Indonesian Rupiah Gains on Intervention Speculation; Bonds Rise

By Lilian Karunungan

Feb. 3 (Bloomberg) -- Indonesia’s rupiah rose for the first time in four days after the central bank said yesterday that it may use bilateral swap agreements to help boost the currency. Bonds gained.

The rupiah has declined 6.9 percent so far this year, the second-biggest loser among Asia’s 10 most-active currencies outside Japan, as a deepening global recession eroded demand for riskier assets. Bank Indonesia is concerned about the currency’s slide, said Benny Santoso at PT Bank Rakyat.

“BI has promised they will still be in the market,” said Santoso, treasury manager in Jakarta at the nation’s second- largest bank. “They’re pushing the rupiah to be below 12,000.”

The rupiah rose 0.3 percent to 11,713 per dollar as of 1:52 p.m. in Jakarta, according to data compiled by Bloomberg. The currency, which yesterday touched 12,000, the lowest level since Dec. 5, may trade between 11,500 and 12,000 today, Santoso forecast.

The central bank will sign a currency swap agreement with Japan this month for “additional ammunition from outside our foreign-exchange reserves,” Governor Boediono told reporters in Jakarta yesterday, without providing details.

“Bank Indonesia is threatening to use bilateral foreign- exchange swap lines to help support the rupiah, but this won’t do anything but smooth the moves,” Win Thin, a senior foreign- exchange strategist at Brown Brothers Harriman & Co. in New York, wrote in a note to clients yesterday.

The currency will fall to 12,188, Thin predicted, without providing a timeframe.

Rate Cut

Non-deliverable forwards contracts signal traders are betting the rupiah will weaken to 12,380 per dollar in three months, compared with odds yesterday for a rate of 12,625. Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.

Central banks intervene by arranging purchases or sales of currencies to influence an exchange rate. Indonesia’s foreign- exchange reserves fell to $51.64 billion in December from $57.11 billion in late September, a sign that Bank Indonesia may have been buying rupiah.

Five-year government bonds rose for the fifth day in six on speculation the central bank will reduce its benchmark interest rate for a third straight month tomorrow to stimulate economic growth.

The yield on the 11.25 percent note due May 2014 dropped 8 basis points, or 0.08 percentage point, to 11.18 percent, according to midday prices at the Inter Dealer Market Association. The price advanced 0.31, or 3,100 rupiah per 1 million rupiah face amount, to 100.233.

Helmi Arman, a bond analyst at PT Bank Danamon in Jakarta, forecasts the five-year bond will outperform, with the yield falling to 10.25 percent by year-end for a return of 13.5 percent.

The central bank will lower its benchmark interest rate by 50 basis points to 8.25 percent tomorrow, according to 20 of 23 economists in a Bloomberg News survey.

To contact the reporter on this story:
Lilian Karunungan in Singapore at
lkarunungan@bloomberg.net.

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Asian Currencies Rise, Led by Taiwan Dollar, on Spending Plans

By David Yong

Feb. 3 (Bloomberg) -- Asian currencies rose, with Taiwan’s dollar posting its biggest gain this year, on optimism investor appetite for the region’s equities will increase as governments step up public spending.

Taiwan’s currency rebounded from a four-year low as the island’s government plans to add as much as NT$30 billion ($893 million) to its economic stimulus package, the Economic Daily News reported yesterday. Asian economies have room to adopt counter-cyclical measures by boosting domestic demand, the International Monetary Fund said.

“A strong rebound in stocks is giving an impetus back to the currency market,” said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul.

Taiwan’s dollar gained 0.3 percent to NT$33.65 as of 12:18 p.m. in Taipei, the most since Dec. 30, according to Taipei Forex Inc. South Korea’s won climbed 0.3 percent to 1,386 per dollar. The peso advanced 0.5 percent to 47.49 per U.S. dollar in Manila, according to Tullett Prebon Plc.

The MSCI Asia Pacific Index of regional equities jumped 1.5 percent, led by Taiwanese stocks. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, halted a three-day decline.

“In the middle of the year, you will get these shifts in the Taiwan dollar when there’s a shift in risk appetite,” said Dwyfor Evans, a currency strategist with State Street Global Markets in Hong Kong. “The trend is still lower.”

Spending Power

Asian economies have room to adopt counter-cyclical measures by boosting domestic demand to spur growth, IMF Managing Director Dominique Strauss-Kahn told reporters from Washington. There are “grounds for optimism” in the region, he said.

The yen ended a three-day winning streak against the dollar and euro after the Bank of Japan said it will resume a program of buying corporate shares held by banks, helping revive demand for higher-yielding assets. The yen declined 0.4 percent to 89.85 per dollar, from 89.45 late in New York yesterday. The currency dropped 0.6 percent to 115.53 per euro.

The Korean currency, Asia’s worst performer last year, snapped a three-day decline after briefly falling beyond 1,400 per dollar for the first time since Dec. 10. The Kospi stock index jumped 2.4 percent after two days of losses. Currency reserves rose to $201.74 billion in January from $201.22 billion in the previous month, the Bank of Korea said in Seoul today.

Won Forecasts

South Korea’s won will be 16 percent stronger on average this year as the currency’s biggest loss in a decade revives exports and prompts intervention, according to Kia Motors Corp. and Korea Electric Power Corp.

Kia, the nation’s second-largest automaker, Kepco, the biggest power producer, and Korean Air Lines Co., the leading airline, are basing their financial projections on an average exchange rate of 1,200 per dollar, a gain of 16 percent from yesterday’s close of 1,390.

The IMF expects South Korea’s economy will contract 4 percent in 2009 and stage a recovery in 2010 with growth of 4.2 percent, according to a statement from the finance ministry today.

“The IMF expects the South Korean economy to hit the bottom in the second quarter and start to pick up in the third quarter,” Vice Finance Minister Hur Kyung Wook told reporters yesterday in comments embargoed until today. “We have sufficient room both on the fiscal and financial side to increase spending and cut rates if needed.”

Rating Outlook

Malaysia’s ringgit reached an eight-week low after Fitch Ratings cut the outlook on the nation’s local-currency debt rating to “negative” from “stable,” citing the government’s widening budget deficit.

“As long as the U.S. economy and stock market continue to suffer, it will affect currencies like the ringgit and Singapore dollar,” said Hideki Hayashi, chief economist at Shinko Securities Co. in Tokyo. “Investors will prefer to keep their assets liquid and this will sustain the demand for U.S. dollars, at least in the next six months.”

The ringgit fell to 3.6365 per U.S. dollar, the weakest since Dec. 9, before trading at 3.6225 in Kuala Lumpur versus 3.6077 on Jan. 30. Markets were closed yesterday for a public holiday.

Deputy Prime Minister Najib Razak on Jan. 29 said Malaysia will unveil a second fiscal stimulus program to help revive growth. The budget deficit will be revised up from its forecast of 4.8 percent of gross domestic product, he said.

Elsewhere, the Singapore dollar gained 0.2 percent to S$1.5116 and China’s yuan advanced 0.1 percent to 6.8443. The Thai baht was little changed at 34.96, while the Vietnamese dong held at 17,485.50.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net

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Vodafone Third-Quarter Sales Rise on Pound’s Drop

By Simon Thiel

Feb. 3 (Bloomberg) -- Vodafone Group Plc, the world’s largest mobile-phone company, said third-quarter sales rose 14 percent as the pound slid and revenue climbed in India.

Vodafone had the biggest gain in more than eight weeks in London trading after raising its sales and profit forecast to reflect the currency’s decline. Sales in the three months ended Dec. 31 rose to 10.47 billion pounds ($14.9 billion) from 9.16 billion pounds a year earlier, the Newbury, England-based company said in a statement today. Analysts predicted 10.29 billion pounds, the average of six estimates compiled by Bloomberg News.

The pound slumped 23 percent against the euro in 2008, increasing the value of Vodafone’s euro-denominated sales when converted into the U.K. currency. Excluding currency swings and acquisitions, revenue fell 1 percent as growth in Asia and Africa failed to make up for a decline in Europe, where the company generates about two-thirds of its sales.

“Our underlying performance showed similar trends to the previous quarter,” Chief Executive Officer Vittorio Colao said in the statement. “In the context of the current economic environment, we have continued to implement our strategy, with an emphasis on customer value, mobile data, enterprise and fixed broadband.”

Vodafone also made progress on its plan to reduce costs by 1 billion pounds by March 2011, Colao said. The measures will have “some impact on headcount,” he told reporters on a conference call today. He declined to say how many jobs may be affected.

Shares Gain

Vodafone gained as much as 5.7 percent to 135.45 pence, the biggest intraday gain since Dec. 8, and traded at 135 pence as of 8:45 a.m. in London.

In November, the company cut its full-year sales forecast for the second time in four months. Today, the company raised its forecast for sales and profit to reflect the pound’s decline.

Vodafone now predicts a full-year adjusted operating profit of 11.5 billion pounds to 12 billion pounds on sales of 40.6 billion pounds to 41.5 billion pounds. That compares with a previous forecast for adjusted operating profit of 11 billion pounds to 11.5 billion pounds on sales of 38.8 billion pounds to 39.7 billion pounds.

In Europe, Vodafone’s sales excluding currency swings and acquisitions dropped 2.8 percent. That compares with a 3.5 percent increase for Africa and Eastern Europe and with a 9.2 percent gain in Asia and the Middle East.

‘Deteriorating’ Market

Service revenue in Spain dropped 5.8 percent amid a “deteriorating market environment” that put pressure on usage in some customer segments.

Vodafone has expanded in emerging markets in the past two years with acquisitions in Turkey, India and Ghana to make up for slower growth in Europe. Vodafone added 9.5 million new customers in the fiscal third quarter for a total of 289 million on Dec. 31.

The company bought a 52 percent stake in Hutchison Essar Ltd., now India’s third-largest wireless provider, for $10.7 billion in May 2007, and purchased Turkey’s Telsim Mobil Telekomunikasyon Hizmetleri AS for $4.55 billion in 2006. On May 28, Vodafone and a local partner said they will pay $2.1 billion for Qatar’s second wireless license.

To contact the reporters on this story: Simon Thiel in London at sthiel1@bloomberg.net.

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Money Markets Show Return of Dollar Shortage, ABN Amro Says

By Justin Carrigan

Feb. 3 (Bloomberg) -- Money markets are showing the same shortage of dollars that drove the U.S. currency’s gains in September through November, ABN Amro Holding NV said.

“The implication is that deleveraging is again a factor creating demand for the dollar,” Greg Gibbs, director of foreign-exchange strategy at ABN Amro Australia Ltd. in Sydney, wrote in a e-mailed report yesterday. “This is all tied up with the confidence the market has in the global authorities to turn around the global credit crisis and prevent a further deterioration in global financial asset prices. Confidence in the effectiveness of government interventions is waning.”

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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U.K. Pound Declines Against Euro on Speculation Slump Deepening

By Anchalee Worrachate

Feb. 3 (Bloomberg) -- The pound fell against the euro for a second day on speculation a report on U.K. construction will fuel the Bank of England’s need to cut interest rates.

The British currency was also little changed versus the dollar before economic surveys this week that may show house prices, consumer confidence and manufacturing production fell while factories raised prices at the slowest pace in at least a year. The Bank of England will cut its benchmark rate by 50 basis points to an unprecedented low of 1 percent on Feb. 5, according to a Bloomberg News survey of 61 economists.

“The pound is still under a lot of pressure,” said Ian Stannard, a currency strategist in London at BNP Paribas SA. “The economic outlook is not supportive of the currency.”

The pound weakened to 90.17 pence per euro as of 8:36 a.m. in London, from 90.02 pence. It was at $1.4257 from $1.4264.

Vodafone Group Plc, the world’s largest mobile-phone company, said today sales rose 14 percent in the third quarter, partly helped by the pound’s decline.

Two-year gilts fell before a sale of 3.75 billion pounds of 3.5 percent securities due 2011, part of a record 146.4 billion pounds of bonds the government plans to issue in the fiscal year ending March 31.

The yield on the two-year note climbed two basis points to 1.52 percent. The 10-year yield held at 3.69 percent.

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

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Lawmakers Seek to Revise Stimulus Bill as Senate Debate Begins

By Brian Faler

Feb. 3 (Bloomberg) -- Democrats and Republicans are seeking changes worth tens of billions of dollars to President Barack Obama’s economic-stimulus package as the U.S. Senate began debate yesterday on the plan.

Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said lawmakers from both parties are developing plans to redirect at least $50 billion to aid the ailing housing industry. Another Democrat, Ben Nelson of Nebraska, said he and other senators are preparing an amendment to cut “tens of billions” of dollars in spending in the plan, saying they doubt it would do much to help the economy.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Democrats are ignoring Obama’s call, made in an interview with NBC television, to incorporate Republican ideas in the plan. “The way to build this package is, indeed, to do it on a bipartisan basis, which doesn’t mean just talking to us but including ideas that we think would work,” McConnell said.

Obama discounted the differences over the stimulus legislation, calling them “very modest.” Democratic congressional leaders met with him yesterday at the White House about the measure. A White House statement said, “They agreed on the urgency of passing effective legislation in the short term and committed to continue working together to achieve the bipartisan consensus” that Obama has sought.

The Senate began work on the bill in hopes of getting a measure to Obama’s desk by mid-February. Senate Majority Leader Harry Reid, a Nevada Democrat, said there will be a number of votes today on amendments. The House passed its version of the bill last week without any Republican votes.

Quicker Impact

Democrats, buffeted by complaints the House plan would take too long to boost the economy, got some good news yesterday when the nonpartisan Congressional Budget Office said the Senate’s version would have a quicker impact. The agency said the Senate’s plan, which it estimated would cost $885 billion, would pump about $700 billion into the economy by the end of next year.

That would amount to almost 80 percent of the package. Obama has said his goal is to have three-quarters of the money funneled into the economy within 18 months. The CBO said the House bill would inject about 64 percent of its package into the economy by the end of 2010.

Reid said lawmakers will vote first on an amendment sponsored by Senator Patty Murray, a Democrat from Washington State, which would increase funding for highway, mass transit and water infrastructure projects by $25 billion. That would boost highway funding in the bill to $40 billion from $27 billion.

Projects on Hold

“Construction projects across the country have been put on hold because states simply don’t have the money,” said Murray. “This amendment invests in tried-and-true projects that get laid-off workers back on the job.”

Jim Manley, a Reid spokesman, said he didn’t know what other amendments would get a vote today.

Conrad said he and about eight other senators form a bipartisan group of lawmakers who want at least $50 billion within the stimulus package for programs aimed at fighting housing foreclosures.

“We are really trying to reduce things that have less value in terms of stimulus and investment and move it into a place where we know we really need the money,” he said. Conrad said the lawmakers haven’t agreed on what they would try to cut in the bill to make room for their proposal.

Cutting Spending

Nelson, who complained the plan includes funds to develop environmentally sensitive spacecraft, said “more than a handful” of lawmakers are working on a plan to reduce spending. Nelson, who said he won’t support the stimulus plan as it is currently written, declined to provide specifics.

McConnell said the plan doesn’t include enough tax cuts or mortgage relief. Republicans are considering offering an amendment that would temporarily offer mortgages with fixed rates between 4 percent and 4.5 percent to homebuyers and homeowners wanting to refinance. The plan would direct Fannie Mae and Freddie Mac to buy the loans to encourage banks to make them.

Republicans believe “that a stimulus bill must fix the main problem first, and that’s housing -- that’s how all of this began,” he said.

McConnell warned Democrats against expanding the stimulus package, saying many of his colleagues believe it is already too big. He also criticized “Buy American” provisions in the bill that would require iron and steel used in projects funded by the measure to be American-made.

“I don’t think we ought to use a measure that is supposed to be timely, temporary and targeted to set off trade wars,” he said. “It’s a very bad idea.”

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

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Australia’s Dollar Strengthens After Rate Cut, Stimulus Plan

By Candice Zachariahs

Feb. 3 (Bloomberg) -- The Australian dollar gained after the central bank cut borrowing costs to the lowest since 1964 and the government announced a stimulus package to avoid a recession. New Zealand’s currency rose from near a six-year low.

The Australian dollar ended three days of losses as the government said it will spend A$42 billion ($26.7 billion) on grants and infrastructure to counter the impact of the global financial crisis. The Reserve Bank of Australia lowered its benchmark rate 1 percentage point to 3.25 percent, two hours after the stimulus package was announced.

The combination of fiscal and monetary stimulus “is going to be a positive for the currency,” said David Forrester, a currency economist at Barclays Capital in Singapore. “I wouldn’t be surprised to get above 64 U.S. cents against the dollar but meet resistance there.”

Australia’s currency climbed to 63.71 U.S. cents as of 4:36 p.m. in Sydney from 62.72 cents late in Asia yesterday. The currency advanced 2.6 percent to 57.25 yen after falling 3 percent yesterday. It may advance toward 60 yen, Forrester said.

New Zealand’s dollar gained to 50.50 U.S. cents from 49.92 cents yesterday. It earlier touched 49.62 U.S. cents, the weakest level since November 2002. It rose to 45.21 yen from 44.40 yen yesterday.

Australia’s stimulus package includes A$12.7 billion in grants to families and low-income earners and A$28.8 billion for infrastructure. It will help send the nation’s budget into an A$22.5 billion deficit, the first shortfall since fiscal 2001-02.

Avoiding Recession

The economy would contract in 2009-10 without today’s stimulus, current Treasury forecasts show. The stimulus package will help the economy grow 1 percent this fiscal year and 0.75 in the year ending June 30, 2010, according to the Treasury.

“The Australian dollar can rally a bit further up to 64 to 66 U.S. cents,” said Greg Gibbs, director of foreign-exchange strategy at ABN Amro Australia Ltd. in Sydney said after the stimulus was announced. “From there the realities of a slowing global economy and worsening terms of trade will remain important factors driving the currency lower again.”

Australia’s trade surplus narrowed in December by more than forecast as coal and metal exports declined, a government report showed today. The surplus shrank in December to A$589 million from a revised A$979 million in November.

Australia’s currency tumbled 31 percent over the past six months as the central bank has lowered its benchmark from a 12- year high of 7.25 percent since September.

Carry Trades

Higher interest rates in Australia and New Zealand, compared with 0.1 percent in Japan and as low as zero percent in the U.S., attract investors to the South Pacific nations’ higher-yielding assets. New Zealand’s central bank cut its benchmark 1.5 percentage points to 3.5 percent on Jan. 29.

The currencies also advanced against the yen after the Bank of Japan said it will resume a program of buying shares held by financial institutions, raising speculation investors will buy assets offering higher returns. The bank will purchase 1 trillion yen ($11.1 billion) in equities through April 2010 and hold them until March 2012 at the earliest.

The BOJ decision has provided support for higher-yielding currencies, said Sharada Selvanathan, a currency strategist at BNP Paribas SA in Hong Kong. Australia’s dollar will meet resistance at 64.50 and then 64.85 U.S. cents, she said. Resistance is a level at which sell orders are clustered.

New Zealand’s dollar earlier traded near an eight-year low versus the yen as an industry survey showed consumer confidence sank to the least in a decade. Seventy-two percent of 750 people surveyed in late January expect the economy to worsen this year, up from 56 percent in December, UMR Research said.

New Zealand’s economy will remain in recession until at least March 31, the Treasury Department said yesterday.

Australian government bonds declined, pushing the yield on the 10-year note up 12 basis points, or 0.12 percentage point, to 4.22 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 1.060, or A$10.60 per A$1,000 face amount, to 108.397.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.32 percent.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

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Euro Trades Near Eight-Week Low Before Europe Inflation Report

By Ron Harui

Feb. 3 (Bloomberg) -- The euro traded near an eight-week low against the dollar before a report that may show European producer prices fell for a fifth month, giving the region’s central bank more room to cut interest rates.

The pound may weaken for a second day versus the dollar and the euro on speculation a U.K. report today will indicate construction, which accounts for 6 percent of the economy, shrank last month at the fastest pace in more than a decade. The yen fell against the Australian and New Zealand dollars after the Australian government said it will spend A$42 billion ($26.7 billion) to help prevent the economy from entering a recession.

“European currencies such as the euro and the pound are likely to remain under downward pressure,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “There are still worries over their economies.”

The euro traded at $1.2847 as of 8:07 a.m. in London from $1.2843 late in New York yesterday, when it reached $1.2706, the lowest level since Dec. 5. The European currency was at 115.30 yen from 114.89 yen. The dollar traded at 89.68 yen from 89.59.

The pound was at $1.4250 from $1.4264 in New York yesterday, and weakened to 90.30 pence per euro from 90.03. The yen dropped 1.4 percent to 57.30 against the Australian dollar, and 0.7 percent to 45.39 versus the New Zealand dollar.

Producer Prices

Europe’s single currency may pare gains against the yen as prices of goods leaving euro-area factories may have dropped 1.2 percent in December after a 1.9 percent decline in November, according to a Bloomberg News survey of economists. The European Union statistics office will release the report at 11 a.m. in Luxembourg today.

European Central Bank President Jean-Claude Trichet reiterated in an interview on Bloomberg Television at the World Economic Forum in Davos, Switzerland, last week that the central bank’s next important meeting is in March, signaling policy makers will keep the rate unchanged at 2 percent on Feb. 5.

“As most recent data releases confirmed a further weakening in growth conditions, and inflation fell at a faster pace than initially anticipated, the probability for a policy step this week has risen considerably,” analysts led by Zurich- based Mansoor Mohi-Uddin at UBS AG, the second-biggest currency trader last year, wrote in a research report yesterday. “We expect the euro to remain in a broad downtrend.”

The pound weakened versus 13 of the 16 most-active currencies as a U.K. index based on a survey of purchasing managers at building companies may have dropped 29 in January, the lowest since the survey began in April 1997, a separate Bloomberg survey showed. The Chartered Institute of Purchasing and Supply and Market releases the data at 9:30 a.m. in London.

‘Unconventional Measures’

The U.K. currency may decline for a second day versus the yen as investors maintained bets that the Bank of England will cut interest rates at its next meeting on Feb. 5 to help counter the nation’s recession.

“The central bank is likely to reduce rates further and will probably start taking unconventional measures,” said Masashi Kurabe, head of currency sales and trading in Hong Kong at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest publicly traded bank by assets. “This may weigh on the pound.”

The Bank of England may lower its 1.5 percent benchmark rate an additional 44.7 basis points over the next 12 months, a Credit Suisse Group AG index based on swaps showed on Jan. 30. A basis point is 0.01 percentage point.

The yen snapped three days of gains versus the greenback and the euro, after the Bank of Japan announced today it will buy 1 trillion yen ($11.2 billion) of shares held by financial companies, reviving demand for higher-yielding assets.

‘Positive Impact’

Japan’s currency also weakened against Australia’s dollar after Australian Treasurer Wayne Swan announced the spending package, which includes A$12.7 billion in grants to families and low-income earners and A$28.8 billion for infrastructure. The package will help the economy grow 1 percent this fiscal year and 0.75 percent in the year ending June 30, 2010, government figures show.

“The packages being announced by governments worldwide are likely to have a large positive impact on market sentiment,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-biggest lender. “The yen may be sold.”

The yen remained lower after the Reserve Bank of Australia cut its benchmark rate by 1 percentage point to 3.25 percent at a meeting today. The rate decision was forecast by economists surveyed by Bloomberg.

Benchmark rates are 3.25 percent in Australia and 3.5 percent in New Zealand, compared with 0.1 percent in Japan, encouraging investors to borrow in yen and buy higher-yielding assets elsewhere. In these so-called carry trades, investors get funds in a country with low borrowing costs and invest in another with higher rates. The risk is that market moves can erase those profits.

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

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Copper Rises on Global Stockpile Drop, U.S. Manufacturing Data

By Li Xiaowei

Feb. 3 (Bloomberg) -- Copper climbed in London after global stockpiles fell for the first time in seven weeks and as manufacturing in the U.S., the world’s second-largest user after China, shrank less than economists forecast.

London Metal Exchange-monitored inventory fell 325 metric tons to 491,200 tons yesterday, the first decline since Dec. 11. The U.S. Institute for Supply Management’s factory index rose to 35.6 in January from 32.9 in the prior month, as a decline in new orders moderated. Readings less than 50 signal a contraction.

“The unexpected inventory decline and the factory index rebound supported copper,” Chen Yonglin, an analyst with Citic Futures Co., said from Shanghai today.

Copper for three-month delivery rose 1.6 percent to $3,225 a ton on the London Metal Exchange at 12:43 p.m. in Shanghai.

April-delivery copper on the Shanghai Futures Exchange rose 3.2 percent to 25,970 yuan ($3,797) at the same time.

“As the premium of Shanghai prices over London has narrowed, we’d expect closure of arbitrage positions,” Citic’s Chen said.

The improvement in the U.S. ISM manufacturing index was only due to textiles and petroleum and coal, while others sectors including fabricated metals contracted, Anne-Laure Tremblay, an analyst at BNP Paribas, said in an e-mailed report today.

Construction Spending

Construction spending in the U.S. dropped 5.1 percent in 2008, the most since records began in 1993, according to a Commerce Department report yesterday. Non-residential construction slid 0.6 percent in December, showing a collapse in residential building may be spreading to commercial properties.

Builders are the biggest users of copper in the U.S.

Among other LME-traded metals, aluminum fell 0.5 percent to $1,382.50 a ton, zinc added 2.1 percent to $1,137 and lead rose 1.8 percent to $1,125.

Ningbo Sunhu Chemical Products Co., China’s biggest nickel trader, said its post-Lunar New Year sales slumped as 90 percent of its customers remained closed because of a lack of demand.

Sales in the first two days after the week-long holiday dropped 95 percent from the same period last year, Kevin Ji, chief analyst, said in a phone interview from Beijing today.

To contact the reporter for this story: Li Xiaowei in Shanghai at xli12@bloomberg.net

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China’s Key Stock Index Rises to 2-Month High on Government Aid

By Zhang Shidong

Feb. 3 (Bloomberg) -- China’s stocks rose, driving the benchmark index to its highest in almost two months. Youngor Group Co. and PetroChina Co. gained on speculation they may benefit from new government incentives.

Youngor Group added 5.3 percent after Shanghai Securities News said a stimulus plan for the textile and machinery industries will be submitted to the Cabinet tomorrow. PetroChina advanced 2.1 percent after an official said the government is discussing a stimulus plan for oil refiners. Guangzhou Shipyard International Co., a unit of China’s biggest shipbuilder, climbed the 10 percent daily limit after a report said the local industry increased profit 51 percent last year.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 49.13, or 2.4 percent, to 2,060.81, the highest close since Dec. 10. The CSI 300 Index, measuring the exchanges in Shanghai and Shenzhen, gained 2.5 percent to 2,108.91.

“The market has heightened expectations that more measures and policies will come along to boost economic growth and various industries,” said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing.

Aluminum Corp.

Aluminum Corp. of China Ltd. jumped by the 10 percent limit on speculation the nation’s largest producer of the metal may benefit from the potential purchase of Rio Tinto Group’s assets by its parent.

The Shanghai Composite Index, the world’s second-best performer this year, has rebounded 18 percent since the government pledged 4 trillion yuan ($584 billion) of spending to revive economic growth. The central bank has also cut the key lending rate five times since September to support industries and stem job losses. The government said Jan. 14 it would cut taxes and offer subsidies for the auto and steel industries.

Youngor Group, China’s biggest maker of men’s clothing by sales, advanced 5.3 percent to 8.94 yuan. Nanjing Textiles Import & Export Corp. gained 3.7 percent to 4.19 yuan. Shenzhen Textile (Holdings) Co. jumped by the maximum 10 percent daily cap to 5.89 yuan. Luthai Textile Co., a textile maker in the eastern province of Shandong, added 6.7 percent to 7.50 yuan.

The incentives may include raising export rebates for textile companies to as much as 17 percent, Shanghai Securities News said. The current rate is 14 percent. The plan may provide support to help develop the machinery industry, reducing reliance on imports, the report said.

Changsha Zoomlion

Changsha Zoomlion Heavy Industry Science & Technology Development Co., China’s second-biggest maker of concrete- handling machinery, advanced 2.2 percent to 15.90 yuan. Guangxi Liugong Machinery Co., a Chinese maker of construction equipment, rose 2.3 percent to 13.58 yuan.

“It’s just amazing when you look at speed of implementation and announcements,” said Diane Lin, Sydney-based portfolio manager at Pengana Capital, which oversees about $1.9 billion. “The stimulus has been put firmly in place and it will continue to stimulate demand.”

PetroChina, the nation’s biggest oil company, rose 2.1 percent to 10.57 yuan. China Petroleum & Chemical Corp., Asia’s biggest oil refiner, also known as Sinopec, gained 1.5 percent to 7.95 yuan.

The government may enact the stimulus plan for the oil refining and petrochemicals industry before a gathering of the country’s legislature in March, an official at the state-backed China Petroleum and Chemical Industry Association said today.

Guangzhou Shipyard

Guangzhou Shipyard jumped the maximum 10 percent to 18.26 yuan. China State Shipbuilding Co., the country’s biggest shipbuilder, rose 7 percent to 49.55 yuan.

China’s shipbuilding industry posted a 51 percent rise in profit last year to 28.3 billion yuan, Xinhua News Agency said, citing the Ministry of Industry and Information Technology. China’s share of the global shipbuilding market rose to 29.5 percent last year from 22.9 percent in 2007, it said.

Aluminum Corp. of China, also called Chalco, surged the maximum 10 percent to 7.79 yuan. Parent Chinalco, the largest shareholder in Rio, said yesterday it was in “initial talks” to buy some assets from the world’s third-biggest mining company. Chalco said today the company wasn’t involved in the discussions.

“The market may have wrongly believed that Chalco intends to buy Rio Tinto assets,” Peng Bo, analyst at Ping An Securities Co., said by phone from Shenzhen today. “Some funds took it as an excuse.”

The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

Shipping lines: The Baltic Dry Index, a measure of shipping costs for commodities, posted a 10th consecutive advance as the end of China’s New Year break spurred business. The index tracking transport costs on international trade routes rose 2.7 percent to 1,099 points, according to the Baltic Exchange.

China Cosco Holdings Co. (601919 CH), the country’s largest container line, added 0.28 yuan, or 3.1 percent, to 9.40. Cosco Shipping Co. (600428 CH), a unit of China’s biggest shipping company, climbed 0.80 yuan, or 9.7 percent, to 9.03.

Bank of China Ltd. (601988 CH), the country’s third-largest bank, added 0.03 yuan, or 1 percent, to 3.10. Bank of China had its stock rating raised to “buy” from “neutral” at Goldman Sachs Group Inc.

China Construction Bank Corp. (601939 CH), the country’s second-largest bank, rose 0.06 yuan, or 1.5 percent, to 4.08. Construction Bank said it received regulatory approval to raise as much as 40 billion yuan selling subordinated bonds to boost capital.

Industrial & Commercial Bank of China Ltd. (601398 CH), the nation’s biggest listed lender, gained 0.07 yuan, or 1.9 percent, to 3.73. The bank said its overseas assets increased by 15 percent last year as the lender curbed losses tied to the global financial crisis.

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

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Chi-X, LSE Rival, Will Offer Clearing Choice to Lower Costs

By Nandini Sukumar

Feb. 3 (Bloomberg) -- Chi-X Europe Ltd., the electronic market started last year to compete with European exchanges, plans to give customers a choice of clearing houses to process their trades and lower transaction costs.

Clients should be able to use both Switzerland’s SIX x-clear AG and European Multilateral Clearing Facility NV from mid-2009, Chi-X Chief Executive Officer Peter Randall said in an interview, without being more specific. The two post-trade service providers have signed an agreement to allow use of the other’s electronic system, he said. The proposal is awaiting regulatory approval.

London-based Chi-X is a unit of Instinet Europe Ltd. and competes with other alternative trading systems such as Turquoise and the European ventures of Bats Trading Inc. and Nasdaq OMX Group Inc. as well as traditional bourses including London Stock Exchange Group Plc. The new platforms are seeking to gain market share partly through lower trading and clearing costs.

“Choice and competition will result in lower prices,” Randall said in the interview.

To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net.

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Kuwaiti Shares Rise on Stimulus Package; U.A.E. Indexes Retreat

By Zainab Fattah

Feb. 3 (Bloomberg) -- Kuwaiti shares rose to the highest in more than two weeks as Kuwait’s cabinet approved the “principles” of a stimulus package to bolster financial institutions.

United Arab Emirates benchmark indexes dropped after Morgan Stanley said property prices in the country “fell off a cliff” as banks reduced lending and speculators withdrew from the market because of the global economic crisis.

Gulf Finance House EC, Bahrain’s biggest Islamic investment bank by market value, rose to its highest in intra-day trading in Kuwait in more than a month. Global Investment House KSCC climbed to its highest since Jan. 13, while Boubyan Bank KSC rose after saying its board resigned.

The Kuwait Stock Exchange Index gained 1.3 percent to 6,919.2 at 11:09 a.m. in Kuwait City, bringing the advance this month to 2.3 percent.

“The talk of the bailout plan is driving the market,” said Ali Taqi, director of asset management at AT Capital Management Ltd in Dubai. “But its scope and terms will determine the actual impact it may have on troubled investment companies.”

Kuwait’s cabinet approved the “principles” of a stimulus package after discussing amendments to the plan. The cabinet “asked its economic team to present the bill in its final form in light of the remarks and the amendments that were discussed,” a cabinet statement said. No other details were provided and the statement did not say what the amendments were.

U.A.E. Shares Drop

Gulf Finance House jumped 7.4 percent to 290 fils. The shares have surged 45 percent during an eight-day rally. Global Investment House, Kuwait’s biggest investment bank by assets, climbed 8.2 percent to 106 fils.

Boubyan Bank added 2.7 percent to 380 fils. The Kuwaiti Islamic lender announced the resignation of its board, effective once a new board has been selected.

In the U.A.E., the Dubai Financial Market General Index fell 0.9 percent to 1,460.33, while the Abu Dhabi Securities Exchange General Index lost 1.1 percent, bringing the four-day retreat to 4 percent.

Property prices in Dubai have slumped 25 percent from the market’s peak in September, while Abu Dhabi prices have declined 20 percent, Morgan Stanley said in a report received yesterday.

NBAD Earnings

Emaar Properties PJSC dropped 2.1 percent to 1.84 dirhams. The U.A.E.’s biggest publicly traded real-estate developer will be affected the most by the drop in property prices, Morgan Stanley said.

Separately, Moody’s Investor Services put the company’s credit rating under review for possible downgrade.

Sorouh Real Estate PJSC, Abu Dhabi’s largest developer by market value, slid 8.2 percent to 2.36 dirhams, bringing the four- day slump to 21 percent. Aldar Properties PJSC retreated 7.7 percent to 2.15 dirhams, poised for its lowest close on record.

National Bank of Abu Dhabi PJSC slid 3.4 percent to 7.7 dirhams. The U.A.E.’s second-biggest bank by assets reported a 34 percent fall in fourth-quarter profit to 492 million dirhams ($134 million) as it boosted provisions for possible loan defaults and said it expects a “difficult” 2009.

Oman’s Muscat Securities Market 30 Index lost 1.6 percent, while Qatar’s Doha Securities Market Index decreased 0.9 percent. The Bahrain All Share Index slipped 1 percent. Saudi Arabia’s Tadawul All Share Index added 0.5 percent.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

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U.K. Stocks Swing Between Gains and Losses; Vodafone Advances

By Sarah Jones

Feb. 3 (Bloomberg) -- U.K. stocks swung between gains and losses as a rally in Vodafone Group Plc was offset by sell off in oil companies after BP Plc reported its first quarterly loss in seven years.

Vodafone rose more than 6 percent after the world’s largest mobile-phone company posted third-quarter sales that topped analysts’ estimates. BP declined 3 percent after reporting a loss of $3.3 billion as the global recession spurred a record plunge in crude prices. Vedanta Resources Plc climbed as Goldman Sachs Group Inc. upgraded the copper producer.

The benchmark FTSE 100 index rose 11.91, or 0.3 percent, to 4,089.69 at 9:06 a.m. in London. The measure earlier fell as much as 0.2 percent. The broader FTSE All-Share Index increased 0.3 percent, while Ireland’s ISEQ Index added 1.2 percent.

Vodafone, which accounts for than 7 percent of the benchmark index by market weighting, added 7.75 pence to 135.9 pence. The company posted a 14 percent rise in third-quarter sales to 10.47 billion pounds ($14.9 billion) as the pound slid and revenue increased in India. The average of six analysts surveyed by Bloomberg News was 10.29 billion pounds.

BP, which accounts for more than 8 percent of the FTSE 100 by market weighting, fell 3.5 percent to 467.75. Europe’s second- largest oil company reported a loss of 18 cents a share compared with a net income of 23 cents a year earlier. Excluding one-time items and gains or losses from inventories, earnings missed analyst estimates.

Tullow Oil Plc, the U.K. explorer seeking funds for projects in Ghana and Uganda, lost 1.7 percent to 652 pence. Cairn Energy Plc, the oil and gas explorer in India, fell 1.1 percent to 1,734 pence.

Vedanta Resources increased 2.3 percent to 555.5 pence. Goldman Sachs upgraded the largest copper producer in India to “neutral” from “sell” because the shares already reflect concern about the company’s spending plans.

‘Risk’

“The market is now discounting much of the risk we see attached to the company’s investment program,” London-based analyst Peter Mallin-Jones wrote in a research note.

Royal Bank of Scotland Group Plc gained 3.4 percent to 21.1 pence. The lender facing the biggest loss in British history was raised to “overweight” from “neutral” at HSBC Holdings Plc, which said the risk of immediate nationalization has been removed.

Measures announced recently “confirm that the government does not want to fully nationalize U.K. banks,” HSBC said in a note to clients.

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

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NYSE Extends Rebates as Exchange Seeks to Rebuild Market Share

By Edgar Ortega

Feb. 3 (Bloomberg) -- NYSE Euronext’s plan to extend rebates to all brokerages that trade at the New York Stock Exchange shows Chief Executive Officer Duncan Niederauer is betting higher market share will boost profit as equity volume dries up.

NYSE Euronext will start paying incentives next month to all traders posting orders to the Big Board as it overhauls fees for U.S. stocks. The plan revamps an incentive program offered only to NYSE market makers that some analysts said was too expensive.

Niederauer is combating a decline in the company’s share of trading at a time when analysts forecast profit will fall for the first time since NYSE Euronext went public in 2006. He’s boosting rebates on the NYSE and the electronic Arca platform to make good on a goal of capturing 50 percent of NYSE-listed trading, reversing a four-year slump to a record low to 41.9 percent.

“The moves taken together represent the belief that rewarding liquidity providers will create more attractive, higher-volume venues,” said Ed Ditmire, an exchange analyst at Fox-Pitt Kelton Cochran Caronia Waller who has an “outperform” rating on the stock. “They are trying to make their platform more competitive in terms of price, while at the same time making upgrades that close an extremely large gap in terms of execution speeds with rivals.”

NYSE Euronext’s trading in Europe fell 21 percent in January from a year earlier, while trading at the Big Board slowed 28 percent to a daily average of 1.33 billion shares.

Technology Overhaul

The pricing plan comes as the NYSE completes a technology overhaul that will cut the time it takes to process orders to less than 10 milliseconds, compared with 0.2 milliseconds for Bats Exchange, an all-electronic platform based in Kansas City, Missouri.

In November, the NYSE eased restrictions on market makers, such as rules that prevented them from sharing computers with parent firms. Buying and selling by the traders, who are responsible for maintaining orderly markets for stocks, more than doubled, according to exchange data.

NYSE Euronext matched 43.4 percent of trading volume for NYSE-listed companies in December, up from an all-time low of 41.9 percent in August, according to data on its Web site. The company’s slice of Big Board-listed volume was 76.2 percent as recently as 2004.

“They can’t afford to lose any more market share because it’s so critical to their listing business and to their overall brand,” said Justin Schack, vice president of market structure analysis at New York-based Rosenblatt Securities Inc.

Taking Liquidity

To fund the increased rebates, NYSE Euronext will next month raise the amount brokers pay to buy and sell shares based on bids or offers that have already been placed with the exchange, a process known as “taking liquidity.” The new fee structure helps mitigate the costs of a two-month-old program that required the New York-based exchange to pay about $30 million a quarter to NYSE market makers, according to Goldman Sachs Group Inc. analyst Daniel Harris.

“The goal is really about encouraging more liquidity providers by offering a more attractive rebate,” Colin Clark, NYSE Euronext vice president of competitive analysis, said in an interview. The effect on NYSE Euronext’s revenue “is going to depend ultimately on customer behavior and the interaction of the order flow,” he said.

NYSE Euronext shares tumbled 78 percent since the end of 2007, compared with a 73 percent drop for the FTSE/Mondo Visione Exchanges Index, amid concern brokerages and hedge funds will pare their use of borrowed money to buy and sell assets. The biggest annual drop in the Standard & Poor’s 500 Index since 1937 and more than $1 trillion in bank losses wiped out about 920 of the 10,096 hedge funds in business at the start of 2008, according to Hedge Fund Research Inc.

Rising Dollar

NYSE Euronext’s stock slumped 12 percent yesterday after analysts at Goldman Sachs and KBW Inc. said the rising U.S. dollar and a slowdown in trading may crimp earnings this year. The company will report fourth-quarter profit of 57 cents a share excluding some costs next week, according to the average estimate of 18 analysts surveyed by Bloomberg. That compares with 66 cents a year earlier.

Niederauer plans to reduce $250 million in annual costs by 2010 through cutting jobs and sharing technology across exchanges in Europe and the U.S.

“While the industry is under pressure, the company is undergoing a big restructuring,” Ditmire said. “They seem to be buckling up for a bumpy road in 2009.”

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.

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Aflac, Hologic, Rent-A-Center, SanDisk: U.S. Equity Preview

By Lu Wang

Feb. 3 (Bloomberg) -- Shares of the following companies may have unusual fluctuations in U.S. trading. Stock symbols are in parentheses.

Aflac Inc. (AFL US): The largest provider of supplemental insurance said it doesn’t need to raise capital even after fourth-quarter profit dropped 48 percent on investment losses.

Hologic Inc. (HOLX US): The maker of medical and surgical products designed for women forecast fiscal second-quarter profit of 28 cents a share at most. That’s less than the 29-cent average analyst estimate in a Bloomberg survey.

OSI Pharmaceuticals Inc. (OSIP US): The drugmaker said a safety panel recommended ending a clinical trial of Tarceva in lung cancer patients because the treatment significantly extended the time patients lived compared with a placebo.

Rent-A-Center Inc. (RCII US): The largest U.S. chain offering goods for consumers to rent with the intent to buy forecast first-quarter profit of as much as 60 cents a share, or 18 percent more than the average analyst estimate.

SanDisk Corp. (SNDK US): The biggest maker of memory cards for digital cameras said first-quarter sales will be as low as $475 million, or 25 percent less than the average analyst estimate in a Bloomberg survey.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net.

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Pampa Energia, Transportadora, Acucar: Latin Equity Preview

By John Detrixhe

Feb. 3 (Bloomberg) -- The following companies may have unusual price changes today in Latin American trading. Stock symbols are in parentheses and share prices reflect the previous close.

The MSCI Latin America Index fell 1.9 percent to 2,031.31 Friday. In Brazil, preferred shares usually are the most-traded class of stock.

Argentina

Pampa Energia SA (PAMP AF): The Buenos Aires-based electricity holding company will buy up to $14.3 million of its own shares in a tender offer. Pampa will pay 75 centavos to 1.2 pesos apiece for up to 66.7 million of is own shares, or a total of 50 million pesos. Pampa fell 2 percent to 96 centavos.

Transportadora de Gas del Sur SA (TGSU2 AF): Argentina’s biggest natural gas transporter appointed Carlos Seijo as chief executive officer effective yesterday. Jorge Casagrande resigned for personal reasons, an external public relations representative said by phone. TGS rose 0.6 percent to 1.78 peso.

Brazil

Acucar Guarani SA (ACGU3 BS): The sugar and ethanol producer may sell as much as 301.6 million reais ($129.7 million) of shares as part of a private placement. Shares were unchanged at 2.10 reais.

Cia. Vale do Rio Doce (VALE5 BS): The world’s biggest iron- ore exporter will ship no more than an average of 55,000 metric tons of nickel concentrate annually from the Voisey’s Bay mine in Canada over the next four years. The mining company’s shares fell 0.9 percent to 27.75 reais.

Laep Investments Ltd. (MILK11 BS): The private-equity fund’s unit Parmalat Brasil Industria de Alimentos sold the Garanhuns milk operations for 31 million reais ($13.3 million) to Laticinios Bom Gosto SA. Laep rose 9.5 percent to 46 centavos.

Votorantim Celulose & Papel SA (VCPA4 BS): Brazil’s third- biggest pulp maker had its credit rating cut to BB+, one notch below investment grade, by Fitch Ratings. The shares fell 0.9 percent to 13.49 reais.

Mexico

Grupo Mexico SAB (GMEXICOB MM): The largest mining company in Mexico reported a fourth-quarter net loss of $175 million after copper prices plunged. That compares with a profit of $170 million in the year-earlier period. Shares fell 2.8 percent to 7.88 pesos on Jan. 30.

To contact the reporter on this story: John Detrixhe at jdetrixhe1@bloomberg.net

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Australian Reserve Bank Slashes Key Rate by 100 Basis Points

Daily Forex Fundamentals | Written by DailyFX | Feb 03 09 03:51 GMT |

The Reserve Bank of Australia slashed its overnight cash rate by 100 basis points to 3.25% as expected by a survey of economists. Since August the bank has slashed rates by a whopping 400 basis points. Further action may be needed as growth prospects continue to weaken on the back of slowing global demand. Indeed earlier today it was announced that the country’s trade surplus had narrowed as iron ore exports dwindled by 26.0% in the month of December. With third quarter output growing by a mere 0.1% it is expected that the last three month period of 2008 will see the economy actually shrink. In the accompanying statement, Governor Glenn Stevens appeared to express some optimism, stating that the nation “has been affected, through less than in other advanced economies.” He also added that “inflation has begun to moderate and…it is likely to continue to decline.” If indeed inflation undershoots the banks 2.0% target, further action by the board may be necessary to ensure that deflation does not take hold of the South Pacific economy. The report, however, was ambiguous as to whether further action would be taken. One thing is certain, the board understands the importance of the use of fiscal stimulus to prop the ailing economy. When Stevens stated that "the combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad," he was implicitly endorsing today's announcement of a secondary A$26.5 fiscal stimulus plan. Australia Announces Secondary A$26.5 Billion Stimulus Plan Australia also unveiled a massive $26.5 billion second stimulus package that would be aimed at padding the economy from severe recession. The package would add to the A$45.0 billion announced in October. Indeed Prime Minister Kevin Rudd said today that the package would be “part of a broad strategy on which we embarked last year.” He further added, “the government remains determined to take what further measures are necessary to continue to support growth and jobs and the stability of financial markets into the future.” The release of a secondary stimulus, however, comes as little surprise as Treasurer Wayne Swan had previously stated that he would do whatever “necessary” to keep the nation’s economy afloat. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | Feb 03 09 02:30 GMT |

EURUSD Outlook The EURUSD failed to continued it's bearish momentum yesterday. The pair attempted to push lower, bottomed at 1.2706 but further bearish scenario was rejected as the pair whipsawed to the upside, hit the top at 1.2898 and closed at 1.2814. The bias is neutral in nearest term but bearish scenario in longer term is still intact. We still have a valid bearish channel on hourly chart and only a breakout to the upside could be a potential violation to the bearish scenario. We also seem to have a strong resistance (double top) at 1.2900 area. Break above that level could trigger further bullish correction towards 1.3000 area. Immediate support is seen at 1.2700 area. Break below that level could trigger further bearish momentum targeting 1.2500. CCI in oversold area and heading up on daily chart suggesting a potential upside pressure. EURUSD Daily Supports and Resistances: S1= 1.2714 S2= 1.2614 S3= 1.2522 R1= 1.2906 R2= 1.2998 R3= 1.3098 GBPUSD Outlook After corrected significantly higher last week, the GBPUSD bullish momentum was paused yesterday. The pair topped at 1.4468, hit the bottomed at 1.4051 and closed at 1.4230. We had a high volatile market lately, forming a broadening formation seen on hourly chart, make new highs and lows without clear direction. I think the pair is consolidating now. Keep stay away, waiting for clearer direction. Pay high attention to the key/psychological level 1.4000 at this phase. Break below that level could trigger further weakness to the Sterling. CCI in neutral area on daily chart. GBPUSD Daily Supports and Resistances: S1= 1.4031 S2= 1.3832 S3= 1.3614 R1= 1.4448 R2= 1.4666 R3= 1.4865 USDJPY Outlook The USDJPY didn't make a significant movement yesterday. The pair attempted to push lower, bottomed at 88.80 but closed higher at 89.36. We have a symmetrical triangle formation on hourly chart suggesting a consolidation phase. A break from the triangle would give us a clearer direction. The bias is neutral in nearest term, but still bearish in longer term. Immediate resistance is seen at 89.97 (yesterday's high). Initial support at 89.00. CCI in neutral area on daily chart. USDJPY Daily Supports and Resistances: S1= 88.78 S2= 88.20 S3= 87.61 R1= 89.95 R2= 90.54 R3= 91.12 USDCHF Outlook The USDCHF didn't make a significant move yesterday. However we have a minor bearish channel on hourly chart that seem to be a potential threat to the bullish scenario. The price is now testing the bullish channel line support around 1.1550 area. A violation to the downside could trigger further bearish momentum towards 1.1470 area. Initial resistance at 1.1750. CCI just cross the -100 line down on hourly chart suggesting a potential downside pressure. USDCHF Daily Supports and Resistances: S1= 1.1573 S2= 1.1521 S3= 1.1466 R1= 1.1680 R2= 1.1735 R3= 1.1787 FX Instructor LLC www.fxinstructor.com The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

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Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Feb 03 09 03:52 GMT |

EUR/USD closed higher due to short covering on Monday as it consolidated some of last week's decline. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bearish signalling that sideways to lower prices are possible near-term. If it extends this year's decline, fib support crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. USD/JPY closed slightly lower on Monday as it extended last week's decline. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends this year's decline, broken resistance crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. GBP/USD closed lower on Monday due to profit taking as it consolidated some of last week's rally. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing are needed to confirm that short-term low has been posted. If it renews January's decline, monthly support crossing is the next downside target. USD/CHF closed slightly lower on Monday as it extended last week's decline. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends this year's decline, broken resistance crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. HY Markets http://www.hymarkets.com

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Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | Feb 03 09 03:27 GMT |

EUR/USD Today's support: - 1.2780(main), where correction is possible. Break would give 1.2748, where correction also may be. Then follows 1.2729. Break of the latter would result in 1.2687. If a strong impulse, we would see 1.2668. Continuation will give 1.2642 and 1.2606. Today's resistance: - 1.2938 and 1.2960 (main). Break would give 1.2978, where a correction is possible. Then goes 1.2994. Break of the latter would result in 1.3006. If a strong impulse, we'd see 1.3025. Continuation will give 1.3052 and 1.3064. USD/JPY Today's support: - 89.10, 88.60 and 88.42(main). Break would bring 88.22, where correction is possible. Then 87.98. If a strong impulse, we would see 87.75. Continuation would give 87.30 and 87.02. Today's resistance: - 90.22, 90.47 and 90.92(main), where a correction may happen. Break would bring 91.13 and 91.46, where also a correction may be. Then 91.77. If a strong impulse, we would see 91.90. Continuation will give 92.18. DOW JONES INDEX Today's support: - 7920.00(main), where a delay and correction may happen. Break of the latter will give 7886.22, where correction also can be. Then follows 7860.72. Be there a strong impulse, we would see 7832.26. Continuation will bring 7782.18 and 7745.63. Today's resistance: - 8052.19, 8077.50 and 8107.00(main), where a delay and correction may happen. Break would bring 8153.44, where a correction may happen. Then follows 8175.92, where a delay and correction could also be. Be there a strong impulse, we'd see 8201.27. Continuation would bring 8225.16 and 8274.38. FXtechtrade http://www.fxtechtrade.com Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.

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