'' The Australian currency is often called the Aussie.
New Zealand's dollar gained 0.6 percent to NZ$1.2605 per Australian dollar at 8:58 a.m. in Wellington. It earlier touched NZ$1.2599, the strongest since July 10. The kiwi slid to a seven-year low against the Aussie in July, weakening to NZ$1.2969 on July 24.
The currency rose 0.4 percent to 72.67 U.S. cents, from 72.40 cents late in Asia yesterday. It bought 78.74 yen from 78.09.
The New Zealand dollar rose for the sixth day against the Australian currency after Reserve Bank of Australia Governor Glenn Stevens said yesterday that inflation may slow, allowing for a ``less restrictive stance'' on interest rates. Traders are betting that the RBA will reduce its benchmark rate by 91 basis points over the next 12 months according to a Credit Suisse Group index based on swaps trading yesterday.
Commodity Prices Rise
New Zealand's commodity export price index rose in July, led by beef, aluminum and lamb, ANZ National Bank Ltd. said yesterday. Prices rose from a year ago for eight of 13 commodities tracked by ANZ, including dairy products, which are a fifth of all exports, the bank said. Sales of commodities make up 70 percent of New Zealand's overseas shipments.
The kiwi has fallen 3.4 percent since the central bank lowered borrowing costs on July 24 and signaled further cuts were likely. A benchmark rate of 8 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, has made the country's assets popular with international investors seeking higher yields.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Asics, Mitsubishi UFJ, Sapporo, Softbank: Japan Equity Preview
By Norie Kuboyama
Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in Japanese trading. Stock symbols are in parentheses, and share prices are from the previous close. The information in each item was released after markets shut, unless stated otherwise.
Ain Pharmaciez Inc. (9627 JQ): The pharmacy operator will sell new shares to Japan's biggest retailer Seven & I Holdings Co. (3382 JT), allowing it to become Ain's fourth-largest shareholder with 7.8 percent. The companies will ally on their store openings, medicine marketing and product development, Ain said in a release. Ain soared 261 yen, or 15 percent, to 1,991. Seven & I gained 110 yen, or 3.2 percent, to 3,510.
Asics Corp. (7936 JT): The sporting goods maker said first- quarter net income rose 23 percent to 7.57 billion yen, aided by higher sales of running shoes. The company lowered its profit forecast for the first half by 3.4 percent and for the full year by 1.9 percent to 15.2 billion yen, citing lower-than-expected sales in Europe and foreign-exchange impacts. Asics advanced 34 yen, or 3.5 percent, to 1,002.
Fuji Machine Manufacturing Co. (6134 JN): The maker of automated assembly machines cut its full-year net income forecast 26 percent to 7.3 billion yen and its sales forecast 12 percent to 91 billion yen. The stock slumped 73 yen, or 3.8 percent, to 1,870.
Funai Electric Co. (6839 JO): The audio-visual equipment maker said it settled a dispute on its digital television-related patents with U.S.-based companies Polaroid Corp. (PRDCQ US) and Petters Group Worldwide LLC and signed a cross-licensing contract on the patents. Funai was unchanged at 3,120 yen.
Futaba Corp. (6986 JT): The electronic-parts maker slashed its full-year net income outlook 85 percent to 300 million yen, citing increased raw materials and transport costs, as well as a delay in passing on products prices. First-quarter profit advanced 27 percent to 1.02 billion yen. Futaba added 1 yen, or 0.1 percent, to 1,806.
Hiroshima Gas Co. (9535 JT): The natural gas supplier reversed its full-year forecast to net loss of 150 million yen from an 800 million yen profit due to increased raw materials costs from surging crude oil prices. The stock slipped 9 yen, or 2.8 percent, to 316.
Japan Airlines Corp. (9205 JT) and All Nippon Airlines Co. (9202 JT): The carriers, reeling from high jet-fuel costs, plan to reduce flights or end service on some international and domestic routes, Nikkei English News reported, without citing anyone. Japan Airlines added 4 yen, or 1.8 percent, to 222 yen, and All Nippon increased 5 yen, or 1.3 percent, to 399 yen.
Konami Corp. (9766 JT): The creator of the ``Metal Gear Solid'' video game series said first-quarter net income jumped 47 percent to 5.66 billion yen, with a 17 percent gain in revenue. Konami rose 30 yen, or 0.9 percent, to 3,440.
Kureha Corp. (4023 JT): The resin products maker said first- quarter net income more than doubled to 790 million yen from a year earlier, with a 14 percent rise in sales. Kureha was unchanged at 540 yen.
Marui Group Co. (8252 JT): The department store operator and consumer loan services provider said first-quarter net income halved to 923 million yen from a year earlier, as sales slid 11 percent. The declines reflected last year's store closures, a delay in a summer sales campaign and inclement weather, it said. Marui fell 6 yen, or 0.7 percent, to 809.
Mikuni Coca-Cola Bottling Co. (2572 JT): The soft drink maker will spend as much as 2.4 billion yen to buy back up to 3.98 percent of its outstanding shares. First-half net income fell 22 percent to 706 million yen, with a 1.8 percent slip in sales, Mikuni separately said in a statement. The stock added 2 yen, or 0.2 percent, to 1,005.
Mitsubishi Gas Chemical Co. (4182 JT): The chemical products maker lowered its full-year net income forecast 11 percent to 31 billion yen, citing a slump in sales of its polycarbonate sheet films and materials used for print circuit boards, as well as higher raw materials costs. First-quarter profit dropped 33 percent to 9.19 billion yen. The stock declined 24 yen, or 3.6 percent, to 650.
Mitsubishi Rayon Co. (3404 JT): The chemical products maker cut its full-year earnings forecast to breakeven from 9.5 billion yen in profit and reduced its planned annual dividend to 6 yen from 11 yen. The company cited a higher-than-expected surge in raw materials prices and slumping demand. The stock dropped 1 yen, or 0.3 percent, to 310.
Mitsubishi UFJ Financial Group Inc. (8306 JT): Japan's biggest bank by market value posted a 66 percent drop in first- quarter net income to 51.2 billion yen, missing analysts' estimates, as bad-loan costs soared. The stock rose 14 yen, or 1.6 percent, to 915.
Mixi Inc. (2121 JT): The social-networking Web site operator boosted its first-half net income forecast 20 percent to 900 million yen, citing lower data center costs. Mixi increased 18,000 yen, or 2.8 percent, to 666,000.
Oriental Land Co. (4661 JT): The operator of Tokyo Disneyland said first-quarter net income declined 37 percent to 2.06 billion yen, citing increased depreciation costs and expenses to open new facilities. The stock rose 20 yen, or 0.3 percent, to 6,950.
Paramount Bed Co. (7960 JT): The bed maker lowered its full- year net income outlook by a quarter to 600 million yen due to a later-than-expected recovery in earnings at a French subsidiary. Paramount advanced 6 yen, or 0.4 percent, to 1,582.
Sapporo Holdings Ltd. (2501 JT): The brewery said first-half net income totaled 9.59 billion yen, rebounding from a 5.54 billion yen loss a year earlier, aided by a gain from the sale of a 15 percent stake in Yebisu Garden Place, an office and shopping complex in Tokyo. Sapporo cut its full-year sales outlook 5.1 percent to 426.3 billion yen. The stock fell 15 yen, or 1.9 percent, to 775.
Softbank Corp. (9984 JT): Japan's fastest-growing mobile- phone operator said first-quarter net income fell 23 percent to 19.4 billion yen after one-time gains boosted earnings last year. Softbank said it will pay a full-year dividend of 2.5 yen. Softbank slid 47 yen, or 2.4 percent, to 1,936.
Sony Corp. (6758 JT): The firm will buy Bertelsmann AG's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the world's second-largest record company and artists including Britney Spears and Justin Timberlake. Sony added 60 yen, or 1.5 percent, to 4,060.
Sumitomo Real Estate Sales Co. (8870 JT): The property brokerage said first-quarter net income plunged 82 percent to 534 million yen, with a 28 percent drop in revenue due to slumps in housings and land transactions. The stock was unchanged at 3,250 yen.
Tamron Co. (7740 JT): The lens maker said it will buy back as much as 2.8 percent of its outstanding shares through Sept. 30. The company said first-half operating profit, or sales minus the cost of goods sold and administrative expenses, fell 24 percent to 3.42 billion yen, with a 9.2 percent slid in sales. Tamron rebounded 35 yen, or 2.3 percent, to 1,541.
Tomy Co. (7867 JT): The toymaker almost tripled its first- half net income outlook to 1.6 billion yen, citing increased royalty income and lower administration costs. The company said first-quarter operating profit declined 41 percent to 40 million yen, with a 2.8 percent fall in sales. Tomy fell 7 yen, or 1 percent, to 674.
Tsumura & Co. (4540 JT): The drugmaker cut its first-half operating profit outlook 5.1 percent to 7.4 billion yen, while it lifted its net income forecast by 6.4 percent to 5 billion yen, reflecting the sale of shares in a subsidiary. The company boosted its full-year dividend to 34 yen from 26 yen. Tsumura climbed 85 yen, or 3 percent, to 2,915.
To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.
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Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in Japanese trading. Stock symbols are in parentheses, and share prices are from the previous close. The information in each item was released after markets shut, unless stated otherwise.
Ain Pharmaciez Inc. (9627 JQ): The pharmacy operator will sell new shares to Japan's biggest retailer Seven & I Holdings Co. (3382 JT), allowing it to become Ain's fourth-largest shareholder with 7.8 percent. The companies will ally on their store openings, medicine marketing and product development, Ain said in a release. Ain soared 261 yen, or 15 percent, to 1,991. Seven & I gained 110 yen, or 3.2 percent, to 3,510.
Asics Corp. (7936 JT): The sporting goods maker said first- quarter net income rose 23 percent to 7.57 billion yen, aided by higher sales of running shoes. The company lowered its profit forecast for the first half by 3.4 percent and for the full year by 1.9 percent to 15.2 billion yen, citing lower-than-expected sales in Europe and foreign-exchange impacts. Asics advanced 34 yen, or 3.5 percent, to 1,002.
Fuji Machine Manufacturing Co. (6134 JN): The maker of automated assembly machines cut its full-year net income forecast 26 percent to 7.3 billion yen and its sales forecast 12 percent to 91 billion yen. The stock slumped 73 yen, or 3.8 percent, to 1,870.
Funai Electric Co. (6839 JO): The audio-visual equipment maker said it settled a dispute on its digital television-related patents with U.S.-based companies Polaroid Corp. (PRDCQ US) and Petters Group Worldwide LLC and signed a cross-licensing contract on the patents. Funai was unchanged at 3,120 yen.
Futaba Corp. (6986 JT): The electronic-parts maker slashed its full-year net income outlook 85 percent to 300 million yen, citing increased raw materials and transport costs, as well as a delay in passing on products prices. First-quarter profit advanced 27 percent to 1.02 billion yen. Futaba added 1 yen, or 0.1 percent, to 1,806.
Hiroshima Gas Co. (9535 JT): The natural gas supplier reversed its full-year forecast to net loss of 150 million yen from an 800 million yen profit due to increased raw materials costs from surging crude oil prices. The stock slipped 9 yen, or 2.8 percent, to 316.
Japan Airlines Corp. (9205 JT) and All Nippon Airlines Co. (9202 JT): The carriers, reeling from high jet-fuel costs, plan to reduce flights or end service on some international and domestic routes, Nikkei English News reported, without citing anyone. Japan Airlines added 4 yen, or 1.8 percent, to 222 yen, and All Nippon increased 5 yen, or 1.3 percent, to 399 yen.
Konami Corp. (9766 JT): The creator of the ``Metal Gear Solid'' video game series said first-quarter net income jumped 47 percent to 5.66 billion yen, with a 17 percent gain in revenue. Konami rose 30 yen, or 0.9 percent, to 3,440.
Kureha Corp. (4023 JT): The resin products maker said first- quarter net income more than doubled to 790 million yen from a year earlier, with a 14 percent rise in sales. Kureha was unchanged at 540 yen.
Marui Group Co. (8252 JT): The department store operator and consumer loan services provider said first-quarter net income halved to 923 million yen from a year earlier, as sales slid 11 percent. The declines reflected last year's store closures, a delay in a summer sales campaign and inclement weather, it said. Marui fell 6 yen, or 0.7 percent, to 809.
Mikuni Coca-Cola Bottling Co. (2572 JT): The soft drink maker will spend as much as 2.4 billion yen to buy back up to 3.98 percent of its outstanding shares. First-half net income fell 22 percent to 706 million yen, with a 1.8 percent slip in sales, Mikuni separately said in a statement. The stock added 2 yen, or 0.2 percent, to 1,005.
Mitsubishi Gas Chemical Co. (4182 JT): The chemical products maker lowered its full-year net income forecast 11 percent to 31 billion yen, citing a slump in sales of its polycarbonate sheet films and materials used for print circuit boards, as well as higher raw materials costs. First-quarter profit dropped 33 percent to 9.19 billion yen. The stock declined 24 yen, or 3.6 percent, to 650.
Mitsubishi Rayon Co. (3404 JT): The chemical products maker cut its full-year earnings forecast to breakeven from 9.5 billion yen in profit and reduced its planned annual dividend to 6 yen from 11 yen. The company cited a higher-than-expected surge in raw materials prices and slumping demand. The stock dropped 1 yen, or 0.3 percent, to 310.
Mitsubishi UFJ Financial Group Inc. (8306 JT): Japan's biggest bank by market value posted a 66 percent drop in first- quarter net income to 51.2 billion yen, missing analysts' estimates, as bad-loan costs soared. The stock rose 14 yen, or 1.6 percent, to 915.
Mixi Inc. (2121 JT): The social-networking Web site operator boosted its first-half net income forecast 20 percent to 900 million yen, citing lower data center costs. Mixi increased 18,000 yen, or 2.8 percent, to 666,000.
Oriental Land Co. (4661 JT): The operator of Tokyo Disneyland said first-quarter net income declined 37 percent to 2.06 billion yen, citing increased depreciation costs and expenses to open new facilities. The stock rose 20 yen, or 0.3 percent, to 6,950.
Paramount Bed Co. (7960 JT): The bed maker lowered its full- year net income outlook by a quarter to 600 million yen due to a later-than-expected recovery in earnings at a French subsidiary. Paramount advanced 6 yen, or 0.4 percent, to 1,582.
Sapporo Holdings Ltd. (2501 JT): The brewery said first-half net income totaled 9.59 billion yen, rebounding from a 5.54 billion yen loss a year earlier, aided by a gain from the sale of a 15 percent stake in Yebisu Garden Place, an office and shopping complex in Tokyo. Sapporo cut its full-year sales outlook 5.1 percent to 426.3 billion yen. The stock fell 15 yen, or 1.9 percent, to 775.
Softbank Corp. (9984 JT): Japan's fastest-growing mobile- phone operator said first-quarter net income fell 23 percent to 19.4 billion yen after one-time gains boosted earnings last year. Softbank said it will pay a full-year dividend of 2.5 yen. Softbank slid 47 yen, or 2.4 percent, to 1,936.
Sony Corp. (6758 JT): The firm will buy Bertelsmann AG's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the world's second-largest record company and artists including Britney Spears and Justin Timberlake. Sony added 60 yen, or 1.5 percent, to 4,060.
Sumitomo Real Estate Sales Co. (8870 JT): The property brokerage said first-quarter net income plunged 82 percent to 534 million yen, with a 28 percent drop in revenue due to slumps in housings and land transactions. The stock was unchanged at 3,250 yen.
Tamron Co. (7740 JT): The lens maker said it will buy back as much as 2.8 percent of its outstanding shares through Sept. 30. The company said first-half operating profit, or sales minus the cost of goods sold and administrative expenses, fell 24 percent to 3.42 billion yen, with a 9.2 percent slid in sales. Tamron rebounded 35 yen, or 2.3 percent, to 1,541.
Tomy Co. (7867 JT): The toymaker almost tripled its first- half net income outlook to 1.6 billion yen, citing increased royalty income and lower administration costs. The company said first-quarter operating profit declined 41 percent to 40 million yen, with a 2.8 percent fall in sales. Tomy fell 7 yen, or 1 percent, to 674.
Tsumura & Co. (4540 JT): The drugmaker cut its first-half operating profit outlook 5.1 percent to 7.4 billion yen, while it lifted its net income forecast by 6.4 percent to 5 billion yen, reflecting the sale of shares in a subsidiary. The company boosted its full-year dividend to 34 yen from 26 yen. Tsumura climbed 85 yen, or 3 percent, to 2,915.
To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.
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Dollar Trades Near Seven-Week High on Fed's Comments, Oil Drop
By Candice Zachariahs and Ye Xie
Aug. 6 (Bloomberg) -- The dollar traded near a seven-week high against the euro as oil tumbled and the Federal Reserve left borrowing costs unchanged yesterday.
The U.S. Dollar Index traded on ICE Futures in New York touched the strongest in more than a month as Fed policy makers said ``downside risks'' to growth remain, while inflation is a ``significant concern.'' The dollar rallied against the Norwegian krone and Canadian dollar after oil fell to the lowest since May.
``It seems to be a pretty balanced statement,'' said Steven Englander, a currency strategist at Lehman Brothers Holdings Inc. in New York. ``This dollar rally clearly gets support from commodities. The recognition that the rest of the world is under pressure gives the dollar a boost.''
The dollar traded at $1.5454 per euro at 6 a.m. in Tokyo, after rising 0.8 percent yesterday when it touched $1.5447, the strongest level since June 16. The U.S. currency was at 108.36 yen. The euro traded at 167.45 yen, after falling 0.7 percent yesterday.
The U.S. currency has gained 1.1 percent against the euro since April 30, the last time the Fed lowered its target rate. The Fed cut borrowing costs seven times since September from 5.25 percent. The dollar fell 10.5 percent between September and April.
Canada's Dollar
Canada's dollar touched C$1.0453 against its U.S. counterpart, the lowest since Sept. 11, as crude oil fell below $119 a barrel for the first time since May. Oil and gold account for half of Canada's exports.
Norway's krone fell 1.4 percent yesterday to 5.1999 per dollar after touching 5.2035, the weakest since June 16. Norway is the world's fifth-largest oil supplier.
Oil's decline also pushed the dollar higher versus the euro. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.
The Fed said yesterday financial markets remained ``under considerable stress,'' while the outlook for prices is ``highly uncertain.'' Dallas Fed President Richard Fisher dissented for a fifth time this year, preferring an increase.
U.S. stocks advanced yesterday for the first time in four days.
``With oil prices trading the way they are, and equity markets responding positively, I think the dollar is going to hold up pretty well this week,'' said Mike Moran, senior currency strategist at Standard Chartered Bank in New York.
Dollar May Strengthen
The dollar may strengthen beyond $1.53 per euro this week, Moran said.
Federal Reserve Bank of Philadelphia President Charles Plosser said July 22 that the central bank should raise interest rates ``sooner rather than later'' to lower inflation and prevent price expectations from getting out of control. Plosser has argued against cutting rates at two Fed meetings this year.
``The Fed's statement matched expectations,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``They will keep the rate on hold at least until later this year.''
Traders yesterday pared bets the Fed will raise interest rates on Sept. 16. Futures on the Chicago Board of Trade showed a 27 percent chance the Fed would raise its target lending rate at least a quarter percentage point next month, down from 32 percent on Aug 4.
``It won't be surprising if some investors interpret this as slightly more dovish,'' said Todd Elmer, currency strategist at Citigroup Global Markets in New York. ``We don't expect the Fed statement to act as a catalyst for a sharp move from euro- dollar.''
Consumer Inflation
Consumer inflation accelerated to 0.8 percent in June, the fastest pace since September 2005, the U.S. Commerce Department reported yesterday.
``They are clearly not signaling tightening,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar has already gained some ground. While commodities continue tanking, the rally can last a little bit longer here.''
The dollar fell to its all-time low of $1.6038 per euro on July 15 after Fed Chairman Ben S. Bernanke told the Senate Banking Committee that growth and inflation risks have both increased.
To contact the reporters on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
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Aug. 6 (Bloomberg) -- The dollar traded near a seven-week high against the euro as oil tumbled and the Federal Reserve left borrowing costs unchanged yesterday.
The U.S. Dollar Index traded on ICE Futures in New York touched the strongest in more than a month as Fed policy makers said ``downside risks'' to growth remain, while inflation is a ``significant concern.'' The dollar rallied against the Norwegian krone and Canadian dollar after oil fell to the lowest since May.
``It seems to be a pretty balanced statement,'' said Steven Englander, a currency strategist at Lehman Brothers Holdings Inc. in New York. ``This dollar rally clearly gets support from commodities. The recognition that the rest of the world is under pressure gives the dollar a boost.''
The dollar traded at $1.5454 per euro at 6 a.m. in Tokyo, after rising 0.8 percent yesterday when it touched $1.5447, the strongest level since June 16. The U.S. currency was at 108.36 yen. The euro traded at 167.45 yen, after falling 0.7 percent yesterday.
The U.S. currency has gained 1.1 percent against the euro since April 30, the last time the Fed lowered its target rate. The Fed cut borrowing costs seven times since September from 5.25 percent. The dollar fell 10.5 percent between September and April.
Canada's Dollar
Canada's dollar touched C$1.0453 against its U.S. counterpart, the lowest since Sept. 11, as crude oil fell below $119 a barrel for the first time since May. Oil and gold account for half of Canada's exports.
Norway's krone fell 1.4 percent yesterday to 5.1999 per dollar after touching 5.2035, the weakest since June 16. Norway is the world's fifth-largest oil supplier.
Oil's decline also pushed the dollar higher versus the euro. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.
The Fed said yesterday financial markets remained ``under considerable stress,'' while the outlook for prices is ``highly uncertain.'' Dallas Fed President Richard Fisher dissented for a fifth time this year, preferring an increase.
U.S. stocks advanced yesterday for the first time in four days.
``With oil prices trading the way they are, and equity markets responding positively, I think the dollar is going to hold up pretty well this week,'' said Mike Moran, senior currency strategist at Standard Chartered Bank in New York.
Dollar May Strengthen
The dollar may strengthen beyond $1.53 per euro this week, Moran said.
Federal Reserve Bank of Philadelphia President Charles Plosser said July 22 that the central bank should raise interest rates ``sooner rather than later'' to lower inflation and prevent price expectations from getting out of control. Plosser has argued against cutting rates at two Fed meetings this year.
``The Fed's statement matched expectations,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``They will keep the rate on hold at least until later this year.''
Traders yesterday pared bets the Fed will raise interest rates on Sept. 16. Futures on the Chicago Board of Trade showed a 27 percent chance the Fed would raise its target lending rate at least a quarter percentage point next month, down from 32 percent on Aug 4.
``It won't be surprising if some investors interpret this as slightly more dovish,'' said Todd Elmer, currency strategist at Citigroup Global Markets in New York. ``We don't expect the Fed statement to act as a catalyst for a sharp move from euro- dollar.''
Consumer Inflation
Consumer inflation accelerated to 0.8 percent in June, the fastest pace since September 2005, the U.S. Commerce Department reported yesterday.
``They are clearly not signaling tightening,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar has already gained some ground. While commodities continue tanking, the rally can last a little bit longer here.''
The dollar fell to its all-time low of $1.6038 per euro on July 15 after Fed Chairman Ben S. Bernanke told the Senate Banking Committee that growth and inflation risks have both increased.
To contact the reporters on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
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Japan's Yen, Taiwan Dollar, Korean Won: Asia Currency Preview
By Aaron Pan
Aug. 6 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today.
Exchange rates are from the previous session.
Japanese yen: The Cabinet Office will publish at 2 p.m. the government's coincident index, a composite of 11 statistics including factory output and the ratio of jobs to applicants, for June.
The yen was at 107.85 a dollar at 7:04 a.m. in New York.
Taiwan dollar: Consumer prices rose 5.92 percent in July from a year earlier, the biggest gain since September 1994, a government report showed yesterday after trading hours. Prices increased 4.97 percent in June.
The Taiwan dollar was at NT$30.721.
South Korean won: Retail sales data for June are due today. The National Statistics Office had reported a 10.2 percent increase in May sales from a year earlier.
The Bank of Korea will decide on interest rates tomorrow. Policy makers left borrowing costs unchanged at a seven-year high of 5 percent in July.
The won was at 1,017.90.
Singapore dollar: The Monetary Authority of Singapore will detail July foreign-exchange reserves tomorrow. The MAS reported having $176.65 billion in reserves in June.
The Singapore dollar traded at S$1.3784.
To contact the reporter on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net.
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Aug. 6 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today.
Exchange rates are from the previous session.
Japanese yen: The Cabinet Office will publish at 2 p.m. the government's coincident index, a composite of 11 statistics including factory output and the ratio of jobs to applicants, for June.
The yen was at 107.85 a dollar at 7:04 a.m. in New York.
Taiwan dollar: Consumer prices rose 5.92 percent in July from a year earlier, the biggest gain since September 1994, a government report showed yesterday after trading hours. Prices increased 4.97 percent in June.
The Taiwan dollar was at NT$30.721.
South Korean won: Retail sales data for June are due today. The National Statistics Office had reported a 10.2 percent increase in May sales from a year earlier.
The Bank of Korea will decide on interest rates tomorrow. Policy makers left borrowing costs unchanged at a seven-year high of 5 percent in July.
The won was at 1,017.90.
Singapore dollar: The Monetary Authority of Singapore will detail July foreign-exchange reserves tomorrow. The MAS reported having $176.65 billion in reserves in June.
The Singapore dollar traded at S$1.3784.
To contact the reporter on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net.
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Australia Stocks Preview: James Hardie, Just, Kagara, Newcrest
By Shani Raja
Aug. 6 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in September rose 1.8 percent to 4,915 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index declined 0.5 percent in New York.
The S&P/ASX 200 Index dropped 67.30, or 1.4 percent, to 4,820.40.
Mining shares: American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, slipped 2.1 percent to the equivalent of A$36.16 a share in New York, 34 cents higher than the A$35.82 close in Sydney.
Rio Tinto Group (RIO AU), the world's third-largest mining company, declined A$7.31, or 6.2 percent, to A$110.79.
Oil companies: Crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies. Gasoline also fell to the lowest since May. Crude oil for September delivery fell $2.24, or 1.8 percent, to settle at $119.17 a barrel at 2:59 p.m. on the New York Mercantile Exchange.
Woodside Petroleum Ltd. (WPL AU), Australia's second-largest oil and gas producer, fell A$2.80, or 5.2 percent, to A$51.20.
U.S.-linked stocks: U.S. stocks rallied the most since April as oil retreated to a three-month low and the Federal Reserve predicted inflation will ease through next year. Sears Holdings Corp. jumped, sending the Standard & Poor's 500 Consumer Discretionary Index to its steepest advance in five years. The S&P 500 added 35.87, or 2.9 percent, to 1,284.88.
James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., rose 6 cents, or 1.3 percent, to A$4.65. Westfield Group (WDC AU), which owns 59 shopping malls in the U.S., advanced 22 cents, or 1.4 percent, to A$16.11.
Kagara Ltd. (KZL AU): The Australian supplier to Korea Zinc Co. may increase copper production from its Australian mines by 34 percent in the year to June 30, 2009, and more than double zinc output within two years. Annual copper production will increase to as much as 40,000 tons from 26,329 tons now, Executive Chairman Kim Robinson said at a conference in Kalgoorlie, Western Australia. Kagara dropped 13 cents, or 4.4 percent, to A$2.82.
Macquarie Group Ltd. (MQG AU): Australia's biggest investment bank has submitted a formal application for a license to create a U.S. bond insurer, Reuters reported, citing a person familiar with the matter. The Australian bank has submitted the application, which may be approved within weeks, to the New York Insurance Superintendent, the newswire said. Macquarie slipped 16 cents, or 0.3 percent, to A$49.34.
Newcrest Mining Ltd. (NCM AU): Gold fell below $900 an ounce for the first time since June as the dollar's rebound and plunging energy costs reduced the appeal of the precious metal as a hedge against inflation. Gold futures for December delivery fell $21.80, or 2.4 percent, to $886.10 an ounce on the Comex division of the New York Mercantile Exchange. Australia's biggest gold producer slumped A$3.42, or 12 percent, to A$26.31.
Just Group Ltd. (JST AU): Premier Investments Ltd., controlled by Australian billionaire Solomon Lew, increased its stake in Just Group to exceed 50 percent, ensuring support from the target's board for a A$774 million ($712 million) takeover bid. Premier declared its offer unconditional, which means investors will be paid for their stock within five days, the Melbourne-based company said in a statement. Just plunged 28 cents, or 7.8 percent, to A$3.32.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Aug. 6 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in September rose 1.8 percent to 4,915 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index declined 0.5 percent in New York.
The S&P/ASX 200 Index dropped 67.30, or 1.4 percent, to 4,820.40.
Mining shares: American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, slipped 2.1 percent to the equivalent of A$36.16 a share in New York, 34 cents higher than the A$35.82 close in Sydney.
Rio Tinto Group (RIO AU), the world's third-largest mining company, declined A$7.31, or 6.2 percent, to A$110.79.
Oil companies: Crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies. Gasoline also fell to the lowest since May. Crude oil for September delivery fell $2.24, or 1.8 percent, to settle at $119.17 a barrel at 2:59 p.m. on the New York Mercantile Exchange.
Woodside Petroleum Ltd. (WPL AU), Australia's second-largest oil and gas producer, fell A$2.80, or 5.2 percent, to A$51.20.
U.S.-linked stocks: U.S. stocks rallied the most since April as oil retreated to a three-month low and the Federal Reserve predicted inflation will ease through next year. Sears Holdings Corp. jumped, sending the Standard & Poor's 500 Consumer Discretionary Index to its steepest advance in five years. The S&P 500 added 35.87, or 2.9 percent, to 1,284.88.
James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., rose 6 cents, or 1.3 percent, to A$4.65. Westfield Group (WDC AU), which owns 59 shopping malls in the U.S., advanced 22 cents, or 1.4 percent, to A$16.11.
Kagara Ltd. (KZL AU): The Australian supplier to Korea Zinc Co. may increase copper production from its Australian mines by 34 percent in the year to June 30, 2009, and more than double zinc output within two years. Annual copper production will increase to as much as 40,000 tons from 26,329 tons now, Executive Chairman Kim Robinson said at a conference in Kalgoorlie, Western Australia. Kagara dropped 13 cents, or 4.4 percent, to A$2.82.
Macquarie Group Ltd. (MQG AU): Australia's biggest investment bank has submitted a formal application for a license to create a U.S. bond insurer, Reuters reported, citing a person familiar with the matter. The Australian bank has submitted the application, which may be approved within weeks, to the New York Insurance Superintendent, the newswire said. Macquarie slipped 16 cents, or 0.3 percent, to A$49.34.
Newcrest Mining Ltd. (NCM AU): Gold fell below $900 an ounce for the first time since June as the dollar's rebound and plunging energy costs reduced the appeal of the precious metal as a hedge against inflation. Gold futures for December delivery fell $21.80, or 2.4 percent, to $886.10 an ounce on the Comex division of the New York Mercantile Exchange. Australia's biggest gold producer slumped A$3.42, or 12 percent, to A$26.31.
Just Group Ltd. (JST AU): Premier Investments Ltd., controlled by Australian billionaire Solomon Lew, increased its stake in Just Group to exceed 50 percent, ensuring support from the target's board for a A$774 million ($712 million) takeover bid. Premier declared its offer unconditional, which means investors will be paid for their stock within five days, the Melbourne-based company said in a statement. Just plunged 28 cents, or 7.8 percent, to A$3.32.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Dollar Jumps to 6-Week High vs Euro, 7-Week High vs Pound in Overnight
Daily Forex Fundamentals | Written by CMS Forex | Aug 05 08 22:05 GMT |
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AUS Services Contract in July, RBA Signals Rate Cuts Ahead
In Australia, activity in the services sector contracted again in July, with the PMI sliding to 42.8. When the index is below 50, the sector is contracting. The economy was hot in the beginning of the year but has sharply turned around from that point, as household spending and business activity decline in the face of high inflation and borrowing costs. The Reserve Bank of Australia held rates at 7.25% and acknowledged that growth was slowing. It concluded it had room to cut rates, and signaled such a move for the next meeting.
AUD/JPY - Aussie Weakens Following RBA Statement, Carry Trade Retreats
The Aussie sank following the news against its rivals. The Aussie-Yen, a big destination for carry trade fell 160 pips following the statement finding support near 98.70. The prospect of RBA cuts in the future is a quick turnaround from a few months ago and has brought this pair down 500 pips in the last 2 weeks.
UK Inudstrial and Manufacturing Production Negative in June
UK industrial production declined 0.2% in June, after a fall of 0.8% in May. Manufacturing production fell 0.5%. Both figures disappointed forecasts.
UK Services Contract, EUR Services Match Preliminary, Down as Well
The UK services PMI marked another month of contraction at 47.4. Activity didn't fall as much as in June, and beat forecasts but still weakened the Pound overnight. The final version of Euro-zone services confirmed the preliminary figure of 48.3.
EUR Retail Sales Decline 0.6% on Month, -3.1% on the Year
Euro-zone retail sales fell 0.6% in June, and at an annual rate of 3.1% - a 13 year low. Consumers, faced with high energy and food prices are cutting back on discretionary spending. The news adds further data suggesting the Euro-zone is facing serious headwinds. The ECB meets later this week.
EUR/JPY - Euro Weakens vs Yen, Despite Strong Stocks
The Euro-Yen pair, similar to the Aussie pair earlier, saw a steep decline. From its open there was a 180 pip swing in the Yen's favor as there was an exit from carry trade. The pair now sits near its level from Friday. The fall comes despite stocks in Europe being in the green, up on falling oil prices.
GBP/USD - Pound Falls to 7 Week Low vs Dollar Prior to FOMC Statement
The Pound-Dollar was pressured by its fundamental data and Dollar strength prior to the FOMC meeting. The pair fell 80 pips in favor of the greenback, breaking support at 1.96. This put it at a new 7-week low.
US ISM Non-Manufacturing PMI in Contraction, but Beats Forecasts
In the US, the ISM Non-manufacturing PMI, a measure of services activity posted a 49.5 in July, improving on June's level. New orders fell and other key indicators stayed below 50, while the prices measure cooled.
US FOMC Holds Rates at 2%, Inflation and Growth Remain Concerns
At 2:15 PM EST, the Fed held rates at 2%, and pointed out uncertainty over inflation while seeing downside risks to growth. The statement may have disappointed those traders hoping to see some indication of a rate hike in October, as the Fed still seems concerned about growth.
EUR/USD - Euro Hits 6-Week Low vs Dollar Before Fed, Initial Euro Gains After Release Cut Down
Overnight the Euro-Dollar pair was down 100 pips following weak European data and expectations of a FOMC statement more inflation focused. The pair jumped 30 pips in the minutes following the release, but did not sustain these gains, and instead returned to pre-FOMC statement levels.
USD/JPY - Dollar Gains vs Yen as US Stock Rally on Oil Prices, Unable to Break 108.30 Resistance
The Yen gained initially against the Dollar overnight, but the Dollar found support and by the New York session nearly retested the 108.50 resistance level, which has held up multiple times in recent weeks. US stocks, bolstered by yet another day of oil declines, rallied during NY morning trading. The DOW was up 200 points and oil prices were down by $2.50 by 12:30PM. However, there was not enough dollar-bullish sentiment after the FOMC statement to penetrate the critical resistance level.
Upcoming Releases
Tonight, the UK posts data on consumer confidence and a monthly GDP estimate. Australia follows that up with data on home loans and its construction PMI. Overnight, Japan releases its leading index.
Also overnight, Germany releases factory orders and the UK posts a index of retail prices. Tomorrow Canada reveals its Ivey PMI, a measure of business activity.
Capital Market Services, L.L.C.
www.cmsfx.com
©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C.
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Dollar Index And Financial Sector
Daily Forex Fundamentals | Written by The LFB-Forex.com | Aug 05 08 21:25 GMT |
Dollar Index And Financial Sector
Dollar Index: The important thing to take from the FOMC statement is that policymakers continue to voice concerns regarding growth and inflation metrics, as Chairman Bernanke did during his recent congressional testimony. By noting that "the inflation outlook remains highly uncertain" Bernanke was apparently able to appease the inflation hawks, as Richard Fisher remained the lone dissenter. The bottom line is the economy is either in, or is very close to being in a recession and the chances of the Fed raising interest while the situation exists are probably very small. The statement and vote likely do not offer a sufficient vigilance on inflation in order to give true support the dollar, in that there is a lack of any signal regarding a rate increase. Look for the Fed to be on hold through the rest of 2008. On the day, the index rose to 73.921 after gaining 0.459 (0.62%).
The Financial Sector: The sector did very well as Citigroup and Bank of America led financial shares to their best gain in a week. Financial shares rallied 4.3% as traders increased bets that the central bank will hold borrowing costs at 2.0% through the rest of the year after the FOMC statement was released. AIG, the world's largest insurer, rallied 10% to $29.33 for the biggest gain in the Dow average. Citigroup gained 5.6% and Bank of America rose 3.6%. Of immediate concern to the sector as well as the overall market is the direction of oil prices. The market will be supported if oil falls to a level that will not ignite inflation, slow global growth further, or force central banks to raise interest rates. On the day, the XLF gained 1.09 (5.08%) to close on 22.54 good volume of 180,565,922 about 10.5 million above the daily average.
U.S. Session Wrap DOW gains an additional 110 points after the Fed's statement
It was a day of falling oil prices and rising equity markets, helped at the end when the Fed failed to signal that a rate increase was eminent. The question going forward is how much further oil prices can decline, because despite the fact that it has fallen nearly 18% since the July peak, it is still up nearly 30% on the year and therefore still has the potential to spur inflation and retard growth. There still are plenty of headwinds for the economy; The Institute for Supply Management said that its non-manufacturing index rose to 49.5 in July from June's reading of 48.2, but any number below 50 still indicates contraction is the sector, which declined for the second month in a row.
At the close of floor trading on the NYSE, the DOW was on 11615.77 after gaining 331.62 (2.95%). The DOW was 220 points ahead immediately prior to the FOMC decision. The S&P closed on 1284.88, up 35.87 (2.87%) while the NASDAQ finished trading on 2349.8 with a gain of 64.27 (2.81%). Goodyear (12.4%), Capital One (12.1%) were the two biggest percentage gainers, followed by Lehman (12.0%), AIG (11.7%) and Wachovia (11.2%). Treasuries were slightly lower. The two-year note yield gained 2.4 basis points to 2.548%. The benchmark 10-year note rose 5.6 basis points to yield 4.022%. The dollar had a big day against the euro (0.78%) and pound (0.35%) but gained only 0.01% on the yen despite the sharp rise in the equity markets.
Crude oil for September delivery fell $2.24 (1.8) to settle at $119.17 a barrel for the first time in three months, on the threat of slowdowns in the U.S. and European economies. Gasoline also fell to the lowest since May.
Gold futures for December delivery fell $21.80 (2.4%) to $886.10 an ounce falling below $900 an ounce for the first time since June as the dollar rebounded.
In other news Merrill Lynch slashed its third-quarter earnings estimates on Goldman Sachs to $2.80 from $4.28, citing negative trends, particularly in the strongest businesses of the investment bank. "We feel that GS's leverage to global equity markets and principal businesses will prove a fairly significant headwind," Merrill's Guy Moszkowski said in a note to clients. After the market closed, Cisco Systems reported earnings and sales that just edged analysts' estimates as companies upgraded networks to handle growing Internet traffic, despite concerns of a slower global economy.
The LFB-Forex.com
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Dollar Index And Financial Sector
Dollar Index: The important thing to take from the FOMC statement is that policymakers continue to voice concerns regarding growth and inflation metrics, as Chairman Bernanke did during his recent congressional testimony. By noting that "the inflation outlook remains highly uncertain" Bernanke was apparently able to appease the inflation hawks, as Richard Fisher remained the lone dissenter. The bottom line is the economy is either in, or is very close to being in a recession and the chances of the Fed raising interest while the situation exists are probably very small. The statement and vote likely do not offer a sufficient vigilance on inflation in order to give true support the dollar, in that there is a lack of any signal regarding a rate increase. Look for the Fed to be on hold through the rest of 2008. On the day, the index rose to 73.921 after gaining 0.459 (0.62%).
The Financial Sector: The sector did very well as Citigroup and Bank of America led financial shares to their best gain in a week. Financial shares rallied 4.3% as traders increased bets that the central bank will hold borrowing costs at 2.0% through the rest of the year after the FOMC statement was released. AIG, the world's largest insurer, rallied 10% to $29.33 for the biggest gain in the Dow average. Citigroup gained 5.6% and Bank of America rose 3.6%. Of immediate concern to the sector as well as the overall market is the direction of oil prices. The market will be supported if oil falls to a level that will not ignite inflation, slow global growth further, or force central banks to raise interest rates. On the day, the XLF gained 1.09 (5.08%) to close on 22.54 good volume of 180,565,922 about 10.5 million above the daily average.
U.S. Session Wrap DOW gains an additional 110 points after the Fed's statement
It was a day of falling oil prices and rising equity markets, helped at the end when the Fed failed to signal that a rate increase was eminent. The question going forward is how much further oil prices can decline, because despite the fact that it has fallen nearly 18% since the July peak, it is still up nearly 30% on the year and therefore still has the potential to spur inflation and retard growth. There still are plenty of headwinds for the economy; The Institute for Supply Management said that its non-manufacturing index rose to 49.5 in July from June's reading of 48.2, but any number below 50 still indicates contraction is the sector, which declined for the second month in a row.
At the close of floor trading on the NYSE, the DOW was on 11615.77 after gaining 331.62 (2.95%). The DOW was 220 points ahead immediately prior to the FOMC decision. The S&P closed on 1284.88, up 35.87 (2.87%) while the NASDAQ finished trading on 2349.8 with a gain of 64.27 (2.81%). Goodyear (12.4%), Capital One (12.1%) were the two biggest percentage gainers, followed by Lehman (12.0%), AIG (11.7%) and Wachovia (11.2%). Treasuries were slightly lower. The two-year note yield gained 2.4 basis points to 2.548%. The benchmark 10-year note rose 5.6 basis points to yield 4.022%. The dollar had a big day against the euro (0.78%) and pound (0.35%) but gained only 0.01% on the yen despite the sharp rise in the equity markets.
Crude oil for September delivery fell $2.24 (1.8) to settle at $119.17 a barrel for the first time in three months, on the threat of slowdowns in the U.S. and European economies. Gasoline also fell to the lowest since May.
Gold futures for December delivery fell $21.80 (2.4%) to $886.10 an ounce falling below $900 an ounce for the first time since June as the dollar rebounded.
In other news Merrill Lynch slashed its third-quarter earnings estimates on Goldman Sachs to $2.80 from $4.28, citing negative trends, particularly in the strongest businesses of the investment bank. "We feel that GS's leverage to global equity markets and principal businesses will prove a fairly significant headwind," Merrill's Guy Moszkowski said in a note to clients. After the market closed, Cisco Systems reported earnings and sales that just edged analysts' estimates as companies upgraded networks to handle growing Internet traffic, despite concerns of a slower global economy.
The LFB-Forex.com
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