Thursday, October 23, 2008

Yen Climbs to Highest Since 2002 on Global Economic Concern

By Ye Xie and Agnes Lovasz

Oct. 23 (Bloomberg) -- The yen advanced to the highest level versus the euro in almost six years and rose against the dollar as global economic turmoil led investors to sell higher- yielding assets and pay back low-cost loans in Japan's currency.

Russia's ruble fell to the lowest versus the dollar since July 2006 as Standard & Poor's cut the country's debt rating outlook to negative. The dollar rose to the highest against the euro in almost two years as investors sought a haven.

``There's a fair amount of fear in the markets,'' said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. ``The yen is the safe haven.''

The yen gained 0.6 percent to 124.79 per euro at 10:20 a.m. in New York, from 125.60 yesterday. It touched 123.43, the strongest level since December 2002. The yen rose 0.3 percent to 97.37 per dollar from 97.66 after touching 96.86, the strongest since March 18. The U.S. currency increased 0.3 percent to $1.2818 per euro from $1.2855. It earlier touched $1.2728, the strongest since November 2006.

Sterling slid to the lowest level against the dollar in more than five years after the Office for National Statistics said today that retail sales in the U.K. declined 0.4 percent last month after rising 1.1 percent in August.

The pound dropped 1 percent to $1.6105 after touching $1.6042, the lowest level since September 2003. It fell yesterday as much as 3.4 percent, the biggest intraday decline since September 1992, when investor George Soros drove the currency out of Europe's system of linked exchange rates.

Falling Ruble

The ruble fell as much as 0.5 percent to 27.0664 per dollar, the weakest level in more than two years. S&P cut the outlook for Russia's BBB+ credit rating to ``negative'' from ``stable,'' saying the country's rating could be downgraded if the cost of the government's bank rescue increases.

Brazil's real rose, erasing a decline of as much as 5.8 percent, as the central bank bought the currency to stem a two- month rout. The real gained 2.7 percent to 2.3166 per dollar. The currency has lost 21 percent in the past month.

The yen gained 0.9 percent to 65.15 against the Australian dollar and 1.3 percent to 156.78 versus the pound on speculation investors will unwind carry trades, in which they get funds in a country with low borrowing and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 4.5 percent in the U.K. and 6 percent in Australia.

Japan's currency may strengthen to 90 per U.S. dollar by March 2009 as investors dump higher-yielding assets funded in Japan and bring their cash home, Barclays Capital said in a research note today.

Yen vs. Dollar

Japan's yen has appreciated 8 percent against the dollar this year, the only gain among the 16 most actively traded currencies tracked by Bloomberg.

The euro has lost 20 percent versus the dollar since touching the all-time high of $1.6038 on July 15. The European economy may be headed for a recession that could last two to three years, Finland's Finance Minister Jyrki Katainen said yesterday in an interview on Bloomberg Television.

Net selling of European stocks among institutional investors has been three times higher than average over the past year, and foreign investors account for most of the sales, according to Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon, the world's largest custodial bank, with more than $23 trillion in assets under administration.

``One thing that stands out this week is huge European equity market outflows,'' said Shankar. ``The net selling is adding to pressure on the euro. Growth in the euro zone is deteriorating very fast.''

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Agnes Lovasz in London at alovasz@bloomberg.net

Brazil Real Rises as Central Bank to Sell $50 Billion of Swaps

By Jamie McGee

Oct. 23 (Bloomberg) -- Brazil's real rose, erasing an initial decline of as much as 5.8 percent, as the central bank said it's prepared to sell as much as $50 billion of currency swaps to stem a two-month rout.

The real gained 1.8 percent to 2.3373 per dollar at 9:37 a.m. New York time, from 2.379 yesterday. The central bank also bought reais in the spot market to shore up the currency after it dropped 11 percent over the past two days.

``It's a very significant chunk of money,'' said Alvise Marino, an emerging-markets analyst at IDEAglobal in New York. ``The central bank is willing to go beyond expected.''

To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net

Mexico Peso Trades Near Record Low on Waning High-Yield Demand

By Valerie Rota

Oct. 23 (Bloomberg) -- Mexico's peso traded near a record low amid a decline in most emerging-market currencies and global stocks as investors pulled out of higher-yielding assets.

Yields on Mexico's benchmark peso-denominated bond rose for an eighth trading day, reaching a 3 1/2-year high. Standard & Poor's lowered Russia's credit rating outlook to negative, while Argentine lawmakers battled to block President Cristina Fernandez de Kirchner from seizing privately managed pension funds as the government struggles to avert its second default this decade.

``Risk aversion is very strong,'' said Benito Berber, a macro strategist with RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. This makes investors ``run towards the dollar at any price.''

The peso fell as much as 3 percent to 14.3017 per U.S. dollar, from 13.879 yesterday. It traded at 12.3259 at 10:17 a.m. New York time. Mexico's peso has fallen 26 percent since touching a six-year high on Aug. 4, joining a decline in all but two of the 26 most-traded emerging-market currencies, the Hong Kong dollar and the Chinese yuan.

Mexico's peso rebounded, rising as much as 2.3 percent, after the Brazilian central bank bought the real in a bid to stem a two-month rout, said Omar Martin del Campo, a currency trader at Banco Ve Por Mas SA in Mexico City. Brazil's real rose 2.3 percent, snapping two days of declines.

Yields on Mexico's 10 percent bond due in December 2024, the country's most-actively traded security in pesos, rose 27 basis points, or 0.27 percentage point, to 10.92 percent, its highest since May 2005. The yield has climbed 2.02 percentage points since Oct. 13. The bond's price fell 1.94 centavo to 93.03 centavos per peso today, according to Banco Santander SA.

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.

Gold Drops Below $700 as Investors Flee to Cash; Silver Falls

By Pham-Duy Nguyen

Oct. 23 (Bloomberg) -- Gold fell below $700 an ounce as a rising dollar and stock-market losses forced investors to sell the metal to raise cash. Silver also dropped.

Before today, gold slid 12 percent this year as the dollar gained 11 percent against a weighted basket of six major currencies and the Dow Jones Industrial Average lost 36 percent. The metal reached a record in March. Gold hasn't traded below $700 in more than a year.

``The name of the game is to raise dollars,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``People will sell their winners to fund their losers. The best performer since the financial crisis began has been gold.''

Gold futures for December delivery fell $24.80, or 3.4 percent, to $710.40 an ounce at 9:27 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $695.20, the lowest since Sept. 6, 2007, the last time the metal traded for less than $700.

Silver futures for December delivery fell 12.5 cents, or 1.3 percent, to $9.335 an ounce. Before today, the price dropped 37 percent this year.

The dollar has risen 4.1 percent this week against the basket of currencies.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Oil Falls as Saudi Arabian Minister Fails to Endorse OPEC Cut

By Alexander Kwiatkowski

Oct. 23 (Bloomberg) -- Crude oil fell, giving up earlier gains, after Saudi Arabia failed to endorse Iran's call for an OPEC production cut when the group meets tomorrow.

Oil prices lost earlier gains after the oil minister of Saudi Arabia, the group's biggest producer, declined to express his support for a possible cut on his arrival in Vienna. Iranian Oil Minister Gholamhossein Nozari had earlier called for the group to slash production by 2 million barrels a day.

``OPEC's major problem is that they have never faced a demand-led surplus before,'' David Hufton of London-based PVM Oil Associates Ltd. said in an e-mailed note today. ``Cutting supply when the other leg is being cut off faster does not restore the balance.''

Crude oil for December delivery fell as much as 85 cents, or 1.3 percent, to $65.90 a barrel on the New York Mercantile Exchange. The contract traded at $66.88 at 1:57 p.m. London time. It earlier rose as much as $1.75 to $68.50 a barrel.

``Who said anything about a cut?'' Saudi Arabia's Ali al- Naimi said when asked whether he supports the possibility of the group agreeing to reduce output when it meets tomorrow. ``Prices will be determined by the market.''

Prices have more than halved since rising to a record $147.27 on July 11 on concerns that the global economic slow down will cut oil demand. Yesterday, futures fell $5.43 to $66.75, the lowest settlement since June 13, 2007.

U.S. Demand Falls

U.S. fuel demand during the past four weeks was down 8.5 percent from a year ago, according to an Energy Department report yesterday. Gasoline demand averaged 8.8 million barrels a day in the past four weeks, down 4.3 percent from the same period last year, the report showed.

The global economy will be in a recession through most of next year as weak demand in the U.S. spreads to Europe and beyond, Dow Chemical Co. Chief Executive Officer Andrew Liveris said in a telephone interview today.

``The rate of reduction in demand is good for cutting,'' Iran's Nozari told reporters today.

Brent crude oil for December settlement fell as much as 52 cents, or 0.8 percent, to $64 a barrel on London's ICE Futures Europe exchange. It traded at $64.51 at 1:45 p.m. local time.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Copper, Nickel, Zinc, Aluminum Extend Declines on Lower Demand

By Claudia Carpenter

Oct. 23 (Bloomberg) -- Copper, nickel and zinc extended declines in London on speculation the global economic slump will crimp demand for industrial, or base, metals from investors who had helped send commodity prices to a record in July.

Copper fell below $4,000 a metric ton for the first time since November 2005, nickel's the cheapest since August 2003 and zinc is the lowest since November 2004. The Bloomberg World Mining Index of 162 companies has lost $493 billion in value since the bankruptcy of Lehman Brothers Holdings Ltd. in September spurred the financial crisis worldwide.

``As long as we have uncertainty about the overall financial system, this is probably not yet the bottom for base metals,'' said Christoph Eibl, who helps manage more than $1 billion of commodity investments at Tiberius Asset Management AG in Zug, Switzerland. ``People just don't want to own any commodities that have a high correlation to overall economic developments.''

Copper for delivery in three months declined $163, or 3.9 percent, to $3,992 a ton as of 11:17 a.m. on the London Metal Exchange and earlier fell to $3,851. Prices have dropped 54 percent since July 3, the peak in the Reuters/Jefferies CRB Index of 19 commodities. That index has declined 44 percent during the same period.

European and U.S. stock indexes fell and shares in Japan dropped to the lowest in five years. BHP Billiton Ltd., the world's biggest mining company, dropped 6.1 percent in trading on the London Stock Exchange.

Japanese Exports

Japan's Finance Ministry said the nation's exports rose 1.5 percent in September while economists had expected a 5.1 percent gain. The government said this week that the world's second- largest economy has probably entered its first recession in six years.

``We're seeing a slowdown in China,'' Russell Norton, head of commodities sales at Barclays Capital in Asia, said in a Bloomberg Television interview. Buying patterns there ``have always been very price sensitive so when they see a falling market the buyers step back and let the market fall.''

Inventories of copper in warehouses monitored by the LME advanced 1,500 tons to 209,250 tons and aluminum stockpiles jumped 3,475 tons to 1.5 million tons, the most since February 1995, exchange figures show.

Aluminum dropped $12 to $1,993 a ton and earlier fell to $1,970, the lowest since November 2005. Vimetco NV, the aluminum producer controlled by Russia's Vitaliy Machitski, cut 80,000 tons of output a year in China and will delay investment after prices slumped, the Amsterdam-based company said in a statement today. China is the world's largest producer of aluminum.

Nickel Drops

Nickel declined $399 to $9,601 a ton after falling to $9,200. Nickel's biggest use is in the manufacture of stainless steel. That market is ``weaker'' partly because some distributors have postponed purchases because of falling nickel prices, Outokumpu Oyj, the world's fourth-largest maker of stainless steel, said in a statement today. Nickel has dropped 63 percent this year.

Zinc declined $25 to $1,115 after dropping to $1,076, lead fell $50, or 4 percent, to $1,211 a ton and tin dropped $141 to $11,409 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

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Enea Opens Polish IPO, Undeterred by Tumbling Stocks

By Katarzyna Klimasinska

Oct. 23 (Bloomberg) -- Enea SA, the first Polish power distributor to sell shares on the Warsaw Stock Exchange, started its 2.87 billion-zloty ($969 million) initial public offering, undeterred by the global plunge in stocks.

Enea is selling a 30 percent stake, all new shares, seeking cash to build new power plants. The Poznan, Poland-based company already postponed the offering twice this year and at least six other Polish companies canceled or delayed IPOs over the last month, as the benchmark WIG20 Index declined 34 percent.

``This is the worst possible timing for an IPO,'' said Kamil Gaworecki, who helps manage about 4.9 billion zloty at pension fund Nordea PTE SA, adding that the estimated 2008 price-earnings ratio of 40 valued the company higher than its European peers. ``The State Treasury may have trouble closing this offering.''

Enea, owned by the Polish government, will sell shares at a minimum of 19.25 zloty apiece to power-industry investors, and to retail and institutional investors at a 10 percent discount, it said on its Web site. The subscription period will begin tomorrow and the company expects to start trading on Nov. 10.

Enea is coming to the market as banks such as Goldman Sachs Group Inc. and Merrill Lynch & Co. cut their forecasts for growth in central Europe's largest economy. CEZ AS of Czech Republic, the largest electricity provider listed on the Warsaw bourse, has lost 45 percent this year.

EBRD Support

The IPO does have support from the European Bank of Reconstruction and Development, which will subscribe for as much as 15 percent of the offering, according to the London-based bank's Web site. Enea also wants other power producers to buy two-thirds of the new shares.

The government, which now holds 100 percent of Enea, plans to sell its holdings to a power company next year. Investors interested in the controlling stake will probably bid in the IPO, said Deputy Treasury Minister Joanna Schmid, declining to name potential bidders.

Poland predicts that within years its largest cities may face power shortages during peak demand times, because the country has failed to build enough capacity to meet rising demand from air-conditioned offices and factories.

``Our target is to get funding for the company, whatever it takes,'' Chief Executive Officer Pawel Mortas said during a press conference in Warsaw today. ``The company is in very good condition, it has no debt.''

Bank loans would be a more expensive way of raising capital than a share sale and Enea may cancel some investments if the IPO fails, Mortas also said.

Bank Zachodni WBK SA and Credit Suisse Group are arranging the sale.

Warsaw overtook London to become Europe's hottest market for IPOs this year. Six companies debuted in Poland since last month's bankruptcy of Lehman Brothers Holdings Inc., bringing this year's total to 68, data compiled by Bloomberg show. In the U.K., 59 initial share sales took place in 2008, the data show.

To contact the reporter on this story: Katarzyna Klimasinska in Warsaw at kklimasinska@bloomberg.net

Russian Stocks Tumble to Three-Year Low as Debt Risk Climbs

By William Mauldin

Oct. 23 (Bloomberg) -- Russian stocks tumbled, erasing gains for this week, led by OAO Sberbank after the country's debt risk rose and its reserves fell for a third straight week.

Standard & Poor's cut the outlook for Russia's BBB+ credit rating to ``negative'' from ``stable,'' saying the country's rating could be downgraded if the cost of the government's bank- rescue operations increases.

The ruble-denominated Micex Index sank 5.4 percent to 594.18 at 3:35 p.m. in Moscow, the lowest since May 2005. The Micex Stock Exchange halted trading for an hour because of the slump. The dollar-based RTS Index dropped 2.4 percent to 650.07.

The yield on Russia's 30-year, 7.5 percent dollar notes increased 34 basis points to 11.32 percent. Credit-default swaps on Russian government debt, which protect bondholders from default, climbed to 1052.5 basis points, according to CMA Datavision prices. That's the highest level since 2001, according to Bloomberg data.

``The street is looking for protection at any price,'' said Constantin Demchenko, head of trading at Everest Asset Management in Moscow. ``The risk to equities should not be lower than that of the bonds, and with credit-default swaps jumping we should see equities falling. Any recovery would start from fixed income, not equities.''

Sberbank, Russia's biggest bank and holder of ruble deposits, slipped 2.2 rubles, or 8.6 percent, to 23.50 rubles, the lowest in three years. Bank Vozrozhdenie, a regional mortgage lender, dropped 2.9 percent to 315.50 rubles.

The Russian ruble weakened to its lowest level against the dollar in two years, falling to 26.99 to the dollar. Russia's international reserves, the world's third largest, fell $14.9 billion last week after the central bank sold currency to prop up the ruble. Reserves declined more than $15 billion in each of the two previous weeks.

August 1998

``There is a rumor racing through Russia that the government is about to devalue the ruble,'' said a report by Stratfor, a U.S.-based risk advisory group. ``Everyone in Russia remembers the outcome of the August 1998 ruble crisis, which dislocated the entire economy and seemed to reduce Russia from a slightly tattered but still proud superpower to a pathetic basket case in one harrowing week.''

Crude futures overnight dropped $5.43 to $66.75 a barrel in New York, the lowest settlement since June 2007. Russian equity benchmarks are dominated by oil and gas producers.

OAO Lukoil, Russia's second-biggest oil producer, sank 4.4 percent to 835.01 rubles. OAO Tatneft, the oil producer controlled by Russia's republic of Tatarstan, dropped 7.3 percent to 31.88 rubles.

Credit-default swaps protect bondholders against default by paying the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. An increase indicates deterioration in the perception of credit quality.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.

U.K. Stocks Fall for Third Day; Anglo American, BHP Retreat

By Sarah Thompson

Oct. 23 (Bloomberg) -- U.K. stocks declined for a third day, led by mining companies, on deepening concern a global economic slump will damp demand for commodities.

Anglo American Plc slipped 4 percent after saying it is reviewing its projects and capital expenditure as the global credit crisis leads to slowing economic growth and falling metal prices. Antofagasta Plc, Rio Tinto Group and BHP Billiton Ltd. also retreated.

The FTSE 100 Index eased 100.91, or 2.5 percent, to 3,939.98 at 1:10 p.m. in London, having gained as much as 1.1 percent. The FTSE All-Share index lost 2.5 percent and Ireland's ISEQ index was little changed.

``Given the slowdown in growth we are seeing around the world, the previous valuations on which the mining sector was trading were unsustainable and pricing now reflects a more realistic outlook for earnings going forward,'' said Alan Borrows, who helps oversee 1.1 billion pounds at Midas Capital Partners in Liverpool, England.

Anglo American, the world's fourth-biggest diversified mining company, fell 5.9 percent to 1,200 pence. ``Against this economic background, Anglo American is conducting a review of its project pipeline,'' the company said in a statement distributed by London's Regulatory News Service.

Antofagasta, which controls three copper mines in Chile, slumped 13 percent to 252 pence. Copper tumbled below $4,000 a ton for the first time since November 2005. Lead, nickel and zinc also fell in London.

Rio Tinto, the world's second-largest iron ore exporter, lost 13 percent to 2,096 pence. BHP, the world's biggest mining company, slipped 10 percent to 791.5 pence.

European Union regulators told lawyers for BHP its $69 billion hostile bid for Rio may break antitrust rules.

Unilever, the world's second-largest consumer-products, added 1.5 percent to 1,377 pence. Nestle SA, the world's biggest food company, raised its forecast for sales growth.

Reckitt Benckiser Plc, the largest maker of household cleaners, advanced 0.8 percent to 2,449 pence.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

U.K. companies:

Cattles Plc (CTT LN) added 5.25 pence, or 15 percent, to 40. The U.K. provider of subprime loans said earnings in the second half of the year are meeting its forecast as it progresses with a plan to get a banking license.

DSG International Plc (DSGI LN) climbed 2.5 pence, or 11 percent, to 26. The U.K.'s largest electronics retailer said a sales decline got no worse in the past two months and plans to cut capital spending as consumers rein in spending on computers and appliances.

Raymarine Plc (RAY LN) slumped 41 pence, or 65 percent, to 22.25. The U.K. maker of electronic marine products such as fish- finders said full-year profit will ``significantly'' miss analysts' estimates as fewer boats are built.

Rightmove Plc (RMV LN) lost 20 pence, or 9.1 percent, to 199.25. The operator of the U.K.'s largest residential-property Web site will cut its workforce by 20 percent to save money as fewer house sales are completed. The company had fallen to its lowest-ever value.

Wolseley Plc (WOS LN) decreased 22.75 pence, or 7.5 percent, to 282. The world's biggest distributor of plumbing and heating equipment will fire 3,000 jobs at its unprofitable U.S. Stock Building Supply unit following the worst housing slump since the Great Depression and a failed attempt to sell the business.

To contact the reporters on this story: Kevin Crowley in London kcrowley1@bloomberg.net Sarah Thompson in London at sthompson17@bloomberg.net.

Canada Stocks Rise as EnCana Gains on Earnings; Suncor Drops

By John Kipphoff

Oct. 23 (Bloomberg) -- Canadian stocks gained for the first time in three days, led by energy producers, after EnCana Corp. and reported earnings that beat analysts' estimates.

Gains among commodity stocks were limited as the prices of gold and copper fell and crude oil fluctuated after dropping to the lowest in 16 months. Suncor Energy Inc. fell after cutting its budget for spending on expansion.

The Standard & Poor's/TSX Composite Index rose 22.82, or 0.3 percent, to 9,259.70 at 9:56 a.m. in Toronto after dropping 5.7 percent yesterday. Canada's benchmark fell 21 percent in October before today, poised for its steepest monthly drop since 1987, on concern that more than $660 billion in credit losses, and a global economic slowdown, will destroy demand for the nation's commodity-related assets.

EnCana rose 2.5 percent to C$51.99. Canada's largest gas producer said third-quarter profit more than tripled to $3.55 billion, or $4.73 a share, from $934 million, after output increased and energy prices surged. Excluding such items as a $2 billion gain in the value of hedging contracts, profit was $1.92 a share, 15 cents higher than the average of 15 analyst estimates compiled by Bloomberg.

Petro-Canada gained 2.3 percent to C$26. The country's third-largest oil company said third-quarter profit rose 61 percent to C$1.25 billion, or C$2.56 per share, from C$776 million, on higher prices, beating analyst estimates. Petro- Canada was expected to earn C$2.29 per share, the average estimate of 15 analysts surveyed by Bloomberg.

Suncor slid 1.8 percent to C$25.99. The world's second- largest oil-sands producer trimmed its 2009 capital budget by 33 percent to C$6 billion ($4.8 billion) and slowed construction at its Voyageur project. In September, Suncor said it would raise 2009 spending to C$9 billion from an estimated C$7.5 billion this year.

Kinross Gold Corp., Canada's third-largest bullion mining company, dropped 3.1 percent to C$11.03.

To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.

European Stocks Fall on Economy Concern; ABB, Daimler, BHP Drop

By Sarah Jones

Oct. 23 (Bloomberg) -- European stocks fell for a third day after ABB Ltd.'s orders were less than analysts estimated, Daimler AG cut its forecast and concern deepened the global economic slump will curb demand for commodities.

ABB, the world's largest builder of electricity grids, tumbled 20 percent. Daimler slumped 5.6 percent as the world's second-biggest maker of luxury cars suspended its share buyback program. BHP Billiton Ltd. and Rio Tinto Group sank more than 8 percent as copper tumbled below $4,000 a ton.

Europe's Dow Jones Stoxx 600 Index lost 1.7 percent to 205.93 at 3:14 p.m. in London. The index has plunged 44 percent in 2008 as credit-related losses and writedowns topped $650 billion in the worst financial crisis since the Great Depression.

``There is a recession in the U.S., and Europe, Japan and emerging markets are strongly impacted by it,'' said Dominique Netter, chairman of Edmond de Rothschild Asset Management, which oversees $36 billion in assets. ``The questions are how long will it be and what will be the severity.''

Analysts have cut profit forecasts this year as the credit turmoil spread, threatening economic growth. Earnings for companies in the Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted the start of the year, according to estimates compiled by Bloomberg.

Bond Risk, Money Markets

The cost of protecting corporate bonds from default surged to a record on concern that Argentina and Pakistan may default, worsening global economic turmoil. Credit-default swaps on the benchmark Markit iTraxx Crossover Index surged above 800 basis points for the first time, according to JPMorgan Chase & Co. prices.

Credit-default swaps on Russian bonds soared to 10.5 percent a year for the five-year contract, from 9.5 percent yesterday, according to CMA Datavision.

Standard & Poor's Ratings Services cut Russia's long-term sovereign debt rating outlook to negative because the cost of the government's ``bank rescue operation.'' The benchmark Micex Index tumbled 6 percent.

The cost of borrowing in dollars for three months in London fell by the smallest margin in nine days as concern about lending intensified even as central banks pour cash into money markets.

The London interbank offered rate, or Libor, for such loans dropped less than a basis point to 3.535 percent today, from 3.541 percent yesterday, the British Bankers' Association said. The overnight rate rose for the first time in 10 days, climbing 9 basis points to 1.21 percent. Asian rates increased for the first time in a week.

National Markets

National benchmark indexes fell in all 18 western European markets except the U.K. France's CAC 40 dropped 1 percent, while Germany's DAX sank 2.4 percent. The U.K.'s FTSE 100 added 0.1 percent.

U.K. retail sales fell in September as rising unemployment and the specter of a recession prompted British shoppers to curb spending. In France, business confidence slumped to the lowest in almost 15 years as the global credit crisis worsened, threatening to deepen a likely recession in the euro region's second-largest economy.

ABB declined 3.41 francs to 13.45 Swiss francs after saying orders at the Zurich-based supplier of factory robots and power substations advanced 7 percent to $8.89 billion. That is down from 33 percent growth a year earlier and short of the $9.56 billion predicted by analysts. Net income rose to a record $927 million, also short of analyst calculations.

Daimler, Fiat

Daimler fell 1.34 euros to 22,785 euros after the carmaker said earnings before interest and tax would be over 6 billion euros ($7.7 billion), down from 7 billion euros predicted earlier.

The carmaker suspended its share buyback program after the company reported a third-quarter profit of 213 million euros, missing analysts' estimate of 818 million euros in a Bloomberg News survey.

Fiat SpA dropped 3.9 percent to 6.29 euros after Italy's largest carmaker forecast earnings may plunge as much as 85 percent next year in a ``worst-case'' scenario if the financial crisis continues to sap credit and depress auto demand.

Net income may fall to 400 million euros if demand drops 20 percent. That compares with this year's profit forecast of 2.6 billion euros. The manufacturer declined to give official guidance for next year as it reported that third-quarter profit rose 1.9 percent.

BHP, the world's largest mining company, dropped 8.2 percent to 807.5 pence. Rio Tinto, the third-biggest, sank 11 percent to 2,124 pence. Xstrata Plc, the world's fourth-largest copper producer, fell 10 percent to 826.5 pence.

Commodities Slump

Copper led a retreat by base metals on the London Metal Exchange, falling below $4,000 a ton for the first time since November 2005. Gold dropped to the lowest in more than a year as the dollar gained.

Credit Suisse Group AG declined 8.5 percent to 42.58 francs after Chief Executive Officer Brady Dougan said he's ``cautious'' on the fourth-quarter and expects markets to remain ``very challenging.''

The Swiss bank posted a third-quarter loss of 1.26 billion Swiss francs ($1.08 billion), compared with a profit of 1.3 billion francs a year ago. The result was in line with a preliminary estimate Credit Suisse announced last week.

Nestle SA rallied 4.9 percent to 45.08 francs after the world's largest food company raised its forecast for sales growth and said nine-month revenue increased 3.4 percent to 81.36 billion francs.

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

Canada Stocks Rise as EnCana Gains on Earnings; Suncor Drops

By John Kipphoff

Oct. 23 (Bloomberg) -- Canadian stocks gained for the first time in three days, led by energy producers, after EnCana Corp. and reported earnings that beat analysts' estimates.

Kinross Gold Corp., Canada's third-largest bullion mining company, dropped 3.1 percent to C$11.03.

To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.

Brazilian Stocks Fall, Led by Vale, Sadia, B2W; Bolsa Climbs

By Alexander Ragir

Oct. 23 (Bloomberg) -- Brazilian stocks fell for a third day, led by commodity producers and retailers, as metal prices slid and Deutsche Bank AG cut its profit estimates for merchants on the prospect of a weakening currency and slowing economy.

Cia. Vale do Rio Doce, an iron ore miner which also produces cooper, led a decline in raw-material producers as copper fell below $4,000 a metric ton for the first time since November 2005. Sadia SA sank as Raymond James & Associates said currency swings and a possible recession next year will hurt food exporters. B2W Cia. Global do Varejo, the biggest online retailer, extended its two-day decline to 20 percent as Deutsche cut profit estimates for the industry by an average 9 percent for next year.

The Bovespa index lost 4.2 percent to 33,602.24 at 9:29 a.m. New York time. The BM&FBovespa MidLarge Cap index slid 4.4 percent, while the BM&FBovespa Small Cap index slipped 3.5 percent. Mexico's Bolsa index climbed 0.2 percent. Chile's Ipsa rose 0.2 percent.

Vale fell 2.5 percent to 23.50 reais.

Copper, nickel and zinc extended declines in London on speculation the global economic slump will crimp demand for industrial, or base, metals from investors who had helped send commodity prices to a record in July. China, the world's largest iron ore consumer, said the global market will be in surplus in 2009, one year earlier than expected, as the credit crisis slows economic growth and orders from steelmakers.

Sadia dropped 4.5 percent to 4.44 reais. Brazil's second- biggest food maker was initiated at ``underperform'' in new coverage at Raymond James.

B2W fell 4.8 percent to 23.15 reais. Deutsche cut the retailer's share-price estimate to 50 reais from 70 reais. Earnings estimates for the country's retailers were cut due to ``a further slowdown and weaker currency in Brazil than previously anticipated,'' wrote Reinaldo Santana, analyst at Deutsche.

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

Bristol-Myers, Goldman, Raytheon, UPS: U.S. Equity Preview

By Elizabeth Campbell and Whitney Kisling

Oct. 23 (Bloomberg) -- The following companies may have unusual price changes today in U.S. trading. Stock symbols are in parentheses, and share prices are as of 8:20 a.m. in New York, unless otherwise specified.

Alliance Data Systems Corp. (ADS US) rose 6 percent to $50 in late trading yesterday. The credit-card processor boosted its forecast for 2008 earnings by 5 cents a share to $4.40 a share. Analysts, on average, expected the company to earn $4.37, according to a Bloomberg survey.

Allstate Corp. (ALL US): The largest publicly traded U.S. home and auto insurer suspended share repurchases after investment losses and claims from Hurricane Ike caused the first unprofitable quarter since Katrina hit in 2005. The stock gained 3.1 percent to $29.11 in late trading yesterday.

Altria Group Inc. (MO US): The largest U.S. tobacco company posted third-quarter profit of 46 cents a share, exceeding the average analyst estimate by 3.8 percent, on higher prices for cigarettes including the top-selling Marlboro brand. The company also reaffirmed its full-year forecast of $1.63 to $1.67 a share. Altria rose 14 cents to $19.32.

Amazon.com Inc. (AMZN US) fell 13 percent to $43.58. The world's largest Internet retailer said its full-year sales and operating income would be lower than it originally projected.

Amgen Inc. (AMGN US) gained 4.6 percent to $52. The world's largest biotechnology company said third-quarter profit rose more than fivefold as sales of its anemia drugs increased. The company forecast full-year earnings of at least $4.45 a share, topping the average estimate of $4.37 by analysts in a Bloomberg survey.

Black & Decker Corp. (BDK US): The power-tool maker forecast fourth-quarter earnings of 70 cents to 90 cents, below the average estimate of analysts surveyed by Bloomberg. The company also lowered its forecast for 2008 earnings by 5 cents. Black & Decker tumbled 5.2 percent to $46.89.

Bristol-Myers Squibb Co. (BMY US) added 2.7 percent to $18. The maker of the anti-clotting drug Plavix reported third-quarter quarter earnings, excluding some items, of 46 cents a share, topping the average analyst estimate by 4 cents.

Dow Chemical Co. DOW US) gained 5.1 percent to $23.25. The largest U.S. chemical maker reported third-quarter profit of 60 cents a share, beating the average analyst by 4 percent because of price increases on plastics and other products.

F5 Networks Inc. (FFIV US) rose 7.7 percent to $21.30 in late trading yesterday. The maker of products that manage companies' computer networks forecast first-quarter earnings that topped some analysts' estimates and said it plans to buy back as much as $200 million of its shares.

Goldman Sachs Group Inc. (GS US): The New York-based securities firm that plans to convert into a bank may cut about 3,200 jobs, or 10 percent of its workforce, said a person briefed on the plans who declined to be identified. The shares dropped 1.8 percent to $112.99.

GSI Commerce Inc. (GSIC US) climbed 11 percent to $10.45. The builder of e-commerce Web sites reported a third-quarter loss of 16 cents a share that was narrower than expected. The company was also raised to ``buy'' from ``hold'' at Jefferies Group Inc.

Seagate Technology (STX US) fell 2.3 percent to $7.82. The world's biggest maker of hard-disk drives posted an 83 percent drop in first-quarter profit and forecast earnings that missed analysts' estimates after the slowing economy reduced demand for computers.

Level 3 Communications Inc. (LVLT US): The operator of fiber-optic phone networks posted a third-quarter loss of 8 cents a share, beating the average analyst estimate by 5.9 percent, and said sales in its core communications services will continue to grow in the fourth-quarter. The shares gained 8.9 percent to $1.34.

Raytheon Co. (RTN US): The world's largest missile maker reported third-quarter profit from continuing operations of $1.01 a share, topping the average analyst estimate by 5.1 percent, and said profit gained on increased sales of radar and missile systems. The shares rose 7 cents to $44.22.

Starwood Hotels & Resorts Worldwide Inc. (HOT US): The third-largest U.S. lodging company forecast 2008 and 2009 profit that trails analysts' estimates as corporations and consumers reduce travel spending. The shares slid $1.20, or 6.3 percent, to $18.

Thomas & Betts Corp. (TNB US): The manufacturer of electrical components forecast 2008 earnings of $5.35 to $5.45 a share, above the average estimate of analysts compiled by Bloomberg, and said ``solid demand'' in industrial markets will help in the fourth quarter. The shares gained 45 cents, or 2.1 percent, to $22.27.

United States Parcel Service Inc. (UPS US): The world's largest package-delivery company posted third-quarter profit of 96 cents a share, beating the average analyst estimate by 8.4 percent. The shares climbed 2.8 percent to $47.70.

Xerox Corp. (XRX US) slid 4 percent to $7.66. The world's largest maker of high-speed color printers forecast profit this quarter that trails analysts' estimates.

To contact the reporters on this story: Elizabeth Campbell in New York at ecampbell11@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

U.S. Stocks Rise, Led by Energy Shares; Dow Chemical Advances

By Elizabeth Stanton

Oct. 23 (Bloomberg) -- U.S. stocks rose and the Standard & Poor's 500 Index rebounded from a five-year low as higher oil prices boosted energy shares, overshadowing a report showing that foreclosures jumped to a record.

National Oilwell Varco Inc. climbed 5.4 percent and led energy shares in the S&P 500 to a 3.2 percent advance after profit topped analysts' estimates and crude rebounded from a 16- month low. Dow Chemical Co., the largest U.S. chemical company, added 9.1 percent after third-quarter profit beat projections on higher prices for latex and plastics used in packaging.

The S&P 500 gained 6.57, or 0.7 percent, to 903.35 at 10:07 a.m. in New York. The Dow Jones Industrial Average rose 76.62, or 0.9 percent, to 8,595.83. The Nasdaq Composite Index added 0.38, or less than 0.1 percent, to 1,616.13.

The S&P 500 closed at the lowest level since April 2003 yesterday on concern a deepening global economic slump will damp profits. The benchmark index for U.S. equities extended its 2008 decline to 39 percent yesterday, poised for its worst annual performance since 1931.

A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, RealtyTrac, an Irvine, California-based seller of default data said today. Rick Sharga, executive vice president of marketing for RealtyTrac, said he wouldn't be surprised if foreclosures continue to increase.

Losses stemming from the collapse of the U.S. subprime mortgage market have surpassed $650 billion globally, prompting the U.S. and at least 10 European countries to inject capital into their banking systems to resuscitate lending.

Libor Watch

A key gauge of banks' willingness to lend, the London interbank offered rate for dollars, has declined over the past two weeks, indicating the measures are working to some degree. Three-month Libor held at 3.54 percent today, down from 4.82 percent on Oct. 10. During the six months through Sept. 15, the rate ranged from 2.54 percent to 2.92 percent.

The S&P 500 has moved more than 1 percent on 13 of the 16 days this month, making it the most volatile by that measure since September 1932, according to S&P analyst Howard Silverblatt. Stock prices are gyrating as investors weigh government efforts to unlock credit markets with growing concern that the global economy is headed for a recession.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | Oct 23 08 11:37 GMT |

USD-CHF @ 1.1665/69... Ranged once again

R: 1.1700 / 1.1750 / 1.1800
S: 1.1600 / 1.1550 / 1.1500 / 1.1450

Strong Resistance keeps the pair trading between 1.17 and 1.16. The day ahead could see the pair slip towards 1.16. The Support at 1.1620-00 is strong and could produce a bounce to re-test the Resistance at 1.17 afresh.

Overall despite the pair remaining in an uptrend the pair could slip towards 1.15 as the Resistance at 1.17 seems strong. The pair has been trading in tight range with a high possibility of it continuing for another week. Thus it is advisable to sell highs and buy bottoms.

GBP-USD @ 1.6225/29... Could re-test 1.6130

R: 1.6320 / 1.6380-400 / 1.6500-25
S: 1.6200 / 1.6150-30 / 1.6060-50

Cable did not manage to trade above the Resistance at 1.6320 for long and the selling pressure has pushed the pair down lower once again to the current levels. A break below 1.62 during the US session could result in the pair slipping further lower towards 1.6130, the recent low.

Overall the downtrend could have seen a relief rally towards 1.65 had the pair continued to trade above the Resistance seen at 1.6320. However, the bias is once again bearish and the pair is expected to continue to slip further. It is difficult to suggest immediate targets on the pair however, a test of 1.58 could be possible if the UK GDP indicates that the economy has seen negative growth for the quarter.

AUD-USD @ 0.6634/38... Slip likely

R: 0.6700 / 0.6800-25 / 0.6900 / 0.6975
S: 0.6600 / 0.6500 / 0.6465 / 0.6400

The pair continues to trade steady below the 0.67 mark after having tested 0.6732 earlier in the day. There is a stronger Resistance at 0.6820 as well, which is expected to curb the rise in the pair from here.

Overall the pair is expected to remain pressured lower. We have been calling for a dip however the pair continues to delay it. Importantly, during the same time that we have been calling for a dip the pair has not risen either. This gives us the confidence that the pair could still slip towards 0.65 if not re-test 0.6330, despite some Support at 0.66.

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.

Japan Unease Over Yen Gains

Daily Forex Fundamentals | Written by Investica | Oct 23 08 11:48 GMT |

Yen strength will be an increasing source of concern for the Finance Ministry, increasing the potential for at least verbal intervention to limit further gains.

There was some temporary relief from the yen advance in Europe on Wednesday, but the dollar failed to regain the 100 level and there was renewed yen support as the Dow Jones index was subjected to renewed selling with the dollar testing 2008 lows below 98.

The trend continued in Asian trading on Thursday with regional equity markets weakening. The latest Japanese trade surplus also recorded further weakness in exports with annual growth held to 1.5% as shipments to the US continued to weaken

Markets will be on increased alert over Ministry of Finance rhetoric in the near term given the greater risk of official action to stabilise markets. Volatility has spiked to extreme levels, especially against European currencies, which will cause concern and there will be greater unease over the economy. There is likely to be some speculation over a move to cut interest rates and the dollar attempted to recover from lows below the 97 level with comments that markets were being watched closely.

Investica
http://www.investica.co.uk

Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.

U.S. Market Update

Daily Forex Fundamentals | Written by Trade The News | Oct 23 08 10:13 GMT |

European Market Update: Emerging market concerns and weaker EU industrial order data hit equities

ECONOMIC DATA

(FR) French Oct Business Confidence Indicator: 88 v 89e; Production Outlook Indicator: -66 v -45e; Own-Company Production: -19 v --13e;
(FR) French Sept Consumer Spending M/M: 0.6% v -0.2%e; Y/Y: 1.5% v 0.5%e

(SW) Swedish Sept PPI M/M: 0.2% v -0.1%e; Y/Y3.4% v 3.1%e

(EU) ECB Euro-zone Aug Current Account: -€8.4B v -€1.7B prior; Current Account nsa: -€-7.9B v -€1.1B prior

(UK) Sept Retail Sales M/M: -0.4% v -0.7%e; Y/Y: 1.8% v 2.0%e (lowest annual rate since Feb 2006)
(UK) BBA Loans for House Purchase: 23,422 v 21,342 prior

(EU) Euro-zone Aug Industrial New Orders M/M: -1.2% v 0.5%e; Y/Y: -6.6% v -0.1%

(US) Sept foreclosures M/M: -12%; Y/YL 21% y/y; foreclosure filings +71% y/y - RealtyTrac

(SW) Swedish Riksbank cut interest rates by 50bps to 3.75%, more than expected. Consensus expectations was for a 25bps cut to 4.00%

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- In equities: Credit Suisse [CSGN.SZ] Confirmed its Q3 Net loss of CHF1.3B that it guided back on oct 16th. Q3 revenues were CHF3.11B. Its ROE -13/1% compared to 12.4% y/y . The bank's Tier 1 ratio came in at 10.4% versus 12% y/y. Credit Suisse Wrote down CHF2.4B in credit and market related losses but added it did not need to use the illiquid fund and ended the share buyback. Agreements with the government did not constrain dividend payments. Capitalization remains strong and is disappointed by the Q3 results and its share buyback and dividend programs will not be constrained || Nestle [NESN.SZ] Reported 9-month Revenues of CHF81.4B in line with estimates of CHF81.1B. It raised its FY organic growth to 8.9%. The co. used €10.4B from its Alcon sale to pay down. FX impacted Sales by 8% but added that remains strong financial position. On the conference call the company noted that it saw continued demand for its commercial paper|| Sony [SNE] Guided FY08/09 Net lower to ¥150B compared to ¥240B prior view. The company citied the strong JPY for its reduced forecast. It now saw Op Profit around ¥200B v ¥470B prior and Revenue ¥9.0T v ¥9.2T prior. The company noted it was on track to sell 10M playstation 3S in 2008 || Essilor [EF.FR] Reported Q3 Revenues €757.6M v €755Me, 9-month sales €2.28B (+3.5% y/y) || Syngenta [SYNN.SZ] Reported Q3 Revenues of $2.3B just above analyst estimates of $2.06B. It reaffirmed sees 2008 EPS growing at least 35% with 2009 EPS growth "in high teens" || Skandinaviska Enskilda Bank [SEBA.SW] Reported Q3 Net Interest Income SEK4.55B versus estimates of SEK4.4B. Revenues came in at SEK8.7B just below expectations of SEK8.92B. The bank announced plans to cut 500 jobs in Sweden || Nordea bank [NDA.SW] Reported Q3 Oper Profit of€847M and Net Profit €655M compared to year-ago level of €761M y/y, Its net Net Interest Income €1.3B while its tier 1 Capital Ratio was 7.0% v 7.2% y/y || Stora Enso [STERV.FH] Reported Q3 Revenues of €2.72B below estimates of €2.83B. It registered a net Loss €119.5M below forecasts of €195Me. It noted the benefit of weakening a SEK currency on results. It saw reduced fuel costs in coming quarters || Glaxo [GSK.UK: In exclusive pact with Affiris for Therapeutic Alzheimer vaccines in which the potential value of agreement could reach €430M. Glaxo to pay Affiris €22.5M in up-front payment. || Air Liquide [AI.FR] Secured €2.5B in back up credit ||

- Speakers: Former Fed Chairman Greenspan stated that the $700B US financial market bailout was adequate and urged stricter regulation to address market collapse. The former fed chair stated that the crisis was worse than expected and that that fears of insolvency are significant || German Chancellor Merkel says Germany will do everything in its means to keep economy growing || Commissioner Barroso noted that the financial market crisis required unprecedented levels of global cooperation. Apart from financial turmoil, leaders must address "major imbalances" and suggested that participation of China, India, and Japan were necessary for reform || Former BOJ member Muto noted that he saw a Japanese economic recovery beginning in 2010 || BoE Barker: saw inflation falling sharply in 2009 but noted that the BOE would not lower interest rates on energy price drop only . She added that Business will see the benefits of the government bailout || BoE Besley: Softer commodity prices are welcome and balance of risks have changed. MPC to focus on limiting impact of global shocks but it remains too early to say if further shocks to come. He noted that the recent credit and oil shocks are beginning to unwind || Japan Govt Spokesperson Kawamura noted that must carefully follow how Yen's rise impacts Japanese economy

- In Currencies: The Asian session continues to exhibited the volatility as the trend of lower European pairs against the JPY continued. The USD was modestly weaker from its opening levels seen in Tokyo. EUR/USD at 1.2840 after testing 1.2735 and EUR/JPY probed blow the 123.50 level before bouncing 200 pips towards the 125.40 area. Reportedly weaker CAD helping takeover according to a Globe & Mail article. It noted that buyers were seeing a material decline in the cost of their financing commitment. Sources working on the takeover say the recent currency move makes it more likely that the long-awaited transaction will close, as scheduled, by Dec. 11.

- In Energy: OPEC President stated that they would likely to announce output cuts during Friday's meeting but added it was hard to suggest the exact amount of possible reductions. He stated that it would be fine if Russia, Mexico, Norway joined OPEC in reducing output. Many companies are abandoning oil projects due to lower prices and favored a $90 level per barrel which would help the oil Sands Projects break-even price - Oil prices will continue to decline unless market becomes balanced ||Iran Oil Min Nozari: Reiterated that OPEC output cut will be higher than 1M bpd, 2M bpd cut would stabilize market || OPEC President: Another option for OPEC is to cut supply in phases

NOTES

- Equity market volatility continues as the US market again experienced steep losses on Wed. The Far East stocks were broadly lower but comments from former fed Chair Greenspan help to sooth thing over for the time being. Greenspan noted that the $700B US financial market bailout plan was adequate. Dealers also noting that a WSJ article on mortgage/foreclosure relief plan is helping US equity futures. However, a weak Euro-zone new order data brought back some risk aversion and sent Both European and US equities to session lows. Emerging markets continue to weigh upon equity sentiment. Sweden's Swedbank noted that its Baltic slowdown is posing a challenging environment and sees credit quality in the area continuing to deteriorate. There were a few interest rate cuts overnight as the New Zealand Central Bank cut by 100bps (as expected), while the Norwegian Central Bank cut by 50bps to 3.75% (was expected to cut by 25bps). The Japanese trade surplus tumbled to Y 95B well below expectations of a Y570B surplus with exports to US weak and exports to the Asian and Euro-Zone areas even softer. ECB members continue with some dovish talk on the inflation front. Gonzalez-Paramo stated that the ECB wasin position to cut rates further without adding to medium term inflation risks. There were rumors that the ECB could cut today as the Gov council meets for a 'non-policy meeting' today.

- Looking ahead: More US corporate earnings with Bristol Myers, Dow Chemical, Enterprise, Altria, Raytheon, UPS among some of the notables before the US open

- 8:30 (US) Initial Jobless Claims w/e Oct 18th. Consensus expectations are 468k; The prior number was 461k.

- 8:30 (US) Continuing Claims w/e Oct 11. Consensus expectations are 3.715M; The prior number was 3.711M.

- 9:00 (BE) Belgian Oct Business Confidence Level. Consensus expectations are -16; The prior number was -14.4.

- 10:00 (US) Aug House Price Index. Consensus expectations are -0.5% ; The prior number was -0.6%.

Trade The News Staff
Trade The News, Inc.

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The Sterling Drops To A Five Year Low Before Retail Data

Daily Forex Fundamentals | Written by Finotec Group | Oct 23 08 09:10 GMT |

The British pound traded near its lowest level in more than five years against the dollar before a report that will probably show retail sales dropped last month and the British economy contracted in the third quarter. 'I don't see anything that can stop this,' said David Woo, global head of currency strategy in London at Barclays Capital. 'It's shocking. I can't say we've anticipated this move.' Bank of England Governor Mervyn King also said this week the U.K. may enter a recession. A report tomorrow may show the economy contracted 0.2 percent in the third quarter from the previous three-month period. The GBP/USD is currently trading at $1.6315 as of 7:55am, GMT.

The Japanese yen may strengthen 8 percent by next year to 90 per U.S. dollar as investors dump higher- yielding assets funded in Japan and bring their cash home, Barclays Capital said. The yen appreciated 8 percent against the dollar in the past year, the only gainer among the 16 most actively traded currencies versus the greenback. 'The main story is that risk aversion will encourage unwinding of yen carry trades,' said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain's third-biggest lender. ' This is coming from the risk of a global recession.' The USD/JPY is currently trading at 97.52 as of 7:42am, GMT.

Economists at Deutsche Bank AG say the ECB will slash the benchmark rate to a record low of 1.5 percent by the middle of next year from the current 3.75 percent as the euro-region economy heads into a recession. European Central Bank President Jean Claude Trichet may need to show he's still willing to fight inflation after price expectations soared in the wake of the bank's Oct. 8th interest-rate reduction. The EUR/USD is currently trading at $1.2828 as of 7:55am, GMT.

Economic Calendar

Time (GMT)	E Event	Currency	Period	Previous	Previous	Significance
15:15	BOC Governor Carney Speaks	CAD				***
14:30	Monetary Policy Meeting Minutes	CAD				***
12:30	Jobless claims	USD	Weekly	461.0K	470.0K	**
09:00	Industrial New Orders m/m	EUR	Aug	1.0%	0.3%	**
08:30	Retail Sales m/m	GBP	Sep	1.2%	0.9%	***
08:30	BBA Mortgage Approvals	GBP		21.1K		**
08:00	Current Account	EUR	Aug	-1.7B	-5.0B	**

Finotec Group Inc.
http://www.finotec.com/

Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.

GBPUSD Ticks Higher Despite Mixed Data

Daily Forex Fundamentals | Written by DailyFX | Oct 23 08 09:14 GMT |

U.K. September retail sales yet again came in better than expected falling just 0.4% m/m, compared to our survey median for a 0.6% drop and after a 1.1% August increase (revised from 1.2%). Meanwhile, however, the annual rate came in weaker than expected, rising 1.8% y/y versus a median estimate for 2.2% and down from 3.3% in August. This was indeed the softest y/y reading since February 2006, but ONS data still stands in contrast to survey data which suggests depressed consumer confidence and falling disposable income are having a real impact on the retail sector.

Meanwhile, Pound traded on a supportive footing after it rebounded out of its Asian session lows as the Nikkei pared its sharp opening losses to end the session 2.46% in the red. European indices are relatively stable after they recovered opening losses, which encouraged GBP-JPY and GBP-CHF demand on dips, with the former around 159.00 and the latter above 1.9000 after hitting lows of 156.95 and 1.8805 respectively. Meanwhile, U.K. retail sales fell 0.4% m/m in September, which was better than expected. Meanwhile, net mortgage lending rose GBP 3.6 bln in September versus GBP 2.1 bln in August, while September mortgage approvals were down 56% year-on-year. Cable is hovering around 1.6300 after the releases, while EUR-GBP maintains its support ahead of 0.7850. The outlook for sterling remains negative, although there are signs that the market is pausing for breath after the sharp losses seen since Monday.

DailyFX

Disclaimer

Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

Currency Pair Daily Forecasts

Daily Forex Technicals | Written by Finotec Group | Oct 23 08 09:36 GMT |

EUR/USD Daily Technical Reports

EUR/USD-market strategy can be a buy from the level 1.2815$

Technical oscillators supporting the bullish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines in a bullish direction and crossing below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction.

USD/JPY Daily Technical Reports

USD/JPY-market strategy can be a sell form the level 97.90

Technical oscillators supporting the bearish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD in a bearish direction below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction.

GBP/USD Daily Technical Reports

GBP/USD-market strategy can be a buy from the level 1.6260$

Technical oscillators supporting the bullish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines are in a bullish direction. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. As seen on the chart there are two bottoms leading upwards to a buying trend.

USD/CHF Daily Technical Reports

USD/CHF-market strategy can be a sell below the level 1.1350

Technical oscillators supporting the bullish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines may be approaching a bullish cross above the zero line. In order to find the power of the market, we can use Momentum. With Momentum we see that the market is bullish.

Finotec Group Inc.
http://www.finotec.com/

Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Oct 23 08 09:04 GMT |

EUR/USD

Current level-1.2789

EUR/USD is in а downtrend, after finalizing the rebound from 1.3882 (Sept. 11 2008) at 1.3882. Technical indicators are falling, and trading is situated below the 50- and 200-Day SMA, currently projected at 1.4595 and 1.5183

As expected 1.2992 managed to limit yesterday's consolidation on the upside and the decline was renewed from 1.2947, reaching low at 1.2721. We believe that the sell from 1.2947 was only an internal part of the consolidation since 1.2731, so allow a few more intraday swings above 1.2721 and below 1.2947 before entering a sharp downward impulse towards 1.2484.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.2992	1.3261	1.3531	1.4865
1.2801	1.2731	1.2484	1.20-sentiment

USD/JPY

Current level - 97.80

The pair is in the second part of the broad consolidation since 95.75 short-term bottom, aiming at 97.63. Trading is situated below the 50- and 200-day SMA, currently projected at 107.61 and 105.76.

Obviously te consolidation pattern below 103.55 resistance has ended at 102.41 and the renewed decline has reached a local bottom at 96.84. We think, that with 96.84 the downtrend from 102.41 has been completed, so we'll expect an uptrend towards 99.93, en route to 103.55. Intraday a minor consolidation is what is unfolding below 98.33, so later today expect next leg upwards, to 99.92. Crucial is 96.84.

Resistance		Support
intraday	intraweek	intraday	intraweek
98.33	99.92	102.41	103.55
97.36	96.84	95.75	90-sentiment

GBP/USD

Current level- 1.6305

The pair has finished the broad consolidation above 1.9338 and the general downtrend has been renewed, targeting levels below 1.70+. Trading is situated below the 50- and 200-day SMA, currently projected at 1.8391 and 1.9421.

The sharp sell-off from yesterday's peak at 1.7194 bottomed at 1.6149, but only a brief consolidation is to be expected above these levels, before next leg downwards to 1.5846. The overall downtrend from 2.0153 is in its most powerfull part, so we will expect current rebound to be limited below 1.6492, followed by another strong downmove to 1.5846, en route to 1.55+.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.6492	1.6799	1.7579	1.8802
1.6131	1.5846	1.55+	1.5112

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