Friday, May 29, 2009

Asian Stocks Gain on Japan Industrial Production; BHP Advances

By Shani Raja and Jonathan Burgos

May 29 (Bloomberg) -- Asian stocks rose and were poised for the longest streak of monthly gains since the credit crisis began in 2007, as a better-than-forecast report on Japanese industrial production lifted mining and energy stocks.

BHP Billiton Ltd., the world’s biggest mining company and Australia’s top oil producer, gained 2.3 percent as copper prices rose on the Japanese report. Mitsui O.S.K. Lines Ltd. added 4.8 percent after commodity-shipping fees climbed to an eight-month high. Bank of China Ltd., the nation’s third-largest bank, climbed 3.4 percent in Hong Kong after Deutsche Bank AG recommended investors buy the stock.

“People are anticipating a recovery and demand for commodities going up on the back of that.” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “Things are getting less worse. It’s still going to be a rocky road, and there’s always the risk of some sort of shock to the negative.”

The MSCI Asia Pacific Index climbed 0.6 percent to 100.8 as of 1:02 p.m. in Tokyo. The gauge rose 1.5 percent this week, taking its rally from a five-year low on March 9 to 43 percent.

Australia’s S&P/ASX 200 Index increased 1.7 percent. Hong Kong’s Hang Seng Index added 0.5 percent. Japan’s Nikkei 225 Stock Average added 0.1 percent as gains in the yen after the production report dimmed exporters’ earnings prospects.

MSCI’s Asian index has climbed 11 percent in May, its third month of gains and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds. India’s Reliance Infrastructure Ltd. and Kotak Mahindra Bank Ltd. surged more than 70 percent this month, leading gains on the gauge amid speculation the government’s election victory will accelerate policies to boost economic growth.

Increased Output

In Sydney, Commonwealth Bank of Australia rose 2.4 percent after the country’s bank lending increased. Singapore’s Chartered Semiconductor Manufacturing Ltd. gained 2.3 percent as the Business Times reported the company received a takeover bid. AirAsia Bhd. climbed 4 percent in Kuala Lumpur after first- quarter profit jumped.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge climbed 1.5 percent yesterday as oil prices jumped and a rebound in 10-year Treasuries eased concern record government debt sales will trigger higher borrowing costs.

Copper futures in New York gained as much as 1 percent today after Japan’s Trade Ministry said industrial production advanced 5.2 percent last month from March. Economists had estimated a 3.3 percent increase. Companies said they planned to increase output in May and June as well, the report showed.

‘More Confidence’

U.S. reports this week added to confidence the worst global slowdown since World War II is easing. The Conference Board’s index of consumer confidence showed sentiment surged to the highest since September. Durable goods orders gained 1.9 percent in April, more than some economists expected. Economists also upgraded their forecasts for Chinese economic growth.

BHP rose 2.3 percent to A$34.80. Mitsui & Co., a trading company that gets more than half its profit from commodities, gained 1.8 percent to 1,219 yen.

Toshiba Corp., Japan’s biggest chipmaker, climbed 2.6 percent to 357 yen after NHK television said the company will raise output of flash memory chips.

“The market is gaining more confidence as we haven’t seen bad economic news lately,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong.

Asian stocks were poised to rise for the fourth time in five weeks as speculation the worst of the recession is over boosted retailers, mining companies and banks. Hong Kong-based property developers had three of the six biggest advances in the MSCI Asia index. Guangzhou R&F Properties Ltd., Sino Land Co. and Shimao Property Holdings Ltd. gained more than 20 percent.

Baltic Dry

The index’s climb since March has driven the average valuation of its companies to 1.4 times the book value of assets, 17 percent higher than at the end of 2008.

Inpex Corp., Japan’s largest oil explorer, climbed 6.8 percent to 774,000 yen. Woodside Petroleum Ltd., Australia’s No. 2 oil company, added 1.4 percent to A$43.58.

Crude oil rose to a six-month high yesterday after the Organization of Petroleum Exporting Countries decided to leave production quotas unchanged. Crude for July delivery rose to $65.08 a barrel in New York, the highest settlement since Nov. 5.

Mitsui O.S.K. jumped 4.8 percent to 674 yen. The Baltic Dry Index, which measures the cost of shipping commodities, gained 4.2 percent yesterday to the highest since Sept. 29.

Pacific Basin Shipping Ltd., which operates bulk cargo ships, surged 12 percent to HK$5.41 in Hong Kong.

Mounting Losses

Bank of China climbed 3.4 percent to HK$3.34. The stock was upgraded to “buy” from “hold” by Deutsche Bank AG on expectation its foray into the international yuan settlement business will boost earnings.

Finance companies accounted for 36 percent of the MSCI Asia Pacific’s advance today. The group is the third-worst performing of 10 industry gauges in the past year as losses from the credit crisis since the start of 2007 swelled to almost $1.5 trillion.

Commonwealth Bank of Australia, the nation’s second-biggest bank by market value, rose 2.4 percent to A$34.78. Australia & New Zealand Banking Group Ltd. climbed 3.3 percent to A$15.88.

Loans provided by banks and other finance companies climbed 0.1 percent in April from the previous month, according to the Reserve Bank of Australia.

Chartered, the world’s third-largest contract chipmaker, gained 2.3 percent to S$2.23. Abu Dhabi’s Advanced Technology Investment Co. offered to buy Chartered shares from Temasek Holdings Pte, which owns a stake of about 60 percent, the Business Times said. Chartered denied the report.

AirAsia, Southeast Asia’s largest low-cost airline, climbed 4 percent to 1.30 ringgit. Profit at Malaysian airline climbed 26 percent in the first quarter from a year earlier to 203.2 million ringgit ($58 million), the company said late yesterday.

Demand in the second quarter “looks good” and the airline won’t slow down its expansion, Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview today.

To contact the reporters for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

Gazprom, Rosneft, Lukoil, Razgulay: Russia Equity Preview

By Yuriy Humber

May 29 (Bloomberg) -- The following companies may have unusual price changes in Russia trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s 30-stock Micex Index climbed for a second day, adding 1.5 percent to 1,075.02 at the close in Moscow. The index has advanced 17 percent this month. The dollar-denominated RTS Index gained 2.2 percent to 1,053.73, the highest this year. The Russian Depositary Index, a measure of global depositary receipts trading in London, rose 0.8 percent.

OAO Gazprom (GAZP RX): Edison SpA, a Milan-based utility, may have to cancel a planned pipeline between Italy and Greece and buy natural-gas from Gazprom if it can’t secure supplies from the Shah Deniz field in Azerbaijan, Edison Development Manager Mario Cumbat said. Supply talks have been stalled by Turkey, which wants to be a gas trader rather than a transit state, he said at a conference in Paris. Gazprom gained 0.5 percent to 172.48 rubles in Moscow on the Micex Stock Exchange.

OAO Rosneft (ROSN RX): Russia plans a 2.2 percent decrease in daily shipments of Urals and Siberian light crude from five Baltic and Black Sea ports in June, according to the final loading schedule of OAO Transneft, the state oil-pipeline operator. Rosneft, the country’s biggest oil producer, rose 3.3 percent to 197 rubles in Moscow on the Micex Stock Exchange.

OAO Lukoil (LKOH RX): The Caspian Pipeline Consortium, in which Lukoil has a stake, saw 2008 profit decline 57 percent to $182 million, said CPC General Director Vladimir Razdukhov. Sales rose 20 percent to $1 billion, he told reporters in Paris at an oil conference. CPC partners may approve expansion of the pipeline by July 2010, he said. Lukoil advanced 1.5 percent to 1,554.67 rubles in Moscow on the Micex Stock Exchange.

OAO Razgulay (GRAZ RX): Russia plans to as much as double its grain exports in as little as a decade, Deputy Agriculture Minister Alexander Petrikov said. Razgulay declined 0.1 percent to 41.493 rubles in Moscow on the Micex Stock Exchange.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

Areva, Credit Agricole, Societe Generale: French Stocks Preview

By Rudy Ruitenberg

May 29 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.

France’s CAC 40 Index dropped 31.16, or 1 percent, to 3,263.70 in Paris, snapping four days of gains. The SBF 120 Index retreated 0.9 percent to 2,363.82.

Air Liquide SA (AI FP): The world’s biggest maker of industrial gases bought Torrance, California-based cryobiology company Pacific Science Inc. It didn’t give financial terms. The shares fell 29.5 cents, or 0.5 percent, to 64.85 euros.

Areva SA (CEI FP): The Transmission & Distribution division of the world’s biggest builder of nuclear reactors won an 80 million-euro converter stations contract from South Korea’s KEPCO. The company’s publicly traded investment certificates gained 3.55 euros, or 0.8 percent, to 424.55 euros.

Credit Agricole SA (ACA FP): France’s second-biggest bank suspended an accord with Assicurazioni Generali SpA on their stakes in Italy’s No. 2 lender Intesa Sanpaolo SpA until June 30, while they try and find a solution acceptable to Italian regulators. The shares lost 18 cents, or 1.7 percent, to 10.17 euros.

Electricite de France SA (EDF FP): Europe’s biggest power producer has been named as a material witness by French judges investigating an alleged espionage plot against Greenpeace, Le Monde reported, citing the company’s lawyer. The shares fell 85 cents, or 2.2 percent, to 37.63 euros.

Imerys SA (NK FP): The building-materials manufacturer raised 251 million euros selling new shares to existing investors. The shares declined 77 cents, or 2.5 percent, to 30.21 euros.

NetBooster (ALNBT FP): The Internet consultant whose clients include Expedia Inc. raised 2.5 million euros selling new shares to existing investors. The stock closed unchanged at 2.60 euros.

Orchestra-Kazibao SA (KAZI FP): The maker of children’s clothing named Bernard Joinet as its new chief executive and said Pierre Mestret will continue as chairman. Mestret previously held both posts. The shares added 21 cents, or 3 percent, to 7.21 euros.

Societe Generale SA (GLE FP): France’s third-biggest bank issued 1.7 billion euros of preference shares to a French government holding company. The shares have no voting rights and cannot be converted into ordinary stock, the bank said. The shares dropped 70.5 cents, or 1.7 percent, to 39.80 euros.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

C.A.T. Oil, E.ON AG, Munich Re, SAP AG: German Equity Preview

By Nadja Brandt

May 29 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.

The X-DAX Index rose 0.2 percent to 4,967.96. The measure, derived from trading in DAX Index futures, provides an estimate of Germany’s benchmark index. The DAX dropped 1.4 percent to 4,932.88.

C.A.T. Oil AG (O2C GY): The Austrian oil-services company operating in Russia and Kazakhstan plans to release first- quarter results. The shares fell 0.7 percent to 4.03 euros.

E.ON AG (EOAN GY): German regional energy supplier HEAG Suedhessische Energie AG may join a group of utilities preparing an offer for E.ON AG’s Thuega unit, Dow Jones Newswires said, citing two unidentified people familiar with the matter. E.ON shares declined 0.4 percent to 25.21 euros.

Munich Re (MUV2 GY): The world’s biggest reinsurer said U.S. reinsurance rates rose in the renewals for July. The shares fell 0.1 percent to 97.66 euros.

SAP AG (SAP GY): Outgoing Co-Chief Executive Officer Henning Kagermann forecast double-digit growth at the world’s biggest maker of business-management software, Frankfurter Allgemeine Zeitung said.

Growth will primarily be driven by product sales rather than license revenue, the chief told the newspaper in an interview. He didn’t specify the time frame. The shares were little changed at 30.22 euros.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

British Airways, Sky, Severn Trent: U.K., Irish Equity Preview

By Howard Mustoe

May 29 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.

The benchmark FTSE 100 Index declined 28.69, or 0.7 percent, to 4,387.54. The FTSE All-Share Index fell 0.7 percent and Ireland’s ISEQ Index fell 2.1 percent.

British Airways Plc (BAY LN): Moody’s Investors Service lowered the corporate family and probability of default ratings of British Airways to Ba2. The senior unsecured and subordinate ratings have been lowered to Ba3 and B1, respectively. British Airways fell 2.5 pence, or 1.6 percent, to 156.8 pence.

British Sky Broadcasting Group Plc (BSY LN): The U.K.’s biggest pay-television provider bid about 60 percent more than its nearest rival for seven digital channels owned by rival Virgin Media Inc., the Financial Times reported, citing people familiar with the auction. Sky fell 10 percent, or 2.2 percent, to 452.5 pence.

Brixton Plc (BXTN LN): The U.K.’s largest owner of warehouses is in talks to sell more than 200 million pounds ($319 million) of properties held in a joint venture to private equity company Westbrook Partners LLC, the Financial Times said, without saying where it got the information. Brixton fell 3.75 pence, or 5.2 percent, to 68.75 pence.

Electrocomponents Plc (ECM LN): The U.K. supplier of 350,000 products ranging from cables to calculators releases results. Electrocomponents fell 5 pence, or 3.2 percent, to 149.25 pence.

Serco Group Plc (SRP LN): The operator of London’s Docklands Light Railway and a service provider for the U.K. and U.S. navies, may be the most successful bidder for contracts tied to the U.K. government’s new long-term unemployment plan, the Financial Times reported. Serco rose 1.25 pence, or 0.3 percent, to 392.5 pence.

Serica Energy Plc (SQZ LN): The U.K. oil and gas explorer announces earnings. Serica declined 3.5 pence, or 5.1 percent, to 65.5 pence.

Severn Trent Plc (SVT LN): The U.K.’s second-biggest water company releases earnings. Severn Trent fell 18 pence, or 1.6 percent, to 1,140 pence.

To contact the reporters on this story: Howard Mustoe in London at hmustoe@bloomberg.net;

E.ON, Royal Dutch Shell Plc, SAP AG: Europe Equity Preview

By Nadja Brandt

May 29 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.

The Dow Jones Stoxx 600 dropped 1.2 percent to 207.93. The Dow Jones Stoxx 50 Index fell 1 percent to 2,117.79. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, decreased 1.1 percent to 2,453.15.

Munich Re (MUV2 GY): The world’s biggest reinsurer said U.S. reinsurance rates rose in the renewals for July. The shares fell 0.1 percent to 97.66 euros.

Royal Dutch Shell Plc (RDSA NA): An Amsterdam court is scheduled to rule whether a $353 million settlement with shareholders outside the U.S. following a restatement of proven oil and gas reserve estimates in January 2004 is binding. Shell was unchanged at 18.76 euros in Amsterdam.

Growth will primarily be driven by product sales rather than license revenue, the chief told the newspaper in an interview to be published tomorrow. He didn’t specify the time frame. The shares were little changed at 30.22 euros.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

Dell, Esterline, FMC, J.Crew, OmniVision: U.S. Equity Preview

By Lu Wang

May 29 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Dell Inc. (DELL US): The world’s second-largest maker of personal computers reported first-quarter earnings that topped analysts’ estimates, helped by cost cuts.

Esterline Technologies Corp. (ESL US): The manufacturer of jet-engine parts reduced its 2009 earnings forecast, projecting $3.20 a share at most. Analysts, on average, estimated profit of $3.68, according to a Bloomberg survey.

FMC Technologies Inc. (FTI US): The world largest provider of subsea systems for oil and natural-gas will replace Covidien Ltd. (COV US) in the Standard & Poor’s 500 Index, effective after the close of trading on June 4, S&P said in a statement.

J.Crew Group Inc. (JCG US): The U.S. clothing retailer forecast second-quarter profit excluding some items of at least 8 cents a share. Analysts expected a 3-cent loss, based on the average estimate in a Bloomberg survey.

OmniVision Technologies Inc. (OVTI US): The maker of image sensors for camera phones forecast first-quarter sales of at least $90 million. That beat the average estimate of $74.5 million from analysts in a Bloomberg survey.

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

ICAP Uses ‘Radiohead’ Commissions to Lure Brazil Stock Buyers

By Alexander Ragir

May 29 (Bloomberg) -- ICAP Plc, the newest arrival to Brazilian stock trading, is offering discounts on commissions to attract individual investors in Latin America’s biggest market.

The world’s largest broker of transactions between banks is charging fees as much as 75 percent below those offered by its largest competitor to gain customers in a market where equity transactions climbed to a record and the benchmark stock index rose 41 percent this year.

The London-based firm opened in Brazil in April, trailing behind Goldman Sachs Group Inc., Credit Suisse Group AG and Morgan Stanley. ICAP’s customers can choose the fee they’ll pay, from as little as 5 reais ($2.50) per trade, compared with 20 reais charged by Agora Corretora, the country’s largest electronic broker for individual investors. The strategy is meant to mimick British rock band Radiohead’s pay-what-you-want offer for digital downloads of its “In Rainbows” album.

“The philosophy with Radiohead is that people react by saying: ‘that’s awesome,’” Alan Gandelman, president of ICAP Do Brasil DTVM Ltda, said in an interview from the company’s Rio de Janeiro headquarters. “They like the idea. They like to choose.”

So far, ICAP’s trading of stocks and derivatives totals 7 percent of the volume handled by Credit Suisse, the country’s biggest brokerage, according to BM&FBovespa SA exchange data provided to local firms. Derivatives are financial instruments whose value is based on another security or benchmark.

Video Chats

Equity trading in Brazil rose to an average 339,901 trades a day this month through May 27, a 28 percent increase from January and 0.7 percent above the previous record in October, according to exchange data.

The Bovespa index rebounded from last year’s 41 percent tumble on signs the economy is recovering after the central bank cut interest rates to a record low. Policy makers reduced the benchmark rate to 10.25 percent in April from 13.75 percent at the end of 2008 and 19.75 percent four years earlier, making stocks more attractive relative to bonds, said Gandelman, 39.

ICAP’s discounts may not be enough to gain market share, said Alvaro Bandeira, a director at Agora, a unit of Banco Bradesco SA, Brazil’s second-largest non-government bank.

“Individual investors are looking for help and advice more than a lower price,” said Bandeira, whose Rio-based firm charges 20 reais per online trade. “We have a TV station, analyst reports, forums, chats and even video chats with experts.”

Credit Suisse, Itau

Electronic trading accounts for 14 percent of all volume on BM&FBovespa, according to exchange data. Another 13 percent of trading comes from individual investors who call through to brokerages, said Paulo Levy, the head of investing for private investors at ICAP in Brazil.

Levy, a Radiohead fan who helped set up London-based HSBC Holdings Plc’s online trading in Brazil before joining ICAP, said he pitched the pay-what-you-want campaign to Gandelman. ICAP offers investors a fee range of 5 reais to 20 reais.

“We needed a way to differentiate ourselves,” Levy said.

ICAP Do Brasil, which employs 90 people, traded 935.5 million reais of securities in the first four weeks of operations that began April 22, Gandelman said. Zurich-based Credit Suisse’s average monthly volume in Brazil this year was 12.6 billion reais compared with 9.7 billion reais for Sao Paulo-based Itau Unibanco Holding SA, according to BM&FBovespa data.

Expansion, Consolidation

In addition to setting up services for individual investors, ICAP acquired Arkhe DTVM, a Rio-based brokerage that focuses on futures trading, in November for $17 million. That purchase is still subject to central bank approval.

ICAP fell 1.5 percent to 394.5 pence yesterday and is up 37.2 percent this year, compared with a 1.1 percent decline in the FTSE 100 Index. The stock dropped 60 percent in 2008.

Madrid-based CM Capital Markets Holdings SA expanded its local brokerage in February. Carlos Kawall, the chief financial officer for BM&FBovespa, said in a May 20 interview that more foreign financial firms may move into the country.

London-based Barclays Plc will open a local brokerage this year, Valor Economico reported in February. Sarah Naegele, a New York-based spokeswoman for Barclays, declined to comment.

“Everyone’s now coming in,” said Francisco Mussnich, a mergers and acquisitions lawyer at Barbosa Mussnich & Aragao in Rio. “Expanding will be the first step and consolidation will be the second. It’ll take a few years.”

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net

Thursday, May 28, 2009

Durable Goods Orders Signal Recession Losing Some Momentum

Daily Forex Fundamentals | Written by Wachovia Corporation | May 28 09 13:35 GMT |

Durable goods orders at U.S. manufacturers increased 1.9 percent in April but the March decline in orders was revised downward. The net change for the two month period is slightly negative. Non-defense capital goods orders, ex-aircraft slipped 1.5 percent. We do not expect to see lasting resurgence in business spending until 2010.

Orders Jumped, but the Revision Made it Roughly a Wash

While the March revision takes the shine off the jump in April, the developing trend signals this recession – the longest and deepest in the post-War era—is losing momentum.

One not-so-bright spot is nondefense capital goods orders, ex-aircraft. Last month's gain was revised to a decline of 1.4 percent, and this month posted a loss of another 1.5 percent. This suggests continued weakness in business spending.

Less Work in the Pipeline, but Stockpiles Still Shrinking

The pace of decline is slowing in unfilled orders for nondefense capital goods ex-aircraft. This tells us the freeze in spending at the height of the financial crisis last fall has abated. This news is encouraging as a bottom in the series is commonly associated with the peak in layoffs at large manufacturers.

Slowing declines are seen in the sub-components as well. Computer & electronics are even approaching positive territory.

Wachovia Corporation
http://www.wachovia.com

Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.

Durable Goods Orders Signal Recession Losing Some Momentum

Daily Forex Fundamentals | Written by Wachovia Corporation | May 28 09 13:35 GMT |

Orders Jumped, but the Revision Made it Roughly a Wash

While the March revision takes the shine off the jump in April, the developing trend signals this recession – the longest and deepest in the post-War era—is losing momentum.

Less Work in the Pipeline, but Stockpiles Still Shrinking

Slowing declines are seen in the sub-components as well. Computer & electronics are even approaching positive territory.

Wachovia Corporation
http://www.wachovia.com

Currency Currents

Daily Forex Fundamentals | Written by Black Swan Capital | May 28 09 13:02 GMT |

Key News

The leading Bank of England official who accurately predicted the recession warns today against complacency that the worst of the slump is over and predicts a further surge of more than a million in unemployment this year. (The Times)

Key Reports Due (WSJ):

8:30 a.m. Initial Jobless Claims For May 23 Week: Expected: +4K. Previous: -12K.
8:30 a.m. Apr Durable Goods Orders: Expected: +0.6%. Previous: -0.8%.
10:00 a.m. Apr New Home Sales: Expected: +2.5%. Previous: -0.6%.
10:00 a.m. DJ-BTMU Business Barometer For May 16: Previous: unch.
1:00 p.m. May 22 U.S. Energy Dept Oil Inventories

Quotable

"There are two things which cannot be attacked in front: ignorance and narrow-mindedness. They can only be shaken by the simple development of the contrary qualities. They will not bear discussion."

Lord Acton

FX Trading - Bring on the Inflation

"Markets are going to increasingly demand that there be some real green shoots" of an economic recovery, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York. "They are going to have to step in at some point and put some more easing in."

If only it were as certain as Mr. Harris here makes it sound. I figured the demand for real green shoots would have come about by now. It hasn't.

Granted, the stock market hasn't hit a new intermediate-term high in what, like 14 days? So maybe this means it'll start heading lower if these real green shoots don't start poking out of the ground soon.

But maybe not.

Short, sideways price action has become the extent of corrections these days. They're just consolidations I guess. The S&P 500 is leaving open the potential for a move in either direction - up or down:

So what's up with the dollar? Am I just going to say it's stuck to stocks; whatever stocks do the dollar will do the opposite?

No. The negative correlation has loosened up between currencies and stocks. Now that risk appetite has taken a breather, the buck has been re-subjected to a different threat. It's now vulnerable to inevitable inflation.

Despite a small recovery so far this week, this buck has been whacked:

So are consumer and producer prices rising now? With the exception of the recent uptick in some commodities, no. But the inflation-apes are banging on their chests again. And it's likely not going unnoticed. The boomer, doomer and gloomer that is Marc Faber made sure his pounding was heard ...

"I am 100 percent sure that the U.S. will go into hyperinflation," Faber said. "The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."

100 percent?? Hyperinflation?? And apparently he also used the word "Zimbabwe" during his interview with Bloomberg. Hmmm... maybe subscription sales to his report are slumping.

Ok, forget the sound-bite for now. The second part of the above quote is something that's legitimately beginning to worry people. I discussed it in more detail in yesterday's Currency Strategist, but to summarize:

To the extent they have the capability of deciding between inflation and deflation, the Fed will choose inflation any day of the week. That belief is based around the idea that only inflation will allow us to cover our growing debts.

Yes, it's an old story - one that played largely into the US dollar's multi-year bear market till the middle of 2008. But thanks to the D-word - deficit - this story is once again prying its way into the minds of the market.

[Note: From the Financial Times today... "German inflation has turned negative for the first time in more than 20 years, fueling fears of a fall I prices across the Eurozone that will add pressures facing the European Central Bank as it grapples with Europe's sever recession."]

When will prices begin to rise? Shoot - I would imagine we'd need to see some real green shoots first. Because without some hard evidence for those on Main Street, as opposed to those happy-go-lucky soles on Wall Street, money simply isn't going to be circulating at anywhere near a rate conducive to hyperinflation.

So let's not panic ... unless of course everyone else starts panicking. In which case the market will move in whichever direction it's pushed. And believe me: you don't want to be on the other side when a herd of stampeding buffalo starts pushing against you.

Just try to keep your wits about you, whichever way the market ends up taking you.

Jack Crooks
Black Swan Capital
http://www.blackswantrading.com

Black Swan Capital's Currency Snapshot is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed disclaimer can be found at http://www.blackswantrading.com/disclaimer.html

FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | May 28 09 12:13 GMT |

USD-CHF @ 1.0894/97...Support at 1.0800

R: 1.0916 / 1.0989-1012 / 1.1096-1114
S: 1.0817 / 1.0750 / 1.0619-0598

Dollar-Swiss has dipped after rising towards 1.0955 during the day. We had exited out of the Short entered at 1.0940 at cost as there was an outside chance of a rise towards 1.1050-70 as suggested by the 4-hourly chart. Instead, the pair faced Resistance at 1.0960-80 which was sufficient enough to keep the pair ranged between 1.0871-1.0955 during the day. On the downside, there's Support in the region of 1.0817-0800 for the US session.

On a rise towards towards 1.1050, we would like to re-enter the Short, for which we place a Limit Sell Order. The chances of an eventual decline towards 1.0500 is still there only on a comprehensive break past 1.0800-0750.

Limit Sell Order:

Sell USD 10K at 1.1040, SL 1.1120, TP 1.0850

Cable GBP-USD @ 1.5918/23...Resistance at 1.6047-80

R: 1.5954-68 / 1.6047-80 / 1.6448
S: 1.5838 / 1.5785 / 1.5604

Cable has bounced back after recording a low of 1.5853 during the day. Overall the Cable has been oscillating between 1.58-1.61 over the last 5 days.

The view continues to be the same as mentioned in the morning. A comprehensive rise past 1.6050-80 is likely to take the pair towards 1.64-65 intially and towards 1.6660 eventually over a longer time frame. On a dip, a break below 1.5838 could next target 1.56.

Limit Buy Order:

Buy GBP 10K at 1.5600, SL 1.5480, TP Open

Aussie AUD-USD @ 0.7813/17...Could dip towards 0.77

R: 0.7889 / 0.8087 / 0.8159
S: 0.7793 / 0.7712-06 / 0.7627-15

Aussie dipped during the day toward 0.7744 and has bounced since then. We continue to believe that it could still move towards 0.7700-0.7675 over the US session or tomorrow which could provide a good opportunity to go Long. A further dip (though not likely) could prove to be very bearish which could take the pair towards the channel Support at 0.7500-7450 over the next few days, if not immediately. On a rise, we do not anticipate it to break past the Resistance at 0.7920 in a hurry.

Limit Buy Order:
Buy AUD 10K at 0.7720, SL 0.7650, TP 0.7850

Kshitij Consultancy Service
http://www.fxthoughts.com

Legal disclaimer and risk disclosure

These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

Dollar May Fall to 87 Yen as Recovery Gathers Pace, Nomura Says

By Shigeki Nozawa

May 28 (Bloomberg) -- The dollar may fall as low as 87 yen in a year as a global economic recovery led by China and India spurs investors to cut holdings of the U.S. currency, according to Nomura Securities Co.

Banks across the world reacted to the worldwide recession by amassing dollars and they are now looking to shift those funds to emerging-market stocks and commodities, said Taisuke Tanaka, a foreign-currency strategist in Tokyo at Nomura Securities, a unit of Japan’s biggest brokerage. The dollar may also weaken as the Federal Reserve adds extra funds to its financial system to combat the recession, he said.

“Increasing expectations that the global economy will recover and the ‘punish-the-printers’ trade will push down the dollar and benefit the yen,” Tanaka said. The yen will strengthen to 90 per dollar by the end of March and reach 87 three months later, he said.

China’s 4 trillion yuan ($586 billion) stimulus package is sparking signs of a government-led recovery in the world’s third-biggest economy. Urban fixed-asset investment climbed 30.5 percent in the first four months of 2009 from a year earlier, and imports from the U.S. posted the biggest back-to-back gain in three years.

The Japanese government raised its assessment of its economy last week for the first time in three years on signs the worst of the recession may be over.

The Dollar Index, used by the Intercontinental Exchange Inc. to track the greenback against the euro, yen, pound, Swiss Franc, Canadian dollar and Swedish krona, slid to a five-month low of 79.805 on May 22, and the dollar hit its three-month low of 93.86 yen the same day. The U.S. currency traded at 95.91 yen as of 11:21 a.m. in Tokyo.

Fed’s Balance Sheet

Should the Fed begin to reduce the amount of money it pumps into the financial system through so-called quantitative easing too early, overseas investors will grow increasingly reluctant to buy U.S. stocks and bonds due to concerns about a “liquidity shock,” Tanaka said.

The size of the Fed’s balance sheet increased to $2.18 trillion yen on May 20, from $900 billion before the collapse of Lehman Brothers Holdings Inc. in September.

To contact the reporter on this story: Shigeki Nozawa in Tokyo at snozawa1@bloomberg.net.

Yen Declines Against Dollar, Euro as Asian Stocks Trim Losses

By Yasuhiko Seki and Ron Harui

May 28 (Bloomberg) -- The yen fell toward a two-week low against the euro and weakened versus the dollar as Asian stocks trimmed losses, reviving demand for higher-yielding assets.

The yen also declined versus all of the 16 most-active currencies after Japanese government data showed local investors boosted purchases of overseas bonds to the highest level in a month. The Australian dollar rose toward a seven-month high against the U.S. currency on optimism the global recession will ease, reviving demand for the South Pacific nation’s assets.

“Equity markets of emerging economies, including Asia, are holding a relatively firm undertone, which means risk appetite is still reasonably strong,” said Akira Takeuchi, a Tokyo-based currency dealer at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group. “The yen will be sold against higher-yielding currencies.”

The yen weakened to 132.74 per euro as of 11:10 a.m. in Tokyo from 131.83 in New York yesterday, when it touched 133.52, the lowest level since May 12. The yen dropped to 95.85 per dollar from 95.34. The dollar traded at $1.3850 against the euro from $1.3825.

Australia’s currency gained 0.5 percent to 77.95 U.S. cents and advanced 1.2 percent to 74.84 yen. New Zealand’s dollar strengthened 0.4 percent to 58.81 yen.

The New Zealand dollar is the best performer against the yen this month, gaining 6.1 percent. The nation’s 10-year government bonds offer 4.43 percentage points more yield than similar-maturity Japanese debt.

‘Betting on the Optimism’

The yen weakened as the Nikkei 225 Stock Average erased losses to be little changed after falling as much as 0.9 percent.

“It seems Japanese investors are betting on the optimism that the global economy has bottomed out and are willing to spend more on assets of emerging markets,” said Shoichi Handa, a senior dealer in Tokyo at SBI Liquidity Markets Co., a unit of financier SBI Holdings Inc. “Since the Australian economy benefits significantly from a recovery of global demand, the Australian dollar may reach 80 yen.”

Benchmark interest rates are 3 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

‘Problem’ Banks

Demand for the relative safety of the yen and the dollar may increase after the Federal Deposit Insurance Corp. said yesterday the number of “problem” banks grew to a 15-year high, reviving concern about the health of the U.S. banking system.

The FDIC classified 305 banks as “problem” and the total assets involved rose 38 percent to $220 billion, the highest since 1993, the agency said, without identifying any of the lenders. The FDIC said its insurance fund slumped 25 percent to the lowest level in 15 years.

The cost of borrowing dollars for three months between banks rose for a second day yesterday after ending a 38-day decline amid renewed concern some financial institutions aren’t strong enough to weather the financial turmoil. The London interbank offered rate, or Libor, for three-month loans increased one basis point to 0.674 percent.

To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | May 28 09 02:44 GMT |

Today's Asia session saw a resumption of JPY weakness, as risk seemed to be the theme. USJPY jumped through NY highs close to the 96 handle and the Yen crosses followed suit. EURJPY was higher by nearly 100 pips from opening levels, and AUDJPY was higher by the same with some slight help from a strengthening AUDUSD. Traders looking for some profit taking following massive gains in the greenback into the closing hours of NY were rewarded in most of the majors

Ahead in the upcoming London session, traders will look for the bounce to continue. Also in focus will be German employment numbers and UK retail numbers. The final Asian session of the week will see Japan CPI and employment numbers.

Forex.com
http://www.forex.com

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | May 28 09 01:38 GMT |

News And Views

Concerns around US debt. US treasury yields rose sharply, 10yrs up 17bp, despite a solid 5yr auction (well bid by foreigners). The attributed catalyst was the rebalancing of mortgage book hedges for convexity reasons, but there is a larger theme of record bond issuance driving yield curves higher (and to historically steep levels) at play here. This aversion to 10yr bonds was duly noted by US equities, the S&P500 falling in the last 2 hours to close down 1.9%. That, in turn, seems to have negatively affected risk currencies. Also contributing to a moderately stronger US dollar was China's central bank saying their economy is still under downward pressure; and Standard & Poor's saying there is no credible replacement for the USD as reserve currency, the UK rating revision was not a warning message to the US, and the US's credit rating was very safe. Moody's also weighed in, saying the US rating was safe despite increased debt.

EUR weakened in a choppy manner from around 1.40 to just under 1.39. GBP bucked the trend to rally from 1.5935 to 1.6085. USD/JPY dipped from 95.50 to 94.65, recovering to 95.20.

AUD spent much of the London and NY sessions clustered around 0.7850, with a sudden drop an hour ago to 0.7770.

NZD ranged around 0.6200, the sudden drop this morning to 0.6160. AUD/NZD edged higher to a 1.26 to 1.27 ranged, and will remain nervous ahead of the NZ budget release at 2pm NZT.

US existing home sales continue to see-saw, most recently rising 2.9% in April, although the annualised pace remains within the 4.49mn to 4.74mn range that has prevailed since November last year (down from 2005's 7.25mn peak). On this basis, we can increasingly confidently call the “bottom” for this sector of the US housing market, as long as we recognise that sales are being supported by the distressed vending of foreclosed properties at knockdown prices. That view is supported by the price data, down 15.4% yr compared to April 2008; the excessive supply of unsold homes is likely to keep that downward pressure on prices for some time yet.

US FHFA house prices down 1.1% in March. The separate government house price measure, based on homes that have been sold at least twice and financed via Freddie Mac or Fannie Mae, resumed its downtrend back in March after surprise gains in the first two months of 2009. The annual rate of decline for this index in Q1 was -7.1% yr, compared to the cycle low of -8.3% yr in Q4 last year. This single digit pace of decline compares to the much steeper annual falls recorded by the NAR price data above and Tuesday's S&P-CS measures, both well into double digit negatives. Those measures have broader coverage of housing transactions across the US and tend to feature more distressed sales than the FHFA data.

Treasury Secretary Geithner said the economy was showing some initial signs of stability although we would characterise most of the data as indicating a slower pace of decline.

Japan's trade balance close to expectations at -¥52bn s.a. The raw balance was +¥69bn, which is the relevant number for the analysis of financial flows. Exports moderated their rate of decline to -39% from -46%yr, while imports recorded a 36% rate of decline (-37% in March). Also today, small business confidence for May showed a modest uptick from 30.8 to 34.1, with one-month ahead expectations factoring in a further gain to 37.4.

The annual German inflation rate fell to zero this month, the lowest since records for reunified Germany began in 1992, beating the previous low-point of 0.2% yr in 1999. The annual inflation rate peaked just ten months ago in July 2008 at 3.3% yr.

UK banks issue 28k mortgages in April. The number of new mortgages approved by UK banks bottomed out at 18k per month in November last year (down from the 87.5k peak earlier this decade), but had shown some signs of recovery earlier this year. However that upswing seems to have stalled in recent months. Industry wide data will be published by the Bank of England next week (the banks currently have a 68% share of new approvals).

Outlook

The NZD is sitting on 0.6150 minor support right now, a break pointing to 0.6100 which should hold on the day, barring event shock (such as an S&P downgrade tonight after the budget). Market consensus is for NZ's AA+ rating to remain intact, but with the negative outlook attached; that scenario would likely produce only a small relief rally at best.

Events Today

Date	Country	Release	Last	Forecast
28 May	NZ	Budget 2009 NZDbn	5.64	–1.50
	Aus	RBA Deputy Governor Battellino Speaking
		Q1 Capex	6.0%	–5.0%
		2009/10 CAPEX Intentions, AUDbn	79.9	–
		Q1 Construction Work Done	1.7%	–3.5%
	US	Apr Durable Goods Orders	–0.8%	flat
		Initial Jobless Claims w/e 23/5	631k	640k
		Apr New Home Sales	–0.6%	–1.0%
	Jpn	Apr Retail Sales %yr	–3.9%	–3.3%
	Eur	May Retail PMI	48.4	–
		May Business Climate Index	–3.33	–3.15
		May Consumer Confidence	–31	–29
		May Economic Confidence	67.2	70
	Ger	Unemployment ch’ 000	58k	80k
	UK	May CBI Distributive Trades Survey
		May GfK Consumer Confidence	–27	–30
29 May	NZ	Apr Building Consents s.a.	–4.6%	9.00%
	Aus	Apr Private Credit	0.1%	0.20%
	US	Q1 GDP, Prelim % ann’lsd	–6.1%	5.00%
		May Chicago PMI	40.1	43.5
		May UoM Consumer Confidence (F)	67.9	68.5

Westpac Institutional Bank
http://www.wib.westpac.co.nz/

Disclaimer

All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.

USD Rebounds Off Lows

Daily Forex Fundamentals | Written by Easy Forex | May 28 09 01:27 GMT |

U.S. Dollar Trading (USD) tested new lows in the Asian and European sessions before rebounding sharply into the close of the day. US stocks sold off in the afternoon on the back of rising US Treasury Yields hurting investor sentiment in stocks and Commodities. Existing Home Sales are forecast at 4.68M vs. 4.65M forecast. Crude Oil finished up $2.20 to finish the day at $63.20 a barrel. In US share markets, the Nasdaq was down 19 points or -1.11% and the Dow Jones was down 173 points or -2.05%. Looking ahead, Weekly Jobless Claims are forecast at 630k and New Home Sales (April) are forecast at 0.36M vs. 0.356M previously.

The Euro (EUR) struggled at the 1.4000 level before falling heavily in the final hours of the day on the back on rising US yields. The pair fell to 1.3850 but speculated support failed to appear and the slide continued into Thursday. Also hurting the sentiment was a FDIC report with a negative outlook on US loan quality. German CPI fell to 0.0% on a y/y basis. Overall the EUR/USD traded with a low of 1.3822 and a high of 1.3998 before closing at 1.3980.

The Japanese Yen (JPY) kept to a very tight range as the USD strengthened and Yen weakened broadly together. Most of the crosses were under pressure from the rise in risk aversion although USD/JPY was very well supported on dips under 95. Overall the USDJPY traded with a low of 94.64 and a high of 95.74 before closing the day around 95.40 in the New York session. UPDATE April Retail Sales are forecast at -2.9% vs. -3.3%.

The Sterling (GBP) broke comfortably back above 1.6000 the highest level since January as EUR/GBP selling and the UK mortgage industry showed signs of rebounding off November lows. The late equity pull back saw the 1.6000 handle being given up on profit taking. Further gains will require the continuing recovery of global financial system. Overall the GBP/USD traded with a low of 1.5924 and a high of 1.6089 before closing the day at 1.5970 in the New York session.

The Australian Dollar (AUD) failed at 0.7900 and the late drop in US stocks prompted heavy selling/long liquidation and the pair slipped to 0.7750. Although Commodities rallied in the US, the AUD rally is starting to show signs of exhaustion. Overall the AUD/USD traded with a low of 0.7743 and a high of 0.7894 before closing the US session at 0.7780. Looking ahead, Q1 Capex forecast at -7% vs. 6% previously.

Gold (XAU) continued in the recent orbit around $950 an ounce as Gold demand was countered by USD strength. Overall trading with a low of USD$943 and high of USD$960 before ending the New York session at USD$947 an ounce.

Easy Forex
http://www.easy-forex.com

Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

FX Technical Commentary

Daily Forex Technicals | Written by Easy Forex | May 28 09 01:30 GMT |

Euro 1.3830

Initial support at 1.3728 (May 21 low) followed by 1.3728 (May 21 low). Initial resistance is now located at 1.4058 (Jan 2 high) followed by 1.4148 (Dec 31 high)

Yen 95.35

Initial support is located at 93.54 (Mar 19 low) followed by 92.52 (Mar 19 low). Initial resistance is now at 96.70 (May 19 high) followed by 97.84 (May 19 high).

Pound 1.5950

Initial support at 1.5757 (May 22 low) followed by 1.5576 (23.6% retrace 1.4398 to 1.5944). Initial resistance is now at 1.6198 (Nov 5 high) followed by 1.6464 (Oct 31 high).

Australian Dollar 0.7765

Initial support at 0.7703 (May 26 low) followed by the 0.7630 (May 19 low). Initial resistance is now at 0.7929 (50% retracement of 0.9847-0.6012 decline) followed by 0.8097 (Sep 30 high).

Gold 945

Initial support at 936 (May 21 low) followed by 925 (May 20 low). Initial resistance is now at 967 (Mar 20 high) followed by 978 (Feb 25 high).

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3531	1.3728	1.3830	1.4058	1.4148
USD/JPY	92.52	93.54	95.35	96.70	97.84
GBP/USD	1.5576	1.5757	1.5950	1.6198	1.6464
AUD/USD	0.7630	0.7703	0.7765	0.7929	0.8097
XAU/USD	925.00	936.00	945.00	967.00	978.00

Easy Forex
http://www.easy-forex.com

Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | May 28 09 02:14 GMT |

EURUSD Outlook

Yesterday I said about battle between buyers and sellers reflected on resistance line at 1.4050 and trendline support on hourly chart, and the battle was won by the sellers as the trendline support violated to the downside. This fact should trigger further bearish pressure testing key support level at 1.3736 area in nearest term. However, for me this is not the best time to trade since bullish outlook of medium term still intact and this bearish momentum still considered as counter trend movement/correction of the medium term trend. CCI just cross the 100 line down on daily chart suggesting a potential downside pressure.

EURUSD Daily Supports and Resistances:

S1= 1.3767
S2= 1.3708
S3= 1.3592
R1= 1.3942
R2= 1.4058
R3= 1.4117

GBPUSD Outlook

After breakout from the rectangle area (1.5966), yesterday the GBPUSD had bullish momentum, topped at 1.6085 but the bullish power seemed very limited as the the pair closed lower at 1.5955. I think we are now back in the no trading zone. However, if the price consistently move above 1.6000 area today, we might see further upside pressure testing 1.6125 area. Immediate support is seen at 1.5922 (yesterday's low). Break below that area could trigger further bearish pressure towards 1.5850 area. CCI just cross the 100 line down on h4 chart suggesting a potential downside pressure.

GBPUSD Daily Supports and Resistances:

S1= 1.5889
S2= 1.5824
S3= 1.5726
R1= 1.6052
R2= 1.6150
R3= 1.6215

USDJPY Outlook

The USDJPY had moderate bullish momentum yesterday. We still have minor bullish channel seen on h4 chart with 96.60/70 resistance level to test. Immediate resistance is seen at 95.50. Break above that area could trigger further bullish momentum. Initial support at 94.50 area. CCI just cross the 100 line up on h4 chart suggesting a potential upside pressure.

USDJPY Daily Supports and Resistances:

S1= 94.80
S2= 94.30
S3= 93.96
R1= 95.64
R2= 95.98
R3= 96.48

USDCHF Outlook

The USDCHF was corrected higher yesterday. On hourly chart below we can see that after failed to break below 1.0810 support (triple bottom) the pair had a bullish momentum. The key level at this phase is 1.0930. Break above that area could trigger further bullish momentum towards 1.1010. CCI just cross the -100 line up on daily chart suggesting a potential upside pressure.

USDCHF Daily Supports and Resistances:

S1= 1.0849
S2= 1.0769
S3= 1.0729
R1= 1.0969
R2= 1.1009
R3= 1.1089

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

Asian Stocks Drop on ANZ Banking Share Sale, Lower Metal Prices

By Jonathan Burgos and Shani Raja

May 28 (Bloomberg) -- Asian stocks fell, led by banks and mining companies, after Australia & New Zealand Banking Group Ltd. sold shares and metal prices declined.

ANZ Banking, Australia’s fourth-largest lender, dropped 1.9 percent after selling shares at a discount. Nomura Holdings Inc., Japan’s biggest brokerage, lost 1.3 percent after Moody’s Investors Service lowered its credit rating. BHP Billiton Ltd., the world’s No. 1 mining company, sank 2 percent. Stocks also fell after a surge in bond yields sparked concern households and businesses will face higher debt burdens.

“A lot of companies are taking advantage of the better market sentiment to raise capital by selling equity,” said Ivan Tham, Singapore-based head of funds management at the state- backed Kuwaiti Finance House, which has about $24 billion in assets. “The question is whether liquidity in the market can absorb all these equity issues. I’m struggling to find value in the market.”

The MSCI Asia Pacific Index fell 0.9 percent to 99.90 at 11:25 a.m. in Tokyo. The gauge has risen 42 percent since falling to a more than five-year low on March 9 on speculation the worst of the economic crisis had passed.

Japan’s Nikkei 225 Stock Average lost 0.1 percent as the government said retail sales in the country fell for an eighth month. Australia’s S&P/ASX 200 Index dropped 1.4 percent, while Singapore’s Straits Times Index sank 1.3 percent.

Shipping stocks in the region gained, led by STX Pan Ocean Co.’s 5.9 percent surge in Seoul as cargo rates climbed. Japan Tobacco Inc. slumped 4.3 percent on plans to sell bonds.

Borrowing Costs

Futures on the Standard & Poor’s 500 Index were little changed. The gauge dropped 1.9 percent in New York yesterday, the biggest slide in two weeks, as Sheila Bair, chairman of the Federal Deposit Insurance Corp., said the asset quality of U.S. banks remains a “major concern.”

The MSCI Asia Pacific Index has lost 32 percent in the past 12 months as the deepening credit crisis caused losses at the world’s biggest financial institutions to swell to almost $1.5 trillion, according to data compiled by Bloomberg.

The yield on 10-year U.S. Treasuries dropped two basis points today, according to data compiled by Bloomberg. Yields surged 19 basis points yesterday, the most since Jan. 19, sparking concern yields on mortgage bonds will increase.

“The real concern hanging over markets globally is that high borrowing costs are going to derail any economic recovery,” said Ben Potter, a Melbourne-based analyst at IG Markets. “People are concerned government efforts aren’t going to be able to bring down those costs.”

Shipping Rally

ANZ Banking Group dropped 1.9 percent to A$15.27 in Sydney after a one-day trading halt. The company sold A$2.5 billion ($1.9 billion) of shares at A$14.40 each, a 7.5 percent discount to the previous closing price, to fund its bid for Royal Bank of Scotland Plc’s Asian assets.

Nomura lost 1.3 percent to 710 yen. Moody’s lowered the company’s credit rating by two levels to Baa2, as the financial crisis hurt earnings.

Sony Corp., the maker of PlayStation 3 game machines, fell 0.6 percent to 2,460 yen. The company had its debt rating cut one level by Moody’s to A3 on concern slowing demand, increased competition and the stronger yen will erode earnings.

BHP declined 2 percent to A$33.95. Rio Tinto Ltd., the world’s third-biggest mining company, lost 1 percent to A$63.74. A gauge of six metals in London fell 1 percent yesterday. Copper futures in New York sank 1.2 percent today, adding to yesterday’s 0.9 percent drop.

Baltic Dry

STX Pan Ocean, South Korea’s biggest bulk carrier, jumped 5.9 percent to 12,500 won. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping company, added 0.8 percent to 404 yen. Its bigger rival Mitsui O.S.K Lines Ltd. gained 1.4 percent to 640 yen.

The Baltic Dry Index, a measure of shipping costs for commodities, climbed 7.6 percent in London yesterday, its 18th- straight day of gains. The measure surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore.

Japan Tobacco slumped 4.3 percent to 274,600 yen. The company set terms for a 100 billion yen ($1.04 billion) sale of five-year, 1.128 percent bonds at par, according to a Nomura Securities Co. banker who is managing the deal.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

Japanese Shipping Stocks Rise on Cargo Fees; Developers Slide

By Jason Clenfield and Masaki Kondo

May 28 (Bloomberg) -- Japanese shipping shares climbed after commodity-shipping fees rose to an eight-month high. Property developers slumped after a 9.4 percent rally in the past three days.

Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, rose 2.2 percent. Inpex Corp., the nation’s largest oil and gas explorer, climbed 2 percent after Nomura Holdings Inc. raised the stock to “buy.” Developer Sumitomo Realty & Development Co. sank 2.2 percent, while Sumitomo Mitsui Financial Group Inc. fell 1.3 percent after a drop in U.S. financial shares.

The Nikkei 225 Stock Average declined 14.90, or 0.2 percent, to 9,423.87 as of 9:30 a.m. in Tokyo. The broader Topix index rose 1.99, or 0.2 percent, to 894.84, with three stocks rising for every two that retreated.

The Baltic Dry Index, a measure of shipping costs for commodities, surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore. The gauge rose for a 17th day to the highest since Sept. 30.

The Standard & Poor’s 500 Index dropped 1.9 percent in New York, the biggest slide in two weeks, led by financial companies as the yield on 10-year U.S. Treasuries climbed 18 basis points to 3.732 percent.

To contact the reporter for this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

GBP Breaks above 1.60

by Korman Tam

The greenback was mixed in the Wednesday session, slumping sharply against the sterling to a near 7-month low and edging up versus the yen.

Economic data from the US was better than expected earlier today. Existing home sales shot up by 2.9% in April to 4.68 million units, reversing a downwardly revised 3.4% decline in March. Traders will look ahead to data on Thursday, including weekly jobless claims, April durable goods orders and new home sales.

Sterling Rallies

The pound advanced to its highest level since October 2008 against the dollar, above the key 1.60-level to 1.6084 and its strongest level against the euro since February at 0.8655. The sterling, which has been aggressively sold in recent months, garnered the lion’s share of the move to riskier assets overnight. With speculation that US debt may also follow in the footsteps of the UK credit outlook, which was downgraded by the S&P last week from stable to negative, traders continued to bid the sterling higher from oversold territory.

The economic calendar from the UK is light, with the release of the May CBI industrial trends survey. The CBI survey is expected to post a reading of -10 in May compared with a reading of 3 in April.

Cable holds steady near the 1.6060-level with interim resistance seen at 1.6085, followed by 1.61 and 1.6130. Subsequent ceilings are eyed at 1.6160, followed by 1.62 and 1.6250. On the downside, support starts at 1.6025 backed by 1.60 and 1.5970. Additional floors are seen at 1.5940, followed by 1.59 and 1.5850.

Euro Regains Footing

The euro recovered off its session lows against the dollar to edge back above the 1.39-foothold. A barrage of economic reports from the Eurozone are slated for release in the coming session, consisting of Germany’s May unemployment data, Eurozone economic sentiment, consumer sentiment, inflation expectations and business climate.

Germany’s May unemployment rate is expected to creep higher to 8.4%, from 8.3% a month earlier, while the unemployment change is seen jumping to 64k, up from 58k in April. The May Eurozone consumer sentiment is estimated to improve moderately to -30 from -31.0 a month earlier and industrial sentiment is seen edging up to -33 versus -35 in April.

Read more...

About Me

Business & Finance

Blog Archive

Economic Calendar

Friday, May 29, 2009

Thursday, May 28, 2009

Key News

Quotable

FX Trading - Bring on the Inflation

USD-CHF @ 1.0894/97...Support at 1.0800

Cable GBP-USD @ 1.5918/23...Resistance at 1.6047-80

Aussie AUD-USD @ 0.7813/17...Could dip towards 0.77

News And Views

Outlook

Euro 1.3830

Yen 95.35

Pound 1.5950

Australian Dollar 0.7765

Gold 945

EURUSD Outlook

GBPUSD Outlook

USDJPY Outlook

USDCHF Outlook

Subscribe To

Number Of Visitors

Followers

Links

Blog Directory