Asian Stocks Snap Six-Day Loss on Bank Rescue Bill Speculation

By Patrick Rial and Shani Raja

Oct. 1 (Bloomberg) -- Asian stocks climbed, snapping a six- day losing streak, on speculation the U.S. Senate will approve a $700 billion bank-rescue plan to revive credit markets and support the global economy.

Westpac Banking Corp., Australia's third-largest bank, rallied 8.2 percent as lawmakers reconsidered opposition to the package that prompted the largest drop in U.S. shares for 21 years. Rio Tinto Group surged 12 percent after Australian regulators said they won't oppose BHP Billiton Ltd.'s takeover. Daikin Industries Ltd. dropped as Japan's manufacturers turned pessimistic on the economy for the first time in five years.

``The very expectation U.S. politicians might do something is proving positive for markets,'' said Troy Angus, who helps manage $3.1 billion at Paradice Investment Management in Sydney. ``The financial crisis might abate, but we still have the impact on the real economy to work its way through worldwide.''

The MSCI Asia Pacific Index climbed 1.7 percent to 108.83 as of 3:44 p.m. in Tokyo, with financial shares accounting for 38 percent of the advance. The gauge lost 8.6 percent in the previous six days as the failures of Washington Mutual Inc. and Bradford & Bingley Plc, record-high bank borrowing costs, and the rejection of the rescue plan rattled investor confidence.

Japan's Nikkei 225 Stock Average gained 1 percent to 11,368.26. Most markets in Asia rose. China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were shut for holidays.

Samsung Electronics Co. led a 0.6 percent drop in South Korea's Kospi index after Macquarie Group Ltd. said semiconductor profit margins will decline. Mitsui O.S.K. Lines Ltd. led shipping stocks lower as the Baltic Dry Index, a measure of costs to transport commodities, completed its worst month on record.

Bailout `Catalyst'

U.S. stocks jumped the most in six years yesterday on renewed confidence a bailout will be passed this week. The Standard & Poor's 500 Index surged 5.3 percent, a day after posting an 8.8 percent decline. Futures on the S&P 500 declined 0.7 percent today.

The Sept. 29 slump wiped off $1.2 trillion in market value from American equities and sent lawmakers scrambling to revive the rescue plan in order to prevent a meltdown in financial markets. Senate Democrats and Republicans agreed to vote on the bailout later today.

``The erosion of a trillion dollars of shareholder wealth may be the catalyst required to get voters to pressure their leaders to approve a financial rescue package,'' Patrick Mohr, an equity strategist at Nikko Citigroup Ltd. in Tokyo, wrote in a report. ``If the `pass the bill' chorus from voters becomes loud enough there should be no problem with passage.''

Westpac, Commonwealth

The deepening credit crisis helped drag the MSCI Asia Pacific down by 15 percent last month, the most since 1990 when Japan's asset bubble burst.

Westpac gained 8.2 percent to A$23.25. Nomura Holdings Inc., Japan's largest brokerage, jumped 6 percent to 1,405 yen. Commonwealth Bank of Australia, the nation's biggest lender, added 5.3 percent to A$44.86.

Rio Tinto, the world's third-largest mining company, surged 12 percent to A$95. BHP's hostile $101 billion bid for Rio isn't likely to ``substantially lessen competition,'' the Australian Competition and Consumer Commission said. BHP, Rio's largest rival, gained 5.7 percent to A$32.75.

Higher oil prices also helped boost BHP, Australia's No. 1 producer. Crude oil for November delivery rose 4.4 percent to $100.64 a barrel in New York, rebounding from its biggest drop in seven years. The contract recently traded at $101.97.

Mitsubishi Corp., Japan's largest trading company, and which generates more than half of its profit from commodities dealing, climbed 3.9 percent to 2,240 yen.

Baltic Dry

Daikin, the biggest Japanese maker of air conditioners, dropped 3.2 percent to 3,360 yen. Sumitomo Electric Industries Ltd., Japan's largest maker of wires and cables, slumped 2.6 percent to 1,104 yen.

The Bank of Japan's Tankan index of confidence among large manufacturers, the nation's most closely watched economic release, dropped below 0 for the first time since 2003, indicating pessimists outnumber optimists. Companies surveyed indicated they are scaling back capital spending plans as the global economy moves toward recession.

Samsung Electronics dropped 1.1 percent to 533,000 won. Semiconductor profit margins for Asia's biggest maker of computer chips will turn negative in the fourth quarter, according to Macquarie.

Mitsui O.S.K., Japan's second-biggest bulk shipper, slid 4.1 percent to 848 yen. Kawasaki Kisen Kaisha Ltd., the third largest, dropped 4.4 percent to 604 yen. Hyundai Heavy Industries Co., the world's biggest shipbuilder, slumped 3 percent to 261,000 won.

The Baltic Dry Index lost 8.2 percent yesterday, bringing its slide for September to a record 53 percent.

Sumitomo Chemical Co. slumped 6.8 percent to 424, the lowest close since February 2004. The Japanese producer of petrochemicals and pharmaceuticals slashed its full-year net income forecast yesterday by 73 percent due to higher costs.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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France Stocks Update: CAC 40 Rises 25.65 to 4,057.75

By Daniel Hauck

Oct. 1 (Bloomberg) -- France's benchmark stock index, the CAC 40, rose 0.64 percent at 9:05 a.m.

The index of 40 companies traded on the Paris Bourse rose 25.65 to 4,057.75. Among the stocks in the index, 32 rose, 7 fell and 1 was unchanged.

Gains in the CAC 40 were led by Arcelormittal, Bnp Paribas and Axa Sa. About 3.69 million shares traded in the CAC 40.

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U.K. Stocks Update: FTSE 100 Rises 52.58 to 4,955.03

By Daniel Hauck

Oct. 1 (Bloomberg) -- The U.K.'s benchmark stock index, the FTSE 100, rose 1.07 percent at 8:05 a.m.

The index of 102 stocks traded on the London Stock Exchange rose 52.58 to 4,955.03. Among the stocks in the index, 62 rose, 25 fell and 15 were unchanged.

Gains in the FTSE 100 were led by Bp Plc (Bp/ Ln), Hsbc Holdings Plc (Hsba Ln) and Royal Bank Of Scotland Group Plc (Rbs Ln). About 13.15 million shares traded in the FTSE 100.

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Stocks in Europe, Asia Rise, Led by UBS; U.S. Futures Decline

By Adria Cimino

Oct. 1 (Bloomberg) -- Stocks in Europe and Asia rose, led by banks and commodity producers, as investors speculated lawmakers will revive a $700 billion plan to rescue the American financial system. U.S. stock-index futures fell.

UBS AG, the European bank with the biggest losses from the credit crisis, climbed 5.9 percent and Westpac Banking Corp. rallied 6.7 percent in Australia after the Senate set a vote for tonight on the bailout plan. Anglo American Plc gained 6.3 percent, and BG Group Plc jumped 2.7 percent as copper rebounded and oil advanced for a second day.

The MSCI World Index added 0.8 percent to 1,191.23 at 8:42 a.m. in London as all 10 industry groups increased. Europe's Dow Jones Stoxx 600 Index advanced 0.6 percent, while the MSCI Asia Pacific Index increased 1.7 percent. Futures on the Standard & Poor's 500 Index lost 0.8 percent before a report that may show manufacturing contracted at a faster pace in September.

``It's certainly good if the package comes through,'' said Bernhard Maeder, who oversees the $793 million Credit Suisse Equity Fund at Credit Suisse Asset Management in Zurich. ``We have to instill trust. My scenario is policy will work, trust will come back and yes we do have upside.''

The Senate tied a revived plan to an increase in bank- deposit-insurance limits and tax breaks to win support from Republicans.

Japanese and Australian money-market rates fell as central banks pumped $15 billion into the system and U.S. lawmakers worked on the plan.

Treasuries, Dollar

Treasuries advanced and the dollar traded near a two-week high against the euro. The U.S. currency was also close to its strongest level in two weeks versus the British pound.

China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were shut for holidays today.

U.S. stocks jumped the most in six years yesterday after President George W. Bush urged passage of the plan designed to rid financial institutions of bad loans. More than $1 trillion in market value was erased on Sept. 29 in the worst day for the Standard & Poor's 500 Index since the ``Black Monday'' crash of 1987 after the House of Representatives rejected the plan.

Europe's Stoxx 600 fell 11 percent in September, the worst monthly slump since January, after Lehman Brothers Holdings Inc. filed for bankruptcy, American International Group Inc. was taken over by the U.S. Treasury and Washington Mutual Inc. was seized by regulators in the biggest U.S. bank failure in history.

``We're optimistic the government plan will be adopted by the end of the week,'' said Francois Savary, a strategist at Reyl & Cie in Geneva. ``We have to stop these successive bankruptcies. The plan will be able to stop this domino effect.''

UBS, Westpac

UBS advanced 5.9 percent to 19.55 francs. The company may announce plans to eliminate about 1,900 jobs in its investment banking, equities, and fixed income units at its shareholder meeting tomorrow, two people with knowledge of the matter said.

Separately, Dresdner Kleinwort analysts said UBS may pre- announce earnings tomorrow. The bank may post a profit in the third quarter, according to the analysts.

Barclays Plc, the third-biggest U.K. bank, jumped 6.3 percent to 347 pence.

Westpac, Australia's third-largest bank, gained 6.7 percent to A$22.91. Nomura Holdings Inc., Japan's largest brokerage, jumped 5.9 percent to 1,404 yen.

Anglo American, the world's fourth-largest diversified metal company, climbed 6.3 percent to 1,972 pence. Kazakhmys Plc, Kazakhstan's biggest copper producer, rallied 6.2 percent to 607.5 pence. Copper rose for the first time in four days in London. Nickel, lead, tin and zinc also advanced.

Xstrata, BHP

Xstrata Plc gained 8 percent to 1,854 pence. The world's fourth-largest copper producer said it does not intend to make a takeover offer for Lonmin Plc because of ``extreme volatility and uncertainty in the financial markets.''

Lonmin plunged 23 percent to 1,755 pence.

BHP Billiton Ltd. rose 4.3 percent 1,313 pence after Australia's competition regulator approved its hostile $101 billion bid for rival Rio Tinto, boosting speculation that the world's largest mining takeover may succeed. Rio gained 7 percent to 3,714 pence.

Crude oil for November delivery rose as much as 1.6 percent to $102.24 on the New York Mercantile Exchange on optimism that the passage of the bailout plan may avert an economic slowdown.

BG Group, the U.K.'s third-biggest oil and gas company, gained 2.7 percent to 1,040 pence. BP Plc, Europe's second- largest oil company, gained 1.1 percent to 469.25 pence.

Fortis jumped 2.7 percent to 4.52 euros. The bank rescued by Belgium, the Netherlands and Luxembourg said the 2.15 billion-euro ($3 billion) sale of half its asset management arm to China's Ping An Insurance (Group) Co. may collapse because of the worsening credit crisis.

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



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Lehman's Hedge-Fund Clients Left in Cold as Assets Are Frozen

By Tom Cahill

Oct. 1 (Bloomberg) -- Lehman Brothers Holdings Inc.'s bankruptcy probably means the end of hedge-fund manager Oak Group Inc. after 22 years in business.

John James, who runs the Chicago-based firm with $25 million of assets, didn't buy Lehman stock or debt. Instead, his potentially fatal mistake was to rely on the bank's prime brokerage in London, a unit that provides loans, clears trades and handles administrative chores for hedge funds. He's one of dozens of investment managers whose Lehman prime-brokerage accounts were frozen when the company filed for protection from creditors on Sept. 15.

``We're probably going out of business and liquidate, game over,'' James, 59, said. ``We've lost 70 percent of our assets.''

The list of funds trapped in the Lehman morass keeps growing. London-based MKM Longboat Capital Advisors LLP said last week it will close its $1.5 billion Multi-Strategy fund in part because of assets stuck at Lehman, according to an investor letter.

LibertyView Capital Management Inc. of Hoboken, New Jersey, owned by Lehman's Neuberger Berman unit, told investors on Sept. 26 it had suspended ``until further notice'' attempts to calculate the value of its funds. LibertyView was not included in the Sept. 29 sale of Neuberger to Bain Capital LLC and Hellman & Friedman LLC.

Managers with a smaller percentage of assets in Lehman limbo include Harbinger Capital Partners, Amber Capital LP and Bay Harbour Management LLC, which are each based in New York, and RAB Capital Plc and GLG Partners Inc., both in London.

Asset Amounts Unknown

PricewaterhouseCoopers, Lehman's bankruptcy administrator in the U.K., where its European prime brokerage was based, doesn't know how much money is at stake. PwC said last month it's trying to recoup about $8 billion in cash that Lehman's parent company allegedly withdrew from its European unit before the collapse. It will take weeks, if not longer, to sort out the mess, according to PwC.

Monique Wise, a spokeswoman for New York-based Lehman, declined to comment.

The Lehman fiasco is another blow to the $1.9 trillion hedge-fund industry, which is staggering toward the end of its worst year in two decades. Hedge funds fell an average of 5.3 percent this month through Sept. 26, according to the Global Hedge Fund Index compiled by Hedge Fund Research Inc. in Chicago. The index has dropped 10 percent for the year.

Losses on stocks, bonds and commodities will be aggravated as funds write down the value of the assets they had with Lehman.

``Some managers might say, `Let's just take the bloodbath now' and write Lehman trades to zero,'' said Taco Sieburgh Sjoerdsma, head of research at Liability Solutions Ltd., a hedge-fund consultant in London. ``For many Lehman trades it would be very difficult to convince administrators that it's worth 100 cents on the dollar.''

Transfer Held Up

While clients yanked about 50 percent of Lehman's prime- brokerage assets in the week before the bankruptcy, at least one, Newport Global Advisors LP, said its request for a transfer to another bank wasn't completed in time.

The Woodlands, Texas-based Newport, which managed $578 million primarily for pension funds, instructed Lehman on Sept. 10 to move its assets to Credit Suisse Group AG, according to a request for information filed in U.S. Bankruptcy Court in the Southern District of New York. Lehman confirmed the switch was being processed, according to the court papers. It didn't happen before the bankruptcy was filed on Sept. 15.

Lehman's Wise declined to comment on Newport Global.

Hedge-fund administrators said funds will likely need to record Lehman-stranded assets in a separate account known as a side-pocket, which is set up for securities that can't be easily valued or sold.

`No Light'

``There's a lot of people scrambling right now to get as much information as possible,'' said Gavin Gray, managing director offshore operations for Phoenix Financial Services Ltd. in Dublin, which administers $12.5 billion in funds. ``Administrators don't have the light to lead people to the right value right now.''

Oak Group used Lehman's unit in London because it allowed the fund to borrow more than U.S. prime brokers, James said. Operating under different regulatory requirements, European prime brokers have been more generous than their U.S. counterparts, sometimes even within the same parent company, said Michael Romanek, principal at Rise Partners Ltd., which arranges financing for funds from London.

``A lot of U.S. managers would rather deal with Europe than New York,'' said Romanek. ``Rarely do you see it go the other way.''

James's account had pledged equity securities as collateral that Lehman then lent to other investors under a practice known as rehypothecation. It's the fate of that collateral that worries many Lehman hedge-fund clients.

Counterparty Risk

``The assets, once `used,' were no longer held for the client on a segregated basis, and as a result the client may cease to have any proprietary interest in them,'' PwC said in a statement on Sept. 22. Complicating matters is Lehman's role as a counterparty for derivatives agreements such as credit default swaps.

One executive who used Lehman as a prime broker -- and who asked not to be named because his firm is private -- estimates that hedge funds had between $50 billion and $70 billion in Lehman prime-brokerage accounts.

``Certainly it's in the billions,'' said John Godden, head of London-based IGS Group Ltd., a hedge-fund investor and consultant based in London. ``A lot of the exposure is not just Lehman's prime brokerage but it's Lehman as a swap counterparty.''

`Single Asset'

Hans Hufschmid, chief executive officer of GlobeOp Financial Services SA, a London-based administrator to funds managing $104 billion, said he's now running reports for clients detailing their bank counterparties.

``A lot of our big clients are spending all their time right now making sure they have their assets in a safe place,'' said Hufschmid. ``The whole Lehman experience is lessons learned in many ways.''

Some hedge funds, now reduced to creditors, will have a new focus.

``Those funds and fund managers who used Lehman as their prime brokerage and were formerly managing hundreds of different securities, positions or trades in those accounts now find themselves managing a single asset, which is their claim in the insolvency proceeding of Lehman U.K.,'' said David Pauker, managing director at Goldin Associates LLC in New York.

Pauker, who was Refco Inc.'s chief restructuring officer in that futures broker's bankruptcy, said the U.K.'s legal system gives ``broader authorities'' to the administrator, leaving creditors less leverage to negotiate and participate in decisions affecting their money.

`Different Animal'

Refco's bankruptcy may be an ``inapt'' comparison with Lehman's, according to Richard Dietz, founder of VR Capital Group Ltd., which was Refco's largest prime broker client with $800 million frozen in that bankruptcy. Deitz, who wasn't a Lehman customer, recovered all his assets in the Refco bankruptcy.

``If you were a Lehman prime-broker client in Europe, from what I can see you ought to be pretty concerned,'' said Dietz from Moscow, where he oversees $2 billion. ``Refco doesn't hold too many signposts for how to think about the Lehman bankruptcy, Lehman is a very different animal.''

For hedge funds, the collapse of Lehman will underscore counterparty risk, and speed decisions to pull assets from prime brokers or banks they perceive as risky.

``Hedge funds tend to have accounts with numerous counterparties,'' said Lynn Hiestand, a partner at Skadden, Arps, Slate, Meagher & Flom (UK) LLP in London, who handled Refco's bankruptcy in the U.K. ``Hopefully they haven't put all their eggs in this one basket.''

To contact the reporter on this story: Tom Cahill in London at tcahill@bloomberg.net

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Cremer, Cresud, Edelnor, Modelo, Molinos: Latin Equity Preview

By William Freebairn and James Attwood

Oct. 1 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.

The MSCI Latin America Index rose 6.1 percent yesterday to 3,186.4.

Argentina

Molinos Rio de la Plata SA (MOLI AF) and Cresud SACIF y A (CRES AF): Argentine farm groups voted to resume protests over government policies, including export restrictions that depress food prices on the domestic market. Farmers will stage a protest outside Congress in Buenos Aires and in rural towns across the country, renewing demonstrations that were halted in July, Eduardo Buzzi, president of the Agrarian Federation, told reporters in Buenos Aires yesterday. Molinos, an exporter of soybean oil, rose 2.1 percent to 9.55 pesos. Cresud, which farms soybeans and other crops, fell 1.5 percent to 3.27 pesos.

Solvay Indupa SAIC (INDU AF): The Buenos Aires-based exporter of chlorine and caustic soda canceled plans to sell shares in Brazil, it wrote in a filing posted on the Web site of the nation's securities regulator yesterday. The company did not give a reason. Solvay Indupa fell 4.1 percent to 3.55 pesos.

Brazil

Cremer SA (CREM3 BS): The Brazilian maker of medical supplies plans to repurchase as many as 1.68 million voting shares, or 5 percent of outstanding stock, over the next year, Cremer said in a filing posted on the local regulator's Web site yesterday. Cremer, which first sold shares to the public in April 2007, fell 4.7 percent to 10.20 reais.

Petroleo Brasileiro SA (PETR4 BS): Declining oil prices may reduce costs for producers by cutting demand for oilfield services, Petrobras chief of refining and supply Paulo Roberto Costa told reporters yesterday in Manaus, Brazil. Petrobras gained 7.2 percent to 35.10 reais.

Chile

Empresa Electrica del Norte Grande SA (EDELNOR CC): Moody's Investors Service upgraded the senior unsecured long-term issuer rating of Edelnor from B2 to Ba3, assigning a ``stable'' outlook. Edelnor's business environment has improved as reduced natural- gas imports from Argentina allow it to increase its mainly coal- fired contracted dispatch capacity, Moody's wrote in a statement yesterday. Edelnor, which sells electricity to mines in northern Chile, fell 2.8 percent to 520 pesos.

Mexico

Grupo Modelo SAB (GMODELOC MM): Mexico's largest beermaker may find it ``very difficult'' to meet its forecasts for export volume growth and earnings before interest and taxes as a percentage of sales, Banco Santander SA said. U.S. beer imports may be lower in the first half of 2009 than expected, analysts Alexander Robarts and Sergio Matsumoto wrote in a research report e-mailed yesterday. Modelo rose 1.4 percent to 46.54 pesos.

To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net



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Forex Market Update: USD Sweeps Stronger Across The Board As Banking Woes Go Worldwide. Equity And Yield Bounceback Trigger Enormous USDJPY Reversal

Daily Forex Fundamentals | Written by Saxo Bank | Oct 01 08 06:52 GMT |

USD may continue to reign supreme for now despite likely very ugly economic data in the pipeline. MAJOR HEADLINES US Sep. Chicago PMI out at 56.7 vs. 53.0 in Aug. US Sep. Consumer Confidence out at 59.8 vs. 55.0 expected and 58.5 in Aug. US Weekly ABC Consumer Confidence out at -41 vs. -43 expected and -41 last week Australia Sep. AiG Performance of Manufacturing Index out at 47.2 vs. 47.0 in Aug. Japan Q3 Tankan Large Manufacturers Index out at -3 vs. -2 expected and vs. 5 in Q2 China Sep. PMI Manufacturing out at 51.2 vs. 48.4 in Aug. Germany Retail Sales out at -3.0% YoY vs. -2.6% expected THEMES TO WATCH - UPCOMING SESSION Switzerland Sep. SVME PMI (0730) EuroZone Final Sep. PMI Manufacturing (0800) UK Sep. PMI Manufacturing (0830) EuroZone Aug. Unemployment Rate (0900) US Sep. Challenger Job Cuts (1130) US Sep. ADP Employment Change (1215) US Sep. ISM Manufacturing (1400) US Weekly Crude Oil and Product Inventories (1435) Australia Aug. Trade Balance (0130) Market Comments To get an idea of how little attention the market is paying to economic data these days, we only have to look at the Canadian GDP release from yesterday, which showed a vastly better than expected growth rate of 0.7% vs. 0.2% expected, and yet upon the data's release, USDCAD adjusted a few pips lower before rocketing 200 pips north to close well back into the old range and suggesting that the old bull trend may yet come alive again. The greenback and risk appetite came storming back yesterday as traders apparently decided that it had overreacted to the failure of the TARA bill to pass the first time around and that some form of it would pass later this week. Speculation is making the rounds that the bill will go up for a vote again by Thursday. The clearest evidence of yesterday's sentiment reversal was in the likes of USDJPY - where Monday's 200-pip sell-off yielded to Tuesday's 200-pip rally - and in US Treasuries, where the enormous rally from Monday also fully reversed. The equity market reversal was slightly less enthusiastic, but still erased a considerable portion of Monday's brutal sell-off. With the end of the month/quarter now behind us, this could open up for some upside pressure in risk appetite if the market continues to gain confidence that a bailout package may go through and begin to unclog credit markets (hope is more important than 'actual success' of the package for the short term). End of month/quarter effects may have also had something to do with the virulence of the USD rally yesterday. The USD is moving stronger as the world understands that this credit/banking crisis is going global. Especially hard hit yesterday were European currencies, as it becomes increasingly clear that any policy response in Europe risks being a piecemeal one since the ECB has no authority to make policy beyond liquidity injections. The EUR sell-off accelerated as Ireland dramatically announced that all bank deposits would be insured. This measure is insurance against a flight of capital from Ireland, where banks have been under enormous pressure. Ireland was also one of the first European countries to nosedive into recession due to its housing bubble of epic proportions. This move sets up a dilemma for the ECB and for other EuroZone countries and shows the European weakness in dealing with the crisis with a broad brush as is possible in the US. As well, banks are desperate for USD funding for US liabilities, and with the forward market simply not functioning, some of the demand seems to be spilling over into the spot market. The Irish move is setting off speculation that the UK could follow suit with deposit insurance, and the US Senate is rolling higher deposit insurance levels into the new version of the TARA bailout bill as well. Some of the key risk spreads did actually fall yesterday - for example the 3-month LIBOR vs. US 3-month T-bills spread - but these indicators are still close to record levels and need to come down much further before we can breathe any sigh of relief. Some of the confidence and PMI numbers out of the US have been surprisingly resilient of late, but we still must consider what may be in the pipeline after the shocks of the last couple of weeks. It is truly remarkable that weekly US confidence numbers have not been more negatively impacted by the last couple of weeks of developments. The average consumer will definitely be feeling the heat from this in the coming months. Our studies indicate a near perfect correlation of weekly confidence and gasoline prices over the last few years, but the pocketbook implications of this credit crisis are far larger than a few cents up and down at the gas pump. Perhaps the US consumer doesn't realize this. We also expect yet another ugly unemployment report on Friday - more on that later. Chart: USDJPY A remarkable reversal yesterday in this chart, which also was visible in US Treasuries yesterday. As long as equities remain somewhat on the mend and yields continue higher, the low yielders could remain under pressure and this pair could head higher toward the upper end of the recent range. Support comes in at 105.80 and then 105.40 today. To the upside, there's a bit of descending trendline that must be overcome to set up a more bullish perspective. Analysis Disclosure & Disclaimer SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by SaxBank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis dnot occur as anticipated. SaxBank utilizes financial information providers and information from such providers may form the basis for an analysis. SaxBank accepts nresponsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in SaxBanks analysis derive from objective fundamental macreconomical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations tbuy or sell a specific financial instrument, such recommendation should be seen as SaxBanks opinion that the specific instrument will respectively outperform the relevant market or underperform compared tthe market. SaxBanks recommendations should statistically correspond tan even distribution between buy and sell recommendations. The recommendations may expire promptly due tmarket volatility and in general, SaxBank does not anticipate its recommendations tbe valid more than one month. An analysis will be updated if and only if a market development or other issues relevant tthe analysis render a new analysis on the same topic relevant. SaxBanks analysis does not cover any specific financial product over time but only products which SaxBanks strategy team finds it important tcover at any given point in time. In order tprevent conflicts of interest, SaxBank has established appropriate business procedures, incl. procedures applicable tresearch and analysis tensure objective research reports. SaxBanks research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. SaxBank is under supervision by the Danish Financial Supervisory Authority. SaxBank does not engage in corporate finance activities and accordingly, SaxBanks employees, incl. the persons responsible for an analysis, dnot receive remuneration associated with investment banking transactions.

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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by Crown Forex | Oct 01 08 06:57 GMT |

EURO

Another vigorous downside movement took the pair near the 1.40 psychological barrier. We see mixed signals on the Stochastic indicator on the four hour charts that will perhaps result in high volatility on the short term while the Relative strength indicator is in a descending channel showing the pair being slightly oversold and the ADX indicator failed to specify a trend as it showed weakness. On the other hand, the pair returned to trade in the descending channel with a key resistance at 1.4200 and despite us expecting an upside correction, if the pair fails to trade above the mentioned level, the bullish movements will not contine and will result in a downside wave neglecting the need for a correction. The trading range for today is among the key support at 1.3980 and the key resistance at 1.4335 The general trend is to the downside as far as 1.5080 remains intact with targets at 1.4040 and 1.3860

Support: 1.4100, 1.4080, 1.4070, 1.4000, 1.3980
Resistance: 1.4150, 1.4180, 1.4200, 1.4215, 1.4335
GBP

Opposing technical expectations, the pair extended its losses yesterday to reach the 1.77 level. Forecasts of an incline today as the Relative strength indicator is still showing that the pair is oversold yet the Stochastic indicator shows the pair being overbought on an intraday basis while the MACD indicator is pointing to the downside on the short term. The possibility of an upside correction for today is valid, which is what we expect, but as long as the pair fails to build a solid base aobve the 1.8060 level, we don't expect to see the divergence of the short term trend for today but it will take the form of a slight bullish wave during trading today. The trading range for today is among the key support at 1.7645 and the key resistance at 1.8060 The general trend is to the downsideas far as 1.9400 remains intact with targets at 1.7600 and 1.7280

Support: 1.7835, 1.7770, 1.7730, 1.7670, 1.7645
Resistance: 1.7895, 1.7905, 1.7960, 1.8030, 1.8060

Recommendation: Buy (carefully) above 1.7830 with targets at 1.7910 and stop loss below 1.7770
JPY

The pair rebounded to trade above the 104.60 where it was able to close above it on the daily charts resulting in a clear neutral trend. We see the pair in an oversold area on the Stochastic indicator yet the releative strength indicator is showing a neutral bias. From here we expect trading to be of high volatility but with tendency to the downside for today but since trading is between the 104.60 and 107.20 levels we can't specify a clear trend The trading range for today is among the key support at 103.80 and the key resistance at 107.40 The general trend is to the upside as far as 103.00 remains intact with targets at 111.00 and 113.24

Support: 105.35, 105.00, 104.60, 104.00, 103.80
Resistance: 105.80, 106.20, 107.00, 107.20, 107.40
CHF

A significant upside movement took the pair into an overbought area as seen on the momentum indicators on the four hour chart. The 1.1230 level is a critical level on the short term and as long as the pair doesn't close above it on the four hour chart we expect to witness a downside wave taking the pair to the 38.2% correction for the ascending channel that occured during the past two days at 1.1085 The trading range for today is among the key support at 1.0920 and the key resistance at 1.1365 The general trend is to the upside as far as 1.0570 remains intact with targets at 1.1025 and 1.1455

Support: 1.1145, 1.1085, 1.1035, 1.0980, 1.0920
Resistance: 1.1205, 1.1230, 1.1285, 1.1315, 1.1365

Recommendation: Sell the pair below 1.1200 with targets at 1.1100 and stop loss above 1.1285
CAD

The breach of the 1.0500 level resulted in a sharp incline for the pair to reach levels above the 1.0625 level as the pair is still trading within an upside trend but to assure this trend, the 1.0625 level must remain intact taking targets to 1.0695. We see the pair being slightly overbough on the short term momentum indicators where from there we expect that breaching that pair will be technically difficult and the biggest possibility is that it will fail to break the level today. The trading range for today is among the key support at 1.0425 and the key resistance at 1.0775 The general trend is to the upside as far as 1.0350 remains intact with targets at 1.0825 and 1.1000

Support: 1.0580, 1.0560, 1.0500, 1.0465, 1.0425
Resistance: 1.0625, 1.0655, 1.0695, 1.0715, 1.0775

Crown Forex

disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.



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Daily Forex Analysis

Daily Forex Technicals | Written by FOREXYARD | Oct 01 08 07:27 GMT |

Headlines U.S. Consumer Confidence Beat Forcast Further Boosting the USD. All eyes look to the U.S. Congress for the approval of the $700 billion U.S. bailout package proposed by Treasury Secretary Paulson and Federal Reserve Chairmen Bernanke to clean up bad mortgage assets. Market Trend EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP Daily Trend Weekly Trend Resistance 1.4205 1.7910 106.70 1.1255 0.8060 0.7995 1.4185 1.7890 106.50 1.1235 0.8040 0.7975 1.4155 1.7860 106.20 1.1205 0.8010 0.7945 Support 1.4095 1.7800 105.60 1.1145 0.7950 0.7885 1.4065 1.7770 105.30 1.1115 0.7920 0.7855 1.4045 1.7750 105.10 1.1095 0.7900 0.7825 Economic News USD - U.S. ADP Non-Farm Employment Change on Tap. The U.S. financial crisis shows no signs of weakening with the recent bank failure of Washington Mutual. WaMu is the countries largest bank failure and shows just how difficult of a time the U.S. financial system faces. All eyes look to the U.S. Congress for the approval of the $700 billion U.S. bailout package proposed by Treasury Secretary Paulson and Federal Reserve Chairmen Bernanke to clean up bad mortgage assets. Worries persist if a solution will provide a meaningful impact and help to provide breathing room to a strangled credit market. Liquidity is at an all time low and many traders have kept very conservative trading strategies to weather the storm. Also due to the perception that the rescue package will be stalled in congressional debates, traders have priced-in added risk to owning the dollar and have pushed the USD lower against the EUR and the JPY. For the past week markets have been ignoring fundamental data and focusing solely on the U.S. market bailout. Despite the well know Euro-Zone economic weakness, the Dollar has continually dropped against the EUR. Due to be released today is the ADP Non-Farm Employment Change figure. The indicator can provide insight as to where the U.S. Non-Farm Payrolls report may land. Traders may look past this measurement, relying on improving news from the U.S. government surrounding the financial crisis in the States. EUR - Will ECB President's Speech Help to Boost the EUR? The risk of a recession looms over Europe as the EUR remains mixed against its peers. The European economy contracted in the second quarter and three leading indicators of European business confidence released worse-than-forecasted results. Tightening credit has been constricting growth and inflation is on the rise. These negative indicators may provide a bearish outlook for the EUR. This difficult combination of slowing growth and rising inflation has some analysts predicating that the European Central Bank (ECB) will keep its benchmark interest rate steady at 4.25%. This is unlikely to ease credit concerns and the toil it is taking on the European economy. A word that has been associated more and more with the Euro-Zone economy is stagflation. This phenomenon may occur when an economy suffers from both slowing growth rates and increased inflation. This was the case in the U.S. during the 1970s when a spike in oil prices triggered massive inflation rates with an economy in recession. JPY - Foreign Influence Over the Yen will Likely Continue Today. The new Prime Minister of Japan, Taro Aso, has signaled his willingness to stimulate the economy through increased government spending and has also appointed a new finance minister to implement his economic programs. This is a reverse of the previous Japanese government policy of balancing the world's second largest budget by 2011. This may slow efforts to reduce the national debt which is the worst among its peers of industrialized nations. The Japanese economy tightened in the second quarter, the worst result in seven years. A drop in exports along with slowing capital spending could spell a decline in the JPY against the USD in the long run. Oil - Oil is Up on U.S Bailout Plan Announcement. Throughout history, Crude Oil prices have gone trough various price movements that have shaped the current rate. Only a few traders today were active in the market when Crude Oil was selling for under $30 a barrel, and even fewer remember prices as low as $3. However, those who have recollection of those prices did experience one of the most bizarre movements to take place since 1973 when the world experienced its first Oil Shock. Following 9/11, Crude Oil prices spiked from lower than 30$ to a record high at mid 2008 of nearly 150$ per barrel. Basically, a series of events throughout the years amplified the price growth to set the current rate. Those price movements reshaped the global economy, and the instability of Crude Oil prices, to what we are seeing today. The main factors that impact the price of Crude Oil are supply and demand, embargos, natural disasters and war. To be successful in Oil trading, investors need to be aware of the impact each of these factors plays on commodity prices, as well as understanding that commodities such as Gold and Oil are bought when strong currencies, like the USD, become weaker. Commodities then play the role of a safety net for investors running from the losses they are taking in the currency market. In addition, speculation by investors is by far more important in commodities than in currencies as the will of large, influential investors can reshape the prices in the market when they take bold stances on a specific trading position in order to capture a corner on the market. Technical News EUR/USD The pair is in the middle of a downtrend that was initiated at the 1.4860 level. Both the RSI and the momentum are indicating that this pair should continue its bearish rampage. Going short might be the right choice today. GBP/USD After peaking at the 1.8670 level, the cable has resumed its bearish trend with full momentum. And now, all oscillators show that the falling move still holds some fuel in it, and further depreciation might take place. Going short seems to be preferable USD/JPY The pair is trading in range for almost two weeks now. The local momentum appears to be bearish but the daily trend is a very strong bullish one. Traders should look for a significant breach before considering an entry position, as the range might continue before one occurs USD/CHF There is a very distinct bullish channel forming on the daily chart, as the pair is now floating in the middle of it. Currently, all oscillators on the daily chart are pointing up, suggesting that the bullish movement might continue. Going long could be a good strategy. The Wild Card NZD/USD An 'M' formation is being slowly established on the 4 hour chart, as the pair is currently galloping downwards. The daily chart is also giving bearish signals, supporting that notion. This might be a great opportunity for forex traders to join a very promising trend. Indicators Date Time (GMT) Country Event Period Previous Forecast 10/01 06:30 AUD Commodity Prices y/y 47.0% * 07:30 CHF SVME PMI 52.5 51.0 08:00 EUR Final Manufacturing PMI 45.3 45.3 08:30 GBP Manufacturing PMI 45.9 45.0 08:30 GBP Index of Services 3m/3m 0.2% 0.1% 09:00 EUR Unemployment Rate 7.3% 7.3% 09:00 USD ECB President Trichet Speaks * * 11:30 USD Challenger Job Cuts y/y 11.7% * 12:15 USD ADP Nonfarm Employment Change -33K -55K 14:00 USD ISM Manufacturing PMI 49.9 49.5 14:00 USD Construction Spending m/m -0.6% -0.4% 14:00 USD ISM Manufacturing Prices 77.0 73.0 14:35 USD Crude Oil Inventories -1.5M 1.8M 23:50 JPY Monetary Base -0.2% * 10/02 01:30 AUD Trade Balance -0.72B 0.26B 05:45 CHF SECO Economic Forecasts * * 06:00 GBP Nationwide House Prices m/m -1.9% -1.6% FOREXYARD

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Euro Hammered

Daily Forex Fundamentals | Written by KBC Bank | Oct 01 08 07:44 GMT | Sunrise Market Commentary

US Treasuries give up Monday's steep gains Easing of global market tensions caused investors to scale back safe haven Treasury holdings. The move was reinforced by hopes on the approval of a bailout plan. US bond trading is still very much order driven, but the prospect of a bailout plan could be negative for US bonds short-term. Sentiment European bond market remains bullish Despite yesterday's rebound on the equity markets, European bonds keep their composure and open strongly this morning. This suggests that the underlying sentiment on the European bond market is still quite bullish. Ahead of Thursday's ECB meeting, we continue to favour the short end of the curve and a further steepening of the European yield curve. FX: euro hammered The euro in general and EUR/USD in particular were heavily sold yesterday. The turmoil in the European financial sector and the hope that the US bailout plan might be approved later this week supported the dollar. However, FX trading is still mostly order driven. So, one should be cautious to draw firm conclusions. The Sunrise Headlines US equities regained some of Monday's losses (Dow / S&P +4.68% / +5.27%) on fresh hopes of a financial rescue plan. Most Asian stocks rise, but are unable to follow the sharp jumps in the US and European equities. The US Senate agreed to vote on a new version of the $700 billion bailout plan on Wednesday night. The adjustment includes a big increase in the amount of bank deposits protected by the government. The Tankan index, which measures business sentiment at big Japanese manufacturers, turned negative for the first time in five years indicating that large manufacturers are becoming more pessimistic on the economic outlook. Fortis halts its deal to sell half of its asset management arm to China's Ping An Insurance Co after it was partially nationalized earlier this week. Shares of HBOS fell as much as 20% amid speculation that Lloyds may reduce its offer by a quarter. Crude oil ($ 101.95) rebounds after falling sharply on Monday on new hopes of a US plan. The calendar is interesting today with UK Manufacturing PMI and ADP employment report and manufacturing ISM in the US Currencies: Euro Hammered Over the previous days, the swings in the currency markets, and in particular in EUR/USD, were often modest if compared to the hectic trading conditions in other markets. EUR/USD again kept a sideways trading pattern between 1.4425 and 1.4325 during the morning session in Europe. However, the single currency came gradually under more pressure as US traders joined the action and the euro got captured in a real stop-loss selling spiral. Better than expected US eco data (which we consider lacking credibility), ongoing turmoil in the European financial sector (why was this explanation used when most European banking stock were off the lows?), previews on the ECB interest rate decision later this week (whatever the ECB does it could be seen as euro negative) and hopes that a US bailout would still be approved this week, all were reasons brought forward on the dealer chat rooms. The interpretation of market moves is an area of free speech but in the current environment we tend to see this kind of moves the result of forced unwinding of positions in a market that still lacks the liquidity needed to absorb high volumes. Whatever, the explanation behind the move, EUR/USD tumbled sharply during the US trading hours and closed the session at 1.4092 compared to a 1.4434 close on Monday. Today, the calendar contains the first set of key economic indicators that usually get ample attention from the trading community (European PMI's, US ISM manufacturing and that ADP labour market report). They won't be completely ignored, but in the current market context the focus will remain on the details of the ‘new' rescue plan and on the chances it has to successfully pass the US parliament. Today, a vote in the US Senate is scheduled. In previous days, we advocated that the US bailout plan as such, even if the details and the specific impact for markets and the economy remain subject to a high degree of uncertainty, would continue to be a key factor for EUR/USD trading going forward. As illustrated earlier this week, it is dangerous to front run on an approval of this plan. However, if a plan passes it should be considered as positive for the dollar. After the approval, the focus could turn even more to the European approach to address the fall-out of this crisis on the European banking sector. For now the European approach mostly consists of ad hoc measures and as long as there are no tangible signs of some kind of global plan in Europe, this could be a short-term negative for the single currency. That said, we hold on to our view that also the currency market remains an order-driven market, with an important part of the deals driven by some kind of obligatory action/forced selling. However, at least for now, the flows apparently also go towards the US currency. EUR/USD: euro hammered Support comes in at 1.4073 (Reaction low), at 1.4008 (ST low), at 1.3974 (Daily channel bottom since 2002), at 1.3958 (Daily envelope) and at 1.3882/71 (Reaction low/Boll bottom). Resistance is seen at 1.4188 (Daily envelope), at 1.4292 (Breakdown), at 1.4380 (STMA) and at 1.4417 (MTMA). The pair is in oversold territory USD/JPY From a technical point of view, EUR/USD started a correction three weeks ago. The pair rebounded from the 1.3885-area, regained a first important resistance area and set a new reaction high in the 1.4865 area on Monday last week. This was a significant correction, but the key 1.4900/10-area (reaction highs) was not challenged. After yesterday's swift correction, the topside has become much better protected and the pair convincingly dropping below the MTMA (1.4416 today) which suggests that the pair is again downwardly oriented. We maintained a (cautiously) USD positive/EUR negative stance. The 1.3882 reaction low remains the first obvious target short-term. In a (very) long-term perspective, the longstanding uptrend line since the low comes in at 1.3974 Yesterday morning, USD/JPY tested the key 103.50/55 area in the wake of the rejection of the US bailout plan. However as global tensions eased, USD/JPY started an uninterrupted uptrend and closed the session at 106.11 compared to 104.18 on Monday. However, to put this into perspective, this was nothing more (or nothing less) than the unwinding of the losses of the previous session. This morning, the Japanese Tankan report showed that Japanese manufacturers turned pessimistic on the economic outlook with the headline large manufacturing index dropping into negative territory (from 5 to -3). Also most other important subindices showed a material deterioration in confidence. The yen lost a few ticks after the release, but the reaction was limited and very short-lived. The Nikkei this morning only shows modest gains, given the rebound in the US yesterday evening, but this is also the case for some other stock markets in Asian. USD/JPY still trades in the 106.00 area at the moment of writing. On the technical charts, USD/JPY set a reaction low in the 103.55 area after the Lehman crisis. The hope on a US bail-out plan propelled the pair again higher in the 103.55/110.68 trading range, but the gains could not be extended and renewed global market stress causes the pair to test again the range bottom. Recently, we indicated that we were not impressed by the yen performance and yesterday's rejection of the 103.50/55 support confirms our feeling that the downside in this pair won't be that easy. The fate of the bailout plan will also be the key for USD/JPY, but if the approval of the plan succeeds, it could help USD/JPY to move higher in the 103.55/110.68 trading range. In a day-to-day perspective, we put the risk for USD/JPY to extend yesterday's rebound. USD/JPY: forceful rebound of from 103.55 key support Support stands at 105.41 (Break-up hourly), at 104.91 (daily envelope), at 104.59 (Break-up hourly), at 103.89/52 (Boll bottom/Reaction low), at 103.32 (50% retracement). Resistance comes in at 106.96 (Week high/Daily envelope), at 107.01/22 (27 Sept/Gap hourly), at 107.42/50 (Weekly envelope/LTMA), 108.63 (MT reaction high) and at 109.08 (08 Sept high). The pair is in neutral territory EUR/GBP Quite remarkable price action in EUR/GBP yesterday! The pair followed a similar pattern compared to EUR/USD. The cross rate traded more or less sideways in the 0.80/0.7950 area during the morning session in Europe. However, the overall euroselling wave that started early in US trading also hammered EUR/GBP and the pair briefly lost more than one big figure, testing bids in the 0.7850 area. As is the case for EUR/USD we consider this order-driven price action in a market that is still rather illiquid. The pair regained some ground later in the session, but closed the day at 0.7913, compared to the 0.7981 close on Monday. Today, UK PMI for the manufacturing sector will be published. The figure is expected to come out slightly lower at a poor 45.00 reading. In the UK press this morning there is some debate whether or not the UK government should consider a similar guarantee for the UK banking sector liabilities compared to what has been put in place in Ireland. The potential impact of these kinds of measures for the UK budget, in theory should be negative for the sterling. Early September, EUR/GBP tried to break out of the longstanding sideways 0.7760/0.8098 trading range, but the test was rejected and this triggered a significant correction sending the EUR/GBP pair again in the previous range. Recently, the sterling showed remarkable resilience vis-à-vis the euro (despite global market stress) and dropped below a series of intermediate support levels, but last week, the rebound of sterling against the euro lost momentum. Even after yesterday's sharp sterling rebound the MT technical picture for EUR/GBP hasn't really changed. We hold on to our view that it is too early for a major/sustained comeback of the sterling, but we admit that we have to take a closer look at (potential) global euro weakness. For now we assume more sideways price action for EUR/GBP in the 0.7845/0.8016 range. 0.7760 remains the key medium support for this pair. EUR/GBP: sterling rebounds, but no technical signal yet Support stands at 0.7885/78 (Breakup hourly/Daily envelope), at 0.7844/39/36 (Reaction lows/Boll Bottom/Weekly envelope), at 0.7795 (12 august low) and at 0.7766 (range bottom). Resistance is seen at 0.7944 (breakdown), at 0.7968/72 (Daily envelope/ reaction high), at 0.7995 (Reaction high), at 0.8016/18 (Reaction high/50 % retracement), at 0.8051/57 (Breakdown/62% retracement). The pair is slightly oversold News US: Consumer confidence extends rebound Consumer confidence extended its rebound in September coming out at 59.8 while the consensus was seeking for a modest decline. The August figure was upwardly revised from 56.9 to 58.5. Expectations improved (60.5 from 54.1) while the present situation deteriorated (58.8 from 65.0) and also labour market conditions worsened. It is however important to note that the cut-off date for the survey was September 23 which might indicate that this figure does not fully reflect the effects of the latest turmoil in financial markets. The S&P Case Shiller house price index fell 16.3% Y/Y in July after falling 15.9% Y/Y in June, while the consensus was looking for a more modest decline of 16.0% Y/Y. The three-months annual figure improved further from -10.03% to -8.56% in June and is now clearly above the low (-24.9%) reached in March. Although the index is still falling, the month-on-month declines became smaller which indicates that some stabilization might be around the corner. Chicago PMI surprised again on the upside coming out at 56.7 in September, while a figure of 53.0 was expected. Looking at the details, production (71.4 from 63.4) and employment (49.1 from 39.2) rose sharply, while new orders (53.9 from 60.2), order backlog (54.9 from 63.0) and inventories (37.7 from 52.2) dropped. Prices were broadly unchanged (80.7 from 80.6). Regional PMI surveys came out mixed in September, but manufacturing ISM, released today, might paint a more accurate picture. The Chicago PMI results go against most, if not all other data about the economy and thus should be approached cautiously. EMU: Inflation slows for the second straight month The euro zone CPI estimate came out in line with the expectations at 3.6% Y/Y in September, after 3.8% Y/Y in August. This is the second straight drop after inflation peaked at 4.0% Y/Y in July, which might soften the ECB stance on inflation and bring a rate cut closer. We are looking forward to the ECB press conference on Thursday to see whether the lower inflation rate and tensions on financial markets have an impact on their view. In Germany, the number of people unemployed fell more than expected in September, declining 29 000 after 39 000 in August. Jobs created stayed unchanged at 39 000 in August and vacancies increased from 1 000 in August to 6 000 in September, which indicates that companies are still hiring new workers. The unemployment rate fell from an upwardly revised 7.7% in August to 7.6% in September. German economy has held up for long and this is reflected in a still strong labour market. The recent deterioration of the economy should be reflected in a weaker labour market in the next months Download entire Sunrise Market Commentary Disclaimer: This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

mzmospnl
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Daily Report: Dollar Firm on Revived Bailout Plan Hope

Market Overview | Written by ActionForex.com | Oct 01 08 06:30 GMT |

After a strong rally, dollar remains firm in Asia on news that a sweetened $700b bailout plan will pass Senate votes today and also pass House vote successfully on Thursday. US Senate is set to vote on the modified $700 rescue plan on Wednesday. Changes include raising FDIC insurance from $100k to $250k, which will get more democrat votes, and a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, which will get more republican votes. It's believed that the arrangement itself and the changes will be enough to take 12 more votes from the House on Thursday to pass the bill. House surprised the markets by voting against rescue plan by 228 to 205 on Monday. In addition, the greenback is supported by concern that the credit crisis in the US is spreading quicker than expected to Europe. Four lenders were bailed out by governments in Europe this week. IMF chief Dominique Strauss-Kahn said that Europe needs to develop a version of their bailout plan for their own financial crisis. Technically speaking, the strong rally in dollar index confirms that correction from 80.38 has completed at 75.89. Also, it reaffirms that whole rise from 71.31 is still in progress and should target 50% retracement of 92.63 to 71.31 at 81.97 next. Quarterly Tankan survey showed confidence among Japanese businesses continued to deteriorate in Q3. Large manufacturing index dropped sharply from 5 to -3, hitting the first negative result in more than five years. Large manufacturing index dropped from 10 to 1. Capex growth slowed from 2.4% to 1.7%, much worse than expectation of 2.5%. Germany retail sales rose 3.1% mom, -3.0% in Aug. In the coming European session, main focus will be on UK manufacturing PMI which is expected to drop further t from 45.9 to 45 in Sep and Eurozone unemployment rate which is expected to be unchanged at 7.3% in Aug. Swiss SVME PMI and trade balance, Eurozone final Manufacturing PMI will be released. In US, ADP employment report is expected to show -55k contraction. ISM manufacturing index is expected to be steady at 50 in Sep. AUD/USD Daily Outlook Daily Pivots: (S1) 0.7825; (P) 0.7960; (R1) 0.8059; More AUD/USD dropped further to 0.7864 before recovering mildly. At this point, intraday bias remains on the downside and further decline is expected to retest 0.7802 low. Break will confirm that near term down trend from 0.9849 has resumed for next medium term support of 0.7675 first. On the upside, above 0.8097 will turn intraday outlook neutral first but further fall is still expected as long as 0.8275 minor resistance holds. However, above 0.8275 will argue that consolidation from 0.7802 is still in progress and should bring stronger rise to above 0.8519 before completion. In the bigger picture, a medium term top is at least in place at 0.9849 with bearish divergence condition in weekly MACD and RSI. While some corrective rebound might be seen in short term, the impulsive nature of the decline from 0.9849 indicates that such fall should extend further after completing the consolidation. Sustained trading below 0.7802 will pave the way for deeper medium term decline to 61.8% retracement of 0.4773 to 0.9849 at 0.6712. On the upside, firm break of mentioned 0.8812 cluster resistance is needed before considering that the fall from 0.9849 has completely finished.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
23:50	JPY	Japan Tankan capex Q3	1.70%	2.50%	2.40%
23:50	JPY	Japan Tankan big manufacturing Q3	-3	-2	5
6:00	EUR	Germany Retail sales M/M Aug	3.10%	0.50%	-1.00%
6:00	EUR	Germany Retail sales Y/Y Aug	-3.00%	-2.20%	0.60%
7:30	CHF	Swiss SVME PMI Sep		50.9	52.5
7:55	EUR	Germany Manufacturing PMI Sep F		48.1	49.7
8:00	EUR	Eurozone Manufacturing PMI Sep F		45.3	47.6
8:30	CHF	Swiss Trade balance (chf) Aug		N/A	-1.64B
8:30	GBP	U.K. Manufacturing PMI Sep		45	45.9
9:00	EUR	Eurozone Unemployment rate Aug		7.30%	7.30%
12:15	USD	U.S. ADP employment Sep		-55.0K	-33K
14:00	USD	U.S. Construction spending Aug		-0.50%	-0.60%
14:00	USD	U.S. ISM manufacturing Sep		50	49.9
14:35	USD	Crude Oil Inventories		1.8M	-1.5M

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Oct 01 08 06:45 GMT |

EURUSD Comment: Trying to stabilise at the 50% retracement level with a small 'spike low' below trendline support. Not very inspiring though and dropped by more than expected yesterday. Expect the Euro to try and form an interim base today and for the rest of the week. Strategy: Possibly attempt tiny longs at 1.4125; stop below 1.4000. Short term target 1.4350, then 1.4450. Direction of Trade: → Chart Levels: Support Resistance 1.4075 " 1.4145 1.4045 1.42 1.4008* 1.425 1.3975 1.43 1.3882** 1.435 GBPUSD Comment: Doing better than some other currencies and forming a decent 'spike low' against 50% retracement support on the monthly chart. Strategy: Possibly attempt small longs at 1.7835; stop below 1.7700. Short term target 1.8000, maybe 1.8200. Direction of Trade: → Chart Levels: Support Resistance 1.7790 " 1.7866 1.7758 1.79 1.7733 1.8 1.7667 1.8120* 1.747 1.8186 USDJPY Comment: September's 'bearish engulfing' candle on the monthly chart suggests the next few months will see the Yen gain against the US dollar, taking prices back down towards 100.00. Bearish pressure should increase if we hold below the 108.00 area. For today expect topping activity at 107.00 and another drift to 104.00 later this week. Strategy: Sell at 106.00; stop above 107.10. Short term target 105.25, then 103.50 Direction of Trade: →↘ Chart Levels: Support Resistance 105.69 " 106.54 105 106.7 104.5 107.00* 103.97 107.5 103.50** 108.04** EUR/JPY Comment: The lowest monthly close since October 2006 completes a massive 'triple top'. Expect more dithering today and maybe for another two weeks around pivotal support very roughly between 148.00 and 152.00. The next very long term move is a lot lower, something which may kick off with tremendous speed and then slow next year. Strategy: Sell at 149.50, adding to 150.50; stop well above 152.00. Short term target 149.00, then 147.50/147.00. Direction of Trade: →↘ Chart Levels: Support Resistance 149.00 " 150.58 148.57 150.8 148 151.38 147.5 152 147.00** 153 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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Australia Stocks Preview: Origin, Qantas Airways, Rio, Telstra

By Shani Raja

Oct. 1 (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 December rose 2.7 percent to 4,812 at 6:57 a.m. in Sydney. The Bank of New York Australia ADR Index gained 2.6 percent in New York.

The S&P/ASX 200 Index slumped 206.90 points, or 4.3 percent, to 4,600.50.

Mining shares: American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, rose 3 percent to the equivalent of A$32.72 a share in New York, A$1.72 higher than the A$31 close in Sydney.

Rio Tinto Group (RIO AU), the world's second-largest iron- ore producer, may more than double planned output at its Corumba mine in Brazil to about 23 million metric tons a year amid rising demand for the steelmaking ingredient. Rio plunged A$11, or 12 percent, to A$84.50.

Oil companies: Crude oil for November delivery rose $4.27, or 4.4 percent, to settle at $100.64 a barrel in New York, rebounding from its biggest drop in seven years, after U.S. lawmakers said they intend to salvage a $700 billion bank-rescue package.

Woodside Petroleum Ltd. (WPL AU), operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, slumped A$3.55, or 6.5 percent, to A$51.

Financial stocks: The U.S. S&P 500 rose 58.35 points, or 5.3 percent, to 1,164.74, its biggest rally since July 2002. JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. climbed more than 13 percent as Senate leaders vowed to resume work on the bailout plan this week after its rejection spurred the market's steepest decline in two decades.

National Australia Bank Ltd. (NAB AU), the nation's largest lender, declined A$1.43, or 5.6 percent, to A$24.26.

Origin Energy Ltd. (ORG AU): The company was reinstated ``buy'' by analyst John Hirjee at Deutsche Bank, with a price target of A$21.10 per share. Origin dropped 53 cents, or 3.2 percent, to A$16.11.

Qantas Airways Ltd. (QAN AU): Global airline passenger traffic-growth slowed in August to the weakest pace in almost five years as the financial crisis hurt travel demand, the International Air Transport Association said in an e-mailed statement. Qantas declined 10 cents, or 3.1 percent, to A$3.13.

Telstra Corp. (TLS AU): Chief Executive Officer Sol Trujillo said the deepening credit crunch's impact on Australia's largest phone company is ``small'' because customers regard phone services as essential. Telstra slipped 4 cents, or 1 percent, to A$4.18.

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



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Trichet Says U.S. Must Pass Plan to Rescue `Global Finance'

By Andreas Scholz and Gabi Thesing

Oct. 1 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said U.S. lawmakers must pass a $700 billion rescue package for banks to shore up confidence in the global financial system.

``It has to go, for the sake of the U.S. and for the sake of global finance,'' Trichet said in an interview in Frankfurt with Bloomberg Television late yesterday. ``I am confident, but of course it is the decision of the U.S. Congress.''

President George W. Bush and Senate leaders yesterday vowed to revive a plan aimed at buying distressed assets from banks that was rejected by Congress a day earlier. The vote roiled markets already struggling to cope with the collapse of Lehman Brothers Holdings Inc. European governments have helped rescue at least five banks since Sept. 28, with Trichet taking part in talks to save Belgium's Fortis over the weekend.

Trichet said a pan-European approach to the banking crisis was unlikely, saying ``we are not a fully-fledged federation with a federal budget.''

``Each country has to mobilize its own efforts,'' said Trichet. ``But of course there is a European spirit and that is the spirit of the single market.''

Trichet declined to answer questions about ECB monetary policy before tomorrow's interest-rate decision. All 58 economists surveyed by Bloomberg News expect the central bank to keep its benchmark rate at 4.25 percent.

Clear Message

U.S. stocks plunged after lawmakers rejected a proposal that would give the Treasury broad power to buy mortgage-backed securities saddling investors and financial institutions with losses. Banks have recorded $588 billion in writedowns since the start of last year.

``I think the message from the markets yesterday was clear,'' Senate Republican leader Mitch McConnell said on Sept. 30.

Stocks rebounded yesterday on optimism the bill will be passed later this week. The Standard & Poor's 500 Index rose 58.35 points to 1,164.74, recouping more than half of the previous day's 8.8 percent plunge.

European leaders are trying to better coordinate their response to the financial crisis. Luxembourg Finance Minister Jean-Claude Juncker said yesterday he expects to meet with Trichet and French President Nicolas Sarkozy on Oct. 4 to discuss ``a more systematic approach.''

Trichet's ECB has so far chosen not to follow the Federal Reserve in slashing interest rates since credit markets seized up 13 months ago, injecting cash into their markets instead, while keeping monetary policy focused on inflation.

Price Stability

``What's needed is for us to continue to tell our fellow citizens that we will ensure price stability,'' Trichet said in an interview broadcast yesterday on the France 2 television channel.

Belgium, the Netherlands and Luxembourg on Sept. 28 agreed to inject 11.2 billion euros ($16 billion) into Fortis, the largest Belgian financial-services company.

Governments and other authorities have also taken steps to protect the U.K.'s Bradford & Bingley Plc, Brussels- and Paris- based Dexia SA, Iceland's Glitnir Bank hf and Germany's Hypo Real Estate Holding AG. Ireland yesterday guaranteed the deposits and borrowings of six lenders.

To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.netAndreas Scholz in Frankfurt at agscholz@bloomberg.net;

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South Korea to Provide $3.6 Billion More Loans to Smaller Firms

By Bomi Lim

Oct. 1 (Bloomberg) -- South Korea plans to provide at least 4.3 trillion won ($3.6 billion) in extra loans to small and medium-sized companies struggling from higher costs and losses related to currency risks.

The extra loans will be provided through state-controlled banks including Korea Development Bank and Industrial Bank of Korea, the Financial Services Commission said today in an e- mailed statement. The government will also ask the central bank to raise the limit on total loans to commercial banks, the regulator said.

The measure comes as smaller companies are saddled with slower sales on weaker demand and higher costs from rising oil prices. South Korean firms, mostly small ones, are also estimated to have lost 1.7 trillion won on contracts designed to hedge currency risks as the Korean won slumped 29 percent against the dollar this year.

Small and medium-sized companies are ``expected to face deepening financial difficulties'' as banks slow loans amid a global credit crunch, the regulator said. Banks extended 2.6 trillion won of loans to these companies in August, about a third of 6.1 trillion won extended in July, according to the regulator.

Bank of Korea, which sets the limit on its loans to commercial banks every quarter, said on Sept. 25 it would leave the amount unchanged at 6.5 trillion won for the last quarter.

The government plans to help out firms that have incurred losses on so-called knock-in knock-out contracts bought through banks, by asking lenders to give extra loans or reschedule contract deadlines, the agency said. Nearly 80 percent of the existing contracts will expire by June 2009, it said.

Under the contracts, companies get a fixed exchange rate provided the dollar trades within a certain range against the won. The companies are required to pay twice or three times the dollar amount of the contract when the U.S. currency appreciates beyond the range.

The regulator said it would investigate whether banks sold the contracts without properly explaining the risks. The Fair Trade Commission in July cleared Kookmin Bank, South Korea's largest, and other lenders of allegations that they were engaged in unfair trading when selling the products.

To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net



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