Friday, May 8, 2009

Dollar Falls to One-Month Low as Jobs Data Pare Safety Demand

By Oliver Biggadike and Ye Xie

May 8 (Bloomberg) -- The dollar declined to a one-month low against the euro as a government report showed U.S. employers cut fewer jobs last month than economists forecast, reducing demand for the safety of the greenback.

The yen slid versus all but one of the 16 most actively traded currencies tracked by Bloomberg and touched a seven-month low against Australia’s dollar this week as evidence the recession is easing spurred demand for higher-yielding assets.

“The prevailing flow now is negative for the dollar, negative for the yen, positive for the commodity-linked currencies and higher yielders,” said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York. “Right now the report is given a positive spin by the market. The market is grabbing on the green-shoot rally.”

The dollar lost 0.6 percent to $1.3476 versus the euro at 8:49 a.m. in New York, from $1.3390 yesterday. It touched $1.3506, the weakest level since April 6. The U.S. currency traded at 99.08 yen, compared with 99.12. The euro increased 0.6 percent to 133.48 yen, from 132.71.

U.S. companies eliminated 539,000 jobs in April after a decrease of 699,000 in the previous month, the Labor Department reported today in Washington. The median forecast of 70 economists surveyed by Bloomberg was for a drop of 600,000. The unemployment rate increased to 8.9 percent.

The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell 0.7 percent this week to 83.390.

Applications for jobless benefits unexpectedly dropped to 601,000 in the week ended May 2, the least since late January, the Labor Department reported yesterday. Productivity rose at a 0.8 percent annual rate from January through March, after a 0.6 percent decrease in the fourth quarter.

Dollar Versus Yen

The dollar appreciated against the yen on April 3, when the U.S. government reported job losses that were close to economists’ forecasts.

The yen dropped 4.5 percent to 59.21 versus the New Zealand dollar and 3.9 percent to 75.37 against the Australian dollar this week on bets the worst of the global recession may be over, prompting investors to get funds in a country with low borrowing costs and buy assets where returns are higher.

Japan’s currency touched 75.75 versus the Aussie yesterday, the weakest level since Oct. 7. The Bank of Japan’s target lending rate of 0.1 percent compares with 3 percent in Australia and 2.5 percent in New Zealand.

The yen dropped 9 percent against the dollar this year after touching 87.13 in January, the strongest since 1995.

Toyota Motor Corp., the world’s largest automaker, forecast a second straight annual loss as the global recession curbed demand for new cars and a stronger yen eroded the value of dwindling overseas sales.

ECB’s Decision

The European Central Bank cut the key interest rate to a record low of 1 percent yesterday and unveiled a plan to buy 60 billion euros ($81 billion) in covered bonds. President Jean- Claude Trichet told reporters in Frankfurt the purchase of debt is a “credit easing.”

Covered bonds, known as Pfandbriefe in Germany, are secured by property loans or lending to public-sector institutions and differ from mortgage-backed securities because they’re also supported by a borrower’s pledge to pay. They have traditionally been considered among the safest bonds available, allowing lenders to pay less interest.

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

Rio Says China’s Steel Demand Shows Recovery Signs

By Stephanie Wong

May 8 (Bloomberg) -- Rio Tinto Group, the world’s third- largest mining company, said China’s steel and iron ore demand is recovering because of the nation’s 4 trillion yuan ($586 billion) stimulus spending.

Monthly steel production has exceeded 40 million metric tons for both March and April, Anthony Loo, managing director of the company’s China unit, said today in Shanghai. That’s helping to drive imports of iron ore, he said.

Rio, BHP Billiton Ltd. and other iron ore producers are betting that a revival in Chinese steel demand would bolster prices for their products. Crude steel output gained 1.4 percent in the first quarter from a year ago, China’s Ministry of Industry and Information Technology said last month.

“It’s still too early to see the effect in the longer term,” Loo said. “We hope the demand will be sustainable.”

China’s steel prices are heading for the third straight week of gains on signs of demand recovery in the automobile industry. China is spending 4 trillion yuan ($586 billion) on a stimulus packing to reach an economic growth target of 8 percent this year.

Hunan Valin Iron & Steel Group, the Chinese steelmaker which bought 17.3 percent of Fortescue Metals Group ltd., said today there’s a “low-level” recovery in steel demand.

Domestic prices of hot-rolled coil, an industry benchmark, have gained 3.6 percent to 3,491 yuan a ton as of yesterday from 3,369 yuan on April 17, according to the Beijing Antaike Information Development Co.

Rio Tinto is still in talks with Baosteel Group Corp., the nation’s biggest mill, to agree on benchmark iron ore prices for the year started April 1, Loo said. He didn’t give details.

Iron ore is used to make steel.

To contact the reporter on this story: Stephanie Wong in Shanghai at swong139@bloomberg.net

Oil Set for Biggest Weekly Gain in 2 Months Before Jobs Report

By Grant Smith

May 8 (Bloomberg) -- Crude oil rose for a third day in New York, heading for the biggest weekly gain since March before a report forecast to show that the U.S. cut fewer jobs in April.

Oil prices are up 8.5 percent this week after economic data indicated the worst of the global recession is over. Analysts predict the payroll report due today at 8:30 a.m. in Washington will show a loss of 600,000 jobs last month, down from 663,000 in March, according to a Bloomberg survey. Asian and European equities rose, extending the week’s gain to 4.5 percent.

“As increasing risk appetite pushes equity markets higher, sentiment in the oil market has become quite optimistic,” said Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich. “The momentum could take us to $60, but we’re skeptical about the short-term fundamentals while U.S. demand remains so weak.”

Crude oil for June delivery rose as much as $1.28, or 2.3 percent, to $57.99 a barrel in electronic trading on the New York Mercantile Exchange, and was at $57.96 at 11:52 a.m. London time. Oil, poised for the largest gain since the week ended March 20, is up 29 percent this year. Yesterday, oil closed at $56.71, the highest settlement since Nov. 14.

Gasoline rose to the highest in six months after Exxon Mobil Corp. temporarily shut down a unit that produces the fuel at its Baton Rouge refinery, the second largest in the U.S. Gasoline for June delivery rose as high as $1.7049 a gallon today on the Nymex, the highest since Nov. 5.

Economic reports this week showed fewer Americans filed claims for unemployment benefits, and U.S. refiners boosted operating rates last week to their highest level since December.

‘Consistent Run’

“Oil is maybe moving to a higher trading range, pushing through what looked like a key resistance level of $55 a barrel,” according to technical analysis by PVM Oil Associates Ltd.

Oil climbed from a low of $10.35 in December 1998 to an all-time peak of $147.27 last July. If oil reaches $62.65, that is equivalent to 38.2 percent of the 10-year rally, a milestone in the “Fibonacci” sequences that suggests additional gains are likely, according to the London-based PVM.

Stocks in Europe and Asia and U.S. index futures rose as Federal Reserve Chairman Ben S. Bernanke said results of the government’s review of the banking industry’s health “should provide considerable comfort.”

U.S. refineries increased their utilization by 2.7 percentage points to 85.3 percent last week ahead of the peak driving demand season this summer, the Energy Department said in a May 6 report.

‘Healthy Driving Season’

“With gasoline prices lower than last year, you’d think we’d have a more healthy driving season,” said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “You can argue that people will drive more because it’s a cheaper form of travel. Directionally we’re coming into a stronger demand season.”

The Organization of Petroleum Exporting Countries is likely to extend its record production cut when the group meets in Vienna on May 28, Mehr news agency reported, citing Ali Khatibi, the Iran’s OPEC governor.

OPEC has completed about 83 percent of an unprecedented series of supply reductions announced since September that total 4.2 million barrels a day, according to the International Energy Agency.

Brent crude oil for June settlement rose as much as $1.33, or 2.4 percent, to $57.80 a barrel on London’s ICE Futures Europe exchange. It was at $57.75 a barrel at 11:50 a.m. London time.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

U.K.’s FTSE 100 Index Climbs, Extends Weekly Rise; RBS Advances

By Adam Haigh

May 8 (Bloomberg) -- U.K. stocks gained, extending this week’s rally on the FTSE 100 Index, after U.S. Federal Reserve Chairman Ben S. Bernanke said results of the government’s review of the banking industry’s health should reassure investors.

Rio Tinto Group and BHP Billiton Ltd. led raw-material producers higher as metals prices climbed in London. Royal Bank of Scotland Group Plc rose 5.5 percent after it reported increased revenue.

The benchmark FTSE 100 Index rose 69.72, or 1.6 percent, to 4,468.4 at 8:38 a.m. in London, bringing this week’s gain to 5.3 percent. The FTSE All-Share Index added 1.5 percent today and Ireland’s ISEQ Index gained 2.7 percent.

The FTSE 100 index has soared 27 percent from its March 3 low on optimism the worst of the global recession may be over. Economic reports this week showed consumer confidence in the U.K. jumped by the most in almost two years, while private employers in the U.S. cut fewer jobs than estimated in April.

A measure of bank shares on the FTSE 350 Index extended this week’s rally to 13 percent as Bernanke said the government’s review of the banking industry’s health “should provide considerable comfort.”

They were “breathtaking figures,” said David Buik, a markets analyst at inter-dealer broker BGC Partners in London. “This rally is incredible. It amazes me that such gargantuan numbers can be digested by the market with a shrug of the shoulders,” he told Bloomberg Television.

Manic Miners

Rio Tinto Group, the world’s third biggest mining company, climbed 2.7 percent to 3,101 pence. BHP Billiton, the largest, gained 2.1 percent to 1,544 pence. Copper gained 1.3 percent on the London Metals Exchange.

Royal Bank of Scotland added 11 percent to 46 pence. Revenue at the biggest U.K. bank controlled by the government rose 26 percent to 9.7 billion pounds ($14.4 billion).

The bank, which is 70 percent-owned by the government, has gained 73 percent in London trading in the past three months, making it the second-best performer in the FTSE 350 Banks index, after Barclays Plc.

Taylor Wimpey Plc soared 26 percent to 46 pence after the homebuilder said it was selling about 510 million pounds in shares to help pay down debt.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

Stocks in Europe, Asia, U.S. Futures Rise; BNP, Citigroup Gain

By Sarah Jones

May 8 (Bloomberg) -- European and Asian stocks and U.S. index futures rose as Federal Reserve Chairman Ben S. Bernanke said results of the government’s review of the banking industry’s health “should provide considerable comfort.”

Deutsche Bank AG and BNP Paribas SA climbed more than 3 percent, while Citigroup Inc. and Bank of America Corp. jumped at least 9 percent in early New York trading. U.S. banks need to raise a total of $74.6 billion in capital, a finding that Bernanke said should reassure investors about the soundness of the financial system. Royal Bank of Scotland Group Plc soared 13 percent as the lender reported higher revenue on “exceptional” growth at its global banking division.

The MSCI World Index added 0.5 percent to 938.63 at 10:52 a.m. in London, extending its weekly gain to 4.7 percent. The gauge of 23 developed countries has surged 36 percent since March 9 as earnings at companies from Credit Suisse Group AG to Ford Motor Co. beat estimates and optimism grew that the U.S. plan to purchase of illiquid assets from banks will pull the global economy out of its first recession since World War II.

"$75 billion is not a bad number, it is more or less what the market had been expecting,” said Marino Valensise, chief investment officer at Baring Asset Management Ltd. in London. “We probably have another 5 to 10 percent in this rally before things start to stabilize.”

Futures on the Standard & Poor’s 500 Index climbed 1.1 percent to 917. The benchmark index for U.S. equities lost 1.3 percent yesterday before the results of the so-called bank stress tests were released.

Europe, Asia

Europe’s Dow Jones Stoxx 600 Index rose 1.6 percent, bringing its weekly advance to 4.7 percent, the eighth gain in nine weeks. The MSCI Asia Pacific Index climbed 0.4 percent.

A report today showed German exports unexpectedly grew for the first time in six months in March, adding to signs a slump in Europe’s largest economy is bottoming out.

Deutsche Bank, Germany’s largest bank, climbed 4 percent to 41.43 euros, while BNP, France’s biggest, advanced 3.6 percent to 46.64 euros. Italy’s UniCredit SpA increased 5.1 percent to 2.09 euros.

“There’s certainly still a feeling of cautious optimism out there after the total capitalization call by the Fed for US banks came in at ‘only’ $75 billion,” said London-based Matt Buckland, a dealer as CMC Markets.

The Fed’s report on the health of the 19 largest U.S. lenders showed that losses at the banks under “more adverse” conditions than most economists anticipate could total $599.2 billion over two years.

Citigroup, Bank of America

Citigroup climbed 12 percent to $4.28 in pre-market trading as the Fed said the bank needs $5.5 billion in additional capital. Bank of America, determined to require $33.9 billion, gained 9 percent to $14.73.

Royal Bank of Scotland, which today reported a first- quarter loss of 857 million pounds ($1.29 billion), rallied 13 percent to 47.1 pence. The British bank posted a 26 percent jump in first-quarter revenue to 9.7 billion pounds, lifted by “exceptional” growth at its global banking and markets securities unit.

Swiss Reinsurance Co., the world’s second-biggest reinsurer, surged 12 percent to 36.76 Swiss francs after Bank of America Corp. raised its recommendation for the shares to “buy” from “neutral.”

3i Group Plc jumped 17 percent to 396 pence. The U.K.’s largest publicly traded private-equity firm said it plans to raise about 700 million pounds in a rights offering after debt climbed and the value of its investments slumped.

Taylor Wimpey

Taylor Wimpey Plc surged 11 percent to 40.75 pence after the U.K. house builder that last week completed a financial rescue deal also announced plans to raise capital. The company said it will raise 510 million pounds selling shares to pay down debt and slash interest costs.

Luxottica Group SpA jumped 12 percent to 16.18 euros as the world’s biggest eyewear maker posted a 23 percent drop in first- quarter net income to 80.4 million euros ($108 million), beating analysts’ estimates. The company also said sales were improving.

U.S. employers probably cut fewer jobs in April as signs emerged that the worst of the recession had passed, economists said before a government report today.

Payrolls fell by 600,000 after a 663,000 drop in March, according to the median estimate of 70 economists in a Bloomberg News survey. The unemployment rate still jumped to a 25-year high of 8.9 percent last month, the survey showed, and probably won’t start retreating until an economic recovery is secured.

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

U.S. Commercial Bank Stocks Upgraded to ‘Overweight’ at UBS

By Sarah Jones

May 8 (Bloomberg) -- U.S. commercial bank stocks were upgraded at UBS AG to “overweight,” following the U.S. government’s review of the banking industry.

Analysts raised their recommendation for the nation’s commercial lenders from “underweight,” saying they were now “more confident in the strength of banks, especially commercial banks.”

UBS shifted its preference from U.S. diversified financials, downgrading the stocks to “equal-weight” from “overweight.”

Federal Reserve Chairman Ben S. Bernanke said results of the government’s review of the banking industry’s health “should provide considerable comfort.” The findings showed U.S. banks need to raise a total of $74.6 billion in capital.

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

Cemex, Telecom Argentina, Petrobras: Latin Equity Preview

By Hugh Collins

May 8 (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 1.5 percent to 2,762.57 In Brazil, preferred shares usually are the most-traded class of stock.

Argentina

Telecom Argentina SA (TECO2 AF): Argentina’s antitrust agency has sent two so-called observers to monitor Telecom Argentina, the country’s second-largest telephone company said in a filing with Argentina’s securities regulator. The regulator is examining whether Telefonica SA’s participation in Telecom Italia violates Argentine anti-monopoly rules. Telefonica and Telecom Italia control Argentina’s two biggest phone companies. Telecom Argentina fell 2.1 percent to 7.35 pesos.

Brazil

Gerdau SA (GGBR4 BZ): Latin America’s biggest steelmaker was cut to “neutral” from “buy” at UBS AG, which said the company reported “disappointing” first-quarter earnings. The stock fell 5 percent to 17.91 reais.

Petroleo Brasileiro SA (PETR4 BS): Brazil’s state- controlled oil company may sign an agreement to borrow from China Development Bank Corp. this month, China’s Ambassador to Brazil Qiu Xiaoqi, told reporters in Brasilia. In February, Petrobras, as the Brazilian company is known, agreed to take a $10 billion loan from China Development Bank to be used for general corporate purposes and to help pay for a $174.4 billion, five-year investment plan. Petrobras fell 1.8 percent to 31.98 reais.

Chile

Sociedad Quimica y Minera de Chile SA (SQM/B CC): Chile’s biggest fertilizer maker expects demand for lithium to increase next year as General Motors Corp. and Toyota Motor Corp. start using the material in car batteries. Toyota will begin putting lithium in batteries used in its Prius hybrid vehicles, Patricio de Solminihac, a deputy manager of Soquimich, as the company is also known, said yesterday at a conference in Santiago. He said GM will employ similar technology in its electric-powered Volt car starting next year. Soquimich fell 0.5 percent to 18,500 pesos.

Multiexport Foods SA (MULTIFOO CC): The salmon producer reported a first-quarter loss of $21 million compared with a $2 million deficit a year earlier, it wrote in a statement on its Web site. The company is negotiating with lenders to restructure debt, according to the statement. Multiexport Foods rose 3.1 percent to 50 pesos.

Mexico

Wal-Mart de Mexico SAB (WALMEXV MM): Mexican consumer confidence rose to 82.1 in April from 79.4 in March, the national statistics agency said on its Web site. Economists had estimated confidence would fall to 78.1, according to the median of 12 forecasts compiled by Bloomberg. Wal-Mart de Mexico, Latin America’s largest retailer, fell 0.8 percent to 38.92 pesos.

Cemex SAB (CEMEXCPO MM): The largest cement maker in the Americas was cut to “sell” from “hold” at Citigroup Inc., which cited the “weaker” operating outlook for the company and the rally in the shares. The stock fell 3.1 percent to 13.09 pesos.

To contact the reporter on this story: Hugh Collins in Mexico City at Hcollins8@bloomberg.net

VIX Futures Show Traders Boosting Bets on End to S&P 500 Rally

By Jeff Kearns

May 8 (Bloomberg) -- Options traders are increasing wagers that the Standard & Poor’s 500 Index’s 34 percent rally in the past two months is coming to an end.

Futures on the Chicago Board Options Exchange Volatility Index are priced above the gauge’s level of 33.44, according to data compiled by Bloomberg. The so-called VIX, which measures the cost of using the options as protection against market declines, has dropped 16 percent this year in CBOE trading.

Dealers are charging more for insurance after better-than- estimated corporate profits at companies ranging from American Express Co. to Ford Motor Co. and economic reports on home sales and durable goods sent the S&P 500 to its steepest eight-week rally since 1938. Now, the so-called term structure shows higher prices for VIX futures for the next six months.

“It’s fascinating, I’ve never seen anything like it,” said Dean Curnutt, president of Macro Risk Advisors LLC, a New York-based brokerage that specializes in equity options. “You’ve never seen the VIX term structure so high and so flat at the same time.”

Investors surveyed by Macro Risk Advisors expect the VIX to jump to as much as 51.70 by year end, more than double the 20.09 average of its 19-year history. The index won’t fall below 28.1 and the S&P 500 will end the year at 834, according to the average estimates in Curnutt’s survey of 75 money managers and traders at hedge funds, insurance companies and pensions.

The S&P 500’s rally restored more than $2 trillion to U.S. equity markets. The U.S. benchmark index remains 42 percent below its record 1,565.15 reached Oct. 9, 2007.

Lehman Collapse

Options are contracts that give the right though not the obligation to buy or sell a security at a set price and date.

The VIX never exceeded 50 before Lehman Brothers Holdings Inc.’s collapse in September. It topped 40 after WorldCom Inc.’s bankruptcy in 2002, the September 2001 terrorist attacks, Long- Term Capital Management’s collapse in 1998 and the Asian financial crisis in 1997.

The U.S. volatility benchmark, derived from S&P 500 contracts that expire in 30 days, climbed for the first time in a week yesterday, adding 3.1 percent. The VIX has averaged 42.68 so far this year.

May futures rose 1.8 percent to 33.65 yesterday. All contracts expiring by November gained at least 0.2 percent while the difference between the highest and lowest futures contracts was 0.65 point. The S&P 500 declined 1.3 percent to 907.39.

“That’s really unusual,” said Ben Londergan, co-chief executive of Group One Trading, the primary market maker for VIX options. “People are saying, ‘Whatever happens today is setting my expectations for the year.’”

November Record

The VIX has retreated 59 percent since soaring to a record 80.86 on Nov. 20. This year, it hasn’t dropped below the levels it reached when Bear Stearns Cos. collapsed in March 2008 and Lehman failed six months later. The measure closed at 32.24 after the Federal Reserve helped New York-based JPMorgan Chase & Co. buy Bear Stearns and 31.70 when Lehman folded in the world’s biggest bankruptcy.

“People are still nervous about the direction of the market, and they believe we’ll remain in a high-volatility environment,” said Samer Nsouli, chief investment officer at Lyford Group International, a New York-based hedge fund that oversees $65 million. Nsouli said he’s using options and futures to wager U.S. stocks will drop.

Jobless claims dropped by 34,000 to 601,000 in the week ended May 2, the Labor Department said yesterday. That’s still higher than 98 percent of all weekly reports since 1967, according to an analysis by Bespoke Investment Group LLC, a Harrison, New York-based firm that manages money for wealthy investors and provides financial research to institutions.

“There remains an abundance of caution,” said Carl Mason, head of U.S. equity derivatives strategy at BNP Paribas in New York. “People are worried about the rest of the year and we do see people buying longer-dated volatility and longer-dated options.”

To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.

U.S. Stock-Index Futures Climb on Stress Tests; Citigroup Gains

By Daniela Silberstein

May 8 (Bloomberg) -- U.S. stock futures climbed, indicating the Standard & Poor’s 500 Index will extend its second straight week of gains, after the Federal Reserve Chairman Ben S. Bernanke said results of the bank stress test “should provide considerable comfort.”

Citigroup Inc. and Bank of America Corp. rallied at least 9 percent in pre-market trading in New York. Ten lenders need $74.6 billion in new capital, a result Bernanke said should reassure investors about the soundness of the financial system. Alcoa Inc., the largest U.S. aluminum producer, and Exxon Mobile Corp. rose in Europe with higher metal and crude oil prices. Investors will also watch a report that may show employers cut fewer jobs last month as signs emerged the worst of the recession had passed.

Futures on the Standard & Poor’s 500 Index expiring in June added 1 percent to 916.40 as of 11:03 a.m. in London. Dow Jones Industrial Average futures increased 0.9 percent to 8,459. Nasdaq-100 Index futures rose 0.5 percent to 1,401.75. European and Asian shares also climbed.

“The market is looking at the glass half full and is glad that the stress test is over,” said Rudolf Buxtorf, who manages about $114 million at RBS Coutts Bank in Zurich. “Sooner or later the situation had to improve and investors are more positive on the future. We had overstretched the bow to the downside.”

The S&P 500 yesterday dropped from a four-month high before the stress-test results as financial, telephone and technology companies retreated. The measure, which has risen 34 percent from a 12-year low in March, this week erased its loss for 2009 as reports on home sales and manufacturing in China boosted confidence the global recession is easing.

Citigroup Gains

Citigroup climbed 12 percent to $4.28 in New York after the Fed said it needs $5.5 billion in additional capital. Bank of America, determined to require $33.9 billion, gained 9 percent to $14.80. Fifth Third Bancorp, Ohio’s largest lender, soared 19 percent to $6.37 as the central bank said it must raise $1.1 billion.

JPMorgan Chase & Co. climbed 4.3 percent to $36.77 in pre- market trading in New York, while Goldman Sachs Group Inc. gained 2.7 percent to $137.36 in Germany. The two banks passed stress tests without needing fresh capital.

Analyst at UBS AG upgraded U.S. commercial bank stocks to “overweight” from “underweight” after the government’s review of the industry.

Alcoa added 2 percent to $10.05 in German trading. Copper rose in London, heading for a second straight weekly advance, amid speculation demand will rebound. Aluminum, zinc and nickel also gained.

Economy Watch

Exxon, the world’s largest oil company, increased 1.2 percent to $69.72. Crude oil rose for a third day in New York, poised for the biggest weekly gain since March, on signs the economy may be starting to recover.

Payrolls fell by 600,000 after a 663,000 drop in March, according to the median estimate of 70 economists in a Bloomberg News survey. The unemployment rate still jumped to a 25-year high of 8.9 percent last month, the survey showed. The Labor Department report is due at 8:30 a.m. in Washington.

Another report scheduled for 10 a.m. may show wholesale inventories in March dropped 1 percent, following a 1.5 percent decline in the prior month, according to a Bloomberg survey of economists.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

VIX Futures Show Traders Boosting Bets on End to S&P 500 Rally

By Jeff Kearns

May 8 (Bloomberg) -- Options traders are increasing wagers that the Standard & Poor’s 500 Index’s 34 percent rally in the past two months is coming to an end.

The S&P 500’s rally restored more than $2 trillion to U.S. equity markets. The U.S. benchmark index remains 42 percent below its record 1,565.15 reached Oct. 9, 2007.

Lehman Collapse

Options are contracts that give the right though not the obligation to buy or sell a security at a set price and date.

The U.S. volatility benchmark, derived from S&P 500 contracts that expire in 30 days, climbed for the first time in a week yesterday, adding 3.1 percent. The VIX has averaged 42.68 so far this year.

November Record

To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.

Gold Advances on Inflation Concern; Heads for Weekly Increase

By Nicholas Larkin

May 8 (Bloomberg) -- Gold rose in London, heading for a weekly gain, on speculation central-bank measures to revive economies will spur inflation and demand for bullion as a hedge.

The European Central Bank yesterday cut benchmark interest rates to a record 1 percent and unveiled plans to buy 60 billion euros ($81 billion) in covered bonds, while the Bank of England said it would increase purchases of debt.

“Credit markets will be unblocked at some point, and this will push up inflation,” Walter de Wet, a London-based analyst at Standard Bank Ltd., said by phone today. ECB and BOE action is “bullish for gold” and “pushes more liquidity into the financial system.”

Bullion for immediate delivery rose $5.62, or 0.6 percent, to $916.32 an ounce by 11:53 a.m. in London, set for a 3.4 percent gain this week. June futures added 0.2 percent to $917.10 in electronic trading on the New York Mercantile Exchange’s Comex division.

The metal increased to $917.50 in the morning “fixing” in London, used by some mining companies to sell production, from $912.25 at yesterday’s afternoon fixing. Still, gains in the metal are being curbed on anticipation the worst of the crisis in the world banking system may have past.

The Federal Reserve determined 10 banks need to raise a total of $74.6 billion in capital, a finding that Chairman Ben S. Bernanke said should reassure investors about the soundness of the financial system. A government report later today will probably show U.S. employers cut fewer jobs in April as signs emerged that the worst of the U.S. recession had passed, according to a Bloomberg survey of economists.

Employment Report

“The much-dreaded U.S. bank stress tests turned out to be a ‘no mover,’ and if today’s non-farm payrolls too come in line with market expectations, gold could suffer a setback,” Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai, wrote in a research report today.

Payrolls dropped by 600,000 last month, less than March’s 663,000, the survey shows.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,104.09 metric tons yesterday. The fund last attracted new flows on April 9.

The precious metal may extend gains next week, according to 22 of 32 traders, investors and analysts surveyed by Bloomberg News. Seven people forecast lower prices and three were neutral. Prices yesterday rose above the 50-day and 100-day moving averages, indicators that gold has further to climb.

Silver, Platinum

Among other metals for immediate delivery in London, silver rose 0.7 percent to $13.945 an ounce. Platinum gained 0.3 percent to $1,151.50 an ounce, and palladium advanced 0.8 percent to $241 an ounce.

Sales of autos, which use platinum and palladium to reduce exhaust fumes, in China rose to a record in April, the China Association of Automobile Manufacturers said today. The country has withstood a global slump in auto sales as the government has cut retail taxes and begun handing out 5 billion yuan ($733 million) in subsidies to help boost demand.

“The numbers were better than expected,” Afshin Nabavi, a senior vice president at Swiss bullion refiner MKS Finance SA, said by phone in Geneva today. “That’s impressing the platinum and palladium market.”

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

Allstate, AIG, CBS, Fuel Systems, Genworth: U.S. Equity Preview

By Lu Wang

May 8 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Allstate Corp. (ALL US): The largest publicly traded U.S. home and auto insurer posted its third straight quarterly loss on investment writedowns and declines in private equity and hedge fund holdings. Profit before investment losses was 84 cents a share, compared with the $1.25 estimate of 14 analyst surveyed by Bloomberg.

American International Group Inc. (AIG US): The insurer reported its sixth straight loss tied to investment markdowns. The loss excluding some investment results was 97 cents a share, wider than the 13-cent average loss estimate from analysts surveyed by Bloomberg.

CBS Corp. (CBS US): The owner of the most-watched television network reported an unexpected first-quarter loss as advertisers cut spending during the U.S. recession.

Fuel Systems Solutions Inc. (FSYS US): The company whose devices allow internal-combustion engines to run on alternative fuels reported profit excluding some items of 44 cents a share in the first quarter, more than double the average analyst estimate, according to Bloomberg data.

Genworth Financial Inc. (GNW US): The life insurer and mortgage guarantor that failed to qualify for U.S. aid reported a fourth straight quarterly loss as the value of holdings backing insurance policies plummeted.

Morgan Stanley (MS US): The sixth-biggest U.S. bank by assets said it plans to raise $2 billion in a share sale and $3 billion by selling debt that’s not guaranteed by the government.

Wells Fargo & Co. (WFC US): The biggest U.S. mortgage originator must raise $13.7 billion after the government’s stress test found the bank had too little common equity to withstand a prolonged recession. The company said earlier it plans to sell $6 billion of common stock.

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

Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | May 08 09 06:50 GMT |

US Banking Stress Tests Quantify Capital Needs but Hardly Pack Sufficient Punch to Live up to Name; Toyota Shares Fall on Profit Speculation by Press; RBA, Treasury Downgrade Australia's GDP Forecasts; USD Majors Drift Pre-NFP

Asian equity markets have shrugged the weakness in US indices on Thursday after the widely dreaded stress-tests for US financials proved to be far more innocuous than initially feared. Nikkei225 finished a stellar week with a gaining session of 0.5%, S&P/ASX traded up 0.1%, and Kospi rallied 0.8%. Front-month S&P futures spent much of the latter part of Asian trading at session highs, up 0.8%. Much of the findings proved to be confirmation of the known developments as 10 of the 19 banks were said to require additional capital in aggregate of $74.6B. Bank of America required the biggest chunk of that sum at $33.9B, pledging to initiate a common equity raise of about $17B made up of ATM offering commencing on Friday with $1.5B and also conversion of non-govt preferred into common equity. Most notably, BAC conference call revealed a healthy Tier 1 capital ratio, with equity request stemming from shoring up the low common value. Additionally, BAC suggested the Fed scenario assumed greater deterioration of economic conditions than previously experienced and was out of line with trends of recovery. Other banks told by the Treasury to raise capital included Citigroup, Fifth Third Bancorp, GMAC, KeyCorp, Morgan Stanley, PNC, Regions Financial, SunTrust and Wells Fargo. Citigroup was instructed to raise $5.5B, below the $10B speculated. The company planned to expand public exchange offers by $5.5B to $33B and much like BAC, rejected the notion of requiring additional bailout funds. Shares of both traded much firmer on the heels of the stress test findings, as the banks will have until June 8 to come up with a plan to raise the needed equity.

Asian economic calendar was limited to central bank quarterly monetary policy statement from Australia. RBA cut its Q2 GDP estimate to contraction from +0.25% to -1.25% while targeting 2009 GDP at -1% and 2010 GDP at +2%. Annual core inflation was raised slightly to 3.25%, but subsequent year's pricing pressure was downgraded through 2011 on forecast of a more gradual and protracted price slowdown. Furthermore, RBA forecasted return in rising unemployment, but did anticipate a more gradual approach to monetary easing amid signs of stabilization in global slowdown with existing monetary and fiscal stimulus supporting domestic demand going forward. Australia's Treasurer Swan echoed RBA's sentiment, noting the upcoming budget plans would see a lower economic growth forecast.

In notable Nikkei names, Toyota traded over 2% lower going into midday break after Japanese Press speculated the company may miss its FY09 operating target, forecastig a ¥500B loss vs a loss of ¥464B expected. Subsequently, Toyota's actual Operating loss actually fell beyond those estimates by ¥682.5B, as auto sector malaise bemoaned in controversial US industry bailout was evident in the global production leader. In tech, Konica Minolta cheered an upgrade to buy from Nomura with a 7% rally, while Sharp contracted 2% after S&P revised the outlook on the firm to negative. In financials, the sector leading this week's Nikkei advance to 6-month highs and once again outperforing other sectors, Mitsubishi Corp was one of the laggards after missing FY09 Net profit estimate of ¥401.2B with a ¥15.2B result while also missing the top line forecast of ¥23.09Te with ¥22.4T figure.

Asian industrials saw earnings updates from Japan's Fuji Heavy and Korea's Doosan. Fuji Heavy beat on the top line, but missed slightly on net profit and cut is operating profit view for current year well below estimates, falling 6.5%. Korea's Doosan traded off by as much as 3% after missing Q1 net profit estimates of KRW28.6Be with a KRW179B loss. In Sydney, telecom Telstra reaffirmed FY09 guidance of 3.4% sales growth and traded slightly higher after announcing resignation of its CEO. Miners Rio Tinto and BHP fell 1-2% on consolidation in metal prices coupled with risk caution seen over the US session.

In currencies, USD moved lower late in the session as Asian equities cautiously moved to their best levels on the day. EUR/USD recovered 1.34 handle while GBP/USD moved above 1.50 after falling broadly in the aftermath of expanded BOE quantitative easing. In commodity FX, AUD consolidated gains after backtracking from 0.76 intraday high, and CAD advanced below 1.17 against USD as front-month crude contract moved back above $57. Japanese Yen traded in narrow range against the greenback, but was sold more firmly against EUR as EUR/JPY moved to session high above 133 in late trading.

Trade The News Staff
Trade The News, Inc.

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Forex Market Update: The 'Stress' Of The Stress Tests Is Over, Now We Await Non-Farm Payrolls

Daily Forex Fundamentals | Written by Saxo Bank | May 08 09 06:28 GMT |

No real market reaction after the stress results, if anything a tad positive

HEADLINES

US Q1 Non-farm Productivity out at +0.8% vs. +0.6% expected and revised -0.6% prior
US Q1 Unit Labour Costs out at +3.3% vs. 2.7% expected and 5.7% prior
US Weekly Initial Jobless Claims out at 601k vs. 635k expected and 635k prior
US Apr. ICSC Chain Store Sales out at +0.7% y/y vs. -1.0% expected and -2.1% prior
US Mar. Consumer Credit out at -$11.1b vs. -$4.0b expected and revised -$8.1b prior

THEMES TO WATCH - UPCOMING SESSION

GE Trade Data (not specified)
UK PPI Input/Output (0830)
GE Industrial Production (1000)
CA Unemployment Rate (1100)
CA Housing Starts (1215)
US Non-farm payrolls (1230)
US Unemployment Rate (1230)
US Avg. Hourly Earnings (1230)
US Wholesale Inventories (1400)

Market Comments

The fireworks in FX-land were mostly restricted to the early part of yesterday's session with the BOE and ECB providing the ammunition yet differing results. GBP weakened after the BOE announced additional quantitative easing measures yet the EUR responded positively after the ECB announced a widely-expected 25bp rate cut and a move to extend liquidity operations with banks to 12 months from the current 6 months.

The US bank stress tests proved to be a damp squib. The numbers were broadly in line with previously leaked/discussed information, with 10 of the US' top 19 banks needing additional capital, cumulatively a $74.6 bln hole in balance sheets. Two of the banks – Wells Fargo and Morgan Stanley have already announced plans to raise capital while BoA reiterating that no further government money would be needed. There was very little fallout in markets. After Wall St had closed 1.3% lower, US stock futures were marginally in the black during Asian hours. Asian bourses were mainly steady after the strong run-up this week and saw only marginal profit-taking pressuring.

There were some more positives to be gleaned from the ICSC Chain Stores data which showed a strong rebound in April, rising 0.7% y/y after March's 1% contraction. But before we get too carried away, it is worth noting that March data on consumer credit showed a record decline in outstanding balances, falling $11.1 bln in the month. Revolving credit fell by $5.4 bln after a $9.7 bln fall in February.

In the aftermath of the ECB's announcement that it was to start buying EUR60 bln in covered bonds, ECB's Mersch commented in European press that the central bank would be able to exit from its program quickly if the inflation environment turned unfavourable. Earlier, ECB's Weber had assured that the central bank would exit non-standard measures when bank lending and the economy show signs of improvement. Markets are still treating the ECB developments with indifference, partly because of the relative size of the program (about 0.7% of European GDP compared with 2% in Japan and 5% in UK).

With the recent data releases around the globe mostly beating forecasts and prompting a constant barrage of comments on “green shoots' and “breaks in the cloud', one could have been forgiven for expecting the RBA to give a more positive slant to its quarterly Monetary Policy Statement issued today. However this was not to be, with the RBA slashing its near-term growth forecasts and acknowledging that Australia had slipped into a technical recession. It forecast a 1.25% contraction in the year to June and 1% for the full year 2009 with a gradual recovery from late 2009. Core CPI was revised higher to 3.75% in June (from 3.5%) and 3.25% for 2009 (from 3.0%), probably the first time in a while that anyone has referred to rising inflation! The AUD slid after the release of the statement, but was contained while bond yields edged marginally lower.

Today's major event will be the release of US non-farm payroll and unemployment numbers. Market consensus is for a loss of 600k jobs in April, but note these surveys were taken before the surprise drop in the ADP private hiring report on Wednesday and the better-than-expected initial jobless claims yesterday. The unemployment rate is expected to tick up to 8.9% from 8.5% last month.

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.

Wakeup Call: While We Are Waiting For US Unemployment Figures

Daily Forex Fundamentals | Written by Saxo Bank | May 08 09 06:48 GMT |

The stress test release from yesterday did not reveal anything that the market did not know. Today's unemployment figures will be decisive for equity market sentiment weeks ahead

Calendar

Economic Data Releases
Country	Name	Time (GMT)	Expectation	Prior	Comment
GE	10:00	Industrial Production MoM (MAR)	-1.3%	-2.9%
US	12:30	Change in Non-farm Payrolls (APR)	-600K	-663K
US	12:30	Unemployment Rate (APR)	8.9%	8.5%

What's going on?

The stress test on US banks was released yesterday and nothing much new information was revealed. BofA need $34 bln., Wells Fargo $13.7 bln and CitiGroup $5.5 bln. The major issue is still whether the assumptions underlying the stress test regarding the worst case scenario is realistic.

ECB cut interest rates to 1% and announced that it wants to buy debt and bunds were heading lower on this. BoE announced that it will have another go of buying debt despite that the prior attempt did not have any long lasting effect on the curve.

Watch out for Non-farm payrolls and Unemployment rate from the US today. Definitely today's most important event and will move markets

Toyota was out with a loss at 436.93 bln. Yen vs. a profit of 1.72 TN Yen last year. Cuts dividend by 50% and present a very bleak outlook for 2009.

FX

FX	Daily stance	Comment
EURUSD	0/-	Rally can extend to 1.3470 high, but would sell there for re-test of 1.3330-40
EURJPY	0/-	200-day MA suppt holds at 132.40. Seen ranging 132.30-133.80
USDJPY	0/-	Looking for a re-test of 99.60, but seen holding for retracement to 98.80-00
GBPUSD	0/-	Prefer downside while below 1.5060. Suppt still 1.4960
AUDUSD	0	Still firm but looking tired. May halt at 0.7580-90 temporarily. Suppt at 0.7475-80

Equities

Equities	Daily stance	Comment
DAX	0/+	Buy at the break of 4835 targeting 4900. S/L below 4790.
FTSE	0/+	Buy at the break of 4424 targeting 4490. S/L below 4380.
S&P500	0/+	Buy at the break of 910 targeting 920. S/L below 905.
Nasdaq100	0/+
Nikkei225	0/+

Futures

Commodities	Daily Stance	Comment
Gold(XAUUSD)	0	Likely suppted at 905. Next res at 925
Silver(XAGUSD)	0/+	Buy dips to 13.75 for a push back abv 14.0
Oil (CLM9)	0/+	Further upside potential to 60+. Buy dips to 56.0, stop below 53.40

FX Options

FX-Options	Comment
EURUSD	Buyers of shortdate starting to appear in both directions as the market looks nervous. Spot likely to be choppy over the next few sessions.
USDJPY	Market is finding buyers along the middle of the curve even though spot is largely rangebound. 6m atms saw an aggressive buyer, also buyers of shortdate downside.
AUDUSD	Sellers of topside persists and the rest of the curve follows slightly lower. Today's session saw a few buyers of low delta downside.

Analysis Disclosure & Disclaimer

Saxo Bank 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 Saxo Bank 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 do not occur as anticipated.

Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained.

Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment.

If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations.

The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time.

In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis.

Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | May 08 09 06:13 GMT |

GBP/JPY

The British pound versus Japanese yen was limited at 150.90 zones below the areas we defined to change our short term bearish anticipation and from there it retraced sharply forming a bearish candlestick pattern that pushed the pair to move below the middle line of the Bollinger bands and below Dema 5. Now we are waiting for a price explosion and we think that it will be to the downside on the short term basis while having a look on the daily close we can notice that it revives our negative prediction.

Trading range for today is among key support at 143.40 and key resistance at 152.75.

The general trend is to the downside as far as 156.20.remains intact with target at 116.00.

Support: 148.40, 147.60, 146.80, 146.20, 145.50
Resistance: 149.90, 150.50, 151.00, 151.50, 152.25

Recommendation: According to our analysis, sell the pair at 149.10 with targets at 146.30 and stop loss at 151.50

EUR/JPY

The pair has inclined yesterday placing a temporary high at 133.50 zones whereas it retraced once more as the chart shows that it doesn't have enough momentum to continue up trending, protected by the super cluster resistance zone which consists of 38.2% Fibonacci of the whole medium term rally from 169.90 to 111.96 areas and also the 76.4% Fibonacci of the short term decline from 137.40 to 124.40. Therefore we see that the pair is still gathering the momentum it needs to move to the downside while we note that there is a negative divergence under preparation on the four-hour chart. A continuous close below 132.50 zones will confirm this scenario.

Trading range for today is among key support at 129.30 and key resistance now at 135.50.

The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels.

Support: 132.50, 131.80, 131.05, 130.50, 129.65
Resistance: 133.15, 133.80, 134.30, 135.00, 135.50

Recommendation: According to our analysis, sell the pair at 133.15 with targets at 130.90 and stop loss at 135.00.

EUR/GBP

The royal pair couldn't penetrate the short term pivotal support around 0.8760 areas whereas it inclined aggressively forming a clear bullish engulfing candlestick which was able to hit 23.6% and 38.2% Fibonacci correctional levels. Now further inclining actions are expected on the intraday basis as a normal result for the bulls power increasing and also at the same time it is a normal effect for entering the previous broken consolidation zone while Alligator supports the direction from below.

Trading range is among the key support 0.8760 and key resistance now at 0.9130.

The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels.

Support: 0.8900, 0.8855, 0.8815, 0.8795, 0.8760
Resistance: 0.8935, 0.8980, 0.9030, 0.9070, 0.9110

Recommendation: According to our analysis, buy the pair at 0.8915 with targets at 0.9005 and stop loss at 0.8840.

Ecpulse

disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

FX Technical Analysis EURUSD

Daily Forex Technicals | Written by Mizuho Corporate Bank | May 08 09 06:40 GMT |

Comment: Will we ever get lift-off? Bouncing again from the top of the 'cloud' and the nine-day moving average, squeezing to a new recent high at 1.3471. Similar patterns can be seen in a series of major currencies suggesting generalised US dollar weakness this month and eventually the Euro should be dragged higher. A weekly close above 1.3600 should add significantly to current bullish momentum.

Strategy: Buy at 1.3400, adding to 1.3245; stop below 1.3090. Add to longs on a sustained break above 1.3475 for 1.3575/1.3600 and more further out.

Direction of Trade: →↗

Chart Levels:

Support	Resistance
1.3342 "	1.3412
1.3245	1.344
1.32	1.3471*
1.3100/1.3090*	1.352
1.3	1.3582*

GBPUSD

Comment: Retreating from a recent high at 1.5198, just under January's high at 1.5375. Cable should re-group today in order to mount another upside attack next week. A weekly close above 1.5150 should add to bullish pressure, though maybe not convincingly.

Strategy: Buy at 1.5015; stop below 1.4800. Add to longs on a sustained break above 1.5200 for 1.5375 short term and then 1.5725/1.5800

Direction of Trade: →↗

Chart Levels:

Support	Resistance
1.5000 "	1.5055
1.4968/1.4942	1.5115
1.4835	1.5200*
1.47	1.5375*
1.4500*	1.5535

USDJPY

Comment: A small 'spike high' yesterday at 99.80 might mean that we hold below here again today and drift down to the Ichimoku 'cloud'.

Strategy: Attempt shorts at 99.25; stop above 99.85. Short term target 97.75, maybe 97.15.

Direction of Trade: →

Chart Levels:

Support	Resistance
98.94 "	99.42
98.3	99.57
97.94	99.80**
97.7	100
97.15/96.90*	100.74

EURJPY

Comment: Conflicting messages as we trade very broadly sideways roughly between 126.00 and 134.00. We feel the latest rally might stall around the 133.00 area but be prepared to be very flexible short term and probably for the whole of this year.

Strategy: Attempt small shorts at 133.00; stop above 134.50. Add to shorts on a sustained break below 130.70 for 128.85 and maybe 126.65.

Direction of Trade: →

Chart Levels:

Support	Resistance
132.15 "	133.23
130.7	133.58
129.85	134
128.5	134.33/134.50*
126.45*	135.5

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.